LOS ANGELES — Los Angeles attorney Michael Avenatti has been arrested and charged with financial crimes by federal law enforcement officials in separate cases in Los Angeles and New York, authorities said Monday.
In Southern California, federal prosecutors accused Avenatti of misusing $1.6 million in funds earmarked for a client’s settlement to cover “expenses for his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in California and Washington state, as well as for his own expenses,” the statement read.
Avenatti, 48, is separately accused of fraudulently obtaining more than $4 million in loans from a Mississippi bank in 2014 by submitting false tax returns that showed he had raked in millions in profits from 2011 to 2013, according to a criminal complaint filed in Los Angeles. In reality, Avenatti had not submitted a personal tax return with the Internal Revenue Service in any of those years, according to the filing.
Prosecutors in Manhattan also accused the attorney of “attempting to extract more than $20 million in payments from a publicly traded company by threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met,” according a statement from the U.S. attorney for the Southern District of New York. The company in question was Nike, according to the complaint, which Avenatti has been sparring with in recent months.
Avenatti approached Nike earlier this month regarding alleged evidence brought by an AAU basketball coach in California, claiming that Nike officials were paying the families of top high school basketball players, according to the complaint. Avenatti threatened to hold a news conference if Nike didn’t pay the client and hire Avenatti to conduct an internal investigation of the company, court records show.
Federal investigators recorded a call between Avenatti and two attorneys representing Nike on Friday, during which Avenatti threatened to take $10 billion off Nike’s market cap by holding the news conference if he wasn’t paid.
“You guys know enough now to know you’ve got a serious problem,” Avenatti said during the recorded conversation, according to the complaint. Just before being arrested Monday morning, Avenatti tweeted he’d be holding the news conference about Nike, alleging criminal conduct in college basketball in Los Angeles, on Tuesday morning.
Avenatti became a foe of President Donald Trump while representing porn actress Stormy Daniels in her public war with the president.
Daniels, who is no longer a client of Avenatti’s, said Monday morning she was “saddened but not shocked” by news of the criminal charges.
“I made the decision more than a month ago to terminate Michael’s services after discovering he had dealt with me extremely dishonestly, and there will be more announcements to come,” Daniels said in a tweet.
Earlier this month, his firm, Eagan Avenatti, filed for federal bankruptcy protection. It is the second time in two years the firm has sought court protection from its creditors.
The move comes three weeks after Jason Frank, a former lawyer at the firm, filed court papers accusing Avenatti of hiding millions of dollars from the court that oversaw its previous bankruptcy.
Avenatti has denied any wrongdoing.
Monday’s news marks Avenatti’s latest run-in with law enforcement, coming just months after his ex-girlfriend lobbed domestic violence allegations at him in Los Angeles. Prosecutors ultimately declined to charge him with a felony in late 2018, and the city attorney’s office decided to settle the matter through an informal hearing.
The arrest announced Monday marked a precipitous fall, even by today’s whirlwind standards. Eight months ago, Avenatti was exploring a 2020 presidential bid, drawing large crowds and favorable reviews from Trump-loathing partisans.
“I believe we cannot be the party of turning the other cheek,” Avenatti told audiences from California to New Hampshire, differing with those — including, most prominently, former first lady Michelle Obama — who counseled grace in the face of enmity. “I say when they go low, we hit harder.”
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By December, however, Avenatti’s presidential exertions had run their course, as some of the novelty wore off and other more credible candidates began ramping up their efforts. He issued a statement taking himself out of the running and citing family obligations as the reason.