LOS ANGELES – A federal grand jury indictment filed late Wednesday charges high-profile attorney Michael Avenatti with a host of fraud and tax offenses that allege, among other things, that he stole millions of dollars from clients and millions of dollars of employment taxes that his coffee company should have paid to the Internal Revenue Service.

The 36-count indictment, which was returned by a grand jury in Santa Ana, outlines four areas of criminal conduct, all of which relate to the misappropriation and/or the illegal concealment of funds.

Avenatti, 48, who resides in Century City, was arrested in this case on March 25 pursuant to a criminal complaint that alleged the theft of money from one client and the use of bogus tax returns to obtain a series of loans. The indictment, which is now the operative charging document, alleges this conduct, but also significantly broadens the scope of the case.

The criminal charges in the indictment address four areas of wrongdoing: the embezzlement of millions of dollars that should have been paid to clients, the failure to file income tax returns and failure to pay the IRS millions of dollars in taxes, the submission of fraudulent loan applications that included tax returns never filed with the IRS, and the concealment of assets from the Bankruptcy Court.

“These four areas of criminal conduct alleged in the indictment are all linked to one another because money generated from one set of crimes appears in other sets – typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing,” said United States Attorney Nick Hanna.

“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” said Acting Special Agent in Charge Ryan L. Korner with IRS Criminal Investigation in Los Angeles. “Individuals who intentionally thwart the IRS and fail to meet their tax obligations will be caught and they will be held accountable”

The Wire Fraud Charges

Avenatti faces 10 counts of wire fraud related to more than $12 million he received on behalf of clients as a result of settlements in lawsuits and other negotiations. While he was entitled to attorney’s fees for work done on behalf of clients, the indictment alleges that Avenatti stole millions of dollars from clients he represented in four matters.

In each of the four cases of embezzlement alleged in the indictment, Avenatti received money on behalf of clients into client trust accounts, misappropriated the money, and lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client.

In the case of a victim called Client 1 in the indictment, Avenatti represented the man in a lawsuit against the County of Los Angeles that alleged, among other things, Client 1 became a paraplegic as a result of the county violating his constitutional rights. The county paid a $4 million settlement in January 2015, but within months Avenatti had drained the entire settlement payment from his law firms’ trust account and used portions of the settlement to finance his coffee business or pay personal expenses. Avenatti concealed the receipt of the settlement from Client 1 and instead gave him periodic “advances” of no more than $1,900 and paid the rent for his assisted living facility, according to the indictment.

Client 2 obtained a $3 million settlement in a matter, which included a payment of $2.75 million in early 2017. The indictment alleges that Avenatti took the bulk of this money – $2.5 million – and used it to purchase his portion of a jet, while falsely telling Client 2 that the settlement called for monthly payments over eight years. Avenatti made 11 monthly payments, making them appear to come from the individual who paid the settlement, but then Avenatti allegedly stopped paying Client 2.

Client 3 is the client-victim discussed in the criminal complaint who was to receive a $1.9 million settlement in an intellectual property dispute. Avenatti allegedly embezzled the first installment of $1.6 million in January 2018, in part by providing Client 3 with a bogus settlement agreement indicating that the payment was going to be made two months later. The indictment alleges that Avenatti used the money to pay expenses at his coffee business and to pay his own legal expenses.

Clients 4 and 5 divested shares in a company after Avenatti negotiated a “Common Stock Repurchase Agreement” for the sale of nearly $27.5 million worth of shares and then another sale of approximately $8.15 million worth of shares. When the first payment was made, Avenatti took his fees for the overall $35 million sale and sent the balance to Client 4. But when the second stock sale was finalized and the company sent nearly $8.15 million, Avenatti kept $4 million for himself and used this money to pay some of his law firm’s bankruptcy creditors, including the IRS; to provide funding for his various businesses; and to make lulling payments to Client 1 and Client 2. When Client 4 and Client 5 demanded their money, Avenatti falsely told them that the purloined $4 million already had been wired to them and provided them with a wire transfer confirmation document which actually documented the transfer of an earlier $4 million payment.

