Exclusive: How a 'nobody' ex-con pushed Avenatti law firm into bankruptcy
Posted May 31, 2018 11:31 p.m. EDT
LOS ANGELES (CNN) — Even before he became famous as the fast-talking, trash-talking, in-your-face attorney representing Stormy Daniels in her sexually-charged lawsuit against the President, Michael J. Avenatti had achieved an enviable degree of success and notoriety.
His law firm, Eagan Avenatti LLP, had hauled in more than $400 million in verdicts and settlements. His cases were featured on CNN, "60 Minutes" and in the pages of the New York Times and Wall Street Journal.
Then, in early 2017, there were suddenly signs of trouble.
His law firm was abruptly forced into bankruptcy by a Florida man who claimed he was owed the relatively meager sum of $28,700.
The Florida bankruptcy judge who handled the case expressed surprise that such a minor debt could threaten to financially topple a multi-million-dollar law firm.
She also questioned the timing of the filing -- two days before the deadline set for Avenatti and two other firm employees to be deposed in a long-running arbitration with a former partner, who said he was owed as much as $18 million by Eagan Avenatti.
The involuntary bankruptcy filing by the Florida man, Gerald Tobin, was a rare and obscure legal maneuver that had the effect of freezing the arbitration proceedings with the former partner. The result was that Avenatti avoided being questioned under oath in the proceeding.
The whole thing, the judge said, "had the stench of impropriety." That didn't have anything to do with Avenatti's firm, necessarily, she said. She referred to Tobin as a "screwy small creditor," and questioned whether he had "some relationship with the firm that would have induced a collusive filing" or if Avenatti's firm "just got plain lucky that somebody filed on the eve of arbitration."
In court papers, Avenatti's lawyers described Tobin as a "private investigator" who'd performed undisclosed services for Avenatti's firm.
But Tobin, 48, is no private investigator, a CNN investigation found.
He's a convicted felon whose rap sheet is 15 pages long and spans four decades, according to court records. He served time in prison in the early 90s and was arrested on domestic violence charges as recently as February. (He pleaded not guilty and the case is awaiting trial).
Avenatti's association with Tobin has taken on new significance in light of his representation of Daniels. In that role, Avenatti has cast himself as a crusader for truth and transparency on behalf of the American public.
He has used Twitter and frequent TV appearances to castigate President Trump and his attorney Michael Cohen for not being forthcoming about Trump's alleged sexual encounter with Daniels and the details surrounding the deal in which Cohen paid her $130,000 to keep quiet.
Similar questions have been raised about the truthfulness and transparency of Avenatti's law firm in a recent lawsuit, and by a panel of retired judges in the arbitration proceedings related to that lawsuit by the former partner.
And, while Avenatti is famously trying to void a non-disclosure agreement Daniels entered into with Trump, his firm has secured its own confidentiality agreement with Tobin, barring him from discussing the scope of his work and relationship with Avenatti and his firm.
In a prepared response to questions from CNN, Avenatti wrote that he was unaware of Tobin's criminal record or that he was not a licensed private investigator. He said the firm did not check Tobin's credentials.
Even though Avenatti's attorneys described Tobin as a private investigator in court papers, Avenatti said the firm "did not hire him to perform private investigator services."
Avenatti said the non-disclosure agreement Tobin signed was "a generic NDA as part of his standard engagement letter when he was retained." Such documents are required, Avenatti said, "as a result of the sensitive nature of the work we perform -- namely legal work for clients."
In his statement to CNN, Avenatti wrote that Tobin did "limited work as an independent contractor for a short period of time" and that a billing dispute arose "that has now been fully resolved."
"The firm did nothing wrong and no court has ever found that the firm did anything wrong," Avenatti wrote. "This is a complete sideshow and has nothing to do with my present work or cases. Who cares?"
In a brief interview with CNN outside his Orlando home, Tobin declined to say what sort of work he'd performed for Avenatti, but described it as "very mundane."
He said he was not a private investigator, and that it would be a stretch to describe the work he did as investigative in nature. But he said he could not discuss details of the matter because of the terms of his agreement with Avenatti's firm.
"My confidentiality is fairly extensive," he said in a phone interview a day later. "I'm not at liberation to talk about that."
