In humble Queens, Lou Pearlman was king

Mitchell Gardens would never be mistaken for a palace, but inside the Pearlman family's tiny third-floor apartment, little Lou was king.

By Helen Huntley, Times Personal Finance Editor
Published October 21, 2007

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FLUSHING, N.Y. - Mitchell Gardens would never be mistaken for a palace, but inside the Pearlman family's tiny third-floor apartment, little Lou was king.

His parents, Hy the dry cleaner and Reenie the school lunchroom aide, slept on a fold-out couch in the living room, giving their only child the bedroom.

Lou spent hours on that bedroom floor, playing the board game Life with Alan Gross, his childhood buddy who lived one floor up. Gross still recalls a time Mrs. Pearlman watched them play. Lou gave the spinner a whirl, then cheated by moving his car game piece an extra space.

"I called Lou out on it and his mother, seeing what he did, admonished me," Gross said, still indignant more than four decades later. Gross was three years older - about 12 at the time - and Mrs. Pearlman thought he should let Lou win.

"Even though I was very young, it made me realize how our upbringings differed," Gross said. "If my mother saw me cheat, she would never let me hear the end of it."

Until his world came crashing down nine months ago, Pearlman was a celebrated Orlando music producer known for introducing the Backstreet Boys and *NSYNC to the world. But long before that, he was a kid from the New York City borough of Queens with a reputation for cutting corners and embellishing the truth.

Their parents are now dead, but Gross still lives in the building where he and Pearlman grew up and got their feet wet in the aviation business before taking different paths. He vividly remembers both the old grudges and the good times they spent together.

Now a part-time interviewer for the Census Bureau, Gross, 56, suffers from a blood disorder and struggles to pay his bills. But he turns passionate when the subject is air pollution, blimps or his childhood playmate. Pearlman, 53, is an inmate in the Orange County Jail, indicted on bank fraud charges and accused of swindling banks and investors out of nearly $500-million. He lost his possessions in bankruptcy and is now reduced to calling old friends collect.

Gross said the phone calls bring out mixed feelings. He said he hurts for the elderly investors who trusted Pearlman with their life savings, now gone, but he can't turn his back on his childhood friend.

"We grew up as brothers and we have this special bond," he said. "As much of a liar as he is, I tend to believe that he didn't want to hurt anybody. I think he thought he'd make enough money to pay everyone back. He was always looking for the next big score. It just unraveled a little too quickly."

The lower-middle-class neighborhood where the two of them grew up is in transition, single-family homes giving way to high-rises and the old neighborhood stores to Asian-run restaurants and beauty shops. Everywhere there are Chinese and Korean signs alongside English. At Flushing High School, which the two boys attended, the gargoyles are shrouded in construction mesh. The six-story brick buildings of Mitchell Gardens are nestled amid well-kept landscaping, but up close they show the wear of more than half a century.

Gross' apartment is a monument to his fascination with blimps and his inability to part with any artifact, document, audiotape or videotape that ever caught his fancy. "I still have everything I ever collected," he said of his blimp memorabilia, which includes swatches of blimp envelopes that he carries in his wallet. He proudly displayed a wide and very crinkled red plastic ribbon that a Ronald McDonald clown cut to launch a McDonald's blimp more than 20 years ago.

With his three cats in hiding and a TV playing in the background, Gross pointed to the living room window that sparked dreams of flight for two young boys. Today it looks out on the Whitestone Expressway and a New York Times printing plant. In the 1960s, it offered Al and Lou a view of the blimps taking off and landing at the now-abandoned Flushing Airport.

Pearlman's autobiography, Bands, Brands & Billions, tells how the boys begged the crew for blimp rides, how Pearlman used a story in his school newspaper to get media "credentials" for a ride, how he got a job helping out at the airport. Gross said the stories were true except it was his newspaper story, not Pearlman's, that earned them a blimp ride and he, not Pearlman, who got the paying job, with Pearlman tagging along.

In fact, he claims Pearlman was so shy around strangers that he made the blimp crew uncomfortable. Gross takes credit for helping Pearlman emerge from his shell.

"In some ways, I feel responsible for creating Frankenstein," he said. By the time Pearlman was 18, he usually had an entourage wherever he went, Gross said. "He was very charming."

Gross said Pearlman also embellished his music history when he wrote about playing and singing with Flyer, a band he managed. "He couldn't play or sing; all that was totally made up," Gross said.

