Another article from an Orlando Sentinel story, Pearlman responds saying that even though executives in the company were criminals - the article also lists the crimes of Edward Bell, Alec Defrawy and Cortes Randall, he doesn't mind and now the company - Wilhelmina -will NOT be moving with Pearlman's Trans Con companies to Church Street in Orlando that Pearlman purchased. Company is getting a lot of heat from local authorities in Orlando, resulting in a lot of backstepping and spin control from the company.
Model agency's Church Street move on hold
By Tim Barker | Sentinel Staff Writer
Posted July 12,2003
Orlando's Lou Pearlman on Friday said his Wilhelmina Scouting Network will not be included in the planning for a revamped Church Street Station while the company is under investigation.
"We would never even contemplate moving this company in there as long as there is controversy around it," said Pearlman, who is receiving $3 million in city and state incentives to move the headquarters of his companies into the downtown landmark.
In February, the Orlando City Council approved the deal that gave Pearlman, who owns Church Street Station along with Robert Kling, 500 parking spaces, a $1.5 million redevelopment loan and tax rebates worth as much as $60,000 a year for 12 years.
In exchange, he pledged to move his Trans Continental Cos. to Church Street by year's end. Included in the move will be the studios where Pearlman's bands record.
Problems existed in past
Pearlman, the man behind the recent boy-band craze, also blamed many of Wilhelmina's current problems on its past -- the company was known as Options Talent Group when he took control in September.
At that time, the company already was under investigation by the Florida Attorney General's Office, which is looking into claims of deceptive advertising and misrepresentations.
"I got involved in this mess. I'm just trying to clean it up," said Pearlman, who says the revolutionary approach -- putting models on the Internet -- is destined to succeed.
Pearlman owns 25 percent of the company and serves as its chairman -- he is paid $150,000 a year and up to $10 for each person who enrolls in the service, according to a 2002 filing with the Securities and Exchange Commission -- but says he deals primarily with the big picture and not day-to-day operations.
Among the things to change since he took over was the name, first to Trans Continental Talent and then to Wilhelmina Scouting Network. The current name comes from a marketing and licensing agreement with New York's Wilhelmina Models, which is not involved in the management of the scouting network.
Pearlman said he also trimmed more than 200 positions -- out of about 700 -- from the company. While most of the cuts were economically driven, he said at least a dozen firings involved workers who did not follow company rules.
Workers are forbidden from making any promises of work to the models and actors who sign up to be listed on the company's Web site, he said. The company only says that its service will expose clients to more than 1,000 registered users, including modeling agencies and casting directors.
But hundreds of unhappy clients say otherwise. They have complained to authorities that company representatives offer assurances that work will be easy to find and the initial sign-up fee -- generally about $995 -- will be recovered quickly.
The attorney general's economic-crimes division in Orlando said it has received more than 600 sworn complaints from customers, and gets several more daily.
That surprised Pearlman, who said his company would look into any allegations of misconduct by specific workers.
"If anyone is found to not adhere to our rules, they will be terminated," Pearlman said. "We have a zero-tolerance policy."
Pearlman said he is working with the Attorney General's Office and that a resolution to the matter is close.
Assistant Attorney General Jackie Dowd, however, did not agree: "We don't even have a written document. I don't particularly think it's close."
Among the issues that continue to haunt the company -- both on the Internet and in the media -- are reports that several of its associates have been in trouble with authorities.
According to the filing with the Securities and Exchange Commission, they include:
Ralph Edward Bell, who entered into a Final Consent Order, after a 1999 investigation by the Federal Trade Commission, neither admitting nor denying allegations that he engaged in unfair or deceptive advertising while offering management services to aspiring models.
With Bell never convicted of wrongdoing, Pearlman said, "We see no problem having him as a consultant, unless we are told not to."
Cortes Randell, who pleaded guilty in 1975 to four counts of securities fraud and was convicted in 1979 of mail and securities fraud. He was under contract to guarantee the company's merchant account, which allows it to accept credit-card payment for its services, according to SEC documents. Pearlman said Randell since has been replaced in that capacity and "is no longer a consultant, officer or anything."
Alec DeFrawy, who pleaded guilty in 1995 to conspiracy to commit bank fraud and wire fraud. DeFrawy remains with the company as a consultant through a contract with General Services Corp. Pearlman said DeFrawy's status would not be changed unless the Attorney General's Office demanded it.
"We do not penalize someone who has paid his debt to society," Pearlman said.
Tim Barker can be reached at firstname.lastname@example.org or 407-420-5022.
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