Michael Avenatti allegedly stole $3 million from client with paraplegia

As part of a 36-count indictment issued Thursday, federal prosecutors accused prominent celebrity lawyer Michael Avenatti of embezzling nearly $4 million from a settlement issued to a client with paraplegia — and then using the money for his business ventures.

Avenatti was charged by a grand jury in the Central District of California on a slew of financial crimes including 10 counts of wire fraud related to allegedly embezzling his clients’ money, 19 counts of tax fraud, four counts of bankruptcy fraud, and two counts of bank fraud.

The indictment alleges that Avenatti committed wire fraud in embezzling $12 million from financial settlements and legal judgments won by four of his clients, often lying to clients about how much money they had received or falsely claiming their judgments would be paid out over the course of several months.

Read more:Justice Department slaps Michael Avenatti with new 36-count indictment that could carry a 335-year sentence

Prosecutors say Avenatti represented a man named Geoffrey Ernest Johnson, identified as client 1 in charging documents, in a lawsuit against Los Angeles County alleging that the County had violated the man’s constitutional rights, causing to him to become paraplegic.

In a Thursday statement to INSIDER, an attorney for Johnson confirmed he is client 1. Johnson’s new lawyer said he was the victim of “appalling fraud” at the hands of Avenatti, “the one person who owed him loyalty and honesty most of all.”

“Mr. Avenatti stole millions of dollars that were meant to compensate Mr. Johnson for a devastating injury, spent it on his own lavish lifestyle, then lied about it to Mr. Johnson for years to cover his tracks,” the statement continued.

Johnson’s current attorney, Josh Robbins, said Avenatti’s actions “have left Mr. Johnson destitute” and that Johnson “is cooperating fully with the government’s investigation, and hopes that justice will be done in this case.”

After LA County agreed to pay Johnson a $4 million settlement in 2015, prosecutors allege that Avenatti falsely claimed to Johnson that the value of the settlement couldn’t yet be disclosed, had to be paid through a special-needs trust, and would be paid out in multiple installments over time.

The indictment further alleges that Avenatti funneled $3.125 million of the total $4 million settlement into his own personal bank accounts, and into shell companies and accounts associated with his personal accounts, the coffee company he owned, Global Baristas US LLC, and his race-car business, GB Auto.

Avenatti is accused of then paying out Johnson in small settlements and helping pay some of his living expenses while continuing to falsely state that the full settlement hadn’t yet been approved and fully handed down from Los Angeles County.

Read more: Michael Avenatti charged over attempted extortion of Nike, bank fraud, and wire fraud in 2 criminal investigations

Prosecutors also allege that when Johnson tried to purchase a house using the settlement, the deal fell through because Avenatti continued to cover up his alleged embezzlement by lying to his client about the status of the payment.

The indictment further alleges that the Social Security Administration (SSA) contacted Avenatti regarding how the settlement could affect Johnson’s eligibility for Supplemental Security Income (SSI) disability benefits in November 2018.

Avenatti did not respond to the SSA’s inquiry out of fear that it would expose his alleged embezzlement of Johnson’s settlement, directly leading to his client losing his disability benefits altogether this February, prosecutors say.

And after Avenatti was questioned by authorities about the alleged embezzlement in late March of this year, Avenatti then allegedly told his client that the settlement had been formally approved by Los Angeles and made his client sign a document stating he was “satisfied with Avenatti’s representation” in the case, prosecutors say.

Read more: Michael Avenatti says he’s ‘nervous’ about potential prison time but proclaims innocence

Avenatti, who has vehemently denied the charges, faces a maximum sentence of 335 years in prison if convicted on all counts.

Last month, federal prosecutors in the Southern District of New York indicted Avenatti in a separate case on charges of trying to extort Nike for $20 million.

Avenatti is set to appear in court to be arraigned in the California case on April 19.

Source

more recommended stories

  • Tesla board of directors changes: Buss, Rice, Jurvetson, Gracias are leaving

    Tesla on Friday announced four members.

  • “Jeopardy!” champions use statistics and game theory to win millions

    Just making it onto the show.

  • BuzzFeed struggling to defend Trump-Cohen scoop after Mueller report discredited it

    When BuzzFeed reported on January 17.

  • A Google employee in Silicon Valley has reportedly been diagnosed with measles

    Google, which has faced criticism for.

  • Pinterest prices IPO – Business Insider

    Pinterest, the self-described “visual discovery” platform,.

  • Alexandria Ocasio-Cortez, Andy Barr coal mine visit falls apart

    A trip that would have shown.

  • Facebook uploaded 1.5 million users’ email contacts without permission

    Facebook harvested the email contacts of.

  • $85,000 bet on Tigers Woods that won $1.2 million was man’s first sports bet

    When Tiger Woods won the Masters.

  • Libratone Zipp 2 Smart Wireless Speaker review: Portable smart speaker

    Insider Picks writes about products and.

  • Bernie Sanders releases 10 years of tax returns after weeks of delays

    Sen. Bernie Sanders on Monday released.

  • How to clear out your Gmail by bulk deleting old emails

    I arrived at work on Monday.

  • El Chapo Guzman in a US jail as El Mayo and Sinaloa cartel fight CJNG

    Former Sinaloa cartel kingpin Joaquin “El.

  • Tiger Woods’ new girlfriend Erica Herman shows up to big tournaments

    Tiger Woods has been dating 33-year-old.

  • Emmanuel Deshawn Aranda: alleged Mall of America pusher has chaotic record

    Authorities say a five-year-old boy who.

  • Uber IPO: Uber may owe another $128 million to Google

    An earlier version of this story.

  • Watch SpaceX Falcon Heavy’s second launch

    SpaceX has launched the most powerful.

  • Salesforce bought CEO Keith Block a $212,000 car and an $86,000 watch

    Salesforce co-CEO Keith Block was awarded.

  • PagerDuty raises IPO price range

    IT unicorn PagerDuty raised its IPO.

  • Facebook ‘Watch Party’ feature is popular with pirates for movies, shows

    Facebook’s new video-streaming feature, Watch Party,.

  • JetBlue shares soar after report it may launch European flight service

    JetBlue appears to be gearing up.

  • San Diego hospital allegedly secretly filmed female patients

    When Eileen Brandt first woke up.

  • DCMS white paper: UK lays out proposed laws to regulate social media

    The internet’s days as the Wild.

  • Kirstjen Nielsen out as Trump’s Homeland Security Secretary

    Kirstjen Nielsen is out as secretary.

  • Kirstjen Nielsen is out: People who left, were fired from Trump administration

    Nikki Haley, the US Ambassador to.

  • Boeing 737 design quirk may have complicated Ethiopian Airlines flight

    Ethiopia’s Aircraft Accident Investigation Bureau (AIB).

  • Amazon paid $97 million for Eero in fire sale that left some with almost nothing

    Amazon paid $97 million to acquire.

  • Elon Musk was accused of shoving, threatening to ‘nuke’ ex-Tesla employee: report

    Tesla CEO Elon Musk was involved.

  • TV shows to watch on Netflix this week

    Netflix features hundreds of TV shows.

  • Colombia rejects Russia warning against Venezuelan military action

    BOGOTA (Reuters) – Colombia on Tuesday.

  • Democratic lawmaker asks IRS for 6 years of Trump’s tax returns

    US House Ways and Means Committee.

  • Reasons it’s hard to measure violence and homicide rates

    The most recent ranking of the.

  • Lori Loughlin smiles before college-admissions scandal court date

    Actress Lori Loughlin was all smiles.