Man pleads guilty to fraud in $13-million investment scheme

A former Newport Beach man who was a fugitive for 15 years pleaded guilty Monday to charges related to his role in an Internet scheme that bilked investors of $13 million.

James Eberhart, 73, pleaded guilty to two counts of mail fraud in federal court in Santa Ana. He’s been in custody since 2012 following his arrest in Malaysia, the United States attorney’s office said in a statement.

Eberhart and his partner, Eugene M. Carriere, ran a fake company in Newport Beach that used dozens of “boiler room” telemarketing firms and an unwitting celebrity spokesman, actor Tom Bosley, to lure money from investors.

“Today’s announcement delivers justice to many victims who waited years while Mr. Eberhart remained a fugitive, living life abroad after stealing their money,” said Bill Lewis, the assistant director in charge of the FBI’s Los Angeles Field Office. “This case, which culminated in Mr. Eberhart’s arrest overseas more than a decade after he was charged, is a perfect example of the global and persistent arm of the law.”

The company, YES Entertainment Network Inc. raised nearly $13 million from people who were falsely told that the company was creating an 18-channel, family-oriented entertainment website. Eberhart and Carriere told investors the company planned an initial public offering of its stock for the fall of 1999, which would potentially make early investments worth millions of dollars.

Only 1% of the funds raised by investors went to the construction of a website that federal prosecutors said was little more than a facade. Another 45% was used to pay sales commissions to telemarketers.

Most of the money was wired to bank accounts in Hong Kong and Singapore in the names of offshore corporations, all formed by Eberhart with the help of an attorney.

The scheme came to an end in November 1999 when federal investigators executed search warrants at the offices of telemarketing companies affiliated with YES.

Eberhart, Carriere and another employee destroyed company documents and fled the country, the United States attorney’s office said.

Eberhart remained a fugitive until May 2012, when the FBI Legal Attaché in Kuala Lumpur, acting on a tip that Eberhart was residing in Malaysia, coordinated with local authorities to arrest him. Malaysia then deported Eberhart to the United States because his U.S. passport had expired.

At the time of his arrest, Eberhart was living on a custom-built, 58-foot yacht.

Eberhart faces up to 10 years in custody when he is sentenced by United States District Judge Cormac J. Carney on Dec. 8. He had previously served several years in prison on charges related to another investment scheme, for which he had been ordered to pay $12.8 million in restitution.

In the current case, five other defendants, including owners of the telemarketing firms, have pleaded guilty and been sentenced to up to 142 months in federal prison.

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