The battle of Backstreet still isn’t over: A new round has begun with the group filing another lawsuit against Lou Pearlman, the manager/ Svengali who created them.
The group first sued (and settled with) Pearlman in 1998 to get out of its contract with him (see “Backstreet Boys Settle With Pearlman, Record New Album” ), and there have been a number of smaller lawsuits over the years. Last week, the group filed a suit in Orange County, Florida, that makes a number of complicated claims, one of which alleges that Pearlman did not dissolve all of the Boys’ business entities but instead used the money to start up new ones in their name.
The group also charges that Pearlman did not settle with some of its original, pre-stardom members (who were later replaced by Kevin Richardson and Brian Littrell), a move that has cost the latter-day act an undisclosed amount of money that exceeds $15,000.
The Backstreet Boys are seeking reimbursement from Pearlman and his record label, Trans Continental Records, for monies paid out to former managers Jeanne Tanzy Williams and Sybil Galler Hall and former members Sam Licata and Charles Edwards to settle litigation that they claim was the result of “the actions or inactions of Mr. Pearlman,” said the group’s lawyer, Jordan Keller. “The Backstreet Boys assumed that Mr. Pearlman had properly dealt with the departures,” but after settling with him, “the Backstreet Boys were then sued by these parties and ultimately settled with them in 2004.”
“Regardless of the fact that the Backstreet Boys had done nothing wrong, Mr. Pearlman’s actions on behalf of the corporations tainted them,” Keller said.
The suit alleges “abuse of the corporate privilege” and “fraud,” and notes that Pearlman had earned the band’s trust “by repeatedly stating, among other things, that they were ’family’ and that he … would protect them and look after their best interest.” Pearlman had lost the band’s trust by 1997, the suit says, when the quintet alleged “a widespread pattern of misappropriation and concealment of revenues generated.”
This conduct continued after that settlement, the suit says, due to Pearlman’s “false representations, fraudulent actions and concealments.” According to the suit, those included telling the former managers and members to hold onto their stock in the group because it would be valuable, even as he was proceeding with plans to diminish its value, and telling the former managers and members that the Backstreet Boys had not yet realized any profits because they hadn’t yet recouped and that any money they had received was tied up “in the pipeline,” to convince them not to take legal action against him.
Because some of these instances date back to the time that Backstreet Boys were originally settling with Pearlman — they ended up paying him $29,500,000 — they’re also saying that the settlement was “fraudulently induced,” since, according to the suit, he had represented to them that there no other claims known to him that could expose them to liability. For his part, Pearlman said through his spokesperson, Elizabeth Neff, that he’s been “operating in accordance with the terms of the settlement agreement.”
“We’re tired of third party frivolous lawsuits trying to interfere with our settlement,” Neff said. “Mr. Pearlman and Trans Continental Records still share in revenue received from the record sales of the Backstreet Boys and wishes them continued success.”