Tag Archives: Avenatti

A Celebrity Beauty Blogger, a Paraplegic, and a Mystery Client: Here Are the People Michael Avenatti Stole From, Feds Say

A Celebrity Beauty Blogger, a Paraplegic, and a Mystery Client: Here Are the People Michael Avenatti Stole From, Feds SaySpencer Platt/GettyCelebrity lawyer Michael Avenatti has been indicted by a federal grand jury in California on 36 counts, including fraud, tax dodging, and embezzlement. The latest charges come about two weeks after federal prosecutors in New York and California accused Avenatti of trying to extort millions from Nike, Inc., and of stealing from clients and forging tax returns to defraud a bank.Avenatti has denied the charges, tweeting on Thursday, “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 indictment names five clients whom Avenatti allegedly scammed—and they include cases The Daily Beast has previously reported on, from a disabled man and a YouTube beauty mogul to a client who has accused Avenatti of running his business like a “Ponzi Scheme.” Client 1In January 2015, Avenatti negotiated a $ 4 million settlement on behalf of “Client 1,” Geoffrey Johnson, a paraplegic man who sued Los Angeles County over his emotional and physical injuries from a stay in jail.Johnson’s story is tragic. According to his now-settled lawsuit, Los Angeles police encountered him at 6:30 a.m. on April 24, 2011, when he was “completely naked, praying in the middle of the street outside his apartment building.”The lawsuit alleges Johnson was suicidal when transported to a local hospital. His intake form, according to the civil suit, said he “believed that the only way to escape the plot of others to kill him was to commit suicide.”Johnson would be transferred from hospital to jail cell, after he allegedly lunged at a doctor. He was taken to the Twin Towers Correctional Facility and placed in a cell with a violent prisoner, despite his father and sister warning the jail of his mental illness and suicidal thoughts. After being released and then re-arrested, Johnson was kept in a cell where inmates were known to spit and throw feces. Johnson attempted to hang himself but landed on his head, resulting in a permanent disability from a spinal cord injury.According to the indictment, Avenatti “falsely represented to Client 1 that the settlement agreement had to remain confidential,” and that Los Angeles County couldn’t pay the $ 4 million in one lump sum. Avenatti also allegedly said the county needed to approve a Special Needs Trust for Johnson before he could receive the funds.Yet Avenatti received millions from the county and failed to disclose the payment to Johnson, prosecutors allege. From Jan. 26, 2015 to March 30, 2015, Avenatti transferred $ 3.12 million of Johnson’s money to an Eagan Avenatti account, before transferring “substantial portions” to an account for his law firm Avenatti & Associates, then to other bank accounts controlled by Avenatti, including his personal bank account and accounts associated with “GB Auto.”By July 6, 2015, the indictment states, Avenatti “had drained all of the settlement proceeds” out of Johnson’s client-trust account, using much of it to pay his own personal expenses.Avenatti then made 69 payments of $ 1,000 to $ 1,900—totaling at least $ 124,000—to Johnson from July 2015 to March 2019, prosecutors say. The lawyer also paid assisted living facilities for Johnson’s rent, and “falsely represented” to Johnson that these payments were “advances” on the settlement owed to him.In 2017, Johnson told Avenatti he wanted to purchase his own residence, and Avenatti allegedly agreed to find him a real estate broker.According to prosecutors, Avenatti promised Johnson he’d received the settlement proceeds to buy a house, but after Johnson was in escrow on the purchase, Avenatti falsely informed him there was no money, because the county still hadn’t approved the Special Needs Trust.Avenatti also caused Johnson to lose his Social Security benefits, prosecutors say.In November 2018, Avenatti informed Johnson he would help him provide documentation to the Social Security Administration, which was evaluating Johnson’s eligibility for Supplemental Security Income benefits. “Knowing full well that the requested information could lead to inquiries that could reveal that defendant Avenatti had embezzled [Johnson’s] portion of the settlement proceeds, defendant Avenatti failed to provide the requested information to SSA, which resulted in [Johnson’s] SSI benefits being discontinued” in February 2019, the indictment alleges.Last month, facing questions over Johnson’s settlement at a judgment-debtor exam, Avenatti falsely told Johnson that the county had finally approved the Special Needs Trust and Johnson would receive his settlement.Avenatti then had Johnson sign a document claiming he was “satisfied” with Avenatti’s representation of him. Avenatti claimed the signature “was necessary to effectuate the settlement agreement,” the indictment states. Client 2Avenatti negotiated a settlement for the unidentified “Client 2” on Jan. 7, 2017, with “Individual 1” agreeing to make an initial payment of $ 2.75 million by Jan. 28. An additional payment of $ 250,000 was due Nov. 1, 2020 under the agreement.Prosecutors say Avenatti, who was owed 33 percent of the total $ 3 million, didn’t provide a copy of the settlement agreement to the client.Instead, Avenatti falsely represented that “Individual 1” would make an