The Tax Fraud Charges

The indictment charges Avenatti with a total of 19 tax-related offenses. The indictment alleges that Avenatti has failed to file personal income tax returns since 2010, and that he failed to file various tax returns for his two law firms in which he held a controlling interest.

Some of the tax charges relate to Avenatti’s ownership of Global Baristas US LLC (GBUS), which operated Tully’s Coffee. Starting in late 2015 and continuing into 2017, GBUS failed to file employment tax returns and failed to pay approximately $3.2 million in federal payroll taxes, according to the indictment, which notes that this figure includes at least $2.3 million in “trust fund taxes” that GBUS had withheld from its employees’ paychecks. In 2016, the IRS initiated a collection action against GBUS, and, in June 2017, the IRS filed a federal tax lien against GBUS as part of its attempts to collect nearly $5 million in unpaid federal payroll taxes and penalties.

Further, Avenatti allegedly attempted to obstruct the IRS’s efforts to collect the taxes. The indictment alleges that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at Tully’s coffee shops, and directed Tully’s employees to deposit cash receipts into a bank account belonging to a car racing outfit that Avenatti also owned. Some of the money that should have been used to pay GBUS’ tax debt was transferred to bank accounts associated with Avenatti’s law firms, and some of that money was used to make lulling payments to Clients 1 and 2.

The Bank Fraud Charges

Avenatti faces two counts of bank fraud stemming from an alleged scheme in which he submitted bogus financial information to obtain three loans totaling $4.1 million from The People’s Bank, a federally insured financial institution in Mississippi. As previously alleged in the criminal complaint, Avenatti submitted personal tax returns that had never been filed with the IRS, but the indictment further alleges that he submitted documents to the bank that overstated the resources of the Eagan Avenatti law firm. For example, the indictment accuses Avenatti of submitting a balance sheet for the law firm stating that the law firm, on March 10, 2014, had $508,200 in its operating account, when in fact the account held slightly more than $43,000. Avenatti also allegedly submitted to the bank a partnership tax return for Eagan Avenatti for 2012 that was different from the return actually submitted to the IRS in that the return provided to the bank reported close to $8 million in additional business income.

The Bankruptcy Fraud Charges

Avenatti faces four bankruptcy fraud charges for allegedly making false statements in relation to a bankruptcy case involving Eagan Avenatti. As the managing partner of the firm, Avenatti agreed in the bankruptcy proceeding to abide by certain guidelines and requirements, including filing monthly operating reports that detailed all of the firm’s financial information. Three of the bankruptcy fraud charges allege that Avenatti submitted, under penalty of perjury, monthly operating reports that failed to report all of the firm’s accounts receivable. Additionally, Avenatti is charged with falsely testifying under oath during a June 2017 bankruptcy hearing by denying the firm had received any fees related to a lawsuit when Eagan Avenatti had actually received more than $1.3 million, which included attorney’s fees in relation to that case.

The indictment specifically charges Avenatti with 10 counts of wire fraud related to the theft of money that should have been paid to clients, eight counts of willful failure to collect and pay over taxes withheld from GBUS employee, one count of endeavoring to obstruct the administration of the Internal Revenue Code, four misdemeanor counts of willful failure to file his personal tax returns for the years 2014 through 2017, three misdemeanor counts of willful failure to file Eagan Avenatti’s tax returns for the years 2015 through 2017, three misdemeanor counts of willful failure to file tax returns for Avenatti & Associates for the years 2015 through 2017, two counts of bank fraud related to the loans received from The People’s Bank, one count of aggravated identity theft for misusing the name of a tax preparer in relation to the bank fraud scheme, three counts of making false declarations in relation to a bankruptcy, and one count of giving false testimony under oath in Bankruptcy Court.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

If he were to be convicted of the charges alleged in the indictment, Avenatti would face a statutory maximum sentence of 333 years in federal prison, plus an additional two-year mandatory consecutive sentence for the aggravated identity theft charge.

