Michael Avenatti, the lawyer who rocketed to fame through his representation of adult-film star Stormy Daniels in her battles with U.S. President Donald Trump, was charged Wednesday with ripping her off.
Federal prosecutors in New York City say Mr. Avenatti used a doctored document to divert about US$300,000 that the actor, whose real name is Stephanie Clifford, was supposed to get from a book deal, then used the money for personal and business expenses. Only half of that money was paid back, prosecutors said.
Ms. Clifford isn’t named in the court filing, but the details of the case, including the date her book was released, make it clear that she is the client involved.
Mr. Avenatti denied the allegations on Twitter.
“No monies relating to Ms. Daniels were ever misappropriated or mishandled. She received millions of dollars worth of legal services and we spent huge sums in expenses. She directly paid only $100.00 for all that she received. I look forward to a jury hearing the evidence,” he wrote.
Mr. Avenatti added in a later tweet that his agreement for representing Ms. Clifford “included a percentage of any book proceeds.”
The charges pile on top of previous allegations of legal misconduct by Mr. Avenatti, who represented Ms. Clifford when she sued to be released from a non-disclosure agreement involving an alleged tryst with Mr. Trump. The President denies an affair took place.
Mr. Avenatti was previously charged in New York with trying to extort up to US$25-million from Nike by threatening to expose claims that the shoemaker paid off high-school basketball players to steer them to Nike-sponsored colleges. And in Los Angeles, he’s facing a multicount federal indictment alleging that he stole millions of dollars from clients, didn’t pay taxes, committed bank fraud and lied during bankruptcy proceedings.
Mr. Avenatti has denied the allegations against him on both coasts, saying he expects to be exonerated. The Los Angeles charges alone carry a potential penalty of more than 300 years in prison.
“I look forward to a jury hearing all of the evidence and passing judgment on my conduct,” Mr. Avenatti wrote in a text message.
Ms. Clifford initially hired Mr. Avenatti to handle a lawsuit she filed last year in which she sought to invalidate the non-disclosure agreement she’d signed with Mr. Trump’s then-lawyer Michael Cohen in exchange for US$130,000.
The money was supposed to buy her silence during Mr. Trump’s run for president about an alleged affair between the two. In August, Mr. Cohen pleaded guilty to violating campaign finance laws in connection with the payment.
In announcing the new charges Wednesday, prosecutors said that Mr. Avenatti sent a “fraudulent and unauthorized letter” to Ms. Clifford’s literary agent, instructing the agent to send payments not to Ms. Clifford but to a bank account Mr. Avenatti controlled. They said he used the stolen funds to pay employees of his law firm and pay for hotels, airfare, dry cleaning and his Ferrari.
“Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client,” Manhattan U.S. Attorney Geoffrey Berman said in news release.
Mr. Avenatti “blatantly lied” and stole to maintain his “extravagant lifestyle,” Mr. Berman said.
Ms. Clifford raised concerns with Mr. Avenatti about late payments around the time her book, Full Disclosure, was published in October, according to the indictment.
“When is the publisher going to cough up my money,” she asked Mr. Avenatti in early December, according to the indictment.
Mr. Avenatti responded that he was “working them and threatening litigation,” prosecutors said, but he did not tell Ms. Clifford he had already received the money.
Ms. Clifford began publicly raising concerns about Mr. Avenatti’s conduct in November. In a statement, she said Mr. Avenatti had launched a fundraising effort to raise money for her legal case without telling her. She also said he had filed a defamation lawsuit against Mr. Trump, on her behalf, against her wishes.
“For months I’ve asked Michael Avenatti to give me accounting information about the fund my supporters so generously donated to for my safety and legal defence. He has repeatedly ignored those requests,” she said. “Days ago I demanded again, repeatedly, that he tell me how the money was being spent and how much was left. Instead of answering me, without my permission or even my knowledge Michael launched another crowdfunding campaign to raise money on my behalf. I learned about it on Twitter.”
At the time, Mr. Avenatti responded that he was still Ms. Clifford’s “biggest champion.”
He said that under his retention agreement, she had agreed to pay him just US$100 for his services, and he was entitled to keep all the money he raised for her legal defence to defray what he said were substantial costs of her case.
The defamation case initiated by Mr. Avenatti against Mr. Trump backfired, with a judge ordering her to pay the President’s legal bills.
When Mr. Avenatti was first charged with defrauding other clients and extorting Nike in March, Ms. Clifford said she was “saddened but not shocked.”
She added on Twitter that she had fired Mr. Avenatti a month earlier after “discovering that he had dealt with me extremely dishonestly.”