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Backstreet Boys settle for pennies on the dollar with their fraudster creator

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Do I need an attorney to file bankruptcy?”

 

The Backstreet Boys have been fighting through bankruptcy, but the boy band’s fans can rest assured: they have not been fighting through their own bankruptcy. Instead, they have been fighting for roughly $3.5 million that the Boys—now grown men, all of them—claim was owed to them by their creator, music mogul Lou Pearlman.

Backstreet Boys Charlotte Mecklenburg Bankruptcy Lawyer North Carolina Chapter 13 AttorneyPearlman created the Backstreet Boys in his Miami laboratory, mixing two parts dance, one-part soul, one-part funk and three ounces of soft rock ‘n’ roll. That’s a joke, but the Backstreet Boys were not amused when Pearlman filed for bankruptcy protection shortly before his arrest on fraud charges.

Pearlman is serving a 25-year prison sentence for his role in running a multimillion dollar Ponzi scheme. Ponzi schemes are a kind of investment fraud in which investors, instead of being paid returns on their money, are paid money invested by new investors, with new investors perpetually footing the “returns” until either new investors cannot be found or existing investors ask for their money back. At that point, the Ponzi scheme collapses.

The Backstreet Boys filed their $3.5 million claim in Pearlman’s bankruptcy over six years ago. Last year, the bankruptcy trustee overseeing Pearlman’s bankruptcy objected to the claims, arguing that they were incomplete. At the time, the trustee observed that the band’s claims lacked “any evidentiary basis,” and therefore the trustee had no option but to object to the claims.

According to documents filed in the Florida bankruptcy court where Pearlman’s case is pending, the band has now reached an agreement to settle its claims. Instead of receiving the $3.5 million the Boys demanded, they will now receive just $99,000. In addition, they will “take possession of a variety of recordings of their music,” according to the Wall Street Journal, and will also receive a Star Trek Adventure VHS tape.

Pearlman’s bankruptcy is drawing to a close. Last year, a bankruptcy judge approved a plan to pay Pearlman’s creditors about four cents on every dollar owed. That deal covered creditor and singer Aaron Carter, who is the little brother of Backstreet Boy Nick Carter.

Aaron Carter received $1,000 and several recordings of his music out of Pearlman’s bankruptcy. He claimed the ex-music mogul owed him $26,000.

As for the band, the Backstreet Boys are due to depart Miami on a cruise this week, along with a bevy of fans who paid $1,000 each to share the cruise with the band. The Boys have been touring in support of a new album and single, which they released last year. The new album marked the band’s twentieth anniversary.

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://blogs.wsj.com/bankruptcy/2014/10/23/backstreet-boys-settle-bankruptcy-claims/

http://blogs.wsj.com/bankruptcy/2013/06/19/backstreet-boys-bankruptcy-claims-incomplete/

http://www.mtv.com/news/1709243/backstreet-boys-in-a-world-like-this-single/

http://www.sec.gov/answers/ponzi.htm

 

 

Image Credit:

http://commons.wikimedia.org/wiki/Backstreet_Boys#mediaviewer/File:BSB_JBB8_Cover.jpg

 

 

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