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A Pennsylvania lawyer at the center of a heated disciplinary battle insists his actions were lawful debt collection efforts—not blackmail. Arkady “Eric” Rayz, of Kalikhman & Rayz LLP, testified Monday before a state disciplinary panel as he fought allegations that he threatened a client’s debtor with exposure of hidden assets unless he paid up.

The case revolves around Florida watch dealer Yuri Lyubarsky, who for over a decade sparred with Rayz over a foreign bank debt later purchased by Vertonix Ltd. The saga includes missed balloon payments, mounting sanctions, and court orders in multiple states.

The $250,000 Threat Allegation

In 2018, when Lyubarsky declared bankruptcy, Rayz allegedly told Lyubarsky’s attorney, Leonid Nerdinsky, that unless his client paid $250,000, he would inform the bankruptcy trustee about undisclosed assets.

The Office of Disciplinary Counsel (ODC) claimed this amounted to blackmail. A bankruptcy judge later agreed, ruling Rayz’s demand violated the automatic stay on collections and slapping him and Vertonix with a $355,000 sanction for fees and emotional distress.

But Rayz’s attorney, Josh J.T. Byrne of Marshall Dennehey PC, countered that Nerdinsky was the only witness to the supposed quid pro quo—and that he later lost credibility after being disbarred in Florida for fabricating court orders and forging judges’ signatures.

Decade-Long Debt Drama

Rayz painted a different picture for the panel, describing debtors who “went to extreme lengths to dodge obligations they guaranteed.” He detailed how the Lyubarskys missed payments, faced daily fines for ignoring discovery, and stalled proceedings across New Jersey, Pennsylvania, and Florida courts.

At one point, sanctions of $100 per day were levied against the couple for failing to disclose financial records. Rayz also submitted social media photos of luxury items allegedly owned by the Lyubarskys, though the ODC accused him of cropping and misrepresenting evidence to strengthen his case. Rayz denied any intent to deceive, saying the edits were meant only to remove irrelevant people from the images.

Testimony Behind Closed Doors

Monday’s hearing included testimony from Gary Seitz of Gellert Seitz Busenkell & Brown LLC, who represented the Lyubarskys in bankruptcy court. Portions of his testimony were sealed due to confidential client information.

The disciplinary panel is set to resume questioning Tuesday, as the high-stakes Eric Atty Blackmail suit continues to unfold.