Avenatti

Michael Avenatti, the lawyer for porn actress Stormy Daniels, was hit with a personal judgment of $4.85 million Monday for his failure to pay a debt to a former colleague at his longtime Newport Beach firm.

Less than an hour after his defeat in the Los Angeles lawsuit, Avenatti suffered another setback at a trial in Orange County: The Irvine Co. won a court order evicting him and his staff from their offices because the firm, Eagan Avenatti, skipped the last four months of rent.

The twin blows came as Avenatti was heading to New Hampshire for his third visit to the state that kicks off the 2020 presidential primaries. The celebrity lawyer is exploring a run for the Democratic nomination. His troubled financial history could emerge as a significant campaign issue if he joins the race.

The personal judgment against Avenatti by Judge Dennis J. Landin in Superior Court in Los Angeles was his latest in a series of courtroom losses in a protracted dispute with Jason Frank, the former colleague.

Eagan Avenatti emerged from federal bankruptcy protection in March after Avenatti promised that it would pay millions of dollars to Frank and other creditors, including the Internal Revenue Service. It has defaulted on nearly every payment that was due.

No one has pursued Avenatti more relentlessly than Frank, who has been fighting in federal court to collect on a $10-million judgment that he won against the firm in May.

“My client has had an awful lot of money owed to him for a lengthy period of time,” said Frank’s attorney, Eric George, “and it has been delayed through one tactic or another. Today, finally, the right thing happened.”

Avenatti has been the managing partner of Eagan Avenatti since its founding in 2007.

He recently told a U.S. Bankruptcy Court judge that his other firm, Avenatti & Associates, wholly owned by Avenatti, had acquired 100% of the equity in Eagan Avenatti, buying out his minority partner, Michael Eagan of San Francisco.

But Avenatti told the Los Angeles Times on Monday that he hadn’t owned Eagan Avenatti for months. He refused to identify the new owner.

“Any judgment issued against me will be deducted from the over $12 million that Jason Frank owes me and my law firm Avenatti & Associates as a result of his fraud,” Avenatti said by email.

No court has found Frank engaged in fraud, and Avenatti is not pursuing any court case alleging that he did. When Frank and two others left Eagan Avenatti to form their own firm, some clients went with them, angering Avenatti.

Frank alleges that Eagan Avenatti cheated him out of millions of dollars in compensation.

As part of its bankruptcy settlement, Eagan Avenatti agreed to pay Frank $4.85 million. Avenatti guaranteed that if the firm missed the deadlines for making the payment, which it did, he would personally be required to pay Frank.

To enforce the personal guarantee, Frank sued Avenatti, and on Monday he won the case.

Daniels, the adult film star whose real name is Stephanie Clifford, is represented by Avenatti & Associates, which operates out of the same offices as Eagan Avenatti and uses the same attorneys. Daniels is trying to void a nondisclosure agreement that bars her from discussing her alleged sexual affair in 2006 with Donald Trump.

Last week, a judge dismissed the defamation suit that Avenatti filed on Daniels’ behalf against Trump, finding the president was exercising his right to free speech when he attacked her credibility on Twitter.

Avenatti had another reversal last month at the confirmation hearings of Supreme Court Justice Brett M. Kavanaugh. The Senate Judiciary Committee refused to interview an Avenatti client, Julie Swetnick, who alleged that Kavanaugh attended a 1982 party where where she said she was gang-raped.

In the Santa Ana trial, 520 Newport Center Drive LLC, an arm of the Irvine Co., alleged that Eagan Avenatti missed $213,254 in rent payments over the last four months for its ocean-view suite on the 14th floor of an office building at Fashion Island.

Nobody from Eagan Avenatti showed up for the trial.

Superior Court Judge Robert J. Moss ordered the firm to vacate the premises and pay the landlord the full amount of overdue rent. He also canceled the remaining three months of the lease. If the firm fails to move out, it could take a few weeks for the Orange County Sheriff’s Department to enforce the eviction.

In court papers filed by Avenatti, the firm claimed it deducted the cost of needed repairs from its rent payments but did not receive proper credit.

The Irvine Co. denied that the offices needed any serious repairs. And the lease, signed by Avenatti, says the tenant “understands that it shall not make repairs at landlord’s expense or by rental offset.”

At the short morning trial, Mark A. Kompa, an Irvine Co. attorney, called just three witnesses. He asked one of them, Irvine Co. assistant manager Abigail Yocam, what happened to the last rent payments received from Eagan Avenatti in July.

She testified: “The checks bounced.”

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Twitter: @finneganLAT

UPDATES:

3:55 p.m.: The article was updated with the testimony of Irvine Co.’s Abigail Yocam and background on Stormy Daniels and the Brett Kavanaugh confirmation hearings.

1:45 p.m.: The article was updated with additional details on the court cases.

11:50 a.m.: The article was updated with background on Michael Avenatti exploring a run for president and the Stormy Daniels litigation against President Trump.

11:15 a.m.: The article was updated with a comment from Michael Avenatti, background on Eagan Avenatti and the eviction judgment.

The article was originally published at 10:15 a.m.

Los Angeles lawyer Michael Avenatti was indicted Wednesday on charges of stealing from his former client Stormy Daniels by skimming money from her deal to write a memoir detailing her alleged sexual affair with Donald Trump.

It was the third time in two months that federal prosecutors have charged the celebrity attorney with criminal wrongdoing. Daniels is the sixth Avenatti client whose money he is accused of embezzling.

A federal grand jury in New York accused Avenatti of forging Daniels’ signature on a document instructing her literary agent to wire nearly $300,000 of her money to him.

Avenatti “blatantly lied to and stole from his client to maintain his extravagant lifestyle,” said Geoffrey Berman, the U.S. attorney for the Southern District of New York.

“Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client,” Berman said.

Avenatti spent roughly half the money on personal expenses, including the lease of a Ferrari, according to prosecutors.

On Twitter, Avenatti denied the charges. “No monies relating to Ms. Daniels were ever misappropriated or mishandled,” he said.

The indictment charges Avenatti with wire fraud and aggravated identify theft. If convicted on both counts, he faces up to 22 years in prison. Combined with previous criminal charges brought against Avenatti over the last two months, he now faces a maximum penalty of 404 years in prison if convicted on all counts.

Daniels’ new attorney, Clark Brewster of Tulsa, Okla., said he brought the case to the FBI and federal prosecutors earlier this year after she showed him the documentation cited Wednesday in the indictment.

“What I witnessed here was just the most base of criminality,” Brewster said. “It really does take a calculated criminal mind to have done what he did over such a long period of time with such dishonesty — and all the while posing as her champion.”

Stormy Daniels’ attorney, Clark Brewster.

(Brandi Simons / Associated Press)

Under an April 2018 contract that Avenatti helped negotiate with Daniels’ publisher, St. Martin’s Press, and literary agent, Janklow & Nesbit Associates, Daniels was to receive an $800,000 advance in four installments for her memoir, “Full Disclosure.”

The book featured graphic details of her alleged 2006 sexual encounter with Trump at a Lake Tahoe resort. It was published in October.

The publisher sent the first two installments — a total of $425,000 — to Daniels’ agent, which forwarded the money to her after taking a fee, according to the indictment.

But Avenatti embezzled the third and fourth installments, the grand jury alleged. They say he did it by emailing a letter to Janklow & Nesbit on Aug. 1, 2018, instructing the agent to wire the remaining money to a bank account that Avenatti controlled. The letter purported to be from Daniels, with her signature.

But Daniels neither authorized nor signed the “false wire instructions,” the indictment says.

When Avenatti received the two remaining installments, he spent the money on hotels, airline tickets, car services, restaurants, dry cleaning, a $3,900 lease payment on the Ferrari and various business expenses, according to the indictment.

Avenatti repeatedly lied to Daniels to cover up the theft, the grand jury alleged.

“When is the publisher going to cough up my money?” she asked him in December, according to the indictment.

Avenatti did not tell her he’d already received and spent the money, saying instead that he was threatening to sue the publisher for failing to pay her.

“They need to pay you the money as you did your part and then some,” he allegedly told her.

In January, the indictment says, Avenatti told her falsely that St. Martin’s Press was resisting making the payment due to purportedly poor sales.

Avenatti accused of embezzling nearly $2 million that NBA player paid ex-girlfriend »

Daniels made Avenatti famous last year by hiring him to sue President Trump to void a nondisclosure agreement she signed before the 2016 election. In exchange for her silence, the adult-film star was paid $130,000 to keep quiet about her alleged sexual encounter with Trump.

Michael Cohen, the president’s former lawyer and fixer, pleaded guilty last year to a campaign finance felony for orchestrating the deal. Prosecutors say Trump directed Cohen to pay the hush money to Daniels, a stripper who has performed in more than 150 pornographic movies over the last two decades.

When the scandal broke in early 2018, Avenatti fueled the media frenzy in scores of interviews with Anderson Cooper, Megyn Kelly, George Stephanopoulos and other television news personalities.

Avenatti, who relished bashing Trump on television, explored a run for president, but his career in politics effectively died last fall when Los Angeles police arrested him on suspicion of domestic violence. Prosecutors declined to charge him.

Tensions between Avenatti and Daniels spilled into public view in November.

Daniels, whose real name is Stephanie Clifford, told the Daily Beast that Avenatti treated her with disrespect, ignored requests for an accounting of her crowdfunding money and, against her wishes, filed a second suit against Trump for defamation. Avenatti denied her allegations.

Geoffrey Berman, U.S. attorney for the Southern District of New York, announces Michael Avenatti’s arrest on extortion charges in March.

(Spencer Platt / Getty Images)

A federal judge dismissed both of Daniels’ lawsuits against Trump. He ordered Daniels in December to pay Trump $292,000 to cover the president’s legal fees. Two months later, Daniels and Avenatti parted ways for reasons neither disclosed.

“He knew that I was unhappy and looking for new counsel,” Daniels told a crowd at a book promotion event in Washington.

The FBI arrested Avenatti in New York on March 25 after secretly recording what prosecutors allege was an attempt to extort sportswear giant Nike in conversations with the company’s lawyers. He was formally indicted in that case, too, on Wednesday.

Prosecutors say Avenatti threatened to hold a news conference that would take billions of dollars off Nike’s market value unless it paid a client $1.5 million and hired Avenatti and L.A. lawyer Mark Geragos for as much as $25 million to conduct an internal investigation.

Geragos, identified by prosecutors as an unindicted co-conspirator, was not charged with any crimes.

Avenatti’s life of luxury hangs by a thread as IRS comes calling »

Still, the most serious legal threat to Avenatti is in California, where he faces a separate 36-count federal indictment.

In August, he is scheduled to be tried in Santa Ana on charges of embezzling millions of dollars from clients, dodging taxes, defrauding a bank by submitting fake financial papers to get loans and concealing assets from creditors and the federal court that oversaw his law firm’s bankruptcy.

Avenatti denies wrongdoing.

Makeup artist Michelle Phan.

(Katie Falkenberg / Los Angeles Times)

The clients whose money prosecutors say he stole include Geoffrey Ernest Johnson, a mentally ill paraplegic man on disability, and Michelle Phan, a makeup artist popular on YouTube.

He is also charged with embezzling most of a $2.75-million payment that Miami Heat basketball center Hassan Whiteside intended for an ex-girlfriend, Alexis Gardner, who was an Avenatti client.