Disgraced Lawyer Michael Avenatti Is Set to Face Fraud Charges in Orange County

Shortly after he’s sentenced in an extortion scheme involving Nike, Stormy Daniels’s former attorney will head to trial for allegedly conning clients out of settlement money

In a Santa Ana federal courthouse, potential jurors are set to start filling out questionnaires next week in a fraud case against one of the Trump era’s forgotten celebrities: Michael Avenatti.

The looming courtroom spectacle will spotlight years of alleged financial crimes by Avenatti, who rocketed to fame in 2018 when he sued then-President Donald Trump on behalf of porn star Stormy Daniels, but for years was entangled in complicated court proceedings involving large debts and broken Los Angeles-area law partnerships.

It’s set to begin five days after Avenatti is due in New York City for sentencing on a felony conviction handed down by a jury there in January 2020 related to an extortion scheme against Nike. Prosecutors in that case say they want him to serve “very substantial prison time.” Probation officials say he’s legally eligible for an 11- to 14-year sentence, but are instead recommending eight years. His lawyers, meanwhile, are asking for six months followed by a year of home confinement, saying the loss of his law license and his “epic fall and public shaming” will already deter him from future crimes.

“The Court may take judicial notice of this fact, as Avenatti’s cataclysmic fall has been well-documented,” a sentencing memo says. “He cannot go anywhere in public without inducing and subjecting himself to vitriolic comments and abuse. These circumstances alone would deter anyone in Avenatti’s shoes from engaging in similar conduct.”

Whatever happens in New York, the California case presents a significant threat to the once-lauded lawyer’s future freedom. Under federal guidelines, he could face at least ten years in prison if convicted, in addition to his New York sentence, and prosecutors have shown no willingness to negotiate leniency. Prosecutors frequently make their disdain for him clear in court documents that lament his “unfounded accusations” about their handling of evidence as an attempt to delay the proceedings “ad infinitum” and distract from his “egregious criminal conduct.” They recently accused of him trying “to embarrass or intimidate” his former paralegal by disclosing information about her that was subject to a protective order.

And during a June 28 court hearing, the lead prosecutor, Brett Sagel, accused Avenatti of purposely scheduling conflicting court dates in New York to try to disrupt the proceedings in Orange County. The jury selection had been scheduled for July 6 and 7, but the trial judge, James V. Selna, postponed it to July 13 after Avenatti’s sentencing in the Nike case was moved to July 8. The judge expects opening statements on July 20.

Sagel objected to the delay, telling Selna: “What I do know is 150 [potential jurors] who are planning on showing up are now going to have to change their plans, and everybody else, because of what the defendant has done, which is always to delay this case.”

Sagel shares some small-world background with Avenatti: both grew up in St. Louis, Missouri, and Sagel earned a law degree from George Washington University School of Law a year before Avenatti. Their paths diverged from there. Sagel joined the U.S. Attorney’s Office in Santa Ana in 2004 and earned a name for himself by prosecuting Orange County Sheriff Mike Carona for corruption.

The second prosecutor, Alexander Wyman, joined the case in February 2021 after Sagel’s former co-counsel, Julian Andre, left the U.S. Attorney’s Office for private practice.

They’ll face off against a familiar face at the Orange County federal courthouse.

Avenatti’s lawyer, H. Dean Steward, is a longtime criminal defense attorney who, in addition to his private practice, often is appointed clients through the federal defender’s office. (He started out as Avenatti’s privately retained counsel but is now being paid with taxpayer money after Avenatti was determined to be indigent.)

With a distinctly folksy demeanor, Steward dusted off his COVID cobwebs last month by defending Orange County chiropractor Susan Poon, who was accused of health care fraud in the first criminal trial in the Central District of California since March 2020. Jurors convicted Poon on all counts.

Steward has requested a new trial over the fact that jurors were masked during the proceedings, which he said hindered his ability to analyze their reactions and demeanor. Steward declined to comment to Los Angeles, but told the Los Angeles Daily Journal that he expects similar problems during Avenatti’s trial.

