The allegations against Avenatti were revealed in charges filed Wednesday in New York.
Federal prosecutors say Avenatti took money Daniels was supposed to get from a book deal.
Daniels isn't named in the court filing, but the details of the case make it clear that she is the client involved in the case.
Avenatti rocketed to fame representing Daniels when she sued to be released from a non-disclosure agreement involving an alleged tryst with President Donald Trump.
He has denied all the allegations.
(© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)
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