Attorney Michael Avenatti Pleads Guilty to Fraud Charges for Bilking Clients

SANTA ANA, Calif.—Newport Beach attorney Michael Avenatti, who was already convicted in New York of bilking funds from former client and adult film actress Stormy Daniels, pleaded guilty Thursday in an Orange County federal courtroom to multiple fraud charges.

Avenatti pleaded guilty to four counts of wire fraud and a single count of tax fraud, admitting he misappropriated funds from four clients.

He made an open plea to the court, meaning there was no agreement with prosecutors on a possible sentence. The charges potentially carry dozens of years in federal prison and restitution topping $10 million, but it will be up to U.S. District Judge James Selna to determine the appropriate sentence. Avenatti said in court he expects the actual sentences to be far less than the maximum, although Selna will have the final say.

Prosecutors said previously that Avenatti ripped off at least five clients of nearly $10 million in settlement funds between January 2015 and March 2019 to bail out his law firm from bankruptcy, fend off creditors and spend money on himself. One of those clients was presented as evidence in his first trial, but Avenatti was not charged in his case.

Assistant U.S. Attorney Ranee Katzenstein told Selna that the government will seek about $9 million in restitution on the wire fraud and another $5 million for tax fraud. Avenatti said he believes the restitution owed is “drastically less than that.”

The maximum punishment Avenatti could face is 83 years, but it is unlikely to ever be that strict.

Prosecutors told Selna that they would let the judge know by Monday if they plan to pursue another trial on the remaining 31 counts.

Selna set a tentative sentencing date of Sept. 19, but it may be put off if there is another trial.

Assistant U.S. Attorney Brett Sagel told reporters after Thursday’s hearing that Avenatti “finally admitted” what authorities “have been saying for several years now.”

Sagel added Avenatti committed “audacious acts” to “line his own pockets.”

Avenatti, who catapulted to fame representing Daniels in a nondisclosure dispute with then-President Donald Trump over an alleged sexual liaison, 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 the attorney managed.

He was also convicted of attempting to extort as much as $25 million from athletic apparel company Nike. In the Nike case, he was sentenced to two- and-a-half years in prison, and he was given four years in the Daniels case. Some of the time will be served concurrently, meaning he received roughly five years combined.

Avenatti’s advisory attorney, Dean Steward, told City News Service the embattled lawyer wanted to plead guilty in the Orange County case so “the energy everyone would put into a trial will be put into sentencing.”

In court papers, Avenatti wrote that he attempted to negotiate a plea agreement with prosecutors without success.

“Despite repeated efforts over the last year by Mr. Avenatti and his counsel, including substantial efforts made in the last 30 days, defendant has been unable to reach a plea agreement with the government,” he wrote.

“Mr. Avenatti wishes to plea in order to be accountable, accept responsibility; avoid his former clients being further burdened; save the court and the government significant resources and save his family further embarrassment.”

Avenatti was still facing a retrial on additional tax and bankruptcy fraud charges. Selna granted a motion from Avenatti last year for a mistrial on the counts. The judge ruled that prosecutors failed to turn over relevant financial records to Avenatti and said he did not find any evidence of intentional misconduct, but the failure to turn over the records was tantamount to an oversight and enough to warrant starting over again with a new trial.

Avenatti won the right on the eve of his trial in Santa Ana last year to represent himself, with Steward acting as his advisory counsel.

City News Service

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