Federal officials in New York announced the indictment today of Michael Avenatti on fraud and aggravated identity theft charges. As alleged, Avenatti used misrepresentations and a fraudulent document purporting to bear his client’s name (Stormy Daniels) and signature to convince his client’s literary agent to divert money owed to Avenatti’s client to an account controlled by Avenatti. Avenatti then spent the money principally for his own personal and business purposes.
Avenatti was separately indicted today on extortion charges, which were the subject of a previous Complaint and arrest of Avenatti, relating to his alleged attempt to extract more than $20 million in payments from Nike, Inc., 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. That case is assigned to U.S. District Judge Paul Gardephe of the Southern District of New York.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Michael Avenatti abused and violated the core duty of an attorney – the duty to his client. As alleged, he used his position of trust to steal an advance on the client’s book deal. As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari. Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client.”
According to the allegations in the Indictment unsealed today[1]:
From August 2018 through February 2019, Avenatti defrauded a client (Stormy Daniels) by diverting money owed to Victim-1 to Avenatti’s control and use. After assisting Victim-1 in securing a book contract, Avenatti allegedly stole a significant portion of Daniels’ advance on that contract. He did so by, among other things, sending a fraudulent and unauthorized letter purporting to contain Daniels’ signature to her literary agent, which instructed the agent to send payments not to Victim-1 but to a bank account controlled by Avenatti. As alleged, Daniels had not signed or authorized the letter, and did not even know of its existence.
Specifically, prior to her literary agent wiring the second of four installment payments due to Daniels’ as part of the book advance, Avenatti sent a letter toher literary agent purportedly signed by her that instructed the literary agent to send all future payments to a client trust account in Daniels’ name and controlled by Avenatti. The literary agent then wired $148,750 to the account, which Avenatti promptly began spending for his own purposes, including on airfare, hotels, car services, restaurants and meal delivery, online retailers, payroll for his law firm and another business he owned, and insurance. When Daniels began inquiring of Avenatti as to why she had not received the second installment, Avenatti lied to Daniels, telling her that he was still attempting to obtain the payment from her publisher. Approximately one month after diverting the payment, Avenatti used funds recently received from another source to pay $148,750 to Daniels, so that she would not realize that Avenatti had previously taken and used her money.
Approximately one week later, pursuant to Avenatti’s earlier fraudulent instructions, the literary agent sent another payment of $148,750 of Daniels’ book advance to the client account controlled by Avenatti. Avenatti promptly began spending the money for his own purposes, including to make payments to individuals with whom Avenatti had a personal relationship, to make a monthly lease payment on a luxury automobile, and to pay for airfare, dry cleaning, hotels, restaurants and meals, payroll, and insurance costs. Moreover, to conceal his scheme, and despite repeated requests to Avenatti, as Daniels’ lawyer, for assistance in obtaining the book payment that she believed was missing, Avenatti led Daniels to believe that her publisher was refusing to make the payment to the literary agent, when, as Avenatti knew, the publisher had made the payment to the literary agent, who had then sent the money to Avenatti pursuant to his fraudulent instructions.
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Avenatti, 48, of Los Angeles, California, is charged in the fraud and aggravated identity theft indictment with one count of wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory term of imprisonment of two years in addition to the sentence imposed for the wire fraud charge.
Avenatti is charged in the extortion indictment with one count of conspiracy to transmit interstate communications with intent to extort, which carries a maximum penalty of five years in prison, one count of conspiracy to commit extortion, which carries a maximum penalty of 20 years in prison, one count of transmission of interstate communications with intent to extort, which carries a maximum penalty of two years in prison, and one count of extortion, which carries a maximum penalty of 20 years in prison.
