Report: Ex-Avenatti Client Exposes Inside Workings of Porn Lawyer's Practice. It Looks Seriously Dirty
Recall how for most of 2018, outspoken anti-Trump attorney Michael Avenatti — who represented former porn star Stormy Daniels in a failed lawsuit against the president — was heralded as some sort of liberal savior who would rescue Democrats and all Americans from the terrible President Donald Trump.
Avenatti became ubiquitous on cable news and was even touted as a potential 2020 presidential candidate.
Everything changed for the lawyer, though, during the contentious confirmation hearings for now-Supreme Court Justice Brett Kavanaugh, when the Avenatti smeared the nominee with vague and unsubstantiated allegations of violent gang rape and other sexual misconduct — smears that actually served to undermine the other allegations of misconduct against Kavanaugh and likely helped see him confirmed to the court.
That blunder with regard to Kavanaugh caused a significant shift by many on the left against Avenatti, and a torrent of bad news for the “creepy porn lawyer” began to flow, bad news that continues to this day with yet another bombshell report that makes serious allegations against Avenatti’s business practices.
The Daily Beast — by no means a conservative-leaning media outlet — just reported on the latest bad news for Avenatti, namely a legal claim by a former client that alleged the attorney ran his firm’s finances like a “Ponzi scheme” and was pocketing for himself settlement funds that rightly belonged to the client.
The claim was recently filed with a private arbitration organization known as Judicial Arbitration and Mediation Services, or JAMS, by a former client named Gregory Barela, according to The Daily Beast
The claim charged that Avenatti — as well as two unnamed associates — had withheld payments of a settlement Avenatti won for Barela, and even attempted to loan Barela money he was due with 10 percent interest when Barela continued to ask about when he would receive his settlement.
Barela’s claim, which is not public but was obtained by The Daily Beast through Barela’s new attorneys, stated, “Avenatti was operating his law firm in a Ponzi scheme like manner, taking settlement proceeds received for clients to pay off debts, pay the other individual Defendants’ salaries and bonuses, and fund his lavish lifestyle, while telling clients that the settlement proceeds had not been received or would be received at a later date.”
As noted, Avenatti had won a confidential settlement against a third party for Barela, and that third party began to make payments on the settlement in January 2018 to a special client trust account managed by Avenatti, according The Daily Beast, citing a statement of claim.
However, according to the news outlet, Avenatti repeatedly told Barela that no payments had been made when asked on occasion over several months. When Barela noted how badly he needed the funds for other financial matters, the Daily Beast reported, Avenatti offered to loan him some with interest.
Rather than accept the loan, Barela hired new attorneys who immediately contacted the third party and discovered that they had been making the payments on the settlement all along, according to The Daily Beast.
One of Barela’s new attorneys, Stephen Bledsoe, told The Daily Beast, “Mr. Barela hired our firm to investigate what happened to the settlement payment that he was supposed to have received early last year.”
Bledsoe added, “As part of our investigation, we contacted the lawyer for the settling party and he gave us a copy of the unaltered settlement agreement and the wire-transfer confirmation showing that his client made the settlement payment to the bank account specified by Mr. Avenatti five days before it was due.”
If that account is true, Avenatti looks to be a clear violation of professional ethical standards, could have committed acts that are potential grounds for disbarment in the state of California, and possibly even criminal charges, according to Gabriel Chin, a law professor at the University of California-Davis interviewed by The Daily Beast.
Chin told The Daily Beast that under those circumstance, Avenatti would have essentially “stolen” the money from Barela by using it for purposes other than settling Barela’s claim against the third party.
“When you get money on behalf of a client, you hold it in trust for that client,” Chin told The Daily Beast. “And if there’s one thing that they teach you in ethics class, in law school, it’s that you don’t commingle your own funds and client funds.”
For his part, Avenatti denied the allegations in a statement to The Daily Beast.
“These allegations are completely fabricated, bogus and fraudulent,” Avenatti’s statement said. “We have no idea where this is coming from or why someone would make up this ridiculous false story and deceive his attorneys. Until recently when we demanded to be relieved as counsel, we previously represented Mr. Barela in multiple matters and he has received 100 percent of what he is entitled to.”
But those who have been paying attention will note that Avenatti always strenuously denies allegations against him, even when there is ample evidence and the legal system has ruled against him.
Recall, this is the same guy alleged to be living a luxurious lifestyle while he owes tens of millions of dollars in numerous judgements and settlements to former partners and clients, not to mention millions in unpaid taxes to the IRS and millions in unpaid child and spousal support to his ex-wife, and was recently evicted from his law firm’s office for failure to pay rent.
Things even temporarily went south between Avenatti and Daniels when she accused him of not keeping her informed on the status of the fundraising efforts on her behalf, though those two appear to have quietly settled their differences after Daniels’ initial stink had been raised publicly.
Avenatti was once held up as the veritable savior of the left in the Age of Trump, but as has now become readily apparent, he’s carrying way more baggage than the Democratic Party can afford.
If Berela’s charges are true, it could be worse than Democrats dreamed.
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