Federal Grand Jury Indicts Michael Avenatti on 36 Counts, Which Includes 34 New Charges

Federal Grand Jury Indicts Michael Avenatti on 36 Counts, Which Includes 34 New Charges

A federal grand jury in Los Angeles indicted celebrity lawyer Michael Avenatti with 36 counts that include “fraud, perjury, failure to pay taxes, embezzlement and other financial crimes.”

The DOJ wrote in its press release that Avenatti faces 10 counts of wire fraud, 19 tax-related charges, two counts of bank fraud, and four bankruptcy fraud charges, and embezzlement charges.

**This is a breaking story. I will add more information once officials release the indictment and speak to the press….

Avenatti already faces in California. In March, the Department of Justice charged Avenatti with federal bank fraud and wire fraud charges.

The new indictment has 36 charges, which means Avenatti faces 34 new charges. The DOJ provided a summary of these charges:

The criminal charges in the indictment address four areas of wrongdoing: the embezzlement of millions of dollars that should have been paid to clients, the failure to file income tax returns and failure to pay the IRS millions of dollars in taxes, the submission of fraudulent loan applications that included tax returns never filed with the IRS, and the concealment of assets from the Bankruptcy Court.

“These four areas of criminal conduct alleged in the indictment 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,” said United States Attorney Nick Hanna.

“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” said Acting Special Agent in Charge Ryan L. Korner with IRS Criminal Investigation in Los Angeles. “Individuals who intentionally thwart the IRS and fail to meet their tax obligations will be caught and they will be held accountable”

The most heartbreaking account comes from Client 1, who is mentally ill and “became a paraplegic as a result of the [Los Angeles] county violating his constitutional rights.” The DOJ wrote that LA county gave the man a $4 million settlement in January 2015, but Avenatti kept it from him to use “portions of the settlement to finance his coffee business or pay personal expenses.” They allege “Avenatti concealed the receipt of the settlement from Client 1 and instead gave him periodic ‘advances’ of no more than $1,900 and paid the rent for his assisted living facility, according to the indictment.”

If convicted, Avenatti faces “333 years in federal court plus an additional two-year mandatory consecutive sentence for the aggravated identity theft charge.” Officials scheduled his arraignment on April 29.

Previous Reporting

From The Los Angeles Times:

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.

One of the clients, Geoffrey Ernest Johnson, was a mentally ill paraplegic on disability who won a $4-million settlement of a suit against Los Angeles County. The money was wired to Avenatti in January 2015, but he hid it from Johnson for years, according to the indictment.

In 2017, Avenatti received $2.75 million in proceeds from another client’s legal settlement, but concealed that too, the indictment says. The next day, he put $2.5 million of that money into the purchase of a private jet for Passport 420, LLC, a company he effectively owned, according to prosecutors.

At the time, Avenatti and his businesses owed millions of dollars in back taxes, the government claimed, and his Newport Beach law firm, Eagan Avenatti, was weeks from bankruptcy.

Yes, the indictment alleges that Avenatti stole money from a mentally ill, physically disabled person.

It looks like the new charges give more power to the way Nick Hanna, U.S. Attorney for the Central District of California, described Avenatti at a press conference in March. He called Avenatti “a corrupt lawyer who instead fights for his own selfish interests by misappropriating close to a million dollars that rightfully belonged to one of his clients.”

Avenatti spoke to CNBC:

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 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.”

Avenatti is out on $300,000 bail. He also faces charges in the Southern District of New York. Prosecutors allege Avenatti attempted “to extract more than $20M in payments from a publicly traded company by threatening to use his ability to garner publicity to inflict substantial financial & reputational harm on the company if his demands were not met.”

The charges include conspiracy to transmit interstate communications with intent to extort, conspiracy to commit extortion, and extortion.

The federal prosecutors wrote in documents that Avenatti and a client claimed “they had evidence that Nike had funneled money to recruits in exchange for their commitments to college teams sponsored by Nike and that they would release them in order to damage Nike’s reputation and market capitalization unless Nike paid them between $15 and $25 million.” The document stated the alleged crime took place in March.

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