Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Ponzi Scheme Victims Receive 4 Cents on the Dollar from Lou Pearlman Following His Bankruptcy
Author: Joel R. Glucksman
Date: July 9, 2013
Key Contacts
Back
Lou Pearlman may be known by many as the creator of teen sensation boy bands ‘N Sync and the Backstreet Boys, but to thousands of mom-and-pop investors, he will forever be known as the Ponzi schemer who scammed them out of millions. What’s worse, bankruptcy trustee Soneet Kapila recently made public that, following a liquidation settlement of the former producer’s assets, Ponzi scheme victims will receive an initial payout of no more than 4 cents on the dollar.
Pearlman is currently serving a 25-year prison sentence for devising a Ponzi scheme that cheated investors out of more than $300 million. Since Pearlman’s conviction and his petition for bankruptcy law protection in 2007, Kapila has recovered roughly $35 million from asset sales, royalty payments, and lawsuit settlements. However, the bulk of this amount will be extended to secured creditors. According to the settlement plan Kapila filed with the U.S. Bankruptcy Court in Orlando, roughly $25 million of the recovered amount will go toward secured creditors and to cover attorney’s fees.
The remaining $10 million will be divided among unsecured creditors – who lost roughly $260 million. This could amount to a payout of roughly $4,000 for a $100,000 loss, the Tampa Bay Times reports. A committee of unsecured creditors is urging the victims to accept the terms, stressing that fighting the plan could result in further delays in the six-year-long struggle. Kapila also defended the settlement, arguing that, were it not for the banks’ choosing to waive tens of millions of dollars in claims, and the IRS accepting a reduced amount, the victims might have walked away with nothing.
“It’s been a case where myself [sic] and my professional team has [sic] been willing to hang in there and take a lot of risk on fees (being reimbursed at all) because there was no money to pay anyone,” Kapila told the Times. “This case required quantum effort.”
- Practices: Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
What Is Antitrust Litigation Law?
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.