LOS ANGELES, CA- The “Porn Lawyer” is back in the news. After a failed presidential bid, amongst many failures, Michael Avenatti was arrested Tuesday evening by IRS agents.

The arrest took place during a break in a disciplinary hearing in Los Angeles over allegations that the high-profile lawyer scammed a client out of $840,000, under allegations that he violated his bail.

“I can confirm that he was arrested by federal agents,” Avenatti’s lawyer Dean Steward said Tuesday. “I anticipate a bail hearing at 2 p.m. tomorrow in Magistrate’s Court in Santa Ana. I haven’t seen the details of the warrant but should have it later this evening.“

Avenatti is accused of fraud, cheating on his taxes and lying to investigators. Federal prosecutors allege that he embezzled funds from clients.

“Completely innocent,” Avenatti said as he was being led out of the Los Angeles courthouse.

A California judge revoked his bail Wednesday, forcing a delay of his New York extortion trial set for next week after prosecutors said he was hiding assets from creditors to live lavishly.

U.S. District Judge James Selna said Avenatti, best known as the brash lawyer for porn actress Stormy Daniels, likely committed the new financial crimes and was a threat to engage in other crimes if he remained free.

In New York, U.S. District Judge Paul G. Gardephe said the disruption had thrown a trial scheduled to start in a week into chaos, and he noted that California prosecutors used evidence largely gathered last summer to make the surprising move.

The New York trial, in which Avenatti is charged with trying to extort up to $25 million from Nike, was supposed to begin with formal questioning of prospective jurors next Wednesday after they filled out questionnaires Tuesday.

Gardephe said he wants the trial to start no later than January 27.

Avenatti has pleaded not guilty and cited his skirmishes with President Donald Trump as proof that prosecutors targeted him.

Wow. Is he grasping at straws or what?

Defense lawyers complained that they may need a longer delay because they have no money for trial now that Avenatti’s finances are viewed suspiciously.

Selna was asked to revoke Avenatti’s $300,000 bail and he did.

“I believe the danger to the community is real and palpable,” Selna said in court.

Prosecutors described several schemes orchestrated by Avenatti to hide his assets from a client, a former legal partner and an ex-wife while living in an $11,000-a-month apartment, being chauffeured in a Mercedes and staying at luxury resorts.

He pocketed $1 million in legal fees during the period and then shifted the money around to conceal the payment despite mounting debts that surpassed $20 million, prosecutors said.

After receiving the money, he even sought legal representation from a public defender while declining to provide a financial affidavit to show his ability to afford a lawyer.

Defense lawyers contested the evidence, saying Avenatti didn’t hide funds, has been paying his bills and posed no threat. Steward said Avenatti was making it difficult for creditors but didn’t commit any crime.

“I suggest it doesn’t go over the line,” Steward said.

Federal prosecutors said Avenatti would be transferred by Friday to New York, where Gardephe scheduled a conference for Tuesday for lawyers to tell him where things stand.

Prosecutors were seeking to hold Avenatti behind bars for allegedly committing new acts of wire and mail fraud, both federal offenses, as well as possible state crimes in California and Washington state.

The alleged new crimes follow a pattern of misconduct since 2011 and appear to mirror crimes he is charged with committing in a 36-count indictment, prosecutors said.

“The defendant’s extensive pattern of criminal conduct and the overwhelming evidence supporting those charges demonstrate that defendant is a substantial danger to the community,” prosecutors wrote in a court document.

“If allowed to remain on bond, defendant will almost certainly continue to engage in further fraudulent and obstructive conduct.”

Avenatti faces another trial in May in California for dozens of charges alleging he defrauded clients of millions of dollars, stiffed the IRS and committed bank fraud.

He has pleaded not guilty to those charges, along with the Nike extortion allegations and a separate case charging him with ripping off ex-client Daniels of book deal proceeds.

The arrest of Avenatti marks a new low for the attorney who was flying high a year ago while in the spotlight championing Daniels’ case against Trump.

Daniels, whose real name is Stephanie Clifford, went to court to tear up a $130,000 hush money deal she said she made to cover up an affair with Trump before he was president.

Although Trump has denied the affair, he chose not to challenge that effort, so she effectively won what she was seeking. But the president won a judgment for his legal expenses after successfully challenging a related defamation case Daniels brought against him.

Avenatti had positioned himself as a Trump troll of sorts, attacking the president on Twitter frequently, and even flirted with running for president at one point, making appearances in Iowa and New Hampshire.

Despite losing the Daniels defamation case, Avenatti had claimed he would eventually prevail and win her even larger lawyer fee judgement than the nearly $300,000 she owed Trump. But Daniels hired a new lawyer to take the case, and Avenatti’s own criminal legal problems began with his arrest in New York in March.

