Michael Avenatti charged with stealing $300,000 from former client Stormy Daniels

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A federal grand jury in Manhattan indicted celebrity attorney Michael Avenatti on Wednesday in two alleged schemes,...

Posted: May 22, 2019 4:23 PM
Updated: May 22, 2019 7:00 PM

A federal grand jury in Manhattan indicted celebrity attorney Michael Avenatti on Wednesday in two alleged schemes, charging him with fraud and aggravated identity theft involving his former client, Stormy Daniels, and with attempting to extort more than $20 million from sportswear giant Nike.

Prosecutors charged Avenatti, 48, with stealing about $300,000 of Daniels' advance for her book contract, according to court papers, and using that money to pay employees of his law firm and a coffee business he owned. Daniels isn't named in the indictment, but she is the individual referred to as 'Victim-1,' according to a person familiar with the matter.

To date, according to the indictment, Avenatti has failed to repay Daniels about half of the sum he allegedly stole from her.

With Wednesday's charges, Avenatti has faced federal indictment three times over the course of about six weeks.

Avenatti rose to fame during his representation of Daniels, the adult-film actress who was a central figure in the hush-money scandal that resulted in Manhattan federal prosecutors charging Michael Cohen -- President Donald Trump's former personal attorney -- with campaign-finance violations for money he paid to silence women, including Daniels, who claimed affairs with Trump.

Cohen, who pleaded guilty to those and other crimes, is serving a three-year prison sentence. Trump has denied the alleged affairs.

Daniels, whose legal name is Stephanie Clifford, has since ended her professional relationship with Avenatti, saying that he 'had dealt with me extremely dishonestly.' CNN has reached out to Daniels for comment on the charges against her former attorney.

Avenatti told CNN he will be 'fully exonerated.'

'I look forward to a jury hearing all of the evidence and passing judgment on my conduct. At no time was any money misappropriated or mishandled. I will be fully exonerated once the relevant emails, contracts, text messages, and documents are presented,' he said.

In the case involving Daniels, prosecutors allege that Avenatti -- who helped negotiate the $800,000 advance for 'Full Disclosure,' which was published in September 2018 -- defrauded Daniels by instructing her literary agent to send two of the installments of the advance to an account controlled by him, rather than directly to Daniels.

When her agent told Avenatti that she couldn't do so without Daniels' authorization, Avenatti sent the agent a letter with a forgery of Daniels' signature, according to the indictment.

Avenatti then lied to Daniels, telling her the publisher hadn't made the payments, when in reality he used the money to cover payroll costs for his law firm, Eagan Avenatti LLP; a $3,900 lease payment for a Ferrari; and expenses including dry cleaning, airfare, hotels and car services.

In the late months of 2018 and through the beginning of this year, Daniels repeatedly asked about the missing payments, and Avenatti continued to lie to her, until Daniels made direct contact with her publisher, and the scheme began to unravel, according to the indictment.

Before the indictments were made public Wednesday, Avenatti tweeted: 'No monies relating to Ms. Daniels were ever misappropriated or mishandled. She received millions of dollars' worth of legal services and we spent huge sums in expenses. She directly paid only $100.00 for all that she received.'

The indictment of the high-profile lawyer was expected in the Nike case.

Earlier this year, New York federal prosecutors unsealed a complaint charging Avenatti with the attempted extortion scheme in which, according to prosecutors, he told attorneys for Nike that he would release what he said were allegations of misconduct by employees on the eve of both the company's quarterly earnings call and the start of the NCAA tournament. Avenatti said he would disclose the allegations at a press conference, according to court papers, unless Nike made millions in payments to him and an unnamed co-conspirator by hiring them to conduct an 'internal investigation.'

He was arrested outside the Manhattan offices of the law firm representing Nike, Boies Schiller Flexner LLP. At the time, he was released on a $300,000 bond.

That day, federal prosecutors in Los Angeles also charged him with wire and bank fraud, and he has since been indicted on 36 counts in that case, including embezzlement, wire fraud, tax evasion, bankruptcy fraud and bank fraud connected to his alleged theft of tens of millions of dollars from five clients, one a paraplegic.

That case is scheduled to go to trial in late August. Trial dates for the two cases in New York haven't been set.

'Michael Avenatti abused and violated the core duty of an attorney -- the duty to his client,' US Attorney for the Southern District of New York Geoffrey Berman said in a statement Wednesday. 'Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client.'

This story has been updated.

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