The indictment was sweeping in its scope, accusing Avenatti of defrauding clients over a period spanning more than four years. The charges included bleak details, such as claims that Avenatti’s alleged actions caused a paraplegic client to lose his Supplemental Security Income benefits, which are paid to adults and children with disabilities, and prevented the same client from using settlement money to buy a home.
The new charges add to the legal jeopardy already facing Avenatti, who rose to prominence as an attorney for Stormy Daniels, the adult-film star who alleged a sexual encounter with Trump several years ago and was paid to remain silent about her claims during the 2016 presidential campaign. Avenatti, 48, no longer represents Daniels, but he parlayed their association into frequent cable news appearances and flirted with a possible presidential campaign before saying he would not run.
Avenatti’s circumstances shifted dramatically last month when he was arrested in New York and accused by prosecutors of trying to extort millions of dollars from Nike by threatening to reveal allegations against the company unless it paid him. Geoffrey Berman, the U.S. attorney in Manhattan, called Avenatti’s actions “an old-fashioned shakedown.” On the same day, prosecutors in Los Angeles filed charges accusing him of wire and bank fraud, a case that officials said included misdeeds spanning years.
Federal officials revealed the 36-count indictment on Thursday that they said was filed the night before by a grand jury. Nicola T. Hanna, U.S. attorney for the Central District of California, said the alleged scheme involved interwoven frauds that involved “taking money from one scheme and using it to lull clients, to string them along, to prevent them from going to authorities and taking money from different pots as needed.”
During a news conference, Hanna said authorities were “looking to recover restitution for all of the victims that we can identify.”
In response to the allegations, Avenatti portrayed himself as an innocent man who had made “powerful enemies” during his legal career.
“For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice,” Avenatti wrote in a tweet. “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.”
The 36-count indictment details Avenatti’s interests outside of his work as an attorney, including coffee stores, a car-racing team and a private airplane. It states that Avenatti’s alleged “scheme to defraud” would unfold the same way, beginning with him negotiating a settlement that would require payment to a client.
Then, the indictment alleges, “Avenatti would misrepresent, conceal, and falsely describe to the client” the details of the settlement and its funds, routing the money instead into accounts he controlled. He would use the money for himself and lie to clients about whether the settlements were being paid or delayed, the indictment stated.
The indictment also includes specific accusations about how Avenatti allegedly defrauded people. In the case of the paraplegic client, identified as “Client 1″ in the indictment, Los Angeles County had agreed to pay a $4 million settlement to dismiss a lawsuit over constitutional violations that caused him “severe emotional distress and severe physical injuries, including paraplegia,” the indictment states.
That client’s name is Geoffrey Johnson, according to Joshua M. Robbins, an attorney who said he is now representing him. The Avenatti indictment states that Johnson decided to buy a home after residing in assisted-living facilities. But after Johnson was in escrow on the purchase, the indictment alleges, Avenatti told him he could not buy the house because Los Angeles County had not approved his special-needs trust — which was a lie, the document states.
The indictment says that instead of going to Johnson, the settlement money instead went to Avenatti’s personal accounts and toward accounts associated with his car-racing team. To cover that up, the indictment continues, Avenatti allegedly made payments to Johnson that totaled about $124,000, along with rent payments to assisted-living facilities, falsely describing these as “advances” on a settlement that had not come in yet.
Johnson was “the victim of an appalling fraud perpetrated by the one person who owed him loyalty and honesty most of all: his own lawyer,” Robbins said in a statement.
“Mr. Avenatti stole millions of dollars that were meant to compensate Mr. Johnson for a devastating injury, spent it on his own lavish lifestyle, then lied about it to Mr. Johnson for years to cover his tracks,” Robbins said. “His actions have left Mr. Johnson destitute.”
Avenatti insisted on Twitter that claims he “mishandled” money owed to his clients are “bogus nonsense.”
In response to the allegations involving Johnson, Avenatti posted a statement he said was signed by Johnson which said Avenatti “has always fiercely advocated on my behalf, looked after my needs, communicated with me about all aspects of my case, and made sure I was taken care of.” According to the indictment, after Avenatti was questioned last month about the allegations involving Johnson’s settlement, he allegedly had Johnson sign a document saying he “was satisfied with defendant Avenatti’s representation.”
Other allegations in the indictment also depicted Avenatti as vacuuming up money owed to his clients and then misleading them about what was happening. In a case involving another client’s settlement, over a little more than two months “Avenatti caused approximately $1,599,400 of the initial $1,600,000 settlement payment to be used for his own purposes,” the indictment states. He then told the client he was still working on getting the payment, the indictment continues.
The indictment alleges that Avenatti rerouted $2.5 million intended for one of his clients to buy a private airplane for his company. Federal officials said they had seized the jet on Wednesday.
All told, Avenatti is facing 10 counts of wire fraud, 19 counts of tax-related charges, four bankruptcy fraud charges and two bank fraud charges. The other counts include allegations that he used wire transfers to move millions of dollars to carry out fraud, failed to pay taxes and file income tax returns, and submitted fraudulent applications for loans.
Hanna, the U.S. attorney, said the various allegations were “all linked to one another, because money generated from one set of crimes was used to further other crimes,” often in the form of payments Avenatti made to clients.
The goal, Hanna said, was “to prevent Mr. Avenatti’s financial house of cards from collapsing.”