Avenatti allegedly took settlement money from football fans

Disgraced attorney Michael Avenatti is accused of stealing money from dozens more clients than previously known, according to newly unsealed documents and recent interviews with Fox News.

It’s alleged that Avenatti, currently behind bars awaiting trial in New York on unrelated charges, directed up to $1.3 million in settlement funds – intended for approximately 170 clients – to cover his own expenses. It’s the latest example of alleged malfeasance by the lawyer who was once a fixture on cable news and flirted with a presidential run.

“We didn’t receive any of that,” Donald Albaugh, one of Avenatti’s clients, said by phone Monday.  Albaugh said he and his wife, Tracy, went to the 2011 Super Bowl in Dallas but, like hundreds of other ticket holders, had problems with their seats and sued the NFL.

“The whole thing is so ludicrous,” Arianne Dar told Fox News about taking her son to the game as a graduation present. Dar said she made sure to buy tickets that were not “obstructed view” but they ended up behind a metal pole. “I never heard about a settlement."

H. Dean Steward, who Avenatti hired to represent him last year, did not immediately respond to Fox News’ request for comment.

The Albaughs and Dar said they each submitted itemized costs to Avenatti and his legal team seeking reimbursement for about $10,000, but they haven’t seen a penny.

In May 2017, Avenatti, representing the ticket holders, entered into an agreement with the NFL for a settlement of about $1,550,000 and a dismissal of all legal claims. But, in a request for a search warrant of Avenatti’s computers and phones seized following his March 2019 arrest, IRS Special Agent Remoun Karlous told a federal judge that Avenatti paid out only a small fraction of that settlement.

“Avenatti used the remainder of the approximately $1.31 million dollars [he] and his law firm received from the settlement of the Super Bowl Litigation for [his] own personal and business purposes,” Karlous wrote.

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Avenatti has not been charged with defrauding his clients in the Super Bowl case, but Karlous wrote, “The government will be seeking to admit this evidence at trial on the basis that this criminal conduct falls squarely within and is inextricably intertwined with” an already existing 36-count federal fraud indictment in Orange County, Calif. In one of those charges, Avenatti stood accused of hiding the existence of the NFL settlement from a bankruptcy court dealing with his now-former law firm.

Avenatti’s office manager had witnessed the behavior, Karlous alleged, writing, “In response to a question as to whether she was aware of Avenatti taking money from client funds, [the manager] said that the plaintiffs in the Super Bowl litigation had not all been paid out ... even though there had been money available to pay them.”

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Paul Colavecchi said he did get money back from Avenatti, but only after his sister, who went with him to the Super Bowl, threatened to report Avenatti to the State Bar of California. None of the Avenatti clients reached by Fox News said they saw any paperwork from Avenatti or his firm after the settlement.

The California fraud case is just one of three criminal cases Avenatti has been facing. He’s scheduled to go to trial in New York next week on charges that he tried to extort $25 million from Nike. But, the timing of that case was thrown into question when Avenatti was arrested in Los Angeles last week on allegations of violating his bond. Avenatti also stood accused of stealing money from adult-film star Stormy Daniels, who he represented in her litigation against President Trump.