Avenatti, lawyer known as Trump foe, indicted for financial crimes

Lawyer Michael Avenatti in New York, New York, US on March 25, 2019. (Reuters pic)

Michael Avenatti, the high-profile lawyer known for his battles with US President Donald Trump, was charged with 36 counts of fraud, tax evasion and other financial crimes in an indictment made public by federal prosecutors in Los Angeles on Thursday.

The indictment came about three weeks after Avenatti, who gained national fame for representing adult film star Stormy Daniels in her litigation against Trump, was arrested in New York on two separate criminal complaints filed by federal prosecutors in New York and California.

The indictment means the grand jury has found the California prosecutors have probable cause to pursue their charges.

Avenatti, 48, has said he planned to fight all the 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, who is free on a US$300,000 bond, wrote on Twitter on Thursday.

Prosecutors in the office of the US Attorney for California’s Central District have charged Avenatti with 10 counts of wire fraud, accusing him of misusing more than US$12 million he received on behalf of clients following settlements and other negotiations.

“Money generated from one set of crimes was used to further other crimes, typically in the form of payments designed to string along victims so as to prevent Mr Avenatti’s financial
house of cards from collapsing,” Nicola Hanna, the US attorney for California’s Central District, said at a news conference on Thursday.

Avenatti became a prominent critic of Trump and a frequent guest on cable television news while representing Daniels, whose real name is Stephanie Clifford.

She filed a lawsuit against the president over a nondisclosure agreement that in the weeks before the 2016 US presidential election kept her from discussing her claims that they had an extramarital affair 10 years earlier.

Prosecutors say Avenatti misled clients and misused their funds to pay personal and legal expenses, to finance a coffee shop business he also ran and to pay for his share of a Honda
private jet, according to the indictment. Federal authorities seized the jet on Wednesday, prosecutors said.

The indictment also accuses Avenatti of various tax crimes.

He is accused of failing to file personal tax returns since 2010, and to pay US$3.2 million in payroll taxes on his coffee business, even though he withheld some portion of this money from employee paychecks.

They also say he defrauded a Mississippi bank of US$4.1 million in loans by submitting false tax returns for 2011 to 2013 that inflated his income.

Avenatti faces up to 333 years in federal prison if convicted on the California charges, prosecutors said. Federal sentencing guidelines typically call for defendants to serve
less than the maximum time.

Nike scheme

The New York prosecutors have separately accused Avenatti of trying to blackmail athletic wear maker Nike Inc for more than US$20 million.

They said Avenatti and a co-conspirator, who they did not name, met with Nike’s attorneys on March 19 and told them they represented a former college basketball coach with information about Nike’s involvement in a scheme to bribe high school basketball players.

They threatened to go public unless Nike hired Avenatti to conduct an internal investigation for US$15 million to US$25 million, and paid an additional US$1.5 million to the client, according to prosecutors.

Avenatti also offered to accept a US$22.5 million payment for his silence, prosecutors said.

The alleged co-conspirator is prominent Los Angeles attorney Mark Geragos, according to a person familiar with the matter who spoke on condition of anonymity. Geragos, who has not been charged with a crime, has declined to comment on the case.

Daniels replaced Avenatti as her lawyer last month, and has said she was “saddened but not shocked” by his arrest.

Avenatti also involved himself in the investigation of sexual abuse charges against R&B singer R Kelly by giving the Chicago state’s attorney’s office what he said was a tape of the
performer having sex with an underage girl.