While free on bond, prosecutors said Avenatti funneled $717,000 from $1 million he earned in a legal settlement to an account his first wife set up. She then returned $500,000 to him and used some of the remaining balance to buy her ex-husband a used Mercedes for $50,000.

Avenatti maintained his membership at Exclusive Resorts, a Colorado-based company billed as as the “world’s elite private vacation club,” according to prosecutors. He paid over $35,000 to the club last summer and stayed at the club’s resorts four times in California, Florida and New York between August and November.

His girlfriend, who is not named in the court papers, also stayed as his guest at one at an Exclusive Resort in Tuscany, Italy, prosecutors said.

And, just in case you had forgotten what the whole Nike extortion trial was about, here is a reminder.

One might call Michael Avenatti’s career a forty thousand foot nose dive.

Federal agents seized the embattled lawyer’s private jet, worth about $4.5 million, in a federal warrant.

Thom Mrozek, a U.S. Attorney’s Office spokesman, said federal agents seized a Honda HA-420 twin-engine jet from Santa Barbara Airport about 10 a.m. after a federal judge issued the warrant.

Originally, it was scheduled to be flown to Orange County on behalf of Avenatti.  But aviation officials say pilots had to file a new flight plan to San Bernardino County.

“Federal authorities have seized a jet co-owned by Mr. Avenatti pursuant to a seizure warrant issued by a federal judge. This seizure is related to the pending criminal case in Los Angeles,” a federal official told Fox News.

Avenatti said that he doesn’t really care.

“I haven’t used the plane in almost a year and I gave up my interest last year. I have no interest in the plane and could care less.”

Re the “jet seizure” and Fox News’ tabloid journalism – led by moron @ShepNewsTeam: I haven’t used the jet in almost a year and gave up my interest months ago last year. So they have no idea what they are talking about.

— Michael Avenatti (@MichaelAvenatti) April 10, 2019

It’s a six-seat business jet that was flown by a private contract pilot to Chino Municipal Airport. It’s now being held there by Threshold Aviation.

According to federal records, the plane was bought on Jan. 30, 2017 and was registered to Passport 420. It’s a company co-owned by Avenatti.

Avenatti bristled at the idea that some people might tie the name of his company in with a drug.

And I almost forgot @ShepNewsTeam – “420” is the model number of the plane not some reference to “marijuana” (oh, horrors). Why are you and your cohorts always so uptight in public but then in private… #Hypocrites

— Michael Avenatti (@MichaelAvenatti) April 10, 2019

According to a government complaint, Avenatti’s wife, Lisa-Storie Avenatti, said he owned two private jets.  She says one is owned through Avenatti & Associates and the other through Passport 420. Each is said to have a value of $4.5 million.

Avenatti dispute this in a statement to Fox:

“I have never owned two planes either directly or indirectly and any claim to the contrary is complete nonsense.”

The warrant itself for the seizure of the plane is under seal.  Prosecutors haven’t said whether the jet was seized to satisfy a judgement, in connection with non-payment of taxes or as part of a broader investigation.

Avenatti is also accused of failing to pay income taxes for almost a decade despite making $18 million since 2010.

In addition, officials say his firm recorded $38 million in deposits but filed no tax returns.

Last year, federal prosecutors in Manhattan charged Avenatti with trying to extort more than $20 million from Nike.

His co-conspirator?  According to The Wall Street Journal it is celebrity attorney and CNN analyst Mark Geragos… a lawyer famous for representing clients like Michael Jackson, Jussie Smollett and Colin Kaepernick.

The criminal complaint details how Avenatti allegedly met in March 2019 with an attorney for Nike. The complaint says he threatened to release damaging information about the company, unless Nike made millions in payments to himself and another unnamed co-conspirator.

 

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The complaint says Avenatti also demanded a payment of $1.5 million by Nike to someone he claimed to represent.

An FBI agent wrote in a court filing, that Avenatti said he would hold a press conference alleging misconduct at Nike unless he and another lawyer were paid between $15 million and $25 million to conduct an internal investigation… either that or were given $22.5 million to resolve their client’s claims and in exchange for their silence.

According to the complaint, Avenatti said:

“I’ll go take $10 billion dollars off your client’s market cap…I’m not f***ing around”.

 

Prosecutors from the Southern District of New York said Avenatti tried to get the cash by:

“threatening to use his ability to garner publicity to inflict substantial financial & reputational harm on the company if his demands were not met.”

According to the FBI agent, the threat was made to a Nike representative. 

“Full confidentiality, we ride off into the sunset.”

And if they didn’t? According to the document, here’s what said would happen if Nike didn’t comply with his demands:

“If we don’t reach a resolution … as soon as this becomes public, I am going to receive calls from all over the country from parents and coaches and friends and all kinds of people — this is always what happens — and they are all going to say I’ve got an email or a text message or — now 90% of that is going to be bullshit because it’s always bullshit 90% of the time, always, whether it’s R. Kelly or Trump, the list goes on and on — but 10% of it is actually going to be true, and then what’s going to happen is that this is going to snowball.” 

“And every time we got more information, that’s going to be The Washington Post, The New York Times, ESPN, a press conference, and the company will die — not die, but they are going to incur cut after cut after cut after cut, and that’s what’s going to happen as soon as this thing becomes public,” Avenatti said, according to prosecutors.

Looks like Avenatti won’t be able to follow through with a Tweet he sent out:

“Tmrw at 11 am ET, we will be holding a press conference to disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered. This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.”

But that’s not all.  

Prosecutors in California say Avenatti stole a client’s $1.6 million settlement and spent the money on personal expenses and debts.  They say he also used it to run his law firm along with his former coffee business, Tully’s Coffee, which had locations in Los Angeles and Seattle.

It gets better.  He’s also accused of defrauding a bank in Mississippi by using fake tax returns to borrow $4.1 million.  But get this – the feds say he ever even filed personal tax returns for 2011, 2012 and 2013… and that he still owes the IRS more than $850,000 in unpaid taxes, penalties and interest for 2009 and 2010.

You may remember that Avenatti represented adult-film actress Stormy Daniels until recently. She was a central figure in the hush-money scandal that lead to Manhattan federal prosecutors charging the president’s former personal attorney, Michael Cohen.  Cohen pleaded guilty and will start a prison sentence in May.

Avenatti tried to get in on the “attack Kavanaugh with fake accusations” game during the nomination confirmation hearings for the now Supreme Court Justice.  It was around the same time he said he’d be running for president against Donald Trump in 2020.  Clearly that didn’t go well.  A couple of months later, he announced he wouldn’t actually be running for president.

“I do not make this decision lightly — I make it out of respect for my family,” said Avenatti.

The twice-married lawyer has three children.

“But for their concerns, I would run,” he said in a statement posted on Twitter.

Avenatti had initially announced his consideration for a run last July, saying:

“only if I think that there is no candidate in the race that has a real chance of beating him.”

Shortly after announcing his decision not to run for the White House, Avenatti was infuriated by data science journalist Nate Silver and went after him on Twitter.  This, after Silver pointed out that Avenatti was “polling at 1 percent” among potential presidential contenders.

The combative litigator went on to become a daily presence on cable news networks, also raising cash for Democrat candidates for other offices.

So why did he decide not to run?  It might have had something to do with his arrest by Los Angeles police on accusations of domestic violence by Mareli Miniutti, an actress with whom he had been living.

He of course denied those claims as “completely bogus” and still hasn’t been criminally charged. The LA City Attorney’s Office continues that investigation as a possible misdemeanor charge, after the DA declined to file a felony charge.

Then, of course, there are the cash flow issues.

Avenatti is in the middle of a number of legal fights related to debts that involve his law firm. Then there was the suit by President Trump to recoup hundreds of thousands of dollars in legal fees from a since-dismissed defamation lawsuit by Daniels against the president.

After the attack on then Supreme Court nominee Brett Kavanaugh, Senate Judiciary Committee Chairman Chuck Grassley, a Republican from Iowa, referred claims made by Avenatti and his client Julie Swetnick to the Justice Department for criminal investigation. 

Why? 

Well, Grassley cited “contradictions” between what Swetnick had told the Judiciary Committee and what she told NBC. That testimony was surrounding her claims that decades ago, she saw Kavanaugh spike drinks at parties so girls could be gang raped

Kavanaugh denied those claims, which were later demonstrated to be untrue.

Avenatti encouraged the Justice Department to bring it on, and accused Gassley of not caring about those claims.

Then Daniels publicly said she was going to drop Avenatti as her attorney.

She said he “has not treated me with the respect and deference an attorney should show a client.” 

She went on to say he had “spoken on my behalf without my approval” and had “filed a defamation case against Donald Trump against my wishes,” and then launched “a new crowdfunding campaign using my name and face without my permission.”

Earlier this month, Stormy Daniels followed through on that.  She hired a new attorney. 

Daniels’ new lawyer is an Oklahoma based attorney named Clark Brewster.

“I’ve started reviewing these matters about two weeks ago and I will be replacing Mr. Avenatti,” Brewster told CNBC.

Avenatti disputes who fired who.  He said in his own tweet he had told Daniels in writing on Feb. 19 that “we were terminating our representation of her for various reasons that we cannot disclose due to the attorney-client privilege.”

“This was not a decision we made lightly, and it came only after lengthy discussion, thought and deliberation, as well as with consultation with other professionals,” Avenatti wrote on Twitter. “We wish Stormy all the best.”

Avenatti has long been engaged in work against the Republican party, going all the way back to college and later in law school when he worked for The Research Group, a political opposition research and media firm run by Rahm Emanuel, who later went on to become White House Chief of Staff for President Barack Obama and Mayor of Chicago.

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