Avenatti Accused of Using Stormy Daniels's Book Cash for Car
Michael Avenatti Indicted for Fraud, Identity Theft in New York
(Bloomberg) -- Michael Avenatti’s legal troubles deepened after the embattled lawyer was indicted on charges of fraud and aggravated identity theft for allegedly stealing the advance on a book deal from the porn actress Stormy Daniels, his most famous client, and using the money on personal expenses like a monthly car payment on a Ferrari.
The indictment by a federal grand jury, announced Wednesday by prosecutors in Manhattan, also charges Avenatti with extorting millions of dollars from Nike Inc., an allegation first made in March when the attorney was arrested outside the New York offices of the shoemaker’s law firm.
Avenatti, 48, faces criminal prosecution in two states. In California, he was indicted in March on three dozen charges, including a claim that he stole millions of dollars from a paraplegic client’s settlement with Los Angeles County. In New York, he is accused of lying and forging documents to persuade a literary agent to divert money owed to his client to an account he controlled. Avenatti used the money for personal and business purposes, according to the indictment.
“No monies relating to Ms. Daniels were ever misappropriated or mishandled,” Avenatti said in a tweet, identifying the victim in the indictment. “She received millions of dollars worth of legal services and we spent huge sums in expenses.”
Avenatti gained fame as the attorney for Daniels in her legal battles against President Donald Trump, with whom she claims to have had an affair. Avenatti must now appear in federal court in Manhattan to enter a plea to the charges, and a judge may set a trial date.
“I look forward to a jury hearing all of the evidence and passing judgment on my conduct,” Avenatti said in a text message. “I will be fully exonerated once the relevant emails, contracts, text messages and documents are presented.”
Avenatti was arrested in March as he arrived for a meeting about Nike at the New York offices of law firm Boies Schiller Flexner LLP. Separately, he’s charged by prosecutors in California with embezzling money from a client and defrauding a bank. He has denied wrongdoing in that case -- and now faces a trial on both coasts.
While the client that Avenatti defrauded in New York was not identified in court papers, the indictment alleges that he stole “a significant portion” of advances from a book contract he helped secure. Daniels’ book, "Full Disclosure," which contains a forward from Avenatti, was published in October of last year.
“Michael Avenatti abused and violated the core duty of an attorney -- the duty to his client,” Manhattan U.S. Attorney Geoffrey Berman said. “As alleged, he used his position of trust to steal an advance on the client’s book deal. As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle.”
Avenatti also is accused of telling Nike he would hold a press conference and reveal that company employees were making improper payments to college basketball recruits unless the shoemaker paid him $1.5 million and hired him and another attorney to conduct a $25 million internal investigation.
Just minutes before his March arrest, Avenatti posted a tweet saying he would hold a press conference to disclose a “major high school/college basketball scandal” perpetrated by Nike that he claimed to have uncovered and reached "the highest levels of Nike and involves some of the biggest names in college basketball."
Avenatti’s alleged threat appeared to center on a U.S. probe into corruption involving college basketball. A former Adidas AG executive, assistant college basketball coaches and others have been convicted in the bribery and kickback investigations. Nike has said it’s been cooperating with prosecutors for more than a year and “immediately” told them of Avenatti’s actions.
Avenatti represented Daniels in her suit over a $130,000 agreement, signed in the runup to the 2016 election, requiring her to keep quiet about having had sex with Trump in 2006. The president denied the affair, but Michael Cohen, his former personal attorney, admitted to federal campaign law violations for arranging the payment to Daniels, whose real name is Stephanie Clifford, to help Trump win election.
Daniels’s new lawyer, Clark Brewster, didn’t immediately respond to a message seeking comment.
The case is U.S. v Avenatti, 19-mj-2927, U.S. District Court, Southern District of New York.
To contact the reporters on this story: Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net;Erik Larson in New York at elarson4@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth, Peter Blumberg
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