Print

Email story

Comment

Email editor

Assured prosperity, now pain

Personal visits. Glowing financial statements. A secure investment with a bright future. Lou Pearlman offered it all, but the state says he left more than 1,800 people ...

By HELEN HUNTLEY
Published February 25, 2007

Just four months ago, Beverly and Emmanuel Silva were in music producer Lou Pearlman's lavishly appointed Orlando office, entranced by his spiel about the bright future for his entertainment business. They were confident their $850,000 investment was in good hands. - Today they are desperately trying to find a buyer for their New Hampshire home before the bank forecloses. Their retirement dreams have crashed along with Pearlman's empire.

"We have no money coming in, zilch," Beverly Silva said.

The Silvas, former St. Petersburg residents, were among more than 1,800 investors pulled into what the state describes as a huge Pearlman Ponzi scheme. The man who launched 'NSync and the Backstreet Boys used money from new investors to repay old investors until he ran out of cash to keep the scheme going. He left the country a few weeks ago, owing investors more than $317-million. A state-appointed receiver is trying to sort out the mess.

"I've left a million messages for Pearlman and he hasn't called back," Mrs. Silva said. She says the couple considered Pearlman a good friend and visited him many times. She even asked him to be the executor of her will and he agreed.

"We spent three or four hours with him that day," she said. "He showed us the financial statement for last year and talked about the stock going public."

Her family began investing in Pearlman's company, Trans Continental Airlines, a dozen years ago, and Mrs. Silva inherited those accounts when her mother died. The couple's investment was split between a savings account paying 8.08 percent, and Trans Continental stock paying 10 percent with potential for what they expected would be big gains.

It was every dollar of their savings. And it was, of course, too good to be true.

But a trusting Mrs. Silva, 58, gave up the day care home she ran in St. Petersburg while Mr. Silva, 46, dropped his efforts to become a nurse. In 2005, they bought their retirement dream home in Center Conway, N.H., planning to live on their Trans Continental interest payments. The money was a little late in December, their first sign of trouble, and since then it hasn't come at all.

The Silvas took out a home equity loan to pay expenses and plan to move in with a friend in Thoms River, N.J., to look for work. They say job prospects are slim in New Hampshire and figure they only have about four months to get their finances on track before the bank will file for foreclosure and their credit will be damaged.

Harry "Buddy" Robinson is welcoming the Silvas into his home, but he regrets copying their investment strategy. He invested $400,000 with Pearlman, including $100,000 borrowed through a home equity loan, on which he is making payments of $1,100 a month. He also invested $50,000 borrowed from a relative, which he plans to repay by selling his car.

"I don't understand how he got away with it," said Robinson, 45, who is self-employed. "If the average Joe did something like this, they'd be in jail now."

The FBI and other agencies are investigating Pearlman, but no charges have been filed.

Read more about Lou Pearlman and Trans Continental Airlines at blogs.tampabay.com/money.

[Last modified February 25, 2007, 00:49:30]