Former Stormy Daniels attorney Michael Avenatti indicted for financial crimes
(Reuters) - Michael Avenatti, a high-profile lawyer and critic of President Donald Trump, was indicted on charges of defrauding clients and the U.S. government out of millions of dollars, including allegations he embezzled from a paraplegic man, prosecutors announced 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 meant the grand jury, which voted to indict Avenatti late on Wednesday, had found the California prosecutors had 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 $300,000 bond, wrote on Twitter on Thursday. “Any claim that any monies due clients were mishandled is bogus nonsense.”
Prosecutors in the office of the U.S. Attorney for California’s Central District have charged Avenatti with 10 counts of wire fraud, accusing him of misusing more than $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 U.S. attorney for California’s Central District, said at a news conference in Los Angeles 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 sued the president over a nondisclosure agreement that in the weeks before the 2016 U.S. presidential election kept her from discussing her claims that she and Trump 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.
One of the clients included a man who won a $4 million settlement in 2015 from Los Angeles County after he became paraplegic in an unspecified incident, prosecutors said. Avenatti concealed the settlement from the client, instead giving the man periodic advances of $1,900 and paying the rent in his assisted living facility, the indictment 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 $3.2 million in payroll taxes on his coffee business, even though he withheld some portion of this money from employee paychecks.
The indictment also said he defrauded a Mississippi bank of $4.1 million in loans by submitting false tax returns for 2011 to 2013 that inflated his income.
The most serious bank fraud charges carry a maximum sentence of 30 years per count, 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 $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 $15 million to $25 million, and paid an additional $1.5 million to the client, according to prosecutors. Avenatti also offered to accept a $22.5 million payment for his silence, prosecutors said.
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.
Reporting by Jonathan Allen, Brendan Pierson, Gina Cherelus, Gabriella Borter and Daniel Wallis; editing by Frank McGurty and Jonathan Oatis
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