On Tuesday, it was revealed that Stormy Daniels' attorney Michael Avenatti has reportedly defaulted on over $440,000 in back taxes, penalties and interest that he had personally promised to pay the Internal Revenue Service. The Los Angeles Times reported, Avenatti had promised to pay the money as part of a bankruptcy settlement for his law firm.
The Times wrote, “Under the Jan. 30 bankruptcy settlement, Avenatti personally agreed to pay the IRS $2.4 million in back taxes, penalties and interest, court records show. Nearly $1.3 million of that was for payroll taxes that his law firm withheld from employees, but did not turn over to the government. Avenatti has paid $1.5 million of what was due, but missed the deadline last week for paying the next installment of $440,291, according to the U.S. attorney's office in Los Angeles.”
In another bankruptcy issue for Avenatti's firm, the Times stated the Eagan Avenatti law firm was ordered to pay a $10 million judgment because Avenatti and his firm failed to pay Jason Frank, a lawyer who used to work for them. Avenatti reportedly personally promised to pay Frank $4.85 million; Avenatti allegedly agreed that if he missed the deadlines he would accept a Bankruptcy Court judgment ordering his law firm to pay Frank $10 million. That includes the $4.85 million that he'd personally guaranteed.
Avenatti had reportedly personally guaranteed that the firm would pay Frank last week, but that didn’t eventuate.
Avenatti responded to the Times’ accusations by asserting that they were "purposely confusing me with a separate legal entity that has no role in the Daniels case." Regarding the $10 million judgment, he added, "Irrelevant. Over blown. Sensational reporting at its finest. No judgment against me was issued nor do I owe any taxes."