initial lump-sum payment that would go to Eagan Avenatti’s fees. The individual would then make 96 monthly payments over the next eight years, Avenatti allegedly told his client. Still, Avenatti allegedly concealed the $ 2.75 million settlement, and transferred $ 2.5 million of it to the attorney-client trust account for another law firm. The same day, prosecutors allege, Avenatti had this law firm transfer the money to Honda Aircraft Company, LLC, so Avenatti could purchase a private jet through his company, Passport 420. (The remaining $ 250,000 was transferred from an EA account to an A&A; account.)To appease the client, Avenatti made 11 payments totaling $ 194,000 to the client from March 2017 to June 2018, the indictment states.After that, Avenatti stopped paying the client, claiming Individual 1 was not complying with the settlement agreement.On March 24, 2019, the client met Avenatti at his Los Angeles residence, where Avenatti claimed the client would soon receive a payment to make up for the missed monthly payments—monthly payments to which Individual 1 never agreed. Client 3In December 2017, Avenatti negotiated a $ 1.6 million settlement on behalf of a client, which appears to be Gregory Barela, who previously accused Avenatti of stealing his payout and running his firm like a “Ponzi scheme.”In May 2015, Barela filed a lawsuit against a Colorado-based company over an intellectual property dispute. The civil complaint said Barela was “the inventor of a product which can be summarized as a paving system for paving or flooring.”Under the settlement agreement, Barela was owed $ 1.6 million by January 10, 2018, followed by three payments of $ 100,000 by Jan. 10 of 2019, 2020, and 2021, according to the indictment. Avenatti was owed $ 760,000 in attorney’s fees, or 40 percent of the total $ 1.9 million payout.During a Dec. 28, 2017 meeting at Eagan Avenatti’s offices, Avenatti gave Barela an “altered copy” of the settlement, which forged a new payment deadline of March 10, 2018.Meanwhile, Avenatti pocketed Barela’s money and used $ 1.59 million of it to pay his own expenses related to his coffee company, Global Baristas, prosecutors say.From March 2018 through November 2018, court papers allege, Avenatti lied to Barela, saying the company hadn’t paid the settlement. Avenatti claimed he was working on obtaining the money Barela was owed.In April 2018, Avenatti began providing Barela multiple payments totaling $ 130,000—calling them “advances” on the unpaid $ 1.6 million settlement. Client 4 and 5In September 2017, Avenatti negotiated a “Common Stock Repurchase Agreement” with a company on behalf of Client 4 and Client 5. Based on the payment deadlines and figures listed in the indictment, these clients appear to be famous beauty vlogger Michelle Phan and a business associate, Long Tran.As The Daily Beast reported, Phan launched her own makeup brand, EM Cosmetics, in 2013. Four years later, she announced she was leaving Ipsy, a beauty subscription service she co-founded, and that she’d acquire EM from the company.According to prosecutors, an unnamed company agreed to repurchase Phan’s shares for about $ 27.47 million, followed by additional shares for about $ 8.14 million. The total repurchase amount was about $ 35.62 million, court papers state.On Sept. 18, 2017, the company wired $ 27.41 million to Avenatti’s client-trust account. About $ 2.79 million was designated for Avenatti’s attorney’s fees, which was 7.5 percent of the total payout.Yet in March 2018, Avenatti withheld Phan’s $ 8.14 million payment. Between March 15, 2018 and May 4, 2018, Avenatti used about $ 4 million of Phan’s money for his own purposes—including using $ 2.82 million to pay his debts to the Internal Revenue Service. The feds claim Avenatti also transferred the money to bank accounts associated with his other companies: Global Baristas, Avenatti & Associates and Passport 420.And to prevent Johnson from discovering that Avenatti embezzled his $ 4 million payment from Los Angeles County, Avenatti used Phan’s money to provide Johnson with about $ 1,900, prosecutors say. Avenatti also used Phan’s settlement to pay Client 2 about $ 34,000, the indictment alleges.From March to May 2018, Avenatti allegedly failed to disclose to Phan and Tran that he’d used about $ 4 million of Phan’s money for his own purposes. He told them he’d give them their money at a later date and that to do so, he needed to visit the bank to fill out paperwork for wire transfers.On May 4, 2018, Avenatti paid Phan $ 4 million and $ 146,288, authorities say. But Avenatti allegedly failed to transfer the remainder of the $ 8.14 million to Phan.From May 4 to June 4, 2018, Avenatti and another unidentified attorney told Phan and Tran that the entire $ 8.14 million had already been transferred to Phan in three separate wire transfers. According to the indictment, Avenatti falsely presented a wire transfer document document that supposedly showed a second $ 4 million wire transfer to Phan.Instead, Avenatti had already used the remaining $ 4 million for his own purposes, prosecutors say, and the wire transfer document he showed Phan related to the first wire transfer she already received on May 4, 2018.After Avenatti’s arrest last month, Phan posted on Twitter: “When karma finally comes through. You never disappoint.” She followed up with, “I’m so grateful.”Read more at The Daily Beast.Got a tip? Send it to The Daily Beast here



