By Samuel Chamberlain
Published May 22, 2019
Embattled attorney Michael Avenatti was charged by federal prosecutors in New York Wednesday with defrauding adult-film star Stormy Daniels, the client who propelled Avenatti into the national spotlight.
Avenatti, 48, faces one count of wire fraud and one count of aggravated identity theft. He faces up to 22 years in prison if convicted of those charges. Daniels is not named in the indictment, but a federal law enforcement official confirmed to Fox News that she is the client prosecutors claimed Avenatti defrauded.
Avenatti rocketed to fame representing Daniels when she sued to be released from a non-disclosure agreement involving an alleged tryst with President Trump in 2006. He parlayed his notoriety into numerous cable news appearances and even was floated as a potential Democratic presidential candidate in 2020.
According to prosecutors, Avenatti stole two payments totaling $297,500 from an advance Daniels was supposed to receive from a book deal in the summer of 2018. According to the indictment, Avenatti sent a doctored letter with Daniels' signature to her literary agent that instructed the agent to divert the money to an account controlled by Avenatti. The lawyer then spent the money "on airfare, hotels, car services, restaurants and meal delivery, online retailers, payroll for his law firm and another business he owned, and insurance."
The indictment said that after Daniels asked Avenatti why she had not received the first payment, Avenatti falsely claimed he was still trying to extract the money from the publisher. Weeks later, the lawyer allegedly "used funds recently received from another source" to pay Daniels the amount she was owed -- $148,750.
Soon after, prosecutors say that Avennatti received another payment of $148,750 from Daniels' agent and used the money on personal expenses, including a lease payment on a Ferrari. When Daniels asked for the remaining money, Avenatti allegedly misled her to believe that the book's publisher was refusing to pay the amount to Daniels' literary agent.
"Michael Avenatti abused and violated the core duty of an attorney – the duty to his client," Manhattan U.S. Attorney Geoffrey Berman said in a statement. "As alleged, he used his position of trust to steal an advance on the client’s book deal. As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari. Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client."
In an emailed statement to Fox News, Avenatti said: "I look forward to a jury hearing all of the evidence and passing judgment on my conduct. At no time was any money misappropriated or mishandled. I will be fully exonerated once the relevant emails, contracts, text messages, and documents are presented."
Avenatti also tweeted a defense of his conduct toward Daniels, writing: "No monies relating to Ms. Daniels were ever misappropriated or mishandled. She received millions of dollars worth of legal services and we spent huge sums in expenses. She directly paid only $100.00 for all that she received. I look forward to a jury hearing the evidence."
Prosecutors on Wednesday also formally indicted Avenatti on charges that he tried to extort up to $25 million from Nike by threatening to expose claims that the shoemaker paid off high school basketball players to steer them to Nike-sponsored colleges. Avenatti also has been facing a multi-count federal indictment in Los Angeles alleging that he stole millions of dollars from clients, didn't pay taxes, committed bank fraud and lied during bankruptcy proceedings.
Avenatti has denied the allegations against him on both coasts, saying he expects to be exonerated. The Los Angeles charges alone carry a potential penalty of more than 300 years in prison, while Avenatti could face a total of 69 years behind bars if convicted of all the New York charges.
Daniels, whose real name is Stephanie Clifford, initially raised concerns about Avenatti's conduct in November when she claimed he'd launched a fundraising effort to raise money for her legal case without telling her. She also said he had filed a defamation lawsuit against Trump, on her behalf, against her wishes.
"For months I've asked Michael Avenatti to give me accounting information about the fund my supporters so generously donated to for my safety and legal defense. He has repeatedly ignored those requests," she said at the time. "Days ago I demanded again, repeatedly, that he tell me how the money was being spent and how much was left. Instead of answering me, without my permission or even my knowledge Michael launched another crowdfunding campaign to raise money on my behalf. I learned about it on Twitter."
At the time, Avenatti responded that he was still Daniels "biggest champion." He said that under his retention agreement, he was entitled to keep all the money he raised for her legal defense to defray what he said were substantial costs of her case.
He repeated that statement on social media Wednesday, tweeting: "I look forward to a jury hearing all of the evidence and passing judgment on my conduct. At no time was any money misappropriated or mishandled. I will be fully exonerated once the relevant emails, contracts, text messages, and documents are presented. I was entitled to any monies retained per my agreement with the client. My agreement for representation and compensation included a percentage of any book proceeds."
The defamation case initiated by Avenatti against Trump backfired, with a judge ordering her to pay the president's legal bills.
When Avenatti was first charged with defrauding other clients and extorting Nike in March, Daniels said she was "saddened but not shocked," adding on Twitter that she had fired Avenatti a month earlier after "discovering that he had dealt with me extremely dishonestly." At the time, she did not elaborate.
Fox News' Jake Gibson, Brooke Singman and The Associated Press contributed to this report.