Michael Avenatti Enters Not Guilty Plea in Federal Wire, Bank Fraud Case

Zachary Stieber
By Zachary Stieber
April 29, 2019USshare
Michael Avenatti Enters Not Guilty Plea in Federal Wire, Bank Fraud Case
In this April 1, 2019 file photo, attorney Michael Avenatti arrives at federal court in Santa Ana, Calif. An indictment filed against Avenatti, Wednesday, April 10, alleges he stole millions of dollars from clients, didn’t pay his taxes, committed bank fraud and lied in bankruptcy proceedings. (AP Photo/Jae C. Hong)

Attorney Michael Avenatti has entered a not guilty plea in a federal case of alleged tax crimes, wire fraud, and perjury.

Avenatti was indicted on 36 counts earlier in April.

U.S. Attorney Nick Hanna said in a statement on April 11 that the alleged crimes were all linked to one another because “money generated from one set of crimes appears in other sets—typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing.”

“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” added Acting Special Agent in Charge Ryan L. Korner with IRS Criminal Investigation in Los Angeles. “Individuals who intentionally thwart the IRS and fail to meet their tax obligations will be caught and they will be held accountable.”

Michael Avenatti and Stormy Daniels
Michael Avenatti and Stormy Daniels attend a City Proclamation and Key to The City of West Hollywood at Chi Chi LaRue’s in West Hollywood, Calif., on May 23, 2018. (Tara Ziemba/Getty Images)

The charges include 10 counts of wire fraud related to more than $12 million he received from clients as a result of settlements in lawsuits and other negotiations.

Avenatti pleaded not guilty to all the charges in federal court in Santa Ana, California on April 29, according to Kris Ankarlo, a reporter for KFIAM in Los Angeles. Avenatti declined to speak to reporters on his way out of the courthouse, referring them to a statement he released earlier in the day.

In the statement, posted on Twitter, he said that he planned to enter the not guilty plea.

“The right to a presumption of innocence and the right to a jury trial are two fundamental rights that our founding fathers demanded when this country was formed over 200 years ago,” he stated.

Avenatti’s Twitter page has since been made private.

In one of these cases, Avenatti represented Geoffrey Johnson, a paraplegic on disability, against the County of Los Angeles where a $4 million settlement was reached in 2015. Prosecutors said Avenatti received the settlement but hid it from Johnson and used the money to pay for his coffee business and other personal expenses. Meanwhile, he only gave Johnson periodic “advances” of no more than $1,900 and paid for his rent.

The indictment also stated that Avenatti received $2.75 million in proceeds for settlement but hid that from another client. He then allegedly took $2.5 million from the settlement and used it to purchase a portion of a jet.

Federal agents confirmed with Fox News that they had seized a Honda HA-420 twin-engine jet—worth $4.5 million—on April 10 after a federal judge issued a warrant. The jet was registered to Passport 420, a company Avenatti co-owns.

Avenatti was charged with 19 tax-related offenses including failure to file personal income tax returns since 2010, and other tax returns for two of his law firms.

Laura Loomer
Michael Avenatti (L) and Laura Loomer attend Politicon 2018 at Los Angeles Convention Center in Los Angeles, California on Oct. 20, 2018. (Photo by Phillip Faraone/Getty Images for Politicon)

The attorney allegedly tried to obstruct efforts by the IRS to collect at least $2.3 million in taxes withheld from the paychecks of employees of coffee shops he owned.

The indictment claimed that he lied to an IRS revenue officer, opened a new bank account to receive funds related to credit card transactions at the coffee shops, and directed employees to deposit cash receipts into a bank account belonging to a car racing outfit that Avenatti owned.

Prosecutors also gave examples of Avenatti’s other alleged fraudulent behavior such as overstating resources of one of his law firms to obtain three loans totaling $4.1 million from a bank and repeatedly lying about income he was receiving during bankruptcy proceedings.

The trial is slated to start on June 25, Ankarlo reported. Prosecutors estimate it will last 15 days.

Epoch Times reporter Janita Kan contributed to this report.

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