Celebrity Lawyer Avenatti Is Charged With Stealing From Client

Federal prosecutors on Wednesday charged celebrity lawyer Michael Avenatti with misappropriating hundreds of thousands of dollars belonging to a former client, pornographic film actress Stormy Daniels.

The indictment, announced by the U.S. Attorney’s Office in Manhattan, marks the disintegration of a relationship that propelled Avenatti to national prominence and adds to his mountain of legal troubles as he stands accused of more than three dozen crimes in California and New York.

Avenatti is accused of taking more than $295,000 from Daniels, who is named in the indictment as “Victim-1” and was identified as the actress by a person with knowledge of the case.

After helping her secure a book contract last year, according to the charges, Avenatti sent “a fraudulent and unauthorized letter” bearing Daniels’ signature to her literary agent, demanding that a portion of the book advance be wired to a client trust account he controlled.

Avenatti is accused of putting the money toward his personal expenses, including plane tickets, hotel stays, meal delivery, dry cleaning and a monthly payment on a Ferrari.

Avenatti denied all the charges against him Wednesday and said he looked forward to fighting them in court.

“At no time was any money misappropriated or mishandled,” he told The New York Times, saying that any funds related to the book were part of his representation agreement.

“She received millions of dollars worth of legal services, and we spent huge sums in expenses,” he added, referring to Daniels, whom he said he had not represented since February. “She directly paid only $100 for all that she received.”

Daniels — whose memoir, “Full Disclosure,” was published by St. Martin’s Press last year — could not be reached for comment Wednesday.

Prosecutors said she “had not signed or authorized the letter” to her agent and “did not even know of its existence.” Avenatti tried to conceal the effort by advancing money to her “from another source” to stand in for one installment, prosecutors said, and he falsely said the publisher had not paid when she asked about another portion.

Avenatti drew national attention when he began representing Daniels in early 2018, filing lawsuits against President Donald Trump and Michael Cohen, the president’s former lawyer and fixer. He sought to release Daniels, whose legal name is Stephanie Clifford, from a hush agreement she had signed before the 2016 election. As part of that deal, she accepted $130,000 and agreed to keep quiet about a sexual relationship she said she had had with Trump in 2006.

Both of the lawsuits Avenatti filed on behalf of Daniels were dismissed, and in one case she was ordered to pay Trump $293,000 in legal fees.

Yet Daniels’ story created further trouble for the president, culminating in Cohen’s guilty plea last year to campaign finance crimes related to the hush payment. This month, he began serving a three-year prison sentence. The same office that won Cohen’s guilty plea — the public corruption unit of the U.S. Attorney’s Office for the Southern District of New York — filed the new charges against Avenatti, which included aggravated identity theft.

The new charges add to numerous others filed this year. Avenatti was arrested in New York in March on extortion charges, accused of seeking millions from Nike in exchange for what he described as evidence of misconduct by company employees in the recruitment of college basketball players. On Wednesday, he was also indicted on those previously announced charges.

In a separate indictment filed in California this spring, Avenatti was accused of stealing millions of dollars from five other clients, one of them a paraplegic man who had won a $4 million settlement but received only a fraction of that in periodic payments that never exceeded $1,900. Avenatti was also accused of filing fake tax returns to a Mississippi bank, and of lying repeatedly about his business and income to an IRS agent, creditors, a bankruptcy court and a bankruptcy trustee.

Avenatti, who spent much of 2018 crusading against Trump on cable news shows and teasing a presidential run of his own, has called the cases against him politically motivated.

But federal prosecutors in California said their indictment had grown out of a criminal investigation initiated in September 2016, months before the election that would catapult both him and his future client, Daniels, into the political arena.

“He blatantly lied to and stole from his client to maintain his extravagant lifestyle,” Geoffrey S. Berman, the top federal prosecutor in Manhattan, said in a statement Wednesday. “Michael Avenatti abused and violated the core duty of an attorney — the duty to his client.”

If convicted on all of the charges pending against him, Avenatti could face more than 300 years in prison.