In paper work he filled out following the 2018 arrest for domestic violence, Tobin listed his highest level of education as a high school general equivalency diploma. He listed his job as "laborer" at an Orlando sheet metal shop. In the space on the form for previous employment, he wrote: "Don't remember."
It remains a mystery why Avenatti's firm engaged Tobin.
Avenatti did not respond to questions about Tobin's qualifications, and said the attorney who retained Tobin is no longer with the firm.
He declined to identify the former attorney or characterize the nature of the relationship he or she had with Tobin.
Avenatti contacted CNN reporters within hours of Tobin being interviewed in Florida last week. He wanted to know why reporters had shown up at Tobin's house asking questions about his role in the case.
He later provided CNN with a copy of a declaration signed by Tobin in July 2017.
In the declaration, Tobin said he was asked by an attorney from Avenatti's firm to "assist the firm in gathering evidence and facts" for a potential lawsuit in the wake of the Pulse nightclub shooting in June of 2016.
Tobin said the attorney, whom he "knew previously," told him the California-based firm needed someone "on the ground" in Florida to "assist with efforts relating to the potential case."
Tobin said he agreed, "and began gathering evidence and facts at the direction of the firm," according to his declaration.
Weeks later, Tobin said, he was told the firm decided against a lawsuit and that his services were no longer needed. He said he told the firm he was owed $28,700 for his work, and that a dispute arose over that amount.
Unable to resolve the matter, Tobin said, he decided to file an involuntary bankruptcy against the firm "because I had read that such an action usually resulted in getting a debt paid quickly and would place the target under considerable pressure to resolve the matter."
USC Gould Law School Professor Bob Rasmussen, who is an expert in bankruptcy law, told CNN that Tobin's legal maneuver actually is "one of the least likely ways to get paid for a debt by a small unsecured debtor. There are far better legal courses of action than filing one of the rarest forms of bankruptcy."
In his declaration, Tobin said he never communicated with Avenatti prior to the filing and that he did not coordinate his filing with anyone at Eagan Avenatti.
"I filed the case on my own without any prompting or suggesting from anyone associated with the firm and I did so for one reason only -- in order to get paid what I believed I was due for the work I had done," Tobin said in his declaration.
The filing of the document in the involuntary bankruptcy suit cost $1,717.00 according to a handwritten notation on Tobin's paperwork. Filing a civil lawsuit in state or federal court in Orlando would have cost $400, according to fees listed on court websites.
Asked whether he or anyone at his firm had played any role in encouraging Tobin to initiate bankruptcy proceedings, Avenatti replied: "Absolutely not, it never happened."
In the end, the Eagan Avenatti bankruptcy was short-lived. The firm was in bankruptcy for a little over a year. It resolved the lawsuit with the former partner through a settlement that was approved by the bankruptcy court judge when she dismissed the case. Tobin says he was paid the money that he was owed.
Tobin has lived in Central Florida since the late 1980s, primarily in the Daytona Beach area, and more recently in Orlando, according to court records.
He told CNN that he builds race cars, exotic cars and performance cars. He declined to provide any further detail about his business, including the name of his company.
Tobin's dozens of contacts with law enforcement over the years are documented in court records in Orange and Volusia counties, many of them listing a false middle name he often provided during encounters with the police.
He has served multiple stints of varying lengths in county jail and was sentenced to two years in state prison in 1990 for cocaine possession and burglary. His record includes convictions on drug charges, a weapons offense and battery on a police officer. His repeated arrests for driving with a suspended license resulted in a felony conviction on that charge in 2000.
In the interview with CNN, Tobin said he filed the involuntary bankruptcy claim against Avenatti's firm in "a last ditch spiteful effort" to get paid. He said he didn't even know such a thing was possible until he completed some legal research on the topic a few days before filing.
In his bankruptcy paperwork, Tobin listed himself as his own attorney. Tobin does not have a law degree. At one point during his interview with CNN, he referred to his involuntary bankruptcy filing as "my lawsuit, or whatever."
Even he seemed skeptical that his filing would propel a law firm such as Eagan Avenatti into bankruptcy.
"It doesn't make sense," Tobin said. "I'm a nobody."