Bank sues dealmaker over debt
O rlando's Lou Pearlman and his airlines owe $ 18-million, the bank says .
By HELEN HUNTLEY
Published January 9, 2007
Orlando entertainment entrepreneur Lou Pearlman and his company, Trans Continental Airlines, are either broke or simply not willing to pay their debts, Integra Bank claims in a lawsuit recently filed in federal court in Orlando.
The bank says Trans Continental stopped paying last summer-the same time investors in a savings program the airline sponsors began having trouble getting their money back.
The lawsuit says "tremendous dividends" paid to Pearlman and other insiders left the company without enough cash to pay its debts.
The Evansville, Ind., bank says Trans Continental and Pearlman owe it more than $18-million and asks the court to award it Pearlman's stake in the company, which was used as security for the loans.
Trans Continental owes far more to investors who signed up for the company's "Employee Investment Savings Account" based on promises of high yields and FDIC insurance. Investors, many of them local, say they can't get their money back and the company doesn't return their telephone calls.
The state says the investment is an unregistered security and was sold illegally, a claim the company denies.
The Office of Financial Regulation and Trans Continental are now cooperating on an independent review of the savings program's books.
Integra Bank said it loaned Pearlman money based on a personal financial statement that he had liquid assets worth more than $8-million. Pearlman's business empire includes a recording studio, record company and reality TV shows. He may be best known as the producer who launched Orlando boy bands *NSYNC and the Backstreet Boys.
[Last modified January 9, 2007, 00:38:47]
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