Blackstone Executive's Father-In-Law Arrested in Extortion Plot

By Joel Rosenblatt

Aug. 23 (Bloomberg) -- The father in-law of Blackstone Group LP London office head David Blitzer was arrested with a lawyer on charges of trying to extort money from Blitzer, New York District Attorney Robert Morgenthau said.

Stuart Ross, 71, of Aventura, Florida, is estranged from his daughter, Allison Blitzer, who is married to David Blitzer, the prosecutor said yesterday in a statement. Ross and his lawyer, Stuart Jackson, 79, threatened to ruin David Blitzer's life unless he paid the two men as much as $11 million, according to the statement.

Earlier this year, Blitzer responded to Ross's request for money for a new business by sending him $65,000, according to Morgenthau. After Blitzer told Ross in May that he wouldn't send more, Ross continued to pursue Blitzer, saying in a June voice- mail message he would ``commit open warfare'' if he didn't get more cash, according to the statement. Jackson sent letters to Blizter's attorney that provided an ``imprimatur of legality'' to the threats, Morgenthau said.

Ross told Blitzer he would ``harass Blitzer with incessant phone calls, and would contact Blitzer's supervisors, the media, and law enforcement with accusations that he claimed would damage Blitzer's reputation, ruin his career, and even lead to his arrest,'' Morgenthau said in the statement.

Blitzer sued Ross in a separate civil lawsuit filed yesterday in New York Supreme Court. Ross was once a successful businessman who had licensing rights to the Smurf cartoon characters and lost his fortune to profligate spending, bad business decisions and a drinking problem, according to the complaint. When Allison Blitzer was pregnant, Ross told her he hoped the child would die and that Allison's gravestone should be carved with a vile obscenity, according to the complaint.

$195,000 Stolen

In addition to the $65,000 described in Morgenthau's statement, Blitzer claims he gave Ross $75,000 for an Internet venture and put another $120,000 in escrow to be released on conditions not specified in the lawsuit. Ross stole the entire $195,000, according to the complaint.

Ross demanded increasing amounts of money in a harassment campaign that included ``countless telephone calls to Blitzer's personal phone and office, at all hours of the day and night,'' according to Blitzer's complaint. Ross threatened to send a note to Blackstone Chairman Stephen Schwarzman, and made calls and sent e-mails to Blitzer's superiors at the company, Blitzer alleged.

Blackstone is the New York-based manager of the world's biggest buyout fund.

`Your Worst Nightmare'

According to the complaint, Ross called Blitzer after he dispatched Jackson to meet with him, telling Blitzer, ``David, this is your worst nightmare. Your father in law Stuart Ross. You have been a discourteous prick to Stuart Jackson. I am going to continue to harass you. I am going to call you every day -- four or five times a day -- I am going to keep calling -- I will continue to harass you.''

Ross and Jackson were charged with two counts of grand larceny and face as much as seven years in prison if convicted, Morgenthau said.

Jackson wasn't immediately available to comment. Phone calls to his office got a busy signal yesterday.

Morgenthau spokeswoman Maxey Greene and Blitzer's lawyer, Roger Stavis, didn't immediately return calls made after business hours yesterday.

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net.