New Lawyers for MTV in Dispute with Pearlman

The tangled bankruptcy mess created by former boy band impresario Lou Pearlman, currently in prison after admitting he ran a $300 million Ponzi scheme, has left a trail of out-of-pocket investors looking to recoup their losses.

In August 2008 the trustee in Pearlman's ongoing Chapter 11 case, Soneet Kapila of Miami, sued MTV Networks in U.S. bankruptcy court in Orlando over the music channel's role in a joint venture with Pearlman's television production company, Trans Continental, to create the popular TV series Making the Band.

In July, MTV canned its litigation counsel at K&L Gates in favor of new counsel at Paul, Weiss, Rifkind, Wharton & Garrison and Holland & Knight.

A three-page substitution of counsel order filed with the bankruptcy court stated that K&L Gates partner Carol Lumpkin and associate Annie Zaffuto have withdrawn from the case and been replaced by Paul Weiss litigation partners Andrew Ehrlich and Leslie Fagen and bankruptcy partner Stephen Shimshak. (MTV's parent
Viacom is a longtime Paul Weiss client; Holland & Knight bankruptcy partner Brian McDowell in Orlando is serving as local counsel.)

The two firms will face off against Kapila's counsel from Kasowitz Benson Torres & Friedman. The latter signed on to handle litigation for the trustee when the firm opened a Miami office in April by acquiring Silverman Cosgrove & Sammataro, a boutique litigation firm founded by three former Akerman Senterfitt partners.

Kasowitz Benson partner James Sammataro ' who brought the Making the Band litigation with him from his old firm ' said in a statement to The Am Law Daily, an affiliate of Entertainment Law & Finance, that the case is important to those victimized by Pearlman's Ponzi scheme.

“[Making the Band] involves iconic figures in the entertainment industry, and a show that has spawned multiple platinum selling musical acts,” Sammataro said. “It is the cornerstone of MTV's television programming, as evidenced by its 10-year run. We believe the Making the Band franchise must be sold, and expect that it will command a significant sum in the open market.”

Making the Band first aired on ABC in 1999 and featured the boy band O-Town. At the first season's conclusion, the new group signed with Pearlman's record label, Trans Continental Records. (Having spawned acts like the Backstreet Boys and *NSYNC, Pearlman was an ideal partner during the boy band craze; the disgraced talent manager is managing a new group, Biteboy, from his jail cell.)

But as the popularity of the boy bands gradually began to wane, plaintiffs claim that MTV dumped Pearlman to create Making the Band 2 with P. Diddy, seeking to infuse the show with new blood and cater to a hip-hop/R&B audience.

According to their 66-page complaint, Trans Continental and Kapila claim that Pearlman's production company was slowly squeezed out of the joint venture as MTV reneged on promises to share profits from advertising revenue, spin-offs and other related projects.

MTV maintains the joint venture contract states that Trans Continental's interests were extinguished when the Making the Band 2 franchise began airing in 2002 on MTV with P. Diddy as the centerpiece instead of O-Town. (O-Town broke up in late 2003.)

The case was scheduled to go to mediation in July, with both sides agreeing on Miami entertainment lawyer Leslie Zigel, a former Greenberg Traurig partner and vice president of business and legal affairs at BMG, serving as mediator. But the change in outside counsel by MTV would likely delay that scenario.

Sources say that MTV was upset with the level of court activity in the case and that depositions haven't gone well for MTV in the early going. (Some of those depos could eventually include P. Diddy himself, who if the case goes to trial, will likely be a witness.)