But part of Pearlman's early music story is true. He really is Art Garfunkel's first cousin; their mothers were sisters. Gross said he and Pearlman went to hear Garfunkel and partner Paul Simon perform in Greenwich Village before they were big stars.

"Art's parents would drive us back to Mitchell Gardens," he said. Gross said that because of Pearlman's reputation as a storyteller, his friends didn't believe him when he told them Garfunkel would be at his bar mitzvah. By then Garfunkel was a celebrity - The Sound of Silence hit No. 1 on the Billboard charts the previous year. However, Garfunkel showed up to celebrate with Pearlman's family and friends at Leonard's of Great Neck. More recently, Garfunkel recorded a video greeting for Pearlman's 50th birthday party, proclaiming his love for Pearlman. However, Garfunkel has not spoken publicly about Pearlman's arrest.

After college - Gross went to Syracuse University and Pearlman to Queens College - Gross' apartment became a staging platform for one of Pearlman's early ventures in aviation, Airship Enterprises, which they began working on about 1978. Gross' parents had died, leaving him the Mitchell Gardens apartment and a small inheritance.

"What my ex-wife didn't get, Lou got," he said. Gross developed brochures and video presentations, housed crew members, bought them uniforms and paid other expenses. He says that for three years of work and an investment of more than $30,000, he received $11,000. "I was his stepping stone," he said.

That early venture produced both the Jordache blimp and a rift between the two friends. As Gross tells it, Jordache signed a contract based on marketing materials he prepared showing a German advertising blimp.

"What they got was a blimp built by a stunt pilot and never rated other than as a logging balloon," he said. It crashed on its initial voyage and Pearlman won $2.5-million in court-ordered damages from the insurance company, which initially refused to pay the claim.

Pearlman went on to start up Airship International, raising $3-million in a 1983 public offering, which allowed him to buy a functioning German blimp. He came back to Gross for another marketing video, but denied him the job he coveted as the company's public relations representative. Gross spent 3 1/2 years on the blimp crew, "feeding my blimp addiction," as he puts it.

There were grand times, including a trip on the Concorde to the Paris Air Show, but Gross says he got fed up with the way Pearlman was running the company.

Although his employment ended, Gross continued to scrutinize and complain about Pearlman's business practices, especially after a fourth Pearlman-owned blimp crashed under what Gross thought were suspicious circumstances.

"Each airship that the companies lost had problems which, if handled properly, would have cost them a lot of money," Gross wrote in a 1994 letter to the National Transportation Safety Board.

"Instead, the airships are destroyed and they produce millions of dollars in insurance awards." The board's investigation led to sanctions against the German company that made the blimps, but none against Pearlman or his companies.

The next year, Gross complained to the Securities and Exchange Commission after Airship International canceled his 500 shares of stock. He got the stock back, but it became worthless as the company faltered. He also got a letter from Pearlman's lawyer telling him to stop making defamatory comments.

Pearlman next shifted into the music business and created a raft of entertainment and aviation companies under the Trans Continental banner. Gross was no longer involved, although he says he found out later that Pearlman used a photo of a model plane Gross had made on a brochure for one of his companies. Gross said Pearlman put a Trans Continental label on the 747 model and photographed it at La Guardia Airport, making it appear the company owned a real 747.

Though they were no longer close, the two men remained friendly despite their differences. Gross said they always called each other on their birthdays and he joined Pearlman and his posse a few times for fun, attending two Super Bowls with him and Pearlman's 50th birthday party, a lavish affair at Disney World's Dolphin Resort. And when he needed $1,800 two years ago for a down payment on a HyundaiAccent, Gross said Pearlman sent him the money.

"Lou had all these weird love-hate relationships with almost everybody," he said. "But nobody tried to stop him other than me."

Frank Vazquez Jr., who also grew up in Mitchell Gardens, often acted as mediator between the two. Last November, Vazquez, 45, died of carbon monoxide poisoning sitting in his Porsche with the motor running in the closed garage of his Orlando home. Vazquez, who headed operations for Trans Continental, had recently found out the savings he had invested with the company were worthless. However, neither Gross nor Pearlman accepts the ruling that the death was a suicide.

Gross said he is saddened by the way Pearlman's life turned out.

"This is a true story of American greed like no other," he said. "He could have had so much."