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Are Michael Avenatti's 15 minutes up?

John Avlon wonders if Michael Avenatti is developing an "Icarus problem." Max Boot argues Avenatti has been very effective in using "Trumpian tactics against Trump" and turning into "a real tormentor for the White House."

Posted: May 23, 2018 1:06 PM
Updated: May 23, 2018 1:06 PM

A US bankruptcy court judge on Tuesday ordered the law firm of Stormy Daniels' attorney Michael Avenatti to pay a $10 million judgment to an attorney who once worked for the firm, according to court documents.

The judgment comes after Avenatti's firm, Eagan Avenatti LLP, failed to make the first payment on a $4.85 million settlement with lawyer Jason Frank, a one-time partner at the firm. During Tuesday's hearing, a lawyer for the federal government also said Avenatti's firm failed to make a payment for back taxes that was due last week.

Avenatti is the managing partner of Eagan Avenatti, according to court documents.

In a text to CNN asking for his response to the judgment, Avenatti said, "Completely irrelevant and a sideshow. Nothing was issued against me personally. That firm has nothing to do with the case or the client. Who cares?"

The settlement, reached in December 2017, stemmed from Frank's claim that Avenatti's firm failed to pay him more than $18 million that he was owed as a non-equity partner of the firm, and that Avenatti misstated the firm's profits.

As the case dragged on, Frank reduced his claim to $10 million and the litigants ultimately agreed to settle for $4.85 million. But under the agreement, Avenatti's firm would be liable for the full $10 million if he failed to pay the settlement, according to court records.

"Michael Avenatti's law firm entered into a crystal clear written settlement agreement to resolve a prior lawsuit brought by Jason Frank, his former law partner," Eric George, an attorney for Frank said in a statement. "The settlement agreement was approved by a federal court and was a condition of his law firm exiting bankruptcy. Under this settlement, Mr. Avenatti's law firm was required to pay Mr. Frank $4.85 million, all of which was personally guaranteed by Mr. Avenatti."

Frank alleged that his former partner repeatedly failed to produce copies of the firm's federal income tax returns, or a full accounting of the firm's revenues and expenses, as required under the terms of their initial arrangement. Under the terms of their partnership, Frank was owed a quarter of the firm's annual profits and a cut of fees paid by some clients.

Frank ultimately sought sanctions against Avenatti's firm through a three-judge arbitration panel.

The panel agreed to sanction the firm for nonpayment of fees related to the arbitration and for not providing copies of tax returns and other documents.

The panel noted that while the case was in arbitration, Avenatti's firm repeatedly failed to comply with the panel's orders to turn over documents to Frank's firm, and did not pay the legal fees that were required as part of the arbitration process.

The judges noted that Avenatti's firm "failed to produce" tax returns; monthly bank statements; revenue accounting records; wires, checks or invoices for expenses over $25,000; as well as email correspondence.

The three-judge panel asserted that Avenatti's firm ignored its October 2016 order for the firm to produce copies of its 2013, 2014 and 2015 federal tax returns.

Eagan Avenatti LLP "did not produce the returns, claiming that neither it nor its accountant had copies of the returns," the judges said.

That response from Eagan Avenatti "stretches the bounds of credibility," the chair of the arbitration panel, retired Judge Terry Friedman wrote.

In an order allowing Frank's law firm to compel depositions from Avenatti and two other employees at his firm, the arbitration panel accused Avenatti's firm of engaging in "a pattern of delay, obfuscation and unresponsiveness."

The arbitration panel allowed Frank to amend his complaint "to add a claim for punitive damages and find that (Avenatti's firm) acted with malice, oppression and fraud in connection with its failure to produce its tax returns."

Bankruptcy records show Eagan Avenatti owed the IRS about $2.4 million in back taxes, penalties and interest. Avenatti's firm made an agreement with the tax division of the US attorney's office to pay off its tax debts.

A spokesman for the US Attorney's office, Thom Mrozek, said the firm made an initial payment of about $1.5 million in taxes. It still owes $880,000, Mrozek said. In an email to CNN, Mrozek confirmed Avenatti missed a payment that was due last week.

Avenatti has suggested that he is the target of a smear campaign because he is representing Stormy Daniels, the adult film star who alleges she had a sexual relationship with President Donald Trump and was paid $130,000 by Trump's attorney, Michael Cohen, as a hush payment.

