Police detain boy band mogul Lou Pearlman

Boy-band mogul Lou Pearlman was arrested at an Indonesian hotel. He was turned over to U.S. authorities and scheduled to be flown to Guam to appear before a judge.

Photo: Police detain boy band mogul Lou Pearlman

Pearlman was charged with one felony count of bank fraud.

"We expect that he will be returned to Florida," said Steve Cole, a spokesman for the U.S. Attorney's Office in Tampa.

The arrest ends several months of hiding for Pearlman, who faces a multitude of civil lawsuits and two involuntary bankruptcy proceedings. He has not responded to court subpoenas and does not have an attorney in either bankruptcy case.

On Tuesday, creditors liquidated his assets, including gold and platinum records from acts like the Backstreet Boys and 'N Sync. Pearlman is most famous for creating those boy bands, though he was also involved in airplane charter, talent scouting, restaurants and other ventures.

Banks are hounding Pearlman and his companies for more than $120 million (90.2 million EUR), according to bankruptcy court documents. It was not entirely clear how Pearlman allegedly committed bank fraud in the federal charges.

However, court documents filed by the Florida Office of Financial Regulation and in civil suits against Pearlman allege he created a fake accounting firm that prepared bogus statements for investors.

Pearlman lost control of several companies in February when a state judge appointed a receiver to take over the books. He also did not mount a defense or appear in court then.

The receiver, Jerry McHale, says he has found few assets and considerable debt. McHale said Pearlman appears to have been operating one of the biggest Ponzi schemes in state history, defrauding about 1,000 individual investors of more than $315 million (236.77 million EUR). Such schemes typically promise huge returns that never materialize.

Pearlman allegedly sold a bogus savings account plan promising large dividends, then transferred payments to himself, to associates and across his companies.

Soneet Kapila, the court-appointed trustee in the bankruptcy cases, said the arrest should help authorities sort through Pearlman's confusing financial picture.

"I'm looking forward to seeing him on American soil," Kapila said. "I'm anxious to see what he had in his possession, where he was located, and how anything he had in his possession will help me locate the assets."

Pearlman's books are convoluted and incomplete, investigators say. He apparently created more than 100 companies - a separate one for each business venture - but treated them all as one by blindly transferring assets and paying bills.