Michael Avenatti charged with stealing $300,000 from former client Stormy Daniels

Avenatti was separately indicted Wednesday for attempting to extort more than $20 million from Nike Inc.

Published May 22, 2019 4:10PM (EDT)

Michael Avenatti (Getty/Eduardo Munoz Alvarez)
Michael Avenatti (Getty/Eduardo Munoz Alvarez)

Michael Avenatti, the silver-tongued attorney who until March represented adult film actress Stormy Daniels in her lawsuits against President Donald Trump, was indicted on Wednesday for financial crimes, including misappropriating $300,000 intended for his former client.

The indictment, which was unsealed Wednesday in the federal Southern District of New York, claims Avenatti used a "fraudulent document purporting to bear his client's name and signature to convince his client's literary agent to divert money owed to Avenatti's client to an accountant controlled by Avenatti," federal prosecutors said in a statement.

Avenatti was separately indicted Wednesday on extortion charges, which were the focus of a previous complaint which led to the arrest of Avenatti, relating to his alleged attempt to extort more than $20 million in payments from the athletic apparel company Nike Inc. by "threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met," according to the Southern District of New York.

Avenatti had said Tuesday the indictment was imminent and denied the charges.

"I expect an indictment to issue from SDNY [Southern District of New York] in the next 48 hrs charging me in connection with m[y] arrest in March. I intend on fighting these bogus/legally baseless allegations, and will plead not guilty to ALL CHARGES," he wrote on Twitter. "I look forward to the trial where I can begin to clear my name."

In a statement, Manhattan U.S. Attorney Geoffrey S. Berman said Avenatti had "abused and violated the core duty of an attorney — the duty to his client."

"As alleged, he used his position of trust to steal an advance on the client's book deal.  As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari.  Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client," Berman continued.

Avenatti also faces an unrelated indictment in federal court in Southern California on allegations that he 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.

Avenatti previously denied the allegations and said he intends to plead not guilty to the charges.

Wednesday's indictment is 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, a charge which he has vehemently denied.

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.

By Shira Tarlo

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2020 Election All Salon Donald Trump Michael Avenatti News & Politics Nike Inc. Stormy Daniels