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Michael Avenatti charged with stealing clients' payouts in massive fraud case

Michael Avenatti charged with stealing clients' payouts in massive fraud caseAttorney 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. Avenatti, 48, was indicted late Wednesday by a Southern California grand jury on a raft of additional charges following his arrest last month in New York on two related counts and for allegedly trying to shake down Nike for up to $ 25 million. The attorney best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump said Thursday on Twitter that he will plead not guilty to the California charges. "I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me," he wrote. The new charges do not include the New York extortion case alleging Avenatti demanded millions to stay quiet about claims he planned to reveal about Nike paying high school players. Avenatti has said he expects to be cleared in that case. The 61-page Southern California indictment alleges Avenatti embezzled from a paraplegic man and four other clients and deceived them by shuffling money between accounts to pay off small portions of what they were due to lull them into thinking they were getting paid. Avenatti, 48, is also charged with not paying personal income taxes, not paying taxes for his various businesses, including two law firms, and pocketing payroll taxes from the Tully's Coffee chain that he owned, the indictment said. Between September 2015 and January 2018, Global Baristas US, the company that operated Tully's, failed to pay the Internal Revenue Service $ 3.2 million in payroll taxes, including nearly $ 2.4 million withheld from employees, the indictment said. When the IRS put tax levies on coffee company bank accounts to collect more than $ 5 million, Avenatti had Tully's employees deposit cash receipts in a little-known account, the indictment said. Avenatti was also charged with submitting fraudulent tax returns to get more than $ 4 million in loans from The Peoples Bank in Biloxi, Mississippi, in 2014. The tax returns he presented to the bank were never filed to the IRS, prosecutors have said. The charges are the latest major blow to a career that took off last year when Avenatti represented Daniels in her lawsuit to break a confidentiality agreement with Trump to stay mum about an affair they allegedly had. Avenatti became one of Trump's leading adversaries, attacking him on cable news programs and Twitter. At one point, Avenatti even considered challenging Trump in 2020. But back home, his business practices had come under scrutiny from the IRS and a former law partner who was owed $ 14 million by Avenatti and the Eagan Avenatti firm, which filed for bankruptcy. The indictment said Avenatti made false statements in bankruptcy proceedings by submitting forms under penalty of perjury that under reported income his firm received. The most glaring example of deception and fraud was described in the indictment as scheming Avenatti allegedly did to deprive clients of money they were due from legal settlements or sales of stock and the actions he took to cover his tracks. In a case involving one client, Avenatti allegedly funneled a $ 2.75 million settlement into his bank accounts and spent $ 2.5 million on a private airplane, the indictment said. Although Avenatti was due a portion of settlement funds for his work, the charges said he paid only a fraction of the money clients were due in some cases and strung them along while they waited to be paid. Avenatti allegedly drained a $ 4 million settlement he negotiated in 2015 on behalf of Geoffrey Johnson, who was paralyzed after trying to kill himself in the Los Angeles County jail, the indictment said. Johnson was referred to as "Client 1" in the indictment, but was named at a recent court hearing involving the money Avenatti was ordered to pay his former partner. Until last month, Avenatti had only provided $ 124,000 over 69 payments to Johnson, the indictment said. Two years after the settlement was reached, Avenatti allegedly helped Johnson find a real estate agent to buy a house. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said. In November, when the U.S. Social Security Administration requested information to determine if Johnson should continue to receive disability benefits, Avenatti said he would respond, but didn't because he knew it could lead to the discovery of his embezzlement, the indictment said. The failure to respond led to Johnson's disability benefits being cut off in February. After Avenatti was questioned about the alleged embezzlement during a judgment-debtor examination in federal court March 22, the indictment said he fabricated a defense for himself. Avenatti had Johnson sign a document a day or two later saying he was satisfied with his representation, which the lawyer told him was necessary to get the settlement that had in fact been paid four years earlier, the indictment said. When asked by The Associated Press last month about Johnson's case, Avenatti said his client approved all transactions and accounting and had been kept in the loop. "He has repeatedly thanked me for my dedication to his case and the ethics I have employed," Avenatti wrote in an email response.



