Michael Avenatti Indicted for Allegedly Stealing $1.6 Million From Client

Minnie Murray
April 14, 2019

"Avenatti stole millions of dollars from five clients and used a tangled web of shell companies and bank accounts to cover up the theft, the Santa Ana grand jury alleged in an indictment that prosecutors will make public Thursday", the Times reported.

"Authorities charge that Avenatti threatened to hold a news conference on the eve of the NCAA college basketball tournament to reveal damaging allegations against Nike unless it paid his client $1.5 million and agreed to hire Avenatti and another lawyer for $15 million to $25 million to conduct an "internal investigation" into the purported allegations". The proceeds were wired to Avenatti, who allegedly "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", the USA attorney's office statement said. One of his businesses, Global Baristas US LLC, failed to file employment tax returns and didn't pay $3.2 million in federal payroll taxes, which had been withheld from employee paychecks.

Avenatti used another $2.5 million in settlement money belonging to another client to help pay for a private jet, the indictment said.

Prosecutors from the Southern District of NY said in a charging document that Avenatti tried to get the money by "threatening to use his ability to garner publicity to inflict substantial financial & reputational harm on the company if his demands were not met".

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.

As prosecutors outlined the charges, Avenatti appeared briefly in Los Angeles Superior Court to answer questions about money he owes attorney Jason Frank for legal work he performed.

Wednesday's indictment comes two weeks after federal prosecutors in Manhattan and Los Angeles charged Avenatti, who became a household name during his representation of adult-film actress Stephanie Clifford, known professionally as Stormy Daniels, almost simultaneously in two criminal cases. The charges could carry a potential prison sentence of 335 years in prison.

In addition to Client 1, Hanna said, Avenatti followed a similar pattern with four other clients.


The 61-page indictment alleges Avenatti embezzled from a paraplegic man and four other clients and deceived them by shuffling money between accounts to pay off small portions of what they were due to lull them into thinking they were getting paid.

Hanna said the Avenatti case "has nothing to do with anything political or with anything else".

In November, when the Social Security Administration requested information to determine if Johnson should continue to receive disability benefits, Avenatti said he would respond, but didn't because he knew it could lead to the discovery of his embezzlement, the indictment said.

He also tweeted a signed statement from Geoffrey Johnson praising Avenatti for advocating for him.

According to the indictment, Johnson's efforts to buy a house failed because Avenatti withheld the settlement money, and Avenatti lied to the U.S. Social Security Administration about the settlement to hide the embezzlement, leading the agency to cut off Johnson's benefits.

After Avenatti was questioned about the alleged embezzlement during a judgment-debtor examination in federal court March 22, the indictment said he fabricated a defence for himself.

Avenatti became a prominent critic of Trump and a frequent cable TV guest while representing Daniels, whose real name is Stephanie Clifford.

Robbins, a former federal prosecutor, said he was surprised Avenatti posted the statement.

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