Avenatti, who is free on a $300,000 bond, is scheduled to be arraigned on the indictment on April 29 in United States District Court in Santa Ana.

The ongoing investigation into Avenatti is being conducted by IRS Criminal Investigation, which has received assistance from the Newport Beach Police Department and the Orange County District Attorney’s Office.

This case is being prosecuted by Assistant United States Attorneys Julian L. André of the Major Frauds Section and Brett A. Sagel of the Santa Ana Branch Office.

In a related action on Wednesday, federal authorities seized the Honda jet that was purchased, in part, with money Avenatti allegedly stole from Client 2. That portion of the case is being handled by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.

Avenatti Indictment</s>Federal prosecutors in California leveled fresh charges against Michael Avenatti on Thursday, marking yet another legal blow for the controversial celebrity attorney known for representing adult film actress Stormy Daniels.

Interested in Michael Avenatti? Add Michael Avenatti as an interest to stay up to date on the latest Michael Avenatti news, video, and analysis from ABC News. Add Interest

In a 61-page federal indictment detailing 36 counts, prosecutors with the U.S. attorney’s office in the Central District of California described Avenatti's alleged decade-long scheme to embezzle and hide millions of dollars from clients. If found guilty, the charges could land him more than 300 years in federal prison.

“The money was used to fuel a lavish lifestyle that had no limits including making mortgage payments on a multi-million dollar home in Laguna Beach," Acting Special Agent in Charge of IRS Criminal Investigation Ryan Korner said during a press conference Thursday.

Korner said federal agents seized Avenatti’s $5 million private jet this week.

A vocal critic of President Donald Trump whose presence on cable television last year made him a national figure, Avenatti now finds himself buried in legal travails on both coasts.

ABC News

Prosecutors in the Central District targeted Avenatti with wire and bank fraud charges last month in a scheme that included allegations he stole funds from a client to pay off his own expenses. In New York, Avenatti faces two counts of extortion for his alleged role in what prosecutors called “an old-fashioned shakedown” of Nike.

Charges in the separate cases were announced almost simultaneously and authorities took Avenatti into custody in New York City later that day. He was ordered released on $300,000 bond later that day.

In the new indictment filed Thursday, Avenatti is accused of stealing millions of dollars from clients who had been paid settlements. The money, which was supposed to flow through Avenatti to his clients when the settlements were paid, stayed with Avenatti, according to prosecutors.

“Mr. Avenatti received money on behalf of clients into client trust accounts, misappropriated the money and lied to the clients about receiving the money,” U.S. Attorney Nick Hanna explained .

One of the clients who was allegedly never paid was Geoffrey Johnson, a paraplegic man on disability. Johnson won a $4 million dollar settlement against Los Angeles County in 2015. Prosecutors say that money was paid to Avenatti but was never given to Johnson.

Avenatti allegedly told Johnson that the money was not yet available and that he was “advancing” Johnson money to pay rent. Yet the entire time, prosecutors say, Avenatti had the $4 million and was using it for personal and business expenses.

“Mr. Johnson is the victim of an appalling fraud perpetrated by the one person who owned him loyalty and honest most of all: his own lawyer,” Johnson’s attorney Josh Robbins writes to ABC News. “His actions have left Mr. Johnson destitute.”

After prosecutors announced plans for Thursday's press conference, Avenatti tweeted that he remains "confident that justice will be done once ALL of the facts are known."

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. — Michael Avenatti (@MichaelAvenatti) April 11, 2019

Avenatti gained prominence last year when he began representing Daniels in a defamation lawsuit against Trump. A federal judge in California later threw out the suit and ordered Daniels to reimburse Trump for legal fees.

A court appearance is scheduled for April 25 in New York.</s>Add tax cheat to the list of charges against anti-Trump celebrity lawyer Michael Avenatti.

Federal prosecutors in California announced 36 new charges Thursday against Mr. Avenatti, accusing him of failing to file or pay his taxes for several years, and detailing more lurid stories of bilking clients.

