Attorney Michael Avenatti Indicted on 36 Counts of Embezzlement, Fraud, Tax Evasion

Michael Avenatti in May 2018

Michael Avenatti in May 2018

Attorney Michael Avenatti has been charged in a 36-count federal indictment alleging he stole millions of dollars from clients, did not pay his taxes, committed bank fraud and lied in bankruptcy proceedings.

US Atty Nick Hanna & the IRS are holding a news conference in Los Angeles at 9am Pacific time.

Amid the news reports, Avenatti said Thursday on Twitter that he intends to plead not guilty and "fully fight" the charges against him.

The lawyer was arrested last month in NY for allegedly attempting to extort millions of dollars from Nike.

Under State Bar of California rules of professional conduct, a lawyer must promptly notify a client of the receipt of any funds they are entrusted to hold for the client and turn over the money at the client's request. In California, it was alleged that Avenatti committed wire fraud and bank fraud to embezzle a client's money for the goal of paying off his own debts.

Avenatti is scheduled to be arraigned on April 29 in federal court in Orange County, Calif., the prosecutor's office said.

The indictment claimed that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at the coffee shops, and directed employees to deposit cash receipts into a bank account belonging to a vehicle racing outfit that Avenatti owned.

The indictments against Avenatti are for wire fraud, tax fraud, bank fraud and bankruptcy fraud.

The indictment moves Avenatti, 48, a step closer to a trial.

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Avenatti's tweet Thursday included a "client testimonial" bearing a signature purportedly from Johnson that said Avenatti is "an exceptional, honest and ethical attorney and I feel fortunate to have had him represent me".

Avenatti was also charged with submitting phony tax returns to get more than $4 million in loans from The Peoples Bank in Biloxi, Mississippi, in 2014.

In the case of the paraplegic client, for example, Avenatti, after having pocketed the client's $4 million settlement, directed a small portion of what the client was owed, $124,000, to be paid to the client and made some payments to assisted living facilities to cover the client's rent. Avenatti continued to lie to his client through last month, according to the indictment. The client was also denied disability benefits in February 2019 after Avenatti failed to respond to the Social Security Administration on the client's behalf, allegedly fearing that disclosure of information the administration sought would expose Avenatti's scheme.

On the day of his arrest, federal agents executed search warrants at Avenatti's Century City apartment, his Echo Park law office and the Yorba Linda home of Judy Regnier, the office manager at Eagan Avenatti, according to the USA attorney's office.

On Thursday, asked about Avenatti's claim that the indictment was the result of a conspiracy by prominent figures Avenatti has antagonized, Hanna dismissed that allegation: "Nothing can be farther from the truth".

Avenatti is also accused of using $2.5 million from a client's $2.75 million settlement to buy a private jet.

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.

He also labeled any claims that he mishandled client money as "bogus nonsense".

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