Disgraced attorney Michael Avenatti was sentenced to more than a decade in prison Monday for stealing millions of dollars from some of his clients.
U.S. District Judge James V. Selna in Santa Ana, California, sentenced Avenatti to 14 years in prison and ordered him to pay approximately $8 million in restitution to his victims and $3.2 million to the government for taxes that he owes.
The 14-year prison sentence will be served after he finishes serving a five-year prison sentence for extortion and fraud crimes.
One of the clients that Avenatti stole money from was Geoffrey Ernest Johnson, a man who is mentally disabled and a paraplegic.
“To this day, I do not know why Michael lied and deceived me, why he broke my trust, why he broke my heart,” Johnson wrote in a statement. “I trusted him implicitly, I believed the things he told me, but it was all part of his plan to defraud me of my settlement.”
“To this day, I have a hard time trusting people because of what Michael did, and I live in constant fear of being taken advantage of again, particularly given my physical disability,” Johnson added.
The Department of Justice highlighted additional details from court documents:
- Alexis Gardner obtained a $3 million settlement in a matter, which included a payment of $2.75 million in early 2017. Avenatti never provided a copy of the settlement agreement to Gardner or told her the true terms of the settlement. Upon receipt of the settlement money, Avenatti took the bulk of this money – $2.5 million – and used it to purchase his portion of a jet, while falsely telling Gardner that the settlement called for monthly payments over eight years. Avenatti gave Gardner a small “advance” for rent and made approximately 12 monthly payments, totally approximately $227,500, making them appear to come from the individual who paid the settlement, but then Avenatti stopped paying Gardner.
- Gregory Barela was to receive a $1.9 million settlement in an intellectual property dispute. Avenatti embezzled the first installment of $1.6 million in January 2018, in part by providing Barela with a bogus settlement agreement indicating that the payment was going to be made two months later. Avenatti used the money to pay expenses at his coffee business and to pay his own legal expenses.
- Michelle Phan and Long Tran hired Avenatti to negotiate a “Common Stock Repurchase Agreement” for the sale of nearly $27.5 million worth of Phan’s shares of ipsy, a company founded by Phan, and then another sale of approximately $8.15 million worth of Phan’s shares. When the first payment was made, Avenatti took his fees for the overall $35 million sale and sent the balance to Phan. But when the second stock sale was finalized and the company sent nearly $8.15 million, all of which belonged to Phan, 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 Johnson, Gardner and Barela. When Phan and Tran demanded Phan’s money, Avenatti falsely told them that the stolen $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.
- Avenatti failed to file individual tax returns or pay any personal income taxes for 2011 through 2017, even though he had a substantial income and lived lavishly.
- He also failed to file partnership returns or pay taxes – including payroll taxes – for his now-defunct Newport Beach-based law firm Eagan Avenatti LLP, of which he was the managing partner, for 2013 through 2017, even though the law firm received many millions of dollars during those years.
- Furthermore, Avenatti failed to file corporate tax returns or pay taxes for Avenatti & Associates, of which he was president, for 2011 through 2017, even though this entity also received substantial funds.
“Michael Avenatti was a corrupt lawyer who claimed he was fighting for the little guy. In fact, he only cared about his own selfish interests,” said United States Attorney Martin Estrada. “He stole millions of dollars from his clients – all to finance his extravagant lifestyle that included a private jet and race cars. As a result of his illegal acts, he has lost his right to practice law in California, and now he will serve a richly deserved prison sentence.”
This is a breaking news story; refresh the page for updates.