In one case, Mr. Avenatti siphoned off a $4 million fund Los Angeles had agreed to pay to a man in a settlement for having left him a paraplegic, according to the charges. The lawyer took money from settlements meant for clients in several other cases, too.

The charges, handed up by a grand jury in the Central District of California, expand on a case already underway there and another ongoing in the Southern District of New York.

U.S. Attorney Nick Hanna said Mr. Avenatti oversaw a “financial house of cards,” and his bilking of clients was his attempt to keep it all going.

“Any claim that any monies were mishandled is bogus nonsense,” he said on Twitter.

He released a document he said was signed by one of his clients calling him “an exceptional, honest and ethical attorney.”

Mr. Avenatti did not address the tax charges.

Authorities said he failed to pay income and Social Security taxes from his coffee shop business, falling millions of dollars in arrears. When the IRS tried to collect, he lied about the payments, then ordered employees to begin hiding cash assets to shield them from detection, the IRS says.

He used money bilked from clients to keep the coffee shops afloat, the government charged.

He also didn’t file any tax returns from 2011 onward, the IRS says.

Authorities took their first step toward punishing Mr. Avenatti Wednesday, seizing a jet the lawyer had bought a share in with money the government says was ill-gotten.

The accusations are a major fall for Mr. Avenatti, who just months ago was a constant guest on CNN, delivering diatribes against President Trump and pondering a run for the White House himself.

He first gained national prominence representing a porn star who has alleged a sexual encounter with Mr. Trump, and who the president paid to keep quiet. He then took on other clients who seemed intent on thwarting Mr. Trump’s agenda, making him a sought-after voice for Democrats.

Things began to unravel criminally last month when he was accused of attempting to extort shoe company Nike, asking for a massive payment of more than $20 million in exchange for not going public with damaging information.

When he was arrested on those charges, the government revealed it had been investigating him for tax violations as far back as 2015, under the Obama administration.

The porn star he’d represented, Stormy Daniels, even broke with him. She said she’d come to realize he had behaved “extremely dishonestly” toward her.</s>Michael Avenatti, the flamboyant lawyer who represented porn star Stormy Daniels in her legal battle with US President Donald Trump, has been indicted on charges of theft, fraud and tax evasion, authorities said Thursday.

Prosecutors say Avenatti stole millions of dollars from his own clients and kept millions of dollars in employment taxes that his coffee company should have paid to the Internal Revenue Service.

The 36-count indictment by a federal grand jury exposes Avenatti to up to 333 years behind bars if convicted, Nick Hanna, US Attorney for the Central District of California, said.

"In the event of his conviction, we seek to have proceeds of Mr. Avenatti's fraudulent conduct forfeited to the government. Authorities seized a $5 million jet that Mr. Avenatti co-owned, a purchase he made from money allegedly stolen from a client," Hanna told a news briefing.

The charges he faces include tax fraud, bank fraud and bankruptcy fraud.

"The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully´s coffee shops, and a private jet," said IRS Acting Special Agent in Charge Ryan Korner.

The wire fraud charges are related to the more than $12 million he received for his clients from lawsuit settlements and other negotiations. The indictment alleges that Avenatti stole millions of dollars from clients he represented in four matters.

"In each of the four cases of embezzlement alleged in the indictment, Avenatti received money on behalf of clients into client trust accounts, misappropriated the money, and lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client," a Justice Department statement explained.

Avenatti, who has been released on a $300,000 bond, is to be arraigned April 29 in United States District Court in Santa Ana, California.

"I intend to fully fight all charges and plead NOT GUILTY," the attorney said on Twitter. "I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me."

Avenatti faces charges in a separate case in New York involving the sports apparel giant Nike.

According to that complaint, the celebrity attorney devised a scheme to extort millions of dollars from Nike by threatening to damage the company's reputation right before its quarterly earnings report and the start of the NCAA men's basketball tournament.

