Avenatti's Troubles Worsen: Bankrupt Firm Hit With New $10 Million Judgment


If Michael Avenatti could convert all of his media appearances into billable hours, he might not be in this situation.

But because the man who became a household name to viewers of CNN and MSNBC in the past few months as the lawyer for porn star Stormy Daniels hasn’t bothered to pay a former law firm colleague the money he promised he would receive, Avenatti’s former law firm was slapped with a $10 million judgment by a bankruptcy judge in California on Tuesday.

Judge Catherine Bauer of U.S. Bankruptcy Court in Santa Ana ordered Avenatti’s bankrupt law firm — Eagan Avenatti, LLP — to pay the $10 million to Jason Frank, a lawyer who used to work at the firm.

Frank, who used to work at the Eagan Avenatti law firm, was personally promised by Avenatti that he would receive $2 million of a settlement of a bankruptcy case by May 14. That money was never paid, the court determined.

“At this point, that’s what’s appropriate,” Bauer said at a brief hearing, as reported by The Los Angeles Times.

Avenatti personally guaranteed in December that the firm would pay Frank $4.85 million as a bankruptcy settlement, with the initial $2 million due last week. But when the $2 million installment wasn’t paid, the court slapped the firm with Tuesday’s judgment.

And that’s not the only promised payment Avenatti has failed to make in the past week.

Is Michael Avenatti's time as a media darling about to run out?
Assistant U.S. Atty. Najah Shariff told the bankruptcy judge that Avenatti’s firm is also delinquent on a payment of $440,291 in back taxes, penalties and interest that Avenatti promised would be paid last week.

That payment is part of an agreement Avenatti and his firm reached with the Internal Revenue Service in January to pay the IRS a total of $2.4 million. An initial payment of $1.5 million was made in that settlement, but nothing has been paid since.

Avenatti’s excuse? The taxes were supposed to be paid by a third-party payroll company used by the firm — a firm Avenatti never identifies.

Avenatti, who appears to welcome the media spotlight when he can use it to attack President Donald Trump on behalf of Daniels, is rather disdainful of the media when it wants to know why he and his former law firm owe so many people so much money.

When asked by the Times about the judgments issued against his firm Tuesday, Avenatti acted as if the media were talking to the wrong person. “Irrelevant,” he wrote in an email to the paper in response to questions about the $10-million judgment and the missed tax payment. “Over blown. Sensational reporting at its finest. No judgment against me was issued nor do I owe any taxes.”

It’s true that Avenatti’s bankrupt firm, not the individual, is supposed to be forking over the millions. But as the man whose name appears on the numerous lawsuits and judgments that have been filed against his businesses, it’s fair to assume he has something to do with why promised payments haven’t been made.

And it was Avenatti himself who agreed to the deadlines for making the $4.85 million in payments to Frank, so why does he appear more angry at the media for reporting on the judgment than the court that issued it?

Perhaps he is trying to dissuade the media from delving into the 45 other lawsuits that have been filed against the coffee companies Avenatti once owned — Global Baristas LLC and Global baristas US, LLC — including a $120,000 payment that a Seattle judge ordered to be paid to a woman who won a sex-discrimination case in October against Avenatti’s companies, saying she was fired after becoming pregnant, according to a report by The Daily Caller.

After Avenatti’s companies failed to make the payment by February, the judge ordered the funds to be garnished from the company’s bank account. But when the garnishment was attempted, the bank said it had no account for the company in question.

While Avenatti the person has tried to hide behind Avenatti the corporate entity, his personal reputation isn’t squeaky clean when it comes to paying taxes, either. The Times discovered unpaid 2009 and 2010 income taxes led the IRS to put a $904,000 lien years later on all of his personal property in Orange County, California.

Avenatti claims the lien “was placed in error,” no taxes were due and the issue was resolved many months ago, according to the Times. But  the newspaper also checked with the Orange County clerk-recorder’s office, which said the lien remained open as recently as last month.

Avenatti has become a folk hero among those on the left who see him as having the bulldog-like mentality needed to bring down the Trump presidency. But as more is learned about his past, people are seeing him more in the light of a rat than a predator.

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Scott Kelnhofer is a writer for The Western Journal and Conservative Tribune. A native of Milwaukee, he currently resides in Phoenix.
Scott Kelnhofer is a writer for The Western Journal and Conservative Tribune. He has more than 20 years of experience in print and broadcast journalism. A native of Milwaukee, he has resided in Phoenix since 2012.
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