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Airline to halt savings program

By HELEN HUNTLEY
Published December 28, 2006

Orlando entertainment entrepreneur Lou Pearlman and Trans Continental Airlines agreed Wednesday to stop selling a savings program the state says is illegal.

The state Office of Financial Regulation sued Trans Continental in Orange County Circuit Court on Wednesday, saying the company's Employee Investment Savings Account is an unregistered security that violates Florida law.

The company denied the charges but agreed to halt all sales.

The St. Petersburg Times published stories last week about investors struggling to get their money back. Trans Continental has acknowledged "administrative setbacks."

The state and Trans Continental have agreed to share the cost of hiring an accounting firm, Oscher Consulting of Tampa, to review the company's savings program records. Work is expected to begin next week, said Gregory Melchior, assistant general counsel for the state's Office of Financial Regulation. "Trans Continental has been cooperating with us in our continuing investigation."

The program, which Trans Continental launched in 2001, took in millions of dollars from investors with promises of high yields and complete safety. Many investors spoke with Pearlman, whose business empire includes a recording studio, record company, reality TV shows and the Church Street Station complex in Orlando. Pearlman was the producer who launched Orlando boy bands *NSYNC and the Backstreet Boys.

The suit filed Wednesday contains few details about the savings program, but it may be amended later based on the results of the investigation, Melchior said.

He said the state is trying to determine the scope of the savings program and would like to hear from investors, who may call the Tampa office at 813 218-5321 and speak to Danielle Brooks.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified December 27, 2006, 22:53:49]