California-born Avenatti, 48, at one point entertained the possibility of running for president. He rose to fame after representing Daniels in her legal battles with Trump over hush money she received for an affair she allegedly had with Trump in 2006.

In addition to Daniels, Avenatti's clients have included singer R Kelly, and Julie Swetnick, who said she witnessed sexually abusive behavior by Brett Kavanaugh, the US Supreme Court justice whose volatile confirmation process was marked by multiple accusations of sexual assault when he was in high school and college.</s>(Reuters) - Lawyer Michael Avenatti was charged with 36 counts of fraud, tax evasion, identity theft and other financial crimes in an indictment made public by federal prosecutors in Los Angeles on Thursday.

The indictment came about three weeks after Avenatti, best known for representing adult film star Stormy Daniels in her legal battles with U.S. President Donald Trump, was arrested in New York on two separate criminal complaints filed by federal prosecutors in New York and California.

The indictment means the grand jury has found the California prosecutors have probable cause to pursue their charges. Avenatti has said he is innocent.

"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," Avenatti wrote on Twitter on Thursday.

The Los Angeles prosecutors have accused Avenatti of misusing a client's $1.6 million settlement to pay for his own expenses as well as those for his coffee business, and with defrauding a Mississippi bank of $4.1 million in loans by submitting false tax returns for 2011 to 2013 that inflated his income.

The New York prosecutors have separately accused Avenatti of trying to blackmail Nike Inc for more than $20 million.

Avenatti became a prominent critic of Trump and a frequent cable TV guest while representing Daniels, whose real name is Stephanie Clifford. She filed a lawsuit against the president over a nondisclosure agreement that in the weeks before the 2016 U.S. presidential election kept her from discussing her claims that they had an extramarital affair 10 years earlier.

Avenatti also involved himself in the investigation of sexual abuse charges against R&B singer R. Kelly by giving the Chicago state's attorney's office what he said was a tape of the performer having sex with an underage girl.</s>LOS ANGELES — In a sweeping expansion of the criminal charges against Michael Avenatti, 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.

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.

Federal agents seized the Honda HA-420 jet at Santa Barbara Airport on Wednesday under a court-approved warrant that remains under seal, said Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles.

The breadth of Avenatti’s alleged crimes is clear in the maximum sentence he would face if convicted on all counts: 335 years in prison.

In a separate federal case in New York, Avenatti faces up to 47 more years if convicted on charges of trying to extort more than $20 million from Nike, the sportswear giant. An indictment in that case is expected soon.

Avenatti, who is free on a $300,000 bond, tweeted Thursday morning that he’d made many powerful enemies over the last two decades.

“I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known,” he wrote shortly after U.S. attorney Nick Hanna summoned media to a Los Angeles news conference to announce the new charges.

The twin criminal cases have put Avenatti’s legal career in jeopardy just a year after he rocketed to fame as the hard-charging and telegenic attorney for adult-film actress Stormy Daniels in her battle to nullify a nondisclosure agreement with President Trump.

He lost both of her lawsuits, and Daniels now owes the president nearly $300,000 in legal fees, more than double the $130,000 in hush money that Trump paid her to keep quiet about their alleged 2006 affair.

In the California case, Avenatti was initially charged with bank and wire fraud, now eclipsed by a wide array of other alleged crimes. Prosecutors say he submitted phony tax returns and financial statements to Peoples Bank of Mississippi to secure more than $4.1 million in business loans.

He is also accused of embezzling from another client’s settlement of $1.6 million, which Avenatti denied receiving when he’d actually spent it all on personal expenses, prosecutors said.

On the day of his arrest, federal agents executed search warrants at Avenatti’s Century City apartment, his Echo Park law office and the Yorba Linda home of Judy Regnier, the office manager at Eagan Avenatti, according to the U.S. attorney’s office.

The exact amount of Avenatti’s alleged embezzlement from the five clients is unclear, because clients typically must use a portion of their settlement funds to pay their lawyers’ fees and expenses.

