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U.S. boy band creator in detention in Guam
2007-06-18
Louis Pearlman, the creator of boy bands like Backstreet Boys and 'N Sync, was remanded on Monday to custody in Guam pending his transfer to Florida where he faces charges of fraud. Pearlman, 53, was brought last week by FBI agents to Guam, a U.S. territory, after he was handed over by Indonesian authorities who apprehended him at a luxury hotel on the island resort of Bali. He was produced in the court of Chief Justice Frances Tydingco-Gatewood, who ordered that he be returned to federal jail until he is transferred to Florida. "It's my understanding from the case agent there's over $500 million at the time allegedly defrauded from 200 plus investors," David Smith, the FBI's assistant legal attache in Jakarta, told the court. The case follows a complaint filed in December by the Florida Office of Financial Regulation alleging securities fraud against Pearlman and 16 of his business entities, many of them beginning with the words Trans Continental. According to the state lawsuit, Pearlman's companies for 15 years sold unregistered securities in what was called an "employee investment savings account" program, committing securities fraud by implying the money was safe and insured. But like a Ponzi scheme, according to the complaint, early investors were paid $118 million in dividends from deposits by more recent investors, while $7 million was paid in sales commissions and $50 million went to Pearlman and two other defendants. Smith told the court Pearlman had roughly $20,000 with him when he was apprehended on Bali. He was registered in the hotel under the name "Incognito Johnson." The court ruled that a request by Pearlman for assistance from the U.S. Public Defender's Office had merit. Pearlman said he was unaware of the charges against him until he was apprehended on Bali. "I had no idea there was ever an arrest warrant," he said. About his registration under a false name, Pearlman said it was common practice in the entertainment industry. "You're not going to find Tom Cruise under his name, you're not going to find Jennifer Lopez under her name," he said.
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