Stuart Ross was charged with attempted grand larceny after threatening to destroy Blackstone Group executive David Blitzer's reputation in 2008 unless he was paid $5.5 million (£3.7 million).
He then demanded a further $5.5 million to give up his rights as a grandparent to the baby his daughter, Blitzer's wife, was expecting, reports the New York Daily News.
Ross appeared in a Manhattan, New York court on Thursday (12Aug10) and admitted to the crime, but insisted he wasn't a bad guy.
Referring to The Smurfs' evil nemesis character, he reporters, "My name isn't Gargamel."
He is due to be sentenced at a later date.
Ross made millions in the 1970s and '80s after winning over American kids with the family of blue creatures.