Authorities accused Avenatti of stealing millions of dollars from five clients and of lying repeatedly about his business and income — not just to clients but also to an IRS collection agent, creditors, a bankruptcy court and a bankruptcy trustee.
Avenatti was indicted by a federal grand jury in Santa Ana, California, on the new charges, which included tax fraud and bankruptcy fraud, adding to charges of wire fraud, bank fraud and extortion that were filed against him last month in California and New York. If convicted of all the crimes of which he has been accused in California alone, prosecutors said, he would face a maximum of 333 years in prison, and an additional two-year mandatory sentence on an identity theft charge.
“It is lawyer 101: You do not steal your client’s money,” Nicola T. Hanna, the U.S. attorney in Los Angeles, said at a news conference Thursday, describing Avenatti’s business as a Ponzi scheme of sorts. “Money generated from one set of crimes was used to further other crimes, typically in the form of payments used to string along victims so as to prevent Mr. Avenatti’s financial house of cards from collapsing.”
Avenatti denied all allegations on Thursday. He has suggested the case against him is politically motivated, following his aggressive representation of Daniels, the pornographic film actress who said she had a sexual relationship with Trump and received a hush-money payment in October 2016.
Among the five clients Avenatti is accused of defrauding across four matters, prosecutors said, one was a paraplegic man who won a $4 million settlement from Los Angeles County four years ago but had received only “a fraction of the money” through periodic payments that never exceeded $1,900.
Avenatti put most of the client money toward his own purchases, authorities said, including a $5 million private jet he co-owned, which prosecutors said they had seized Wednesday.
He also dodged taxes, some he owed himself and others that were owed by his firm, prosecutors said. They alleged that Avenatti had lied to an IRS revenue officer and had taken steps to prevent the government from collecting on tax liens and levies since 2013.
This article originally appeared in The New York Times.