Michael Avenatti pleads guilty to several counts of fraud
Attorney Michael Avenatti pleaded guilty to multiple charges of fraud in a federal courtroom in Santa Ana Thursday.
Avenatti, who had already been convicted in New York of embezzling funds from former client and adult film actress Stormy Daniels, pleaded guilty Thursday to four counts of wire fraud and a single count of tax fraud, admitting he misappropriated funds from multiple clients.
Prosecutors had alleged the Newport Beach attorney defrauded at least five clients of nearly $10 million in settlement funds between January 2015 and March 2019 to save his law firm from bankruptcy, fend off creditors, and spend money on himself. In entering a guilty plea to the tax count, Avenatti also admitted to blocking IRS efforts to collect unpaid payroll taxes of an estimated $5 million and include payroll taxes that had been withheld from employee paychecks of a Tully's Coffee operated by an Avenatti-owned company.
Avenatti has since been suspended by the State Bar of California.
Avenatti made an open plea in the case, meaning there was no prior agreement with prosecutors on a possible sentence. The charges could mean as many as 83 years in federal prison and restitution topping $10 million, but U.S. District Judge James Selna will make the final determination on an appropriate sentence. Avenatti is tentatively scheduled to be sentenced on Sept. 19.
After gaining notoriety for representing Daniels in a nondisclosure dispute with then-President Donald Trump over an alleged sexual liaison, Avenatti tried his hand at his own presidential run – then was dragged back to earth by the weight of several lawsuits. He was convicted earlier this year of identity theft and wire fraud for getting Daniels' literary agent to send about $300,000 in advance money for her book "Full Disclosure" to a bank account he managed. Avenatti was also convicted of attempting to extort as much as $25 million from Nike.
He was sentenced to two-and-a-half years in prison in the Nike case, and four years in the Daniels case, but because some of the time will be served concurrently, he received roughly five years combined.
Avenatti is still facing a total of 31 counts of wire fraud, bank fraud, and tax related charges related to false statements he allegedly made in an attempted to get a bank loan, aggravated identity theft for misusing the name of a tax preparer, and false statements he made after his law firm was forced into bankruptcy.
