Attorney Michael Avenatti arrives at federal court Monday, April 1, 2019, in Santa Ana, Calif. Avenatti appeared in federal court on charges he fraudulently obtained $4 million in bank loans and pocketed $1.6 million that belonged to a client. (AP/Jae C. Hong)

Michael Avenatti faces 36-count federal indictment on charges including embezzlement and wire fraud

The attorney allegedly stole from a mentally ill paraplegic client on disability who won a $4 million settlement


Shira Tarlo
April 11, 2019 7:29PM (UTC)

Michael Avenatti, the silver-tongued attorney who until last month represented adult film actress Stormy Daniels in her lawsuits against President Donald Trump, faces 36-count federal indictment on charges including wire fraud, perjury, failure to pay taxes and embezzlement.

The lawyer was arrested last month in New York for allegedly attempting to extort millions of dollars from Nike. The indictment, filed by a grand jury in Southern California late Wednesday, includes some of the count but "significantly broadens the scope of the case," according to a statement from the U.S. Attorney's Office for the Central District of California.

Advertisement:

The criminal charges in the indictment "are all linked to one another, because money generated from one set of crimes appears in other sets — typically in the form of payments to lull victims and to prevent Mr. Avenatti's financial house of cards from collapsing," U.S. Attorney Nick Hanna said in a statement.

The 61-page indictment claims Avenatti stole millions of dollars from five clients and used a number of shell companies and bank accounts to cover up the theft.

Specifically, it alleges that Avenatti stole from a mentally ill paraplegic client on disability who won a $4 million settlement. The proceeds were wired to Avenatti, who allegedly "drained the entire settlement payment from his law firms' trust account and used portions of the settlement to finance his coffee business or pay personal expenses," the U.S. attorney's office statement said.

"Avenatti concealed the receipt of the settlement from Client 1 and instead gave him periodic 'advances' of no more than $1,900 and paid the rent for his assisted living facility," the statement said.

The lawyer is also accused of embezzling millions of dollars from other clients, using the money to purchase a private jet, finance his coffee business and pay for his own legal and personal expenses. Avenatti used some clients' money to pay previous clients he had swindled and "pay some of his law firm’s bankruptcy creditors, including the IRS," according to the U.S. attorney's office.

The indictment also claims Avenatti did not pay taxes and lied during bankruptcy proceedings.

Advertisement:

Avenatti, who is reportedly free on a $300,000 bond, tweeted Thursday morning that he has "made many powerful enemies" throughout his legal career and intends to plead not guilty to the charges against him.

"I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known," he wrote on the social media platform.

"Any claim that any monies due clients were mishandled is bogus nonsense . . . I look forward to proving my innocence," Avenatti wrote in a tweet, accompanied by a client's testimonial praising him as "an exceptional, honest and ethical attorney."

The charges are the latest controversy surrounding Avenatti, whose career took off last year when he represented Daniels in her lawsuit to break a confidentiality agreement with Trump which required to keep quiet about an affair she has claimed they had in 2006. Late last year, Daniels publicly accused Avenatti of unethical conduct. Questions have also surfaced about the attorney's unpaid debts and various tax liabilities, as well as an arrest last October for allegations of domestic violence, which he has vehemently denied.

Advertisement:

Avenatti became one of Trump's most prominent critics, regularly attacking him on cable news programs and on Twitter. The media briefly flirted with Avenatti as he offered not-so-subtle hints about his political aspirations. At one point, he even considered throwing his hat in the presidential ring to challenge Trump in 2020.

But in California, the celebrity lawyer's business practices had come under scrutiny from the IRS and a former law partner who has claimed he is owed $14 million by Avenatti and his law firm, which filed for bankruptcy last month.


Shira Tarlo

Contact Shira Tarlo at shira.tarlo@salon.com. Follow @shiratarlo.

MORE FROM Shira TarloFOLLOW @shiratarlo

Related Topics ------------------------------------------

All Salon California Donald Trump Michael Avenatti News & Politics Politics Stormy Daniels




Fearless journalism
in your inbox every day

Sign up for our free newsletter

• • •