Steward raised the issue with Judge Selna during the June 28 hearing, but Selna said jurors will be allowed to wear masks if they choose.

They won’t, however, hear much about Avenatti’s luxurious lifestyle, which has included a home in Newport Beach’s exclusive Lido Isle and a Ferrari he was ordered to give his second ex-wife in their divorce. The judge ordered prosecutors not to detail Avenatti’s jet-setting ways, including “dining at fancy restaurants making expensive purchases, and otherwise projecting a lifestyle and wealth,” saying the evidence presents a “fascinating sparkle” that would be more prejudicial than probative.

Meanwhile, in a foundation for a possible post-conviction appeal, Steward has repeatedly questioned his own ability to effectively represent Avenatti. He unsuccessfully asked to delay the trial in May, writing in a court document that he simply wouldn’t be able to effectively defend Avenatti if trial proceeds July 13.

“Since entering my appearance, I have worked on this case diligently,” Steward wrote. “However, my review of the discovery in this case and ability to prepare for trial has been slowed due to the sheer amount of discovery, the pandemic, and my other criminal cases. As the Court is aware, I am in my 70s, with pre-existing health conditions.”

Steward over the years has offered a glimpse at a possible narrative for Avenatti’s defense: he’s repeatedly described the prosecution as essentially a debt collection effort by the U.S. Attorney’s Office on behalf of a former prosecutor in the Orange County office, Andrew Stolper.

Stolper worked with Avenatti after leaving the prosecutor’s office in 2013, but he’s since formed his own firm and is representing another ex-Avenatti law partner, Jason Frank, as he tries to collect approximately $15 million owed to him by Avenatti and the now-bankrupt Eagan Avenatti law firm.

Amid Avenatti’s meteoric rise to fame on cable television, Stolper secured court judgments and conducted examinations that helped publicly expose Avenatti’s dire financial straits and his alleged misuse of client money. (One of the judgments landed the same day Avenatti was in New Hampshire talking to Democrats and a newspaper editorial board about a possible presidential bid.) The lead Internal Revenue Services agent in the Orange County criminal case attended Stolper’s courtroom questioning of Avenatti as part of the debt proceedings in March 2019, and prosecutors plan to use some of Avenatti’s answers as evidence in his upcoming trial.

The case has been split in two, with the first trial focused on allegations that he swindled clients out of settlement money and the second, scheduled for October, focused on tax and bankruptcy fraud charges. The former allegations involve five of Avenatti’s cases, including a lawsuit on behalf of Geoff Johnson, who was paralyzed during a suicide attempt at the Los Angeles County Jail in 2011.

Prosecutors say Avenatti obtained a $4 million settlement, but only paid him $900 to $1,900 every month for four years while lying to him about the status of the settlement. After Stolper questioned him about the whereabouts of the money during the March debt exam, prosectors say Avenatti went directly from the courthouse to Johnson’s home and had him sign a document attesting to Avenatti’s ethical handling of his case.

Another charge involves a $3 million settlement he negotiated for client Alexis Gardner against her ex-boyfriend, Miami Heat player Hassan Whiteside. Prosecutors say Avenatti used $2.5 million of the money to buy a jet, and spent another $250,000 on various expenses including lease payments on a Ferrari and an outstanding tab at the posh Newport Beach restaurant Javier’s.

As for the judge who’ll be running the show, no jurist is likely to go easy on an attorney accused of stealing from clients, but Judge Selna also is generally conservative, and his orderly demeanor makes him even more unlikely to cut Avenatti a break at sentencing.

Like most judges, Selna sees a broad range of cases and doesn’t usually make headlines. His most high-profile decision of late is probably his 2019 recusal of Judge David O. Carter from a lawsuit over south Orange County cities’ refusal to build a homeless shelter, after the cities said Carter was biased against them.

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