Sifting through Lou Pearlman's rubble
Lou Pearlman's talent business is under new management, but the $175,000 sale barely scratches the surface of what is owed.
By Helen Huntley, Times Staff Writer
Published March 29, 2007
The rest of Lou Pearlman's Orlando empire may be in shambles, but the show will go on for wannabe singers, dancers, actors and models.
Pearlman's Talent Rock business has new owners, who plan to keep sponsoring talent expos that give aspiring young artists a chance to learn about show business, compete for trophies and meet agents who can help with their careers.
The transaction won't do much for investors who are out $317-million in what state officials say was a huge Ponzi scheme that supported Pearlman's businesses and his lavish lifestyle.
However, Friday's court-approved sale does help several hundred people who put down deposits on Talent Rock events and probably would have lost their money otherwise.
A cruise planned for this summer has been canceled, but owners of the new Talent Rock Holdings said they will apply deposits toward a December program at Walt Disney World or another event.
Camino Ventures paid $175,000 for Talent Rock, the primary asset of a Pearlman company known as Fashion Rock that is now in receivership along with a dozen other Pearlman entities.
Most of the money - $125,000 - will go to Bank of America, which had a $1.5-million lien on Talent Rock equipment. The rest will go to cover bills for the receivership.
When Pearlman left the country in January, he left behind nearly half a billion dollars in debt to investors and banks, very little cash and an assortment of heavily mortgaged properties. The largest, Orlando's Church Street Station, is scheduled for a bankruptcy court auction April 5.
Pearlman once ran a charter airline, a recording studio and managed the careers of noted boy bands such as *NSync and the Backstreet Boys. But by the time the courts appointed a receiver Feb. 2, Talent Rock was his only functioning U.S. business. It shut down soon after.
"We believe we can turn Talent Rock into a profitable business," said Alan Joelson of Beverly Hills, Calif., one of the investors behind Camino Ventures.
The company's representative, Mark Taylor, is in Orlando, where he hired 20 former Talent Rock employees this week. He said they've temporarily moved back into the Church Street Station office, but plan to find other quarters in Orlando.
Employees will be contacting customers with deposits over the next week, then be ready to sign up new business, he said.
Talent Rock depends on leads generated from its Web site, www.talentrock.com. Employees follow up from two phone rooms that just last week had an eerie ghost-town feel about them, with motivational slogans and sales tips posted in empty cubicles.
The customers are the families of budding stars such as Gabriella Trial, 8, who attended an event two years ago when she was a first-grader.
"It was very good for her to be able to be on a bigger stage than what she was used to and perform in front of a lot of people," said Roger Trial, her dad and music teacher.
He said that as a result of the event, she signed with an agent in New York City and auditioned for several Broadway shows, but didn't land a part.
"There are a lot of talented kids out there and if you don't know anyone who can give you your first 'yes,' you're out of luck," said Trial, who lives in Myrtle Beach, S.C.
Fees for events varied; the charge for this summer's canceled cruise was $1,495.
But Jerry McHale, the court-appointed receiver who negotiated the sale, said they didn't cover the costs.
"They used to drop a bundle on these events, bringing in some pretty heavy hitters" as entertainers, he said.
McHale estimated the business lost about $900,000 last year.
However, Pearlman's companies were so intertwined and the financial record-keeping so poor, it has been difficult to get an accurate financial picture.
Fashion Rock had its roots in a controversial model scouting business that prompted an investigation by the office of then-Florida Atty. Gen. Charlie Crist.
The investigation concluded in 2004 that there was insufficient evidence to file charges.
Helen Huntley can be reached at firstname.lastname@example.org or (727) 893-8230.
[Last modified March 28, 2007, 22:34:34]
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