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
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
Author: Wendy Rubinstein Quiroga
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Author: Sean M. Pena
Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders
Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability. For developers, battery storage presents […]
Author: Nicholas Wall
Navigating Disputes: Hire a Partnership Dispute Lawyer
A falling out between partners can be disastrous for any business. In many cases, the partnership will not survive. If you are in an unworkable situation with your partners, it may be time to consult a partnership dispute lawyer experienced in handling partnership breakups and dissolutions before the situation deteriorates any further. It is easy […]
Author: Jay McDaniel
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Author: John D. Giampolo
Zoning Laws Explained: What You Need to Know Before Buying Property
Before buying property, it is critical to determine whether local zoning laws may affect your plans. If you plan to redevelop the property, you will want to confirm that local zoning regulations permit development as intended. If acquiring property that is already developed, you must verify that the use is permitted in the underlying zoning […]
Author: Wendy Rubinstein Quiroga
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.