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Michael Avenatti charged with fraud, tax crimes in California

Michael Avenatti charged with fraud, tax crimes in California

Avenatti, 48, was arrested March 25 in NY on the Nike charge and federal prosecutors at the time announced he also faced single counts of wire and bank fraud in Southern California, where he lives and practices law.

A grand jury has indicted attorney Michael Avenatti on 36 federal counts, and he's potentially looking at life in prison.

"Money generated from one set of crimes was used to further other crimes, typically in the form of payments created to string along victims so as to prevent Mr. Avenatti's financial house of cards from collapsing", Nicola Hanna, the US attorney for California's Central District, said at a news conference in Los Angeles.

Beginning in 2015, Avenatti executed a scheme to defraud five clients, according to the indictment, one of whom was a paraplegic from whom Avenatti allegedly withheld a settlement payment of $4 million. If convicted, he faces up to 335 years in prison. Avenatti hid the win from the client and used the money to buy a $2.5 million private jet (the jet has since been seized by federal officers).

The indictment claimed that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at the coffee shops, and directed employees to deposit cash receipts into a bank account belonging to a vehicle racing outfit that Avenatti owned. The 48-year-old lawyer, a Los Angeles resident, said he planned to fight the charges and plead not guilty.

After prosecutors announced plans for Thursday's press conference, Avenatti tweeted that he remains "confident that justice will be done once ALL of the facts are known".

Avenatti has denied stealing from clients and tweeted a statement signed by Johnson praising him as an "honest and ethical attorney".

"I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me", he wrote.

Michael Avenatti's jet which was seized at Santa Barbara Airport on Wednesday
Michael Avenatti charged in 36-count federal indictment

In the Johnson theft, the indictment alleges, Avenatti received $4 million from Los Angeles County in 2015 to settle the paraplegic's suit over his treatment at the Twin Towers Correctional Facility.

The alleged crimes "are all linked to one another because money generated from one set of crimes appears in the other sets - typically in the form of payments to lull victims and to prevent Mr. Avenatti's financial house of cards from collapsing", said Hanna.

The IRS reportedly began investigating Avenatti more than a year ago, though it's also been noted that that attorney "began to run afoul of the IRS nearly a decade ago" by failing to file income tax returns. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said.

Hanna said the Avenatti case "has nothing to do with anything political or with anything else".

Avenatti hasn't been indicted in NY.

"Knowing full well that the requested information could lead to inquiries that could reveal" the embezzlement, Avenatti ignored Johnson's request, causing the government to cut off his disability payments two months ago, according to prosecutors.

Avenatti responded on Twitter this morning, saying that he's made a lot of "powerful" enemies over two decades.

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