High-profile attorney Michael Avenatti is facing a raft of new charges after a federal grand jury indicted him on 36 counts of stealing millions of dollars from clients, bank fraud, tax evasion, and perjury in bankruptcy proceedings.
US Atty Nick Hanna & the IRS are holding a news conference in Los Angeles at 9am Pacific time.
Avenatti, who is reportedly free on a $300,000 bond, tweeted Thursday morning that he has "made many powerful enemies" throughout his legal career and intends to plead not guilty to the charges against him.
Under State Bar of California rules of professional conduct, a lawyer must promptly notify a client of the receipt of any funds they are entrusted to hold for the client and turn over the money at the client's request.
Charges in the separate cases were announced nearly simultaneously and authorities took Avenatti into custody in New York City later that day.
According to the indictment, Avenatti withheld Tully's employment taxes from the IRS, and directed employees to deposit cash receipts into an account for Avenatti's vehicle racing company.
The indictment also stated that Avenatti received $2.75 million in proceeds for settlement but hid that from another client.
The proceeds were wired to Avenatti, who allegedly "drained the entire settlement payment from his law firms' trust account and used portions of the settlement to finance his coffee business or pay personal expenses", the USA attorney's office statement said. The charges say he used a similar method to steal $2.75 million from another client. He is accused of failing to file personal tax returns since 2010 and to pay $3.2 million in payroll taxes on his coffee business, even though he withheld some portion of this money from employee paychecks.
Avenatti also allegedly submitted false information to financial institutions for several loans, including a 2011 tax return noting his adjusted gross income for that calendar year of approximately $4.6 million.
Avenatti allegedly drained a $4 million 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.
On Thursday, asked about Avenatti's claim that the indictment was the result of a conspiracy by prominent figures Avenatti has antagonized, Hanna dismissed that allegation: "Nothing can be farther from the truth". The failure to respond led to Johnson's disability benefits being cut off in February.
"Any claim that any monies due clients were mishandled is bogus nonsense", Avenatti said in a tweet that contained an image of what he said was the document signed by Johnson "attesting to my ethics and how his case was handled".