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A federal grand jury has brought a 36-count indictment against celebrity attorney Michael Avenatti, charging him with embezzlement, fraud, perjury, and more.
The Los Angeles Times reported Thursday morning that charges stem from Avenatti’s dealings with multiple clients, including Geoffrey Ernest Johnson, who is mentally ill and a paraplegic. Johnson won a $4 million settlement from Los Angeles County, but Avenatti hid the money from him for years. He allegedly also hid $2.75 million from another client. The day after he received that money, he allegedly purchased a $2.5 million private jet for a company he owned. The jet has since been seized by federal agents
“Avenatti stole millions of dollars from five clients and used a tangled web of shell companies and bank accounts to cover up the theft, the Santa Ana grand jury alleged in an indictment that prosecutors will make public Thursday,” the Times reported.
Avenatti and his various businesses also owed millions in back taxes, and his Newport Beach law firm was reaching bankruptcy, the Times reported.
“The breadth of Avenatti’s alleged crimes is clear in the maximum sentence he would face if convicted on all counts: 335 years in prison,” the Times reported.
Avenatti also faces an additional 47 years in prison for separate charges in New York, stemming from the attorney’s alleged extortion of athletic company Nike. He was arrested for those charges last week, but is out after posting $300,000 bail.
After the impending indictment was reported, Avenatti defended himself on Twitter, saying he was “confident that justice will be done.”
“For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice. Along the way, I have made many powerful enemies. I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known,” he tweeted.
In a press release detailing the charges, the U.S. Attorney’s Office for the Central District of California said the 36-count indictment focused on “four areas of wrongdoing”: Embezzlement, failure to file and pay income taxes, fraudulent loan applications, and concealing assets from a bankruptcy court.
“These four areas of criminal conduct alleged in the indictment are all linked to one another because money generated from one set of crimes appears in other sets – typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing,” said U.S. Attorney Nick Hanna.
Ryan L. Korner, the acting special agent in charge with the IRS’s criminal investigation in LA said the agency’s investigation of Avenatti “details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet.”
Specifically, Avenatti faces 10 counts of wire fraud for taking more than $12 million won by clients and failing to provide them what they were owed.
He also faces 19 counts relating to tax offenses, including failing to file his personal income tax returns in 2010. One of his businesses, Global Baristas US LLC, failed to file employment tax returns and didn’t pay $3.2 million in federal payroll taxes, which had been withheld from employee paychecks. The indictment also said Avenatti lied to the IRS about his taxes.
Further, Avenatti faces two counts of bank fraud relating to filing false tax returns to obtain millions of dollars in bank loans, and four counts of bankruptcy fraud for lying about the bankrupty concerns surrounding his law firm Eagan Avenatti.
Finally, he faces one count for “aggravated identity theft for misusing the name of a tax preparer in relation to the bank fraud scheme.”