AP NEWS

Michael Avenatti charged with 36 counts: Embezzlement, fraud, cheating on taxes

April 11, 2019

Add tax cheat to the list of charges against anti-Trump celebrity lawyer Michael Avenatti.

Federal prosecutors in California announced 36 new charges Thursday against Mr. Avenatti, accusing him of failing to file or pay his taxes for several years, and detailing more lurid stories of bilking clients.

In one case, Mr. Avenatti siphoned off a $4 million fund Los Angeles had agreed to pay to a man in a settlement for having left him a paraplegic, according to the charges. The lawyer took money from settlements meant for clients in several other cases, too.

The charges, handed up by a grand jury in the Central District of California, expand on a case already underway there and another ongoing in the Southern District of New York.

U.S. Attorney Nick Hanna said Mr. Avenatti oversaw a “financial house of cards,” and his bilking of clients was his attempt to keep it all going.

Mr. Avenatti indignantly denied any wrongdoing.

“Any claim that any monies were mishandled is bogus nonsense,” he said on Twitter.

He released a document he said was signed by one of his clients calling him “an exceptional, honest and ethical attorney.”

Mr. Avenatti did not address the tax charges.

Authorities said he failed to pay income and Social Security taxes from his coffee shop business, falling millions of dollars in arrears. When the IRS tried to collect, he lied about the payments, then ordered employees to begin hiding cash assets to shield them from detection, the IRS says.

He used money bilked from clients to keep the coffee shops afloat, the government charged.

He also didn’t file any tax returns from 2011 onward, the IRS says.

Authorities took their first step toward punishing Mr. Avenatti Wednesday, seizing a jet the lawyer had bought a share in with money the government says was ill-gotten.

The accusations are a major fall for Mr. Avenatti, who just months ago was a constant guest on CNN, delivering diatribes against President Trump and pondering a run for the White House himself.

He first gained national prominence representing a porn star who has alleged a sexual encounter with Mr. Trump, and who the president paid to keep quiet. He then took on other clients who seemed intent on thwarting Mr. Trump’s agenda, making him a sought-after voice for Democrats.

Things began to unravel criminally last month when he was accused of attempting to extort shoe company Nike, asking for a massive payment of more than $20 million in exchange for not going public with damaging information.

When he was arrested on those charges, the government revealed it had been investigating him for tax violations as far back as 2015, under the Obama administration.

The porn star he’d represented, Stormy Daniels, even broke with him. She said she’d come to realize he had behaved “extremely dishonestly” toward her.

Mr. Avenatti took to Twitter on Thursday begging people not to judge him yet and said he’s made “many powerful enemies” who were trying to shunt him to the sidelines.

“I am entitled to a full presumption of innocence and am confident that justice will be done once all of the facts are known,” he tweeted.

He said he would plead “Not guilty” to all of the charges.