Disgraced Attorney Michael Avenatti’s Quiet 2020 Is About to Give Way to a Wild 2021

A look inside the Newport Beach-based lawyer’s dizzying legal affairs—and all the people who’ve been swept up in them
2732

After a spectacular 15-minutes-of-fame crash and burn that included serious talk of a U.S. presidential bid, Los Angeles lawyer and three-time convicted felon Michael Avenatti enjoyed a quiet 2020 confined to a friend’s Venice home on a court-ordered COVID release from jail.

But while he’s secured about a dozen continuances in his three cross-county criminal cases, Avenatti couldn’t avoid a sanction issued December 23 in an Orange County civil case: a judge fined him $960 for failing to participate in an evidentiary proceeding in a longstanding lawsuit over $5.4 million Avenatti’s former co-counsel claims he stole. Avenatti’s former business partners, attorneys, and wives also are involved in ongoing court action for their dealings with him, and each could end up facing financial consequences much heftier than the $960 sanction lodged against Avenatti.

The approximately 20 federal bankruptcy actions seek between $48,000 and $2.2 million as part of a broad attempt by a court-appointed trustee, Orange County lawyer Richard Marshack, to recover allegedly misspent money that could instead go to Avenatti’s bankrupt law firm Eagan Avenatti LLP’s multimillion-dollar debts. They include one against Avenatti and his second ex-wife, Lisa Storie Avenatti, whom Marshack accuses of funding their “opulent lifestyle” with at least $6 million from the firm. But others target people and businesses whose only transgression may have been accepting money from Avenatti when they weren’t 100 percent sure of its origins. A lawyer for three of them said his clients “are innocent business people who did business with [Eagan Avenatti] and Michael Avenatti.”

“They supplied value for what they were paid,” says Christopher L. Blank of Newport Beach. “They should not be expected to police how [Eagan Avenatti] and Avenatti ran their business or paid their bills.”

Some of the legal actions target people and businesses whose only transgression may have been accepting money from Avenatti when they weren’t 100 percent sure of its origins.

Blank’s clients are race car drivers Andrew Davis and Robert Faieta and the racing-events company Trackside Performance, LLC. Between the three, Marshack says they owe Eagan Avenatti’s estate nearly $300,000 for money they accepted from Avenatti that paid for his personal motorsports hobby but were allegedly funded by his law firm. Other actions seek $73,328 from Protech Security & Electronics for a home security system Avenatti installed amid his national fame wave in 2018, and $1 million from Seattle lawyer Simeon Osborn, who accepted the money in 2014 as a loan repayment for Avenatti’s Global Baristas LLC, with which he bought the Tully’s Coffee chain in 2013. Osborn declined to comment for this article, as did representatives with Foster Garvey PC, a Washington state law firm that advised Avenatti on the purchase and is on the hook for $1.8 million. Foster Garvey has had the only successful defense so far, at least partially: its lawyers persuaded a judge to dismiss $42,555.22 after showing the money was paid for work done for the law firm, not Avenatti personally.

Avenatti’s first ex-wife, Christine Carlin Avenatti, recently joined the proceedings, as Marshack sued her in October seeking $55,000. She’s also being sued by Avenatti’s former law partner Jason Frank to recover at least $718,723 and 13 pieces of art legally linked to $5 million Avenatti owes him. The underlying drama involves an Orange County Sheriff’s art auction meant to financially benefit Avenatti’s second wife, Storie Avenatti, whom Avenatti also owes millions, but ended with Avenatti attending the auction himself to buy back his own artwork, which Frank says he then laundered through Carlin. Frank says Avenatti also laundered the $717,723 through Carlin to avoid creditors such as Frank himself, then arranged for her to use some of the cash to buy him a Mercedes Benz.

Avenatti pleaded the 5th Amendment when asked about the alleged scheme in an October 2019 judgment debtor exam conducted by Frank’s lawyer and current law partner, Andrew D. Stolper, who like Frank used to work with Avenatti. Avenatti gave Frank $11 from his pocket during the exam and said it was a payment, making last week’s $960 sanction only the second-smallest financial amount in Avenatti’s judicial odyssey.

The sanction occurred in yet another court case over Avenatti’s alleged bilking of his business partners: Since 2011, Los Angeles attorney Robert Stoll has been trying recover $5.4 million he says Avenatti owes him from attorney fees in a $39 million settlement. Their former clients who got the settlement are involved too, and Avenatti’s $960 sanction is payable to them.

