Did the Creator of the Backstreet Boys Take a St. Paul Bank for $28 mil?

American Bank joins two North Dakota banks in suing to recover money loaned to boy-band magnate Lou Pearlman

Comments (0) By Peter S. Scholtes Wednesday, Jul 11 2007

By the time American Bank served a notice of default on the so-called "TOTP Loan" last December—having allegedly never received a payment—the larger house of cards had begun to crumble. In November, after a Florida state spokesman leaked news that Pearlman was under investigation, Trans Continental Companies VP Frank Vazquez died of carbon monoxide poisoning in his Porsche with the garage door closed, an apparent suicide. Investors started having trouble withdrawing their money from Pearlman's Trans Continental Savings Program, and employees began shredding documents and carting off furniture.

Sometime before February, Pearlman fled to Europe. He was last seen free on February 1, at a theater in Berlin, where he watched his latest boy band, the German group US5, receive a Goldene Kamera Pop International Band award. Soon after, the FBI, IRS, FDIC, and local agencies stormed his Orlando offices. Pearlman was traveling under the name A. Incognito Johnson when a German tourist in Indonesia tipped off the FBI.

� Jason Arnold/Reuters

One day you're cutting ribbons with a Hilton, next you're singing "Chain Gang" with a federal marshal: Lou Pearlman (center) and friends in 2004

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The American Bank suit against NACM now accuses the latter local company of acting as Pearlman's agents, and pocketing "$1,855,000 in commissions...making Pearlman and his entities NACM's largest source of revenue."

The estimated total loss to the various plaintiffs in the local suit is in excess of $65 million.