Under State Bar of California rules of professional conduct, a lawyer must promptly notify a client of the receipt of any funds they are entrusted to hold for the client and turn over the money at the client’s request.

In the Johnson theft, the indictment alleges, Avenatti received $4 million from Los Angeles County in 2015 to settle the paraplegic’s suit over his treatment at the Twin Towers Correctional Facility. Johnson, who was suicidal, jumped twice from an upper floor of the jail, injuring himself so badly the second time that he can never walk again, according to the suit.

After getting the $4 million, the indictment says, Avenatti did not tell Johnson the money had arrived. He soon funneled most of the money through multiple bank accounts. It landed in the accounts of GB Autosport, LLC, which managed Avenatti’s race-car team, and Global Baristas U.S., his troubled Seattle coffee company, according to the indictment.

In just over five months, Avenatti had spent the entire $4 million, but never told Johnson, the grand jury alleged. Instead, over the next four years, he paid Johnson a total of $124,000 in installments ranging from $1,000 to $1,900 and made some rent payments at Johnson’s assisted living facility.

He falsely told Johnson the payments were “advances” on a county settlement payment that had not yet arrived, according to the grand jury.

In November 2018, Johnson asked Avenatti to send information on the settlement to the Social Security Administration so it could gauge his eligibility for disability payments.

“Knowing full well that the requested information could lead to inquiries that could reveal” the embezzlement, Avenatti ignored Johnson’s request, causing the government to cut off his disability payments two months ago, according to prosecutors.

Avenatti’s alleged tax crimes were both personal and business. Prosecutors say he failed to file personal income tax returns in 2014, 2015, 2016 and 2017 — years when, according to the Internal Revenue Service, he deposited millions of dollars in his personal bank accounts.

Avenatti also failed to file tax returns for both of his law firms, Eagan Avenatti and Avenatti & Associates, in 2015, 2016 and 2017, the government charged.

The grand jury also accused Avenatti of lying to the IRS about his pocketing of nearly $2.4 million in taxes withheld from the paychecks of employees of Global Baristas U.S., which operated Tully’s coffee stores in Washington and California.

When the IRS started garnishing the company’s bank accounts, the indictment says, Avenatti ordered employees to deposit the stores’ cash and credit-card receipts in new accounts under a new company name. In an email instructing a credit-card processing company to switch accounts, Avenatti wrote, “we need this done ASAP.”</s>Attorney Michael Avenatti has been charged in a 36-count federal indictment alleging he stole millions of dollars from clients, did not pay his taxes, committed bank fraud and lied in bankruptcy proceedings.

Avenatti, 48, was indicted late Wednesday by a Southern California grand jury on a raft of additional charges following his arrest last month in New York on two related counts and for allegedly trying to shake down Nike for up to $25 million.

The attorney best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump said Thursday on Twitter that he will plead not guilty to the California charges.

"I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me," he wrote.

The new charges do not include the New York extortion case alleging Avenatti demanded millions to stay quiet about claims he planned to reveal about Nike paying high school players. Avenatti has said he expects to be cleared in that case.

The 61-page Southern California indictment alleges Avenatti embezzled from a paraplegic man and four other clients and deceived them by shuffling money between accounts to pay off small portions of what they were due to lull them into thinking they were getting paid.

Avenatti, 48, is also charged with not paying personal income taxes, not paying taxes for his various businesses, including two law firms, and pocketing payroll taxes from the Tully's Coffee chain that he owned, the indictment said.

Between September 2015 and January 2018, Global Baristas US, the company that operated Tully's, failed to pay the Internal Revenue Service $3.2 million in payroll taxes, including nearly $2.4 million withheld from employees, the indictment said.

When the IRS put tax levies on coffee company bank accounts to collect more than $5 million, Avenatti had Tully's employees deposit cash receipts in a little-known account, the indictment said.

Avenatti was also charged with submitting fraudulent tax returns to get more than $4 million in loans from The Peoples Bank in Biloxi, Mississippi, in 2014. The tax returns he presented to the bank were never filed to the IRS, prosecutors have said.

