Avenatti Indicted Again for Pattern of White Collar Criminality

Share

Michael Avenatti indicted on 36 counts by California federal grand jury; accused of ripping off mentally ill paraplegic client

Dan Mangan
CNBC

KEY POINTS
  • Celebrity lawyer Michael Avenatti was slammed Thursday with a 36-count indictment by a federal grand jury in California that accuses him of ripping off clients — including a mentally ill paraplegic — tax crimes, wire fraud, bank fraud, and perjury.
  • The indictment comes more than two weeks after federal prosecutors in Los Angeles and New York hit Avenatti with separate criminal complaints.
  • In the New York federal case, Avenatti is accused of trying to extort more than $20 million from Nike by threatening to expose alleged bribery of amateur basketball players and their families unless the company coughed up cash to Avenatti and a client.
GP: Michael Avenatti outside courthouse 190401
Michael Avenatti gestures while addressing the media outside the Ronald Reagan Federal Courthouse in Santa Ana, California on April 1, 2019, following his appearance at a US District Court on a criminal complaint charging him with bank and wire fraud.
Frederic J. Brown | AFP | Getty Images

Celebrity lawyer Michael Avenatti was slammed Thursday with a 36-count indictment by a federal grand jury in California that accuses him of ripping off clients— including a mentally ill paraplegic — for millions of dollars, shorting the IRS of millions more, swiping millions of dollars in employment taxes from his coffee company, and perjury.

The indictment, scheduled to be discussed by the U.S. Attorney Nick Hanna and IRS officials in Los Angeles at 9 a.m. PT, comes more than two weeks after federal prosecutors in Los Angeles and New York hit Avenatti with separate criminal complaints.

Hanna, in a statement, said that Avenatti’s allegedly criminal conduct spanned four distinct areas, which “are all linked to one another because money generated from one set of crimes appears in other sets – typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing.”

In the case in New York, the 48-year-old Avenatti is accused of trying to extort up to $25 million from athletic shoe giant Nike by threatening to expose alleged bribery of amateur basketball players and their families unless the company coughed up cash to Avenatti and a client.

Reached for comment, Avenatti told CNBC in a text message, “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 added.

In a subsequent tweet, Avenatti said, “I intend to fully fight all charges and plead NOT GUILTY. I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me.”

The new, 61-page indictment unsealed in U.S. District Court for the Central District of California in Santa Ana alleges that Avenatti for years hid and then completely spent a $4 million legal settlement obtained in January 2015 in favor of a mentally ill paraplegic client, and hid a $2.75 million settlement for another client that Aventatti allegedly used to help pay for the purchase of a private jet.

Most of the money for the paraplegic client allegedly was funnelled to a company that managed Avenatti’s race-car team, and to his coffee company, Global Baristas, which operated the Tully’s chain.

The indictment says that because Avenatti failed to respond to the U.S. Social Security Adminstration’s request for information about the paraplegic, that client had his Supplemental Security Income benefits discontinued in February.

In all, five clients were allegedly ripped off for millions of dollars by Avenatti, who also is accused of using shell companies and other means to hide the purported thefts.

The grand jury said Avenatti “would misrepresent, conceal, and falsely describe to the clients the true terms of” the more than $12 million in settlements that he had obtained for them in their civil cases. And he would also allegedly lie to the clients by saying the settlements had not yet been paid, or that they were delayed for legitimate reasons.

The indictment said that in some cases, such as with the paraplegic, Avenatti would give a client funds which he claimed were “advances” on the “the purportedly yet-to-be received settlement proceeds.”

Avenatti also is accused in the indictment of taking almost $2.4 million in taxes withheld from the paychecks of workers at Global Baristas,

And the indictment says that the last time he filed his federal income tax return was in 2011 for the 2010 filing year.

Prosecutors said Avenatti failed to pay millions of dollars of taxes due the IRS.

In all, Avenatti is charged with 10 counts of wire fraud, 19 tax-related offenses, two counts of bank fraud, and four counts of bankruptcy fraud. The bankruptcy counts relate to allegedly false statements that Avenatti filed in connection with the bankruptcy of his law firm Eagan Avenatti.

Federal prosecutors in L.A. accused him in their prior complaint of defrauding a legal client by looting a $1.6 million civil settlement for that man to pay for Avenatti’s personal and business expenses.

He was also accused in that case of defrauding a Mississippi bank by using bogus federal income tax returns to apply for and receive $4 million in loans.

The allegations in that complaint are restated in the indictment unsealed Thursday.

Michael Avenatti

Avenatti is free on $300,000 bail.

He is scheduled to be arraigned on the indictment on April 29 in federal court in Santa Ana.

As with the California case, Avenatti is expected to be indicted by a grand jury in the New York case. Unless defendants in federal criminal cases agree to plead guilty, prosecutors have to obtain a grand jury indictment to push a case toward trial after filing a complaint.

Avenatti told CNBC’s “Closing Bell ” on Monday that Nike “pulled a stunt” by having him arrested in New York before he could go public with his claims that the company was bribing high school hoop players to coax them into attending Nike-sponsored colleges.

Avenatti told CNBC that Nike “has been covering up this scandal for over five years.”

“They knew they could not control me. … They effectively had to shoot the messenger.”

Avenatti gained notoriety in 2018 for his representation of porn star Stormy Daniels in her legal cases against President Donald Trump and his former personal lawyer and fixer, Michael Cohen.

Daniels was paid $130,000 by Cohen on the eve of the 2016 presidential election in exchange for her agreement to keep quiet about what she has said was a one-time sexual tryst with Trump a decade before. Trump denies having sex with her.

Cohen last year pleaded guilty to multiple federal crimes, including campaign finance violations related to his facilitating the payment to Daniels, and to a hush money deal paid by The National Enquirer to another self-admitted Trump paramour, Playboy model Karen McDougal. Trump likewise denies McDougal’s claim of an affair.

Cohen is set to begin serving a three-year prison term next month.

Daniels replaced Avenatti with a new lawyer last month.

When he was arrested on March 25, Daniels released a statement saying, “Knowing what I know now about Michael, I’m saddened but not shocked regarding his arrest.”

“I made the decision weeks ago to terminate Michael’s services after discovering that he had dealt with me extremely dishonestly, and I will have my own announcement coming soon.”

Read the indictment against Michael Avenatti:

___
https://www.cnbc.com/2019/04/11/michael-avenatti-indicted-by-federal-grand-jury-in-los-angeles.html

This entry was posted in Uncategorized. Bookmark the permalink.