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

April 11, 2019 Updated: April 11, 2019

High-profile attorney Michael Avenatti is facing a raft of new charges after a federal grand jury indicted him on 36 counts of theft of millions of dollars from clients, bank fraud, tax evasion, and perjury in bankruptcy proceedings.

The new charges, announced by federal prosecutors on April 11, follow his arrest last month in New York for allegedly trying to extort Nike for up to $25 million and two similar charges in California.

He could face a maximum sentence of up to 335 years in prison if found guilty of all charges set out in the California indictment. Meanwhile, he also faces up to an additional 47 years in the extortion case relating to the sportswear giant.

U.S. Attorney Nick Hanna said during a press conference on April 11 that the alleged crimes—which fall under wire fraud, tax fraud, bank fraud, and bankruptcy fraud—were all linked to one another because “money generated from one set of crimes was used to further other crimes, typically in the form of payments designed to string along victims so as to prevent Mr. Avenatti’s financial house of cards from collapsing.”

Avenatti, 48, who is best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump, said that he intends to 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 on social media.

The 61-page indictment (pdf) was filed late April 10 and detailed how Avenatti failed to meet his tax obligations, stole from his client, and used the money to support his racing team, coffee shops, and a private jet.

Lying to Clients

According to the indictment, Avenatti embezzled money from five of his clients and shuffled the money to cover up the theft.

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. Prosecutors said Avenatti received the settlement but hid it from Johnson and used the money to pay for his coffee business and other personal expenses. Meanwhile, he only gave Johnson periodic “advances” of no more than $1,900 and paid for his rent.

The indictment also stated that Avenatti received $2.75 million in proceeds for settlement but hid that from another client. He then allegedly took $2.5 million from the settlement and used it to purchase a portion of a jet.

Federal agents confirmed with Fox News that they had seized a Honda HA-420 twin-engine jet—worth $4.5 million—on April 10 after a federal judge issued a warrant. The jet was registered to Passport 420, a company Avenatti co-owns.

Tax Evasion and Fraud

Avenatti was charged with 19 tax-related offenses including failure to file personal income tax returns since 2010, and other tax returns for two of his law firms.

The attorney allegedly tried to obstruct efforts by the IRS to collect at least $2.3 million in taxes withheld from the paychecks of employees of coffee shops he owned.

The indictment claimed that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at the coffee shops, and directed employees to deposit cash receipts into a bank account belonging to a car racing outfit that Avenatti owned.

Prosecutors also gave examples of Avenatti’s other alleged fraudulent behavior such as overstating resources of one of his law firms to obtain three loans totaling $4.1 million from a bank and repeatedly lying about income he was receiving during bankruptcy proceedings.

Avenatti had denied the accusations in a series of posts on social media on April 11.

“For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice. 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.”

Avenatti is currently free on a $300,000 bond and is scheduled to be arraigned April 29.

Follow Janita on Twitter: @janitakan
RECOMMENDED