The charges are the latest major blow to a career that took off last year when Avenatti represented Daniels in her lawsuit to break a confidentiality agreement with Trump to stay mum about an affair they allegedly had.

Avenatti became one of Trump's leading adversaries, attacking him on cable news programs and Twitter. At one point, Avenatti even considered challenging Trump in 2020.

But back home, his business practices had come under scrutiny from the IRS and a former law partner who was owed $14 million by Avenatti and the Eagan Avenatti firm, which filed for bankruptcy.

The indictment said Avenatti made false statements in bankruptcy proceedings by submitting forms under penalty of perjury that under reported income his firm received.

The most glaring example of deception and fraud was described in the indictment as scheming Avenatti allegedly did to deprive clients of money they were due from legal settlements or sales of stock and the actions he took to cover his tracks.

In a case involving one client, Avenatti allegedly funneled a $2.75 million settlement into his bank accounts and spent $2.5 million on a private airplane, the indictment said.

Although Avenatti was due a portion of settlement funds for his work, the charges said he paid only a fraction of the money clients were due in some cases and strung them along while they waited to be paid. Avenatti allegedly drained a $4 million settlement he negotiated in 2015 on behalf of Geoffrey Johnson, who was paralyzed after trying to kill himself in the Los Angeles County jail, the indictment said. Johnson was referred to as "Client 1" in the indictment, but was named at a recent court hearing involving the money Avenatti was ordered to pay his former partner. Until last month, Avenatti had only provided $124,000 over 69 payments to Johnson, the indictment said. Two years after the settlement was reached, Avenatti allegedly helped Johnson find a real estate agent to buy a house. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said. In November, when the U.S. Social Security Administration requested information to determine if Johnson should continue to receive disability benefits, Avenatti said he would respond, but didn't because he knew it could lead to the discovery of his embezzlement, the indictment said. The failure to respond led to Johnson's disability benefits being cut off in February. After Avenatti was questioned about the alleged embezzlement during a judgment-debtor examination in federal court March 22, the indictment said he fabricated a defense for himself. Avenatti had Johnson sign a document a day or two later saying he was satisfied with his representation, which the lawyer told him was necessary to get the settlement that had in fact been paid four years earlier, the indictment said. When asked by The Associated Press last month about Johnson's case, Avenatti said his client approved all transactions and accounting and had been kept in the loop. "He has repeatedly thanked me for my dedication to his case and the ethics I have employed," Avenatti wrote in an email response.</s>Update: Never one to let grand jury indictments, getting fired by Stormy Daniels, an ongoing bankruptcy battle, #MeToo claims that he beat his girlfriend, and getting caught allegedly trying to bilk Nike for $25 million, Avenatti tweeted on Thursday that he will plead "NOT GUILTY" - describing the whole thing as a "one-sided version meant to sideline me."

One day after it was reported that Michael Avenatti was the subject of a federal warrant that resulted in the seizure of his $4.5 million private jet, CNN's favorite guest was indicted by a federal grand jury in California on 36 counts.

US Attorney Nick Hanna and the IRS are holding a press conference at 9am PST to discuss the charges.

In March, Avenatti was arrested in Manhattan for allegedly scheming to extort $25 million from sportswear giant Nike. More notable, was that federal fraud charges simultaneously unsealed revealed in a nearly 200-page complaint with allegations of bank fraud. He reportedly embezzled a client's debts and lied to a bank with faked tax returns.

But as startling as the Nike allegations may be — attempting to strong-arm one of the most recognizable companies on the planet — the federal fraud charges simultaneously unsealed in California may be more revealing and could pose greater jeopardy to Avenatti and his freedom. They exposed nearly a decade of alleged financial misdeeds on a vast scale, many of which have sporadically surfaced in courtrooms up and down the West Coast. -LA Times

The 48-year-old attorney has been accused by the IRS with failure to pay taxes on millions of dollars between his personal income and his firm - while living an opulent lifestyle.