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Michael Avenatti Indicted on Charges He Defrauded Paraplegic Client, Others Out of Millions

Michael Avenatti Indicted on Charges He Defrauded Paraplegic Client, Others Out of MillionsAvenatti tweeted claims that he mishandled client money are "bogus nonsense."



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Michael Avenatti goes from media darling to criminal suspect

Michael Avenatti goes from media darling to criminal suspectLOS ANGELES (AP) — Michael Avenatti seemingly came out of nowhere, a sharply dressed lawyer with a penetrating gaze who said he would prove President Donald Trump had sex with a porn star and paid her off to keep quiet ahead of the 2016 election.



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Prosecutors say Avenatti wanted in on NY sex-slave case

Prosecutors say Avenatti wanted in on NY sex-slave caseNEW YORK (AP) — An already bizarre case accusing a secretive self-help group in upstate New York of engaging in sex-trafficking took another strange turn Wednesday thanks to firebrand attorney Michael Avenatti and a courtroom scene caused by a wealthy defendant he's tried to represent.



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The quick rise and rapid fall of Michael Avenatti

The quick rise and rapid fall of Michael AvenattiStormy Daniels’ lawyer made his intent to take down Trump public, but he soon went from liberal hero to alleged extortionist Stormy Daniels and Michael Avenatti in New York City on 16 April 2018. Photograph: Eduardo Munoz Alvarez/AFP/Getty Images When celebrity attorney Michael Avenatti stepped into a Manhattan federal courtroom about 6pm on Monday, he lacked the sass and razzmatazz that had secured his roles as a media darling and vociferous social media foe of Donald Trump. As usual, Avenatti sported a slate suit, crisp white shirt and powder blue tie, but his smart clothes couldn’t mask the fact that his arrest hours earlier – for allegedly trying to extort more than $ 20m from Nike – had taken its toll on him. The one-time lawyer for the adult film actor Stormy Daniels, who claimed she was paid $ 130,000 by Michael Cohen to keep her alleged affair with Trump secret, was quietly led to a table by US marshals through a side door in this courtroom. Salt-and-pepper stubble on the back of Avenatti’s always-shaved head was more pronounced than during his many media rounds. Avenatti’s lips were pursed in what could have been a tight grin, or perhaps a mark of resignation, and his skin seemed dry. Prosecutors allege that Avenatti, who had made a splashy and very different appearance with Daniels in the same courthouse less than one year ago, threatened to reveal embarrassing information about the shoe giant, unless the company paid up. Avenatti, 48, also faces federal fraud charges in California related to alleged embezzlement from a client. The criminal complaint against Avenatti describes him as having a “large public following due to, among other things, his representation of celebrity and public figure clients, as well as frequent media appearances and use of social media”. The complaint’s mention of social media, along with the bombastic barrister’s ill-timed missive, show how his web-fueled fame might have turned him into an Icarus of the Twitter age. A breathless biography on Avenatti’s website says he “routinely appears on television and in the print media as a commentator on a range of issues and is widely considered one of the foremost trial lawyers in the nation”. “Michael often works closely with the press and media in connection with his legal practice – an area in which most lawyers falter and under-utilize,” the blurb also says. Avenatti recently told the Guardian that the president’s alleged affair with Daniels – which Trump has denied – could bring him down. “Ultimately, he is going to be forced to resign,” Avenatti said. Such pronouncements often infuriated Trump and his supporters – and delighted many liberals – and turned Avenatti into an activist lawyer seemingly determined to topple Trump (and maybe even replace him). Avenatti went so far as to describe his motivation in going after Trump by paraphrasing a question from the Watergate proceedings, saying “It’s a search for the truth about what the president knew, when he knew it and what he did about it.” Avenatti was feted in West Hollywood several weeks later on “Stormy Daniels Day”, which