Stoll and Marshack recently settled Stoll’s claims with the bankrupt law firm’s estate for the full $5.4 million, though Stoll’s lawyer, H. James Keathley, said the estate has no money and the move is instead a procedural one that allows him to freely pursue his case against Avenatti personally in state court. The judge in that state case, Orange County Superior Judge Walter Schwarm, finalized the $960 sanction on December 23 as part of a larger order preparing for an eventual trial.

The proceedings—which span two states and five courts—add more unflattering details to the seismic downfall of a debt-strapped Southern California attorney who rose to national prominence suing President Trump on behalf of porn star Stormy Daniels while also trying to manage an increasingly dire financial situation. While there were early reports of his highly unusual financial dealings, cable news shows frequently gave Avenatti significant airtime with nary a mention of his troubles. Then came his high-profile March 2019 arrest outside Nike’s lawyers offices in Manhattan, and an avalanche of criminal charges that accuse of him stealing millions from clients, including a paraplegic man who prosecutors say lost his Social Security benefits after Avenatti failed to inform the authorities about the status of a settlement he’d received from L.A. County. Avenatti has denied all charges and says he’s a victim of political persecution as well as federal prosecutors who are acting as debt collectors for his private business partners, including Stolper, a former assistant U.S. attorney.

The trial for Avenatti’s California client theft case was recently postponed from February to July 13, and Avenatti’s sentencing in the Nike extortion case in New York has been postponed to May 7. His trial in the theft case involving Daniels also has been delayed to January 10, 2022. A trial in the California case’s bankruptcy and tax fraud charges is scheduled for October 2021.

Avenatti faces a substantial amount of prison time in the Nike case alone. His convictions are for wire fraud, and wire fraud sentencings are based on the amount of money involved, which, in Avenatti’s case, is $20 million. Steward said the federal probation department is recommending he receive 10 to 12 years in prison while his defense team plans to request probation.

At least some criminal defendants in Avenatti’s situation might try to seek plea deals in his two untried cases that allow concurrent instead of consecutive sentences, but Los Angeles attorney and legal commentator Ken White says he doubts it’s a move Avenatti “is equipped to make.”

“I don’t know if his ego can take it,” says White, who has sparred with Avenatti on Twitter under his account @Popehat. “He strikes me as the type who will keep fighting forever.”

Avenatti’s lawyer in the California case, H. Dean Steward, said last February he was working on a resolution to all Avenatti’s criminal matters, but he said last week the talks fell through and the California case is trial bound. A new U.S. Attorney under the Biden administration could change that, “but it’s impossible to say at this point,” Steward said.

“Everything is getting kicked into the spring time and early summer,” Steward said. “The federal system is pretty much at a standstill right now.”

“He’s been very uncharacteristically quiet during the time that he’s been in home confinement, and I’m sure that’s been painful for him” —Attorney Ken White

Avenatti, meanwhile, recently sued Fox News and a cadre of on-air personalities for defamation, accusing them of conspiring against him because he was a threat to President Donald Trump. White says the lawsuit appears to be “performative more than it is substantive” and could be Avenatti’s way of lashing out amid court-imposed silence.

“He’s been very uncharacteristically quiet during the time that he’s been in home confinement, and I’m sure that’s been painful for him,” White says.

From his friend Jay Manheimer’s home in Venice, Avenatti is also active in his divorce case with Storie Avenatti, which is ongoing in Orange County Superior Court. In October, a judge granted his request for weekly visitations with his 6-year-old son but denied his requests to order Storie Avenatti to cease speaking publicly about him and to allow him access to a private Instagram account she controls for their son.

Meanwhile, federal prosecutors in his Orange County client theft case are currently seeking to jail him for violating his release conditions by using a computer belonging to Manheimer that had the ability to access the Internet. Their motion has been pending since September following a three-hour grilling of Manheimer, but the trial judge, U.S. District Judge James Selna in Santa Ana, still hasn’t addressed it. Steward says the request is “worthless” and that Avenatti has “been flawless at home.”

“So we’re seriously considering a bail reconsideration motion to allow him to move about and at least come down and visit his lawyer” to prepare for trial, says Steward, who’s based in San Clemente.

Steward declined comment on the bankruptcy and civil proceedings, including the sanction, and said he and Avenatti “have decided to remain low profile.”

Meghann Cuniff is a freelance journalist focused on legal affairs. She’s on Twitter @meghanncuniff.


RELATED: Disgraced Attorney Michael Avenatti, by the Numbers


Stay on top of the latest in L.A. food and culture. Sign up for our newsletters today.