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May 21, 2008

Creative ('n suspect?) approach in notable white-collar case

This report from the Orlando Sentinel of a high-profile white collar sentencing is sure to stir some buzz:

Boy-band mogul Lou Pearlman was sentenced this morning to 25 years in federal prison for running a lengthy, systematic con that artificially inflated his net worth and cheated people out of $300 million.

During Pearlman's sentencing in U.S. District Court this morning, Senior U.S. District Judge G. Kendall Sharp offered Pearlman an incentive to pay back his investors: For every $1 million he puts back in investors' pockets, he gets one month off of his sentence. Since Pearlman's sentence is for 300 months, he can avoid prison altogether if he forks up the cash. "I'm most concerned for the investors, even more so than the institutions," Sharp said.

Pearlman, 53, was once the toast of Orlando. His financial empire once included popular musical acts the Backstreet Boys and 'N Sync; an airplane-charter business; and Church Street Station, an iconic piece of real estate in Orlando's downtown.  The boy-band impresario admitted in a March plea hearing to running the scam.  He pleaded guilty to two counts of conspiracy, one count of money laundering and one count of making a false claim in a bankruptcy during that hearing -- charges worth a maximum 25-year prison sentence.

I have lots and lots of thoughts about this, but I want to do more reading and reflecting on the case before opining.  While I ruminate, comment away.

May 21, 2008 at 01:13 PM | Permalink


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If his baseline was 360 months instead of 300, I'd think this was great. The idea that he can entirely buy his way out of a 25-yr prison sentence with the money he stole is kind of galling.

Posted by: anonymous | May 21, 2008 1:45:07 PM

For those who've been saying that prison sentences are way too long, and that more creative and less costly alternatives should be found, I presume this will be welcome news.

Posted by: Bill Otis | May 21, 2008 2:24:52 PM

I believe the sentence may be questionable if he is unable to pay due to lack of funds. It has been quite some time since I have looked at anything that resembles this issue. However, I recall some case law with regard to "stand committed" (until one pays money)federal sentences. Also, I believe there is case law related to other types of sentences that indicates there may be problems with money as the means to opening the jail house door if one does not have the money.

Posted by: Tim Holloway | May 21, 2008 2:37:18 PM

Perhaps I'm displaying my ignorance, but what's the judge's mechanism for reducing his sentence after imposing it? Would the judge just indicate the sliding scale in the original judgment order, and have some method for the BOP to verify what amounts have been paid to investors? Otherwise, I don't know how the judge could adjust the sentence.

Posted by: Mechanics | May 21, 2008 7:53:16 PM

1 month 1 million dollars? If i'd have scammed some people out of 300 million dollars i'd give most of it back minus about 6 mil and just do the time,

Posted by: Mark | May 22, 2008 3:32:09 AM

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