Attorney Michael Avenatti is charged with back and tax fraud

Attorney Michael Avenatti is charged with back and tax fraud

After Avenatti negotiated settlements for the clients that required payment to go to them, he would lie to the clients about the terms of the settlements, instead depositing the funds to attorney trust accounts he controlled, the indictment says.

A hearing was set for 9 a.m. PDT Thursday, when federal prosecutors will release more information in the case.

The Los Angeles Times reported Thursday morning that charges stem from Avenatti's dealings with multiple clients, including Geoffrey Ernest Johnson, who is mentally ill and a paraplegic.

"Mr. Johnson is the victim of an appalling fraud perpetrated by the one person who owed him loyalty and honesty most of all: his own lawyer", said attorney Josh Robbins. He's now free on bail.

According to court documents, prosecutors say Avenatti would occasionally send Client 1 "advance" payments that didn't exceed $1,900. An indictment is expected soon in that case.

The Los Angeles prosecutors have accused Avenatti of misusing a client's $1.6 million settlement to pay for his own expenses as well as those for his coffee business, and with defrauding a MS bank of $4.1 million in loans by submitting false tax returns for 2011 to 2013 that inflated his income.

Following Avenatti's arrest last month, The Washington Post's Devlin Barrett and Elise Viebeck reported that it marked "the latest and most remarkable chapter in the odd public saga of the California lawyer".


Prosecutors also charged Avenatti with giving false testimony in a case involving the bankruptcy of his law firm Eagan Avenatti LLP.

When asked by The Associated Press last month about Johnson's case, Avenatti said his client approved all transactions and accounting and had been kept in the loop. In California, it was alleged that Avenatti committed wire fraud and bank fraud to embezzle a client's money for the objective of paying off his own debts.

Now prosecutors allege that Avenatti stole millions of dollars from his clients. Avenatti was also accused of using fraudulent tax returns to secure a bank loan. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said.

The charges in California are an expansion of criminal charges filed there last month that accused Avenatti of misappropriating $1.6 million from a client and submitting fake tax returns to a MS bank to obtain $4.1 million in loans.

The indictment also said Avenatti lied to the IRS about his taxes.

Avenatti was charged with 19 tax-related offenses including failure to file personal income tax returns since 2010, and other tax returns for two of his law firms. He responded "no" when he was asked whether Eagan Avenatti had received legal fees when it was representing ticket holders who sued the National Football League over seating snafus at the 2011 Super Bowl in Texas. He is accused of obstructing IRS efforts to collect the taxes and of lying to an IRS revenue officer.

In addition to Client 1, Hanna said, Avenatti followed a similar pattern with four other clients.

Related Articles