Pearlman investors get reality check only
Officials tell investors it's unlikely they'll get any money back.
By HELEN HUNTLEY, Times personal finance editor
Published May 1, 2007
ORLANDO -- The creditors' meeting in a bankruptcy case is usually a chance to grill the person who took your money. But unfortunately for dozens of investors who brought their questions to a jammed hearing room Monday morning, music producer Lou Pearlman wasn't anywhere in sight.
"We don't know where Lou Pearlman is, " said Kenneth Meeker, an assistant U.S. trustee who presided over the meeting. And he told investors bluntly not to get their hopes up for recovering the money they lost in the giant Ponzi scheme Pearlman is accused of running from Orlando.
"There is no chance of getting all your money back, " he said. Meeker said a lot of the missing $317-million went to investors to keep the scheme going and some of it may have been spent supporting Pearlman's lavish lifestyle.
Whatever is left, he said, is hidden. "It's in foreign accounts, if it exists at all."
Soneet Kapila, the trustee appointed to find Pearlman's money, assured investors the search is under way. "People are working diligently, " he said.
But Kapila said he has a mammoth task ahead, going through 1, 500 boxes of documents Pearlman left behind, with the records of his companies in shambles. "It is a huge jigsaw puzzle."
Kapila promised to investigate payments to sales agents and contributions Pearlman made to charity and political campaigns.
Kapila told investors it would be "overly optimistic" to expect they could have an estimate of what kind of money they might recover by year end.
In fact, Meeker compared the case to Evergreen Securities, an Orlando-based investment scam that went into bankruptcy six years ago. Investors in that case have recovered 9 percent of their money and are expected to get about 6 percent more.
Investors shared their frustration and discouragement in the meeting that went on for nearly two hours.
"Our family is devastated, " said Rose Causey, who drove with her husband from Indiana because she said they could no longer afford to buy a plane ticket.
Her sister-in-law, Nancy Hostetler, came from Texas. "Looking around at so many elderly people, it's just heartbreaking, " she said. "These should be the best years of their lives."
Pearlman and his primary company, Trans Continental Airlines, were forced into bankruptcy by a group of bank creditors. He is believed to be overseas and did not respond to any of the legal notices.
Helen Huntley can be reached at email@example.com or (727) 893-8230.
Fast Facts: Some steps to filing a claim
Filing a bankruptcy claim in the Pearlman and Trans Continental cases includes the following requirements:
- A claim form must be filed for each type of account ownership. A joint account, a trust account, an individual account and an IRA are all different types of account ownership.
- Duplicate forms must be filed if you want to participate in more than one bankruptcy case. A claim in the Lou Pearlman bankruptcy needs to state a case for holding him individually responsible for an investment in Trans Continental.
- Claim forms must include proof of your investment, such as canceled checks (copy of both sides) and wire transfers. Statements alone are not enough.
- Claims must be received by July 30 at the clerk's office for the U.S. Bankruptcy Court, 135 W Central Blvd., Orlando, FL 32801.
[Last modified April 30, 2007, 21:49:35]
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