U.S. Attorney's Office
Central District of California
(213) 894-2434
September 22, 2014

Leader of Fraudulent Internet Company and Longtime International Fugitive Pleads Guilty in $13 Million Scheme

SANTA ANA, CA—A former Newport Beach resident who fled the country 15 years ago after federal agents executed search warrants relating to his fraudulent Internet company pleaded guilty this afternoon to federal fraud charges, admitting his role in a scheme that raised nearly $13 million from investors around the country in the late 1990s.

James Eberhart, 73, pleaded guilty to two counts of mail fraud before United States District Judge Cormac J. Carney. Eberhart has been in custody since he was arrested in Malaysia in 2012 after living as a fugitive abroad for more than 12 years.

Eberhart and his co-schemer, Eugene M. Carriere, operated a fraudulent Newport Beach company that used dozens of “boiler room” telemarketing firms and an unwitting celebrity spokesman, the late Tom Bosley, to raise investor funds. YES Entertainment Network, Inc. raised nearly $13 million from victims who were falsely told that the company was creating an 18-channel, multimedia, family-oriented entertainment website and that YES would generate profits through the sale of advertising on the website. Eberhart and Carriere told investors that 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.

Eberhart and Carriere used only one percent of the investors’ fund to build the YES website, and that was little more than a façade to reassure investors. Approximately 45 percent of the funds was used to pay sales commissions to the telemarketers. Most of the rest of the money was wired to bank accounts in Hong Kong and Singapore in the names of offshore corporations, all of which Eberhart had formed with the help of an attorney.

In November 1999, while Eberhart was under investigation by the U.S. Securities and Exchange Commission for an earlier investment fraud scheme, and shortly after FBI agents had executed search warrants at the offices of telemarketing companies affiliated with YES, Eberhart, Carriere, and another employee destroyed company documents and fled the country.

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 Malysian authorities to arrest him. Malaysia 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 Judge Carney on December 8.

Carriere was a fugitive for six years before being arrested in Thailand in April 2005. Carriere pleaded guilty in 2007 to two counts of mail fraud and was sentenced to three years in federal prison and ordered to pay $12,838,045 in restitution.

“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.”

In addition to Eberhart and Carriere, five other defendants – including the owners of telemarketing operations used by YES – were indicted, pleaded guilty, and were sentenced to as much as 142 months in federal prison.

This case is the result of an investigation by the Federal Bureau of Investigation and the U.S Postal Inspection Service. The U.S. Securities and Exchange Commission provided substantial assistance on the case.

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