Feds: Avenatti stole $12M from his clients
New federal charges say he pocketed millions
Celebrity lawyer allegedly used money to buy a jet, fund his coffee business
WASHINGTON – Federal prosecutors revealed a batch of new criminal charges against Michael Avenatti on Thursday, accusing the combative celebrity lawyer of embezzling $12 million from his clients to pay for personal expenses, a coffee business and a private jet.
In an indictment revealed Thursday, prosecutors in Los Angeles charged that Avenatti embezzled $3.1 million from one client, a paraplegic man who had received a settlement from Los Angeles County. They said he used the money to finance his coffee business and to pay his personal expenses, ultimately giving his client only a fraction of the $4 million he was owed.
The charges are the latest blow to the brash lawyer who not long ago battled President Donald Trump over hush money the president had paid to an adult film star and now faces criminal charges in two states. The latest set of charges accuses Avenatti of defrauding a bank and the IRS, stealing from his clients and lying about the finances of his bankrupt law firm.
The charges described not a successful lawyer but “a man who allegedly failed to meet his obligations to the government, stole from his clients and used illgotten gains to support his racing team, the ownership of Tully’s coffee shops and a private jet,” said Ryan Korner, acting head of the Los Angeles IRS office.
Prosecutors said Avenatti repeatedly deceived five clients about settlements he obtained for them and misrepresented the terms so he could pocket the money. Prosecutors said Avenatti gave his clients monthly payments, falsely claiming those were “advances” from settlements that had not been paid, while he used much of the money to pay for his personal, business and legal expenses.
In one case, prosecutors say Avenatti used the bulk of a client’s $3 million settlement to buy a share of a private jet, which authorities have now seized. A third client whom Avenatti represented in an intellectual property dispute was supposed to receive $1.9 million, but Avenatti used nearly all of the money for himself, prosecutors said.
Avenatti, 48, is facing several counts of wire fraud, tax fraud, bank fraud and bankruptcy fraud.
The 36-count indictment by a federal grand jury comes two weeks after Avenatti, who once toyed with the idea of a presidential run, was charged by federal authorities in two states with embezzling a client’s money, defrauding a bank and scheming to extort up to $25 million from shoemaker Nike.
In a series of tweets Thursday, Avenatti said he has “made many powerful enemies” over a 20-year career of representing “Davids vs. Goliaths.”
“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 wrote. “I intend to fully fight all charges and plead NOT GUILTY. I look forward to the entire truth being known as opposed to a onesided version meant to sideline me.”
Avenatti has been a prominent legal antagonist of Trump, at one point representing adult film star Stormy Daniels in a legal battle with the president over a hush-money agreement to silence her in the months before the 2016 election.
Federal prosecutors in New York are investigating whether that payoff violated federal campaign finance laws.
Prosecutors charged that Avenatti falsely told his paraplegic client that the settlement he reached with Los Angeles County could not be paid in full until the county approved a special trust. He then steered $3.1 million of the $4 million settlement the county paid in January 2015 to his personal and auto business bank accounts, burning through all of it by July 2015, according to court documents.
That client, Geoffrey Ernest Johnson, became destitute because of Avenatti’s actions, according to a statement from a California attorney who now represents Johnson.
“Mr. Johnson is the victim of an appalling fraud perpetrated by the one person who owed him loyalty and honesty most of all: his own lawyer,” attorney Josh Robbins said. “Mr. Avenatti stole millions of dollars that were meant to compensate Mr. Johnson for a devastating injury, spent it on his own lavish lifestyle, then lied about it to Mr. Johnson for years to cover his tracks.”
From 2015 to as recently as last month, Avenatti made periodic payments of $1,000 to $1,900 to Johnson, falsely claiming those were “advances” to the still-unpaid settlement, according to court documents. In 2017, Johnson, who had been staying at assistedliving facilities, expressed interest in buying a house, but Avenatti told him he could not because Los Angeles County still had not paid the settlement.
Prosecutors said Avenatti used similar schemes with other clients, falsely telling them that they were supposed to receive their settlements in monthly installments or that defendants had yet to pay, which allowed him to keep the money in the interim.
Federal prosecutors in Los Angeles charged Avenatti last month with embezzling more than $1 million from an unnamed client and then using that money to pay for his own expenses and debts, as well as those of his coffee business, which operated Tully’s Coffee, and his California law firm, according to a nearly 200-page complaint filed last month. They also accused him of a longstanding scheme of defrauding a bank to obtain loans.
In New York, federal prosecutors said Avenatti threatened to reveal what he claimed was evidence that Nike made improper payments to high school basketball players unless the company paid $1.5 million to one of his clients and $15 million to $25 million for him and an associate to conduct an investigation of Nike. Avenatti is facing four counts of extortion and conspiracy in that case.
He is free on a $300,000 bond and is scheduled for an arraignment in federal court in Santa Ana, California.