When a Los Angeles Times reporter who attended the hearing tweeted about the $10 million judgment and a Justice Department lawyer's statement that Avenatti also defaulted on back taxes, Avenatti tweeted: "Nonsense."

He added: "Completely different law firm -- no ties to Daniels case. Irrelevant. Over blown..."

In court filings involving the Daniels case, Avenatti has filed as an attorney with the Newport Beach law firm Avenatti & Associates, APC, based in California.

The State Bar of California still lists him as an attorney with Eagan Avenatti LLP, which is based at the same address as Avenatti & Associates in Newport Beach.

CORRECTION: An earlier version of this story incorrectly stated that an arbitration panel did not issue sanctions. The panel issued some sanctions against Eagan Avenatti LLP.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1524527

Reported Deaths: 20751
CountyCasesDeaths
Marion2077652558
Lake1010411517
Allen946081024
Hamilton73638551
St. Joseph65362761
Elkhart50026632
Vanderburgh48959530
Tippecanoe44411338
Johnson38772527
Hendricks36850462
Porter34709476
Madison29301547
Clark26328328
Vigo25941346
LaPorte23600313
Monroe23478249
Howard22382381
Delaware21877370
Hancock18857220
Bartholomew18433216
Kosciusko18124203
Warrick17207215
Wayne16474303
Floyd16129257
Grant15566299
Morgan14615232
Boone13622138
Noble11983142
Shelby11877152
Dearborn11825113
Henry11771201
Marshall11444171
Dubois11418152
Jackson10772104
Cass10380143
Lawrence10308221
DeKalb10292132
Huntington10277140
Gibson9749126
Montgomery9377144
Knox9162125
Harrison9157117
Whitley886771
Steuben8739105
Jasper8325116
Putnam8306100
Clinton827596
Miami8249135
Jefferson8030127
Wabash7914139
Ripley7278116
Adams6713103
Daviess6661130
Scott663586
White624484
Greene6159112
Clay615275
Decatur6062120
Wells6001120
Jennings600081
Fayette5886122
Posey561648
LaGrange535797
Randolph5171129
Washington511470
Owen5068100
Fountain482580
Spencer457456
Sullivan449866
Starke443986
Fulton440393
Orange435083
Jay419964
Rush418839
Perry397555
Carroll384549
Franklin382850
Vermillion363562
Pike327845
Parke327338
Tipton320675
Blackford275955
Pulaski275375
Newton235461
Brown233556
Benton221521
Crawford220132
Switzerland201414
Martin191822
Warren179522
Union172619
Ohio125216
Unassigned0759

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 2496243

Reported Deaths: 31987
CountyCasesDeaths
Franklin2696772100
Cuyahoga2600613087
Hamilton1742641756
Montgomery1162791651
Summit1084961418
Lucas929121193
Butler82981963
Stark766321431
Lorain63976809
Warren52895489
Mahoning50955930
Lake47462611
Clermont46371452
Delaware40674220
Trumbull39527790
Licking38492416
Medina38487427
Fairfield35469349
Greene33906435
Portage32283366
Clark31960453
Richland29400444
Wood29143301
Allen25702403
Miami23931408
Muskingum23316255
Columbiana22903409
Wayne21965365
Tuscarawas19512428
Erie18531224
Ashtabula18489362
Marion18456235
Scioto17888214
Ross17287260
Pickaway16251181
Hancock16004232
Geauga15456229
Lawrence14746186
Belmont14033248
Union1403384
Huron13838184
Jefferson13519261
Sandusky13180200
Athens12624107
Knox12037201
Seneca11934204
Darke11316202
Ashland11157184
Washington11009172
Auglaize10785147
Crawford10333178
Shelby10308160
Brown9972145
Fulton9661154
Highland9632151
Guernsey9612122
Defiance9486137
Logan9403147
Clinton9299132
Mercer9015112
Madison8971111
Preble8428170
Williams8263138
Putnam8024136
Champaign7974113
Ottawa7909123
Jackson7763121
Perry7415102
Coshocton7345136
Morrow723984
Fayette703292
Pike658489
Hardin6532133
Gallia634391
Adams6159127
Van Wert6025121
Henry598196
Hocking5835105
Wyandot498894
Carroll4961101
Holmes4857167
Paulding421665
Meigs397774
Monroe313868
Harrison296362
Noble295652
Morgan289448
Vinton254646
Unassigned08
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