The Justice Department on Thursday issued a 36-count grand jury indictment against attorney Michael Avenatti.
The development comes less than two weeks after federal prosecutors charged Avenatti with wire and bank fraud charges in California, relating to a failure to inform a client he had received a $1.6 million settlement. The DOJ accused the 48-year-old lawyer of appropriating those funds for personal use.
That same day, U.S. attorneys in New York indicted the former lawyer for adult film star Stormy Daniels for allegedly seeking to extort up to $25 million from Nike.
In a news release on Thursday, the DOJ said of the latest court filing, “The criminal charges in the indictment address four areas of wrongdoing: the embezzlement of millions of dollars that should have been paid to clients, the failure to file income tax returns and failure to pay the IRS millions of dollars in taxes, the submission of fraudulent loan applications that included tax returns never filed with the IRS, and the concealment of assets from the Bankruptcy Court.”
In the release, U.S. Attorney Nick Hanna said all of the crimes Avenatti is now charged with were interconnected.
“These four areas of criminal conduct alleged 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,” he said.
Acting Special Agent in Charge Ryan L. Korner, with IRS Criminal Investigation in Los Angeles, addressed the tax-related charges brought against Avenatti. Korner said Avenatti had other priorities, including sports car racing and a coffee shop chain.
“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” Korner said in the release.
CNBC reported the grand jury said Avenatti “would misrepresent, conceal, and falsely describe to the clients the true terms of” the more than $12 million in settlements that he had obtained for them in civil cases.
“And he would also allegedly lie to the clients by saying the settlements had not yet been paid, or that they were delayed for legitimate reasons,” according to CNBC.
Avenatti is accused of using a $2.75 million settlement payment from a client to help purchase a share in a private jet valued at $5 million. Federal authorities seized the jet on Wednesday.
In all, the indictment alleges wrongdoing against five clients. Among them is a paraplegic man Avenatti represented against the County of Los Angeles.
“The county paid a $4 million settlement in January 2015, but within months Avenatti had 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,” according to the Justice Department.
In a tweet that has now apparently been deleted, Avenatti responded by proclaiming his innocence and further stating the move is meant to “sideline” him.
“I intend to fully fight all charges and plead NOT GUILTY. I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me,” he wrote.
In another tweet, which is still active, he characterized the allegations that he mishandled clients’ funds as “bogus nonsense.”
And in a third, which was also deleted, he said his career has been standing up for the powerless and predicted he would be exonerated.
“For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice,” he tweeted. “Along the way, I have made many powerful enemies. I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known.”
In December, a federal judge in Los Angeles ordered Daniels to pay nearly $300,000 in legal fees to President Donald Trump relating to her failed defamation suit against him.
Avenatti is scheduled to be arraigned on the indictment on April 29 in federal court in Santa Ana, California.
Truth and Accuracy
We are committed to truth and accuracy in all of our journalism. Read our editorial standards.