The next auction will be on eBay

Bankruptcy trustee Soneet Kapila is planning another auction of Lou Pearlman's possessions, only this time it will be on eBay. Instead of having people buy the stuff at bankruptcy auctions and resell it on eBay, Kapila's staff will put the stuff up on eBay themselves. It's mostly US5 and Backstreet Boys memorabilia and fancy jewelry. There's a Rolex watch and a couple of imitations as well as three diamond-studded rings (two gold, one platinum) with "LJP 75" on one side and "Trans Continental 19" on the other. Perhaps the numbers signifiy a date--1975--marking Lou's entry into the aviation biz. The platinum model has 170 full-cut diamonds.

Kapila described the items as "turnovers we took from some people who had dealings" with Pearlman and said a decision was made to keep them out of the general auction. He said no dates have been set for the eBay sales.

Story in today's Times with various updates on the case. (Blog readers got all this news first.)

German criminal prosecution stalls

German prosecutors have decided not to pursue a criminal case against Lou Pearlman and Mitchell Louis van Balen of German Invest & Finanzberatung GmbH. Bankruptcy trustee Soneet Kapila filed a "criminal suspicion of fraud" last summer with the hope of getting subpoena power to aid in the search for assets. "The way I understand it is the prosecutor said in simple terms we need to have more evidence in our complaint for him to continue investigating," Kapila said. "That doesn't mean we've given up on it and it doesn't mean we can't go back in if we are able to gather more evidenciary support."

The German publication Der Spiegel recently published this story about the Pearlman case. If any of you can read German, let us know if it has anything interesting to say.

New York case gets stranger by the minute

The New York lawsuit, in which a group of Trans Continental investors is suing the state of Florida, Gov. Charlie Crist and a host of other parties, appears to be in serious jeopardy. The New York lawyer, Ed Fagan has filed this rather bizarre motion  asking the court to stop everything until "certain issues" can be resolved by a magistrate judge and to make some documents in the case secret. Fagan made his dispute with Tampa lawyers Jim Lowy and Fred Lowe public two weeks ago. When I wrote about it then, Lowy said he expected them to work out their differences. However, in the latest filing, Fagan claims "Mr. Lowy and his actions have prevented me from being able to do my job" and that he has "tried in vain to resolve these issues with Mr. Lowy." He says he is trying to make his own arrangements with "certain plaintiffs," but that some issues can only be resolved by the court. The judge granted his request to assign the matter to a magistrate judge.

Chamberlain will have to submit some documents to judge for review

Judge Arthur Briskman says former Pearlman lawyer Rene Chamberlain will have to hand over some of the documents she claimed were protected by attorney-client privilege. Notes from today's hearing show that he ruled that the documents listed as A and B in this motion will have to be given to him for review in secret. Presumably if he decides they are not protected, they then would be given to Soneet Kapila. However, the judge ruled that Chamberlain does not have to reveal account information that she redacted from some documents.

Here's more of what's going on in the bankruptcy court

A California condo developer is bankruptcy trustee Soneet Kapila's latest target in his attempt to round up Lou Pearlman's assets. Kapila filed this motion attempting to rescind Pearlman's agreements to buy three condos at Marina Pointe in Marina Del Rey, Calif. and reclaim $880,000 in deposits.

Kapila is asking the court to approve a settlement with Me, Myself & Eye related to an agreement with Trans Continental Television Productions to produce a 13-episode reality TV show, Big in America II. The show is supposed to be about the activities of US5. What I gather is that TCTP was supposed to put up 267,000 euros to help finance the production. Since it didn't have the money, it signed over the rights to proceeds from US5 merchandise due from a third party, Universal Music. These rights were valued at about 50,000 euros. Under the agreement, TCTP and Me, Myself & Eye are going to share the money from Universal and Me, Myself & Eye's bankruptcy claim will be reduced by any money it gets from Universal.

Financial results are available for the Pearlman and Trans Continental Airlines bankruptcies, as well as the other TC entities. They show $712,898 in receipts to date for LJP's personal bankruptcy and $222,830 for the TCA bankruptcy.

Lou's mansion is quite a mess

The latest bankruptcy court filing includes these photos of damage to Lou Pearlman's Windermere home. Soneet Kapila says in this filing that the damage was done by contractors and subcontractors under the direction of the would-be purchaser, Dr. John Choi. The $7.1-million sale of the property did not close because Choi did not obtain financing. Now Kapila wants the court to hold Choi's $175,000 deposit until he can determine how much it will cost to repair the damage.

Expense tally to date: $187,198

Bankruptcy trustee Soneet Kapila filed a request this week for reimbursement of expenses for his firm and the various other law and accounting firms that are working on the Lou Pearlman- Trans Continental Airlines bankruptcy case. The grand total to date is $187,198. Travel expenses appear to be the largest category (lots of $190 hotel rooms in Orlando). The numbers do not include any professional fees. So far none of the professionals have asked to be paid for their work, although I am sure they will be asking at some point. Here are the documents for those who care to read them: Motion for reimbursement, attachments, more attachments.

The Rene Chamberlain saga continues

Here's a big surprise: Rene Chamberlain did not turn over all the documents that bankruptcy trustee Soneet Kapila says she should have. He objects to her removing account information from documents and claiming attorney client privilege for items such as letters from other attorneys to Lou Pearlman. Another hearing on the matter is set for Monday.

Here are the documents: Letter from Chamberlain's attorney, Kapila's latest motion.

Also, here's another story about former 'NSync member Lance Bass.

Money question of the week: Do you have a budget?

Has budgeting gone out of style? Do you have a budget and if so, do you follow it? Please share your experiences and tips. You are welcome to post here or, if you prefer, send me an email. If you include your first and last names and city, your comments will be considered for publication in the Times. One good source for money-saving tips is Mary Hunt's Debt-Proof Living site. If you've got a budgeting favorite site, share it.

Backstreet Boys: Just call them Unbreakable

The boy band that made Lou Pearlman famous is aiming for a big comeback with the release Oct. 30 of a new album, Unbreakable,the group's first album in two years. The first single from the album, "Inconsolable," was released last month. Last I checked it was #26 on Billboard's "hot adult contemporary" chart. While Kevin Richardson has dropped out of the group, this album features remaining Backstreet Boys Nick Carter, Howie Dorough, Brian Litrell and AJ McLean. The boys' publicists say they've sold more than 75-million albums worldwide. Here's some interesting background on the group and Kevin's departure.

[Newscom.com photo]