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Louis Pearlman seemed to have it all. He lived in a $12 million, Italianate mansion in the same Orlando neighborhood as basketball great Shaquille O'Neal. He was chauffeured around in a powder-blue Rolls-Royce. His office, in a sprawling downtown entertainment complex that he owned, was lined with the gold and platinum records he earned as the creator of 1990s pop music sensations *NSYNC and the Backstreet Boys. All of that may soon come crashing down.

Pearlman, 52, has been accused by the Florida Office of Financial Regulation of orchestrating a massive Ponzi-like scheme that may have duped some 1,800 investors out of $317 million. The FBI has raided his home and office. Banks have begun seizing assets. Dozens of investors have launched civil suits. And, tragically, one of Pearlman's top lieutenants has committed suicide. Pearlman couldn't be reached for comment; in a Feb. 2 letter to the Orlando Sentinel , he said he was in Germany promoting his latest musical act, US5.

"Worse and Worse"

According to Florida regulators and a number of investor suits, Pearlman's main company, Trans Continental Airlines, a charter airline, sold money market-like investments at interest rates a little above what investors could get at their local bank. Pearlman called his product an Employee Investment Savings Account and suggested it was like a credit union for his company that could offer better rates because it was so successful. "The promised rate of return was not truly a red light," says Robert Rosenau, chief of investigations at the Florida financial regulator's office. "It wasn't a blatant bad deal."

Pearlman printed brochures for his Employee Investment Savings Accounts that hyped coverage from the Federal Deposit Insurance Corp. and said additional insurance was being provided by American International Group (AIG) and Lloyd's of London, according to the Florida complaint. Regulators say none of that was true. Pearlman also sent out financial statements ostensibly audited by an accounting firm named Cohen & Siegel. Regulators say the firm's phone number was an answering service and its mail was forwarded to Pearlman's home.

Investors, many of them Florida retirees, came in through networks of independent financial consultants, insurance salesmen, and tax preparers, according to securities lawyer Robert Persante, who represents eight investors suing Pearlman. At least one of the firms, Churchill Financial Group of Clearwater, Fla., took out newspaper ads advertising above-average rates. Churchill did not return calls seeking comment. Persante says one of his clients entrusted her $180,000 life savings to a Pearlman-affiliated agent to qualify for Medicaid. "This thing has gotten worse and worse," Persante says. "Until we find more avenues [of recovery], we're not going to take on more cases."

More Money, More Problems

The investment plan fiasco has only magnified Pearlman's other recent troubles. Washington Mutual won a judgment against him last year after the music impresario defaulted on a $7 million loan. The bank and Pearlman settled earlier this year, according to Pearlman's attorney at the time Daniel O'Malley. Bank of America (BAC) had a $25 million mortgage on Pearlman's Church Street Station, the entertainment complex in downtown Orlando that Pearlman put into bankruptcy Feb. 22. Elizabeth Green, an attorney who represents the Pearlman-related company that owns the complex, confirms that the court has a $40 million offer for the property from a local developer. She says she hasn't spoken to Pearlman since December and doesn't know how to reach him.

The son of a Flushing (N.Y.) dry cleaning service owner, Pearlman has raised red flags with his business dealings before. Both the Backstreet Boys and *NSYNC sued him in the late 1990s, claiming he misappropriated money. Those suits were settled. Last year pop star Justin Timberlake, the former lead singer of *NSYNC, told a British newspaper that he had "been monetarily raped by a Svengali," referring to Pearlman. Timberlake's publicist did not respond to a request for comment.

The allegations go beyond Pearlman's inner circle. Recently inaugurated Florida Governor Charles Crist Jr. was named as a defendant in a Mar. 5 investor suit filed against Pearlman by Tampa attorney James Lowy. The suit claims that when Crist was Florida's attorney general, he didn't pursue complaints about Pearlman's business dealings because Pearlman had held a fund-raiser for him and Pearlman-related entities had contributed $10,000 to his gubernatorial campaign; it also claims that Crist made use of a Pearlman-owned plane and skybox. A Crist spokesperson says the governor hadn't seen a copy of the suit yet and would not comment.

Family Ties

For Don Seligman, the leasing agent for Church Street Station, the first warning that something was amiss came last November, when Frank Vasquez, a vice-president of operations at Pearlman's company, asphyxiated himself in his garage. Vasquez grew up with Pearlman in the same working-class Queens apartment complex. "He was 45, a good-looking guy," Seligman says about Vasquez. "I think that was the precursor. He knew what was coming."

For Manhattan dentist Steven Sarin, the ties go back almost as far. Sarin's parents first invested with Pearlman in 1985, after hearing about good returns from another resident of their Florida retirement community. Sarin says his entire family invested much of their life savings with Pearlman and frequently met with him in New York and Florida. He adds that Pearlman always called his parents on their birthdays and invited everyone backstage at concerts featuring his acts. In December, over corned-beef sandwiches at a deli in Queens, Sarin and his brother asked Pearlman about their investments. "He said, 'Everything's fine,'" Sarin recalls. "'We're moving right along, bands are doing well. The business is doing phenomenally.'"

Now Sarin says his mother can't stop crying, and Sarin himself had to be rushed to the hospital on Feb. 27 due to complications from the stress. "People get blinded by the entertainment field," Sarin says. "You see celebrity; it diverts your mind away from an analytical business sense." Sarin says he wishes Pearlman would come home and return all the money his family has invested.

Right now, however, there's little hope of that. Gerard McHale Jr. was appointed to oversee Pearlman's businesses when a Florida judge put them into receivership in early February. McHale says he's recovered $50,000 so far. "I don't know how I'm going to get paid," he says.