A federal grand jury has indicted the Los Angeles lawyer on 36 counts of fraud, perjury, failure to pay taxes, embezzlement and other financial crimes.
According to the L.A. Times, “Avenatti stole millions of dollars from five clients and used a tangled web of shell companies and bank accounts to cover up the theft, the Santa Ana grand jury alleged in an indictment that prosecutors will make public Thursday.
One of the clients, Geoffrey Ernest Johnson, was a mentally ill paraplegic on disability who won a $4-million settlement of a suit against Los Angeles County. The money was wired to Avenatti in January 2015, but he hid it from Johnson for years, according to the indictment.
In 2017, Avenatti received $2.75 million in proceeds from another client’s legal settlement, but concealed that too, the indictment says. The next day, he put $2.5 million of that money into the purchase of a private jet for Passport 420, LLC, a company he effectively owned, according to prosecutors.
At the time, Avenatti and his businesses owed millions of dollars in back taxes, the government claimed, and his Newport Beach law firm, Eagan Avenatti, was weeks from bankruptcy.”
Avenatti defends himself:
Reached for comment, Avenatti told CNBC in a text message, “For 20 years I have represented Davids vs. Goliaths and relied on due process and our system of justice.”
“Along the way, I have made many powerful enemies. I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known,” Avenatti added.
In a subsequent tweet, Avenatti said, “I intend to fully fight all charges and plead NOT GUILTY. I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me.”
His lawyer, John Littrell, said the indictment proves nothing.
“We intend to fully investigate the charges and provide Mr. Avenatti the robust defense he deserves,” Littrell said.
Regarding the Nike scandal, Avenatti told CNBC on Monday that Nike “has been covering up this scandal for over five years.”
“They knew they could not control me. ... They effectively had to shoot the messenger."
Critics pushes back:
An IRS official said that the money was stolen by Avenatti though “a tangled financial web of lies” was “used to fund a lavish lifestyle which had no limits.”
The official said that IRS investigators began investigating Avenatti more than a year ago, but also said that Avenatti “began to run afoul of the IRS almost a decade ago” by failing to file income tax returns.
The grand jury said Avenatti “would misrepresent, conceal, and falsely describe to the clients the true terms of” the more than $12 million in settlements that he had obtained for them in their civil cases.