Avenatti accused of hiding millions of dollars from court

LOS ANGELES >> Michael Avenatti hid millions of dollars from the court overseeing his law firm’s bankruptcy and used much of the money for personal compensation, a former partner alleges in new court records.

The firm, Eagan Avenatti, was required by law to file monthly reports on its income and spending during the year when it was under U.S. Bankruptcy Court protection from its creditors, starting in March 2017.

Avenatti signed the reports under penalty of perjury as the firm’s managing partner and majority owner.

But the reports did not disclose that Avenatti opened six bank accounts that received millions of dollars in legal fees during the bankruptcy, his former partner claims in court documents filed Tuesday night.

The reports also divulged nothing about the personal compensation to Avenatti, which would have required permission from the bankruptcy trustee, the court papers allege.

He used some of the money for personal expenses such as $13,000 in rent for his Century City apartment; a $3,640 payment on his Ferrari; $21,000 for Passport 420, an Avenatti company that owns a Honda jet; $150,000 for his troubled coffee company, Global Baristas; $53,600 for his ex-wife, Christine Carlin; and $232,875 for HTP Motorsport, his auto racing team, the records show.

The court documents were filed by Jason Frank, a former lawyer at Eagan Avenatti who has been trying for eight months to collect a $10 million judgment he won against the firm. Frank’s court papers allege that Avenatti’s bank maneuvers were an unlawful effort to dodge his firm’s creditors.

“This includes brazen acts of bankruptcy fraud,” Frank’s lawyer, Scott H. Sims, wrote in the court papers.

Avenatti denied wrongdoing. He said the bankruptcy court did not require all of his legal fees to be paid through Eagan Avenatti.