Attorney Admits to Blackmailing Indicted Advisor
A lawyer who worked for indicted investment advisor Todd Eberhard admitted blackmailing his former employer by threatening to expose Eberhard’s alleged fraud and details of his personal life.
The lawyer, Jeffrey Zisselman, Tuesday admitted conspiring with a fellow employee to extort $1.5 million from Eberhard, the president of New York-based Eberhard Investment Associates and a frequent guest on television financial news shows. Eberhard was charged in February with stealing about $12 million from his clients.
“I threatened Mr. Eberhard with exposure unless he paid us a sum of money,” Zisselman told U.S. District Judge Harold Baer as he entered a guilty plea in Manhattan federal court. “I knew at the time that what we were doing was against the law.”
Prosecutors say Eberhard paid the hush money to Zisselman and co-worker Brian Mercier so they wouldn’t disclose his conduct. Both men pleaded guilty to conspiracy and extortion.
Eberhard was charged with stealing client funds and using some of the money to settle lawsuits brought by former investors. He’s also accused of trading excessively in client accounts to generate commissions for himself and of issuing phony account statements. A receiver was appointed to manage Eberhard’s firm.
Zisselman, 36, faces a prison term of 41 to 51 months when he is sentenced Sept. 4. Mercier faces 33 to 41 months in prison.
Zisselman’s attorney, Robert Katzberg, declined to comment on the guilty plea. Zisselman, who is free on $150,000 bail, also was ordered to pay at least $750,000 in restitution.
At one time, Eberhard’s firm claimed to have $500 million under management and more than 1,000 individual and corporate clients, prosecutors said. Eberhard Investment Associates had offices in Manhattan and Millbrook, N.Y.
Eberhard also was chairman of Park South Securities, an investment advisor with offices in Manhattan; Melville, N.Y.; Dallas; and Iselin, N.J.
Zisselman is licensed to practice law in New York and New Jersey, according to court papers. He worked for Eberhard from 1998 to 2002, when the scheme began, prosecutors say. His job at the firm was not detailed at Tuesday’s court hearing. Mercier was Eberhard’s office manager.
In late 2001, after breaking into Eberhard’s e-mail, Mercier, 36, gave Zisselman copies of correspondence from his boss -- who was married -- to other women, prosecutors said.
Mercier told Eberhard he’d keep silent in exchange for cash, prosecutors said. In addition to finding the e-mail messages, Mercier compiled a list of clients whom Eberhard allegedly defrauded, they said. Prosecutors didn’t say how Mercier learned of the fraud.
Eberhard’s payments began immediately, Mercier said at his guilty plea this month.
“Mr. Todd Eberhard paid approximately $1.55 million to my co-conspirator, mostly by wire transfer,” Mercier said in court. “I received from my co-conspirator approximately $750,000.”
The payments stopped after Eberhard’s arrest in February.
