Avenatti was arrested in California court on Jan. 14 after government prosecutors asked a judge to approve a warrant for his arrest.
Julian Andre, an assistant U.S. attorney for the Central District of California wrote in an unsealed document that Avenatti was defrauding his creditors, concealing his assets, and fraudulently transferring his property to others.
Court documents were initially sealed because of concerns that if the defendant “knew of the motion and related documents, prior to an arrest or being brought to answer before this Court, there would be nothing to stop defendant from immediately hiding any remaining assets or making arrangements for others to do so,” he wrote.
U.S. District Judge James Selna issued a warrant for Avenatti’s arrest and later revoked his bail, agreeing that it looked like Avenatti broke federal and state laws by hiding $1 million he received in legal fees in April from an ex-wife and other creditors after being arrested in March.
According to court documents, Avenatti used the money to pay rent on a luxury apartment in California, pay legal bills, and buy a Mercedes-Benz worth $50,000.
“Everything he does is to keep the money in his own pockets and not pay the people who have court-ordered judgments against him,” Assistant U.S. Attorney Brett A. Sagel told the judge at the hearing, the Los Angeles Times reported.
Avenatti’s lawyer, H. Dean Stewart, said at a hearing on Wednesday that Avenatti did try to keep the $1 million from his creditors but claimed everything he did was legal. Avenatti is trying to pay off multiple debts and can pay them off in any order, he said.
Selna concluded that Avenatti would be a danger to the public if he remained free on bail because of the likelihood he would keep committing crimes.
“I believe that the danger to the community is real and palpable,” Selna said.
In a letter published in the U.S. District Court for the Southern District of New York on Tuesday, U.S. attorneys told U.S. District Judge Paul Gardephe that Avenatti was the subject of an arrest warrant because of “potential violations of the conditions of pretrial release.”
Avenatti is facing multiple charges. He was accused with attempting to extort more than $20 million from Nike, a case he was supposed to appear in a New York court for this week. The trial was postponed on Wednesday so the defense counsel could get an opportunity to speak with Avenatti, the New York Times reported. The trial should start no later than Jan. 27.
“The arrest has created enormous disruption and unless parties coordinate effectively, I really have no idea when this trial is going to be tried,” Gardephe said during a telephone conference. “I am asking people to be practical here given the hand we have been dealt—which is a bad one.”
Avenatti was also indicted on 36 counts of theft, bank fraud, tax evasion, and perjury. Avenatti was also charged with defrauding Stormy Daniels, the woman who accused President Donald Trump of paying her off.