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Michael Avenatti Charged With Bank, Tax Fraud in Grand Jury Indictment

Federal prosecutors in Los Angeles announced charges against attorney Michael Avenatti, including a 36-count grand jury indictment on wire, tax, bank and bankruptcy fraud charges.

Avenatti already is facing charges in New York related to an alleged scheme to extort Nike, but he also was arrested in Los Angeles last month on claims that he stole money from a client and used bogus tax returns to secure loans. The new grand jury indictment, from a panel in Santa Ana, expands the number of charges against Avenatti to include tax avoidance and evasion and concealment of assets from the U.S. Bankruptcy Court.

U.S. Attorney Nick Hanna said in a statement that indictment addresses four areas of criminal conduct that “are all linked to one another because money generated from one set of crimes appears in other sets — typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing.”

Avenatti responded on Twitter, writing that “for 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice. Along the way, I have made many powerful enemies. 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 continued, “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.”

Avenatti shot to overnight fame last year as the counsel for Stormy Daniels, the adult film actress who claims to have had sexual relations with President Donald Trump, and his bulldog approach to taking on the president and his legal team helped garner him endless spots on cable TV news shows. That was particularly the case as New York federal prosecutors uncovered an effort to silence Daniels in advance of the 2016 with hush money payments arranged by Trump’s then-attorney Michael Cohen. Avenatti even dangled the prospect of entering politics himself, even as a 2020 presidential contender, before abandoning the idea.

On March 25, prosecutors in the Southern District of New York alleged that Avenatti tried to extract more than $20 million from Nike, and said if the company did not pay him, he would hold a press conference attacking the company.

That same day in Los Angeles, prosecutors claimed that Avenatti misused a client settlements to fund his coffee business, and also used the money to pay personal expenses. They also claim he used fraudulent documents to obtain $4.1 million in loans from a Mississippi bank.

Prosecutors make more claims of misuse of client funds in the indictment. They allege that Avenatti drained a $4 million settlement payment from his law firm’s trust account and used portions of it for the coffee business, but also concealed the receipt of the settlement from his client, a paraplegic who had sued Los Angeles County. Instead, according to the indictment, Avenatti gave his client periodic “advances” of no more than $1,900 and paid the rent for his assisted living facility.

In another instance, Avenatti allegedly took $2.5 million from a $2.75 million client settlement payment to purchase his portion of a private jet, while falsely telling the client that the settlement was set up to provide monthly payments over eight years. In a press conference, Hanna confirmed that the jet was seized by federal authorities on Wednesday.

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