Avenatti pleads guilty to fraud and California tax charges

SANTA ANA, Calif. — Incarcerated attorney Michael Avenatti pleaded guilty Thursday to four counts of wire fraud and one tax-related charge in a case in federal court in Southern California accusing him of having defrauded his clients of millions of dollars.

Avenatti, who is in federal custody and is representing himself in the case, pleaded in a hearing in Santa Ana where he admitted deceiving his clients, but disagreed with prosecutors federal on the amount.

“I misappropriated and abused some of their settlement funds,” Avenatti told the court, but added that he believed the amount owed in restitution was “significantly less” than the $9 million announced by the government.

Prosecutors said the plea — which the 51-year-old attorney offered without a deal — subjects Avenatti to 83 years in prison. They said they would decide by Monday whether to try him on the remaining charges in a 36-count indictment accusing him of defrauding clients by negotiating and collecting payments from settlement on their behalf and routing the money to accounts he controlled in addition to bank fraud and bankruptcy. .

“Michael Avenatti has finally admitted what the IRS Criminal Investigation and U.S. Attorney’s Office has been saying for several years now: that he committed audacious acts to steal money from his clients to line his pockets. “, Assistant US Attorney Brett Sagel told reporters.

“Today is the first step before the government decides what to do about the remaining charges, and he will now be convicted at least for his conduct in violation of his duties to his clients and his duties in as a taxpayer.”

A sentencing hearing has been set for September 19, but will be delayed if the government pursues the other charges.

The plea came after Avenatti, who is suspended from practicing law in California, filed papers with the court over the weekend saying that while he hasn’t reached a settlement with federal prosecutors, he wanted to change his plea to be responsible and spare his family more embarrassment. .

Avenatti is serving five years in federal custody in California for convictions in two cases in New York. He was convicted of stealing book proceeds from Stormy Daniels, the porn actor who catapulted him to fame representing her in court and cable news programs during his legal battles with the then President Donald Trump. He was also found guilty of trying to extort Nike if the shoemaker did not pay him up to $25 million.

Avenatti shot to fame after representing Daniels in her lawsuit to break a confidentiality agreement with Trump to remain mum over a case she said she had. He has become one of Trump’s main opponents, attacking him on cable news programs and on Twitter, and at one point considered challenging him in the 2020 presidential election.

In the California case, a mistrial was declared last year after the judge found that prosecutors failed to turn over key financial evidence to Avenatti. He was due to stand trial on some of the charges next month, with a trial on the rest to follow.

Prosecutors said Avenatti collected millions of dollars in payments from clients and used the money to fund a lavish lifestyle rather than pay them what they were owed. They also accused him of failing to pay personal income and business taxes and of pocketing millions of dollars in payroll taxes from a coffee chain he owned.

In one case, they said Avenatti collected $4 million from Los Angeles County for a man who suffered injuries in custody and became paraplegic after a suicide attempt, but denied the settlement had been received. and paid the man smaller sums ranging from $1,000 to $1,900. he called advances on the larger settlement.

In another case, prosecutors said Avenatti collected a $2.75 million settlement payment for a client and used much of the money to buy a private plane.

Prior to the criminal charges, Avenatti faced numerous legal issues, including a lengthy civil judgment and the bankruptcy proceedings of his law firm.

U.S. District Court Judge James V. Selna said the issue of the amount of restitution owed by Avenatti has yet to be determined. He asked Avenatti if anyone had made him any promises in exchange for his plea and noted that he could sentence him to anything from zero to 83 years in prison.

“No one gave me any guarantees,” Avenatti, who admitted his nervousness, told the court, “because there are no guarantees, Your Honor.”