Hmmm: IRS agents arrest Avenatti in court yesterday — and feds add money-laundering counts today


Could it get any worse for Michael Avenatti? Apparently, yes. The man who briefly embodied the La Résistance dreams of defeating Donald Trump faces extortion charges on one coast while battling fraud charges on the other. In the middle of the court hearing in California, where the State Bar Association wants Avenatti’s license pulled, federal agents placed the beleaguered attorney in custody:

Ex-Stormy Daniels lawyer and Trump antagonist Michael Avenatti