Former Newport man pleads guilty in mail fraud case

A former Newport Beach man pleaded guilty in federal court Monday to two counts of mail fraud for his role in running a fraudulent Internet company that raised nearly $13 million from investors in the late 1990s.

James S. Eberhart, 73, has been in custody since he was arrested in Malaysia in 2012 after living as a fugitive abroad for more than 12 years, according to a U.S. Department of Justice news release.

Eberhart and his co-defendant Eugene M. Carriere were indicted for operating YES Entertainment Network Inc., a fraudulent Newport Beach company that used telemarketing firms and an unsuspecting celebrity spokesman, Tom Bosley, to raise funds for an 18-channel, multimedia, family-oriented website, the release states.

Eberhart and Carriere allegedly raised $13 million, but spent just $130,000 to build the website. About $5.8 million was used to pay sales commissions to the telemarketers, while the rest of the money was wired into bank accounts in Hong Kong and Singapore for their personal use, authorities suspect.

The U.S. Securities and Exchange Commission was investigating Eberhart in connection with an earlier investment fraud scheme in November 1999. Shortly after FBI agents searched the offices of telemarketing companies affiliated with YES, Eberhart, Carriere and another employee destroyed all the company’s documents and fled the country, according to the release.

Carriere was arrested in Thailand in 2005 and eventually pleaded guilty to two counts of mail fraud. He was sentenced to three years in federal prison and ordered to pay more than $12.8 million in restitution.

Eberhart remained a fugitive until May 2012 when he was arrested in Malaysia while living on a custom-built, 58-foot yacht.

Eberhart is to be sentenced on Dec. 8. He faces up to 10 years in prison, the release stated.