Backstreet Boys,*NSYNC try to leave; legal battles ensue against Lou Pearlman: Part 6

Free from Pearlman’s control, *NSYNC released the album "No Strings Attached" and single "Bye, Bye, Bye." Meanwhile, Pearlman had been running an elaborate investment scam.
8:00 | 12/14/19

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Transcript for Backstreet Boys,*NSYNC try to leave; legal battles ensue against Lou Pearlman: Part 6
ain't nothing but a mistake The old music industry line is that there are three jobs of a music manager. The first is to get the money. The second is to make sure to get to money. And the third job is to, above all else, get the money. You're supposed to be getting money on behalf of the band. Lou got the money on behalf of Lou. Quit playing games with my heart with my heart The first band that begins to raise hackles about not getting paid is backstreet. Brian was the one who stepped up and said, "Hey, guys, we got to take a stand here. We are getting mistreated, and there's something wrong." So backstreet's out there bringing in millions and millions of dollars. And then they find out that Lou has taken $10 million for himself and left $300,000 for them to split amongst themselves. They said they began to feel like indentured servants. I never in a million years thought a person that I entrusted my life with and owed my career, my life to, I mean, everything at that point in my life, could do something like this. When Brian Littrell filed the lawsuit, Lou felt like, I'm not in the wrong. I spent $3 million on these guys. They haven't paid me back. If backstreet boys didn't work, I would've eaten the buck. And it was a lot of money that I put up. How much? I had 3 million bucks out on a line. These guys have to thank me for cultivating them. For putting up the money. Each band is told over and overgain that it will be forthcoming down the road. When we wanted to renegotiate it was just a hard no. There was -- that's when Lou there was -- that's when Lou changed from jolly Lou to here's business Lou. The thing they're not realizing, and the thing every single recording artist has failed to realize for 50 years, is the power of a single word. You know what that word is? Recoupable. I wish that was one word that someone would've taught us from day one. Every entertainer needs to know this word. Everything in the recording industry is recoupable. By which we mean everything that's done to make you successful, the record company gets to take out of your royalty. How much was Lou Pearlman taking overall from what nsync was making? I still don't know the answer to that question. Do you know that it's more than 20%. I know it is more than 65%. Lou sued us for our name. He was the sixth member of the group. And he owned the name nsync. So he took our name so we could never use it. And that's why we ended up in court. You're in all the papers. You know, people trying to put the black hat on you. Saying you're bad in business. You're evil. You're mean to the kids. Why deal with all that? Everyone knows in my other businesses I've been straight up and forthright. I'm the same here. Lou's other businesses is a reference to his trans continental megacorp. And Pearlman is generously willing to share the wealth with eager investors. So big banks willingly loan him millions and retirees trust Pearlman with their life savings. Money that Lou says is being placed into a special investment called an eisa. When the backstreet boys finally started making money, and the management company finally got a commission check of some substance, and Lou had to cut the share based on partnership. He said to me, "Before I give you this check," he says, "You know about my eisa account." They called it an employee investment savings account, which sounds legitimate. Lou wants you to believe it's basically this foolproof investment where you can safely park your money. Lou set up this product. But what he also set up was a network of salespeople to sell these products. But Lou Pearlman is by far the top salesman. And he uses these two very shiny lures. The airline which charters the rich and famous around the world and the darlings of the music world, his boy bands. When we were exploding, Lou was bringing people around. But we didn't understand who they were. We figured because he's in the business, these are associates or these are people that he worked with. The plan was marketed to us by telling us that it was headed up by Louis Pearlman. And he had this airline called trans continental air. And they also showed us a video of the types they were invested in. Trans continental companies' business track record will bring music to your ears when it comes to experience in capturing the teen market. He goes, "The banks are only paying 2% to 3% on your income. Mine is guaranteed at 10%." Sounds pretty good. But it's not so good that it starts to raise red flags. He would send his private jet to pick you up. Then when you landed in Orlando, he would send his private limo to get you. Then he's like, "Well, let's go to the studio." So you go to the studio and either one of the backstreet boys or nsync or somebody's in that studio recording or rehearsing. So you get to see it firsthand. Then he hits you with, "Oh, and by the way, your money's guaranteed at 10%." So now you've just been -- it's the greatest picture in the world. What investors don't see is the whole picture. They only see the picture that Lou wants them to. Right away we trusted him. He seemed to be doing great with the boy bands. Those people that were coming to the shows weren't who we thought they were. They weren't associates. They were investors. And that's something that we had no clue over. Lou presents all sorts of financial documentation to back up his claims. And what's crazy is that most investors don't even check to see if it's real. They had pamphlets showing us fdic approved, lloyds of London, and AIG. Who wouldn't feel safe with something like that? Lou had a loyal assistant. So after Lou gave me that check, I went to him. And I said, "Tell me something. Is this eisa account on the up and up?" And he said, "Johnny, I'm a loyal person to Lou, but I also like you." He said, "So if you ask me the right question, I won't lie to you." And I said to him, "I don't need to hear anything else. I'm not giving you my money." But others did. And that's a problem for Lou because the so-called boy band impresario is about to become short two boy bands. In different legal actions, Lou eventually is out as backstreet's manager. But the settlement gives him $30 million. And a continued one-sixth of everything that the band makes. Please be with them today in the court. And please make them really come out victorious. After that, Lou Pearlman is out as manager of nsync. But again with a settlement that he says continues to provide him income. When nsync breaks their contract with Lou, they celebrate by coming out with their album, which they called "No strings attached." "No strings attached" had 1,000% to do with Lou. Justin, J.C., and I were in a cab in London talking about the next record. And I said, "You know, there's no strings attached anymore." And J.C. Goes, "I'm gonna write a song about that." They are the puppets without the puppet master. The puppet master is gone. With backstreet and nsync leaving the fold, Lou Pearlman needs to reinvent himself fast. Everyone's like, "Man, you created backstreet and nsync. There's no way you can do it again." And him and his crazy ambition is like, "Yeah, I can. Watch me."

This transcript has been automatically generated and may not be 100% accurate.

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