As with the Los Angeles case, Avenatti is expected to be indicted by a grand jury in the New York case. Unless defendants in federal criminal cases agree to plead guilty, prosecutors have to obtain a grand jury indictment to push a case toward trial after filing a complaint. Avenatti told CNBC’s “Closing Bell ” on Monday that Nike “pulled a stunt” by having him arrested in New York before he could go public with his claims that the company was bribing high school hoop players to coax them into attending Nike-sponsored colleges. Avenatt in that interview claimed 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.” -CNBC

On Wednesday, US Attorney's Office spokesman Thom Mrozek told Fox News that federal agents had seized Avenatti's HA-420 twin-engine jet from Santa Barbara airport at approximately 10am following the issuance of the warrant.

According to the New York Post, the plane had been originally scheduled to be fly to Orange County for Avenatti - however pilots filed a new flight path to San Bernardino County.

"Federal authorities have seized a jet co-owned by Mr. Avenatti pursuant to a seizure warrant issued by a federal judge. This seizure is related to the pending criminal case in Los Angeles," an official told Fox News.

Avenatti told Fox: "I haven’t used the plane in almost a year and I gave up my interest last year. I have no interest in the plane and could care less."

Avenatti was recently in the news when Seagrams heiress Clare Bronfman fainted after being asked during her NVXIM sex cult trial if Avenatti was secretly representing her. Of note, Bronfman is being represented by Mark Geragos - identified by the Wall Street Journal this week as a co-conspirator Avenatti's Nike extortion scheme.</s>Michael Avenatti, former attorney for Stormy Daniels, has been indicted by a federal grand jury in California on 36 counts, including embezzling from a paraplegic, court documents show.

The indictment expands on a criminal complaint filed against Avenatti earlier in California and includes allegations of impropriety by Avenatti against former business partners and two additional clients. Officials with the Justice Department and the Internal Revenue Service were expected to share additional details on the indictment Thursday.

Avenatti faces charges of wire fraud, failure to collect and withhold payroll taxes, attempting to obstruct the IRS, failing to file tax returns, aggravated identity fraud, bank fraud and false testimony under oath during bankruptcy.

Avenatti wouldn’t comment beyond statements he made on Twitter.

“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,” he wrote Thursday.

The charge involving the paraplegic client states that Avenatti lied to his client several times, including telling him that L.A. County hadn’t paid him in a $4 million dollar settlement as a lump sum, which the county had. Avenatti allegedly depleted that money in a matter of months.

The new charges follow Avenatti’s arrest in New York last month for allegedly trying to shake down Nike for up to $25 million and on two counts of wire and bank fraud from Southern California, where his firm is based. Avenatti has said he expects to be cleared.

The attorney is best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump.

The charges are the latest major blow to a career that took off last year when Avenatti represented Daniels in her lawsuit to break a confidentiality agreement with Trump to stay mum about an affair they allegedly had.

Avenatti became one of Trump’s leading adversaries, attacking him on cable news programs and Twitter. At one point, Avenatti even considered challenging Trump in 2020.

But back home in California, his business practices had come under scrutiny from the IRS and a former law partner who was owed $14 million by Avenatti and the Eagan Avenatti firm, which filed for bankruptcy.</s>FILE PHOTO: Lawyer Michael Avenatti in New York, New York, U.S., March 25, 2019. REUTERS/Carlo Allegri/File Photo

(Reuters) - Lawyer Michael Avenatti was charged with 36 counts of fraud, tax evasion, identity theft and other financial crimes in an indictment made public by federal prosecutors in Los Angeles on Thursday.

Avenatti, best known for representing pornographic film star Stormy Daniels in her legal battles with U.S. President Donald Trump, has said he is innocent.
Michael Avenatti is charged by a federal grand jury in California on 36 counts, including embezzlement, wire fraud, tax evasion, bankruptcy fraud and bank fraud connected to his alleged theft of tens of millions of dollars from several clients.