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Michael Avenatti pleads guilty to stealing millions of dollars from clients

By Kara Scannell

Disgraced attorney Michael Avenatti pleaded guilty Thursday to embezzling millions of dollars from four of his clients, taking another step closer toward resolving a flurry of federal charges against him.

Avenatti pleaded guilty in Santa Ana, California, to four counts of wire fraud for each client he stole from and one count of endeavoring to obstruct the administration of the Internal Revenue Code. Prosecutors said Avenatti obstructed the IRS’ effort to collect $5 million in unpaid payroll taxes for a company he operated known as Tully’s Coffee.

Judge James Selna set Avenatti’s sentencing for September 19. Avenatti faces a statutory maximum of 83 years in prison, although his sentence would likely fall below the maximum.

Avenatti’s plea resolves one of two remaining criminal cases against him. The former lawyer, a pugnacious critic of former President Donald Trump who once considered a presidential run of his own, fell from grace after being hit with three federal indictments in a six-week period in 2019.

On Thursday, Avenatti admitted to stealing millions of dollars from clients, including $4 million from a client with major disabilities. According to the indictment, after Avenatti negotiated settlements for the clients that required payment to go to them, he would lie to the clients about the terms of the settlements, instead depositing the funds into attorney trust accounts he controlled. He would then embezzle and misappropriate those funds, according to the indictment, and to prevent discovery of his scheme, he would tell clients the settlement proceeds hadn’t yet been paid, among other tactics.

He is currently serving a five-year prison term after being convicted in two separate trials in New York for attempting to extort millions of dollars from Nike and stealing nearly $300,000 from a book advance from his then-client Stormy Daniels, the adult-film star who alleged she had an affair with Trump years before he ran for office. (Trump has denied having an affair with Daniels.)

Avenatti was charged in a 36-count indictment in California with embezzling millions of dollars from his clients, multiple charges alleging he failed to file tax returns, and for lying in a case involving the bankruptcy of his previous law firm, Eagan Avenatti.

Last year he went to trial on the client-related charges and a mistrial was declared on technical grounds. He was set to go to trial next month before he decided to plead guilty.

Avenatti still faces 31 counts of wire fraud, bank fraud, aggravated identity theft, bankruptcy fraud and tax-related charges.

The US Attorney’s Office for the Central District of California, which is prosecuting the case, said in a statement, “The government is reviewing the case to determine how it will move forward after today’s guilty pleas. In the event that the government elects to proceed on the remaining counts, Judge Selna will vacate the September 19 sentencing date.”

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