aimed at celebrating the resistance against Trump, with chants of “Mi-chael! Mi-chael!” Avenatti, who races cars when he is not sparring with someone in court or on TV, even flirted with the idea of a presidential run in the Democratic race and travelled to the key early voting state of Iowa last August. While there, he addressed a crowd of activists at a high-profile political dinner and received a raucous and warm reception. “I believe that our party, the Democratic party, must be a party that fights fire with fire,” he told the crowd and advocated using rough tactics against Republican opponents, saying Democrats too often had a “tendency to bring nail clippers to a gunfight”. Avenatti’s swift ascent started wavering soon thereafter. In October, Daniels’ defamation lawsuit against Trump was thrown out. Avenatti was arrested on 14 November on suspicion of alleged domestic violence. (Prosecutors later announced that they would not pursue charges against him, according to reports.) Later in November, Daniels alleged that Avenatti filed the defamation suit against Trump “against my wishes”. Daniels told the Daily Beast: “He repeatedly refused to tell me how my legal defense fund was being spent. Now he has launched a new crowdfunding campaign using my face and name without my permission and attributing words to me that I never wrote or said.” A federal judge on 7 March dismissed Daniels’ lawsuit, seeking to void the non-disclosure agreement she had signed that barred her from discussing Cohen’s payment. Less than one week later, Daniels and Avenatti were reported to have parted ways. Then came Avenatti’s federal arrest this week. As Avenatti waited for his lawyers and prosecutors to appear in the courtroom, he exuded a mildly nervous-yet-pensive energy; sometimes cupping or scratching his chin, sometimes tapping a hand against his knee. When the judge went through
pro forma questions with Avenatti – did he understand his rights? did he have a copy of the complaint? – he stood and answered: “Yes, your honor, I do.” Avenatti was released on a $ 300,000 personal recognizance bond. His travel would be limited to the New York City area and central California, and he had to turn in his US and Italian passports. After Avenatti left the courthouse at about 8.30pm, he said: “I am highly confident that when all the evidence is laid bare in connection with these cases, when it is all known, when due process occurred, that I will be fully exonerated and justice will be done.” He was already back on Twitter at 3.06am, reiterating his claims against Nike and thanking his supporters.



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Lawyer Avenatti arrested, accused of fraud and of extorting Nike

Lawyer Avenatti arrested, accused of fraud and of extorting NikeMichael Avenatti, who shot to fame as the lawyer of adult film star Stormy Daniels, was arrested on Monday on charges of trying to extort more than $ 20 million from Nike and for embezzling a client’s money. The celebrity attorney, who represented Daniels in her lawsuit against President Donald Trump, was arrested in New York based on separate complaints filed in that city as well as California. According to the complaint filed in New York and involving the sports apparel giant, Avenatti devised a scheme to extort millions of dollars from Nike by threatening to damage the company’s reputation right before its quarterly earnings and the start of the NCAA men’s basketball tournament.



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Avenatti arrested and charged with extortion, embezzlement, bank and tax fraud

Avenatti arrested and charged with extortion, embezzlement, bank and tax fraudThe lawyer who represented Stormy Daniels faces the prosepect of spending the rest of his life behind bars.



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Avenatti arrested and charged with extortion, embezzlement, bank and tax fraud

Avenatti arrested and charged with extortion, embezzlement, bank and tax fraudThe lawyer who represented Stormy Daniels faces the prosepect of spending the rest of his life behind bars.



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Michael Avenatti and Stormy Daniels split up

Michael Avenatti and Stormy Daniels split upDaniels, whose real name is Stephanie Clifford, was first to announce she had new representation in a tweet posted Tuesday afternoon.



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