Attorney Michael Avenatti Indicted on 36 Counts of Embezzlement, Fraud, Tax Evasion

Prosecutors in the office of the U.S. Attorney for California's Central District have charged Avenatti with 10 counts of wire fraud, accusing him of misusing more than $12 million he received on behalf of clients following settlements and other negotiations.

Avenatti allegedly built a "financial house of cards" using his stolen millions to fund his lavish lifestyle, U.S. Attorney Nick Hanna said at a press conference Thursday.

Avenatti, 48, has said he planned to fight all the charges and plead not guilty.

He was arrested last month in NY on two related counts and for allegedly trying to shake down Nike for up to $25 million US.

Avenatti shot to overnight fame a year ago as the counsel for Stormy Daniels, the adult film actress who claims to have had sexual relations with President Donald Trump, and his bulldog approach to taking on the president and his legal team helped garner him endless spots on cable TV news shows. Prosecutors allege Avenatti drained money from the man's trust account and used the money to finance a coffee business and pay other expenses.

According to court documents, prosecutors said Avenatti would occasionally send Client 1 "advance" payments that didn't exceed $1,900.

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. "Typically in the form of payments created to string along victims so as to prevent Mr. Avenatti's financial house of cards from collapsing".

Avenatti also allegedly submitted false information to financial institutions for several loans, including a 2011 tax return noting his adjusted gross income for that calendar year of approximately $4.6 million. But Avenatti denied to the client that the total settlement had already been paid, the indictment reads. In a press conference, Hanna confirmed that the jet was seized by federal authorities on Wednesday.

In one of these cases, Avenatti represented Geoffrey Johnson, a paraplegic on disability, against the County of Los Angeles where a $4 million settlement was reached in 2015.

Adult film actress Stephanie Clifford, also known as Stormy Daniels, speaks to media alongside Avenatti, her lawyer, outside a federal court in the Manhattan borough of New York City on April 16, 2018.

"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 tweeted after the indictment was reported. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said.

He added later: "Any claim that any monies due clients were mishandled is bogus nonsense".

Avenatti allegedly tried to hide the scheme by derailing the client's attempt to buy a house and lying to the Social Security Administration about the settlement, resulting in the client losing his Social Security benefits in February, according to the indictment.

At that time, the U.S. Department of Justice and the IRS will reportedly plan to announce the "filing of a 36-count indictment".

  • Joey Payne