Michael Avenatti charged in 36-count federal indictment

Avenatti said he will plead not guilty to the California charges, which include embezzlement and filing fraudulent tax returns

Michael Avenatti, the attorney who once represented Stormy Daniels and floated the idea of running for president, has been charged in a 36-count federal indictment alleging he stole millions of dollars from clients, did not pay his taxes, committed bank fraud and lied in bankruptcy proceedings.

Avenatti, 48, was indicted late Wednesday by a southern California grand jury on a raft of additional charges following his arrest last month in New York on two related counts and for allegedly trying to shake down Nike for up to $25m.

The attorney is best known for representing the pornographic actress and producer Stormy Daniels in lawsuits against Donald Trump over hush money she was paid to cover up an alleged affair with the president in the past, also involving a nondisclosure agreement.

Avenatti said on Thursday on Twitter that he will plead not guilty to the California charges.

I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me, he wrote.

The new charges do not include the New York extortion case alleging Avenatti demanded millions to stay quiet about claims he planned to reveal about Nike paying high school players. Avenatti has said he expects to be cleared in that case.

The 61-page southern California indictment alleges Avenatti embezzled from a paraplegic man and four other clients and deceived them by shuffling money between accounts to pay off small portions of what they were due to lull them into thinking they were getting paid.

He is also charged with not paying personal income taxes, not paying taxes for his various businesses, including two law firms, and pocketing payroll taxes from the Tullys Coffee chain that he owned, the indictment said.

Avenatti was also charged with submitting fraudulent tax returns to get more than $4m in loans from the Peoples Bank in Biloxi, Mississippi, in 2014. The tax returns he presented to the bank were never filed to the IRS, prosecutors have said.

The charges are the latest major blow to a career that took off last year when Avenatti represented Daniels in her lawsuit to break a confidentiality agreement with Trump to stay quiet about an affair they allegedly had.

Avenatti became one of Trumps leading adversaries, attacking him on cable news programs and Twitter. At one point, Avenatti even considered challenging Trump in 2020.

But back home, his business practices had come under scrutiny from the IRS and a former law partner who was owed $14m by Avenatti and the Eagan Avenatti firm, which filed for bankruptcy.

The indictment said Avenatti made false statements in bankruptcy proceedings by submitting forms under penalty of perjury that under reported income his firm received.

The most glaring example of deception and fraud was described in the indictment as scheming Avenatti allegedly did to deprive clients of money they were due from legal settlements or sales of stock and the actions he took to cover his tracks.

In a case involving one client, Avenatti allegedly funneled a $2.75m settlement into his bank accounts and spent $2.5m on a private airplane, the indictment said.

Although Avenatti was due a portion of settlement funds for his work, the charges said he paid only a fraction of the money clients were due in some cases and strung them along while they waited to be paid.

Avenatti allegedly drained a $4m settlement he negotiated in 2015 on behalf of Geoffrey Johnson, who was paralyzed after trying to kill himself in the Los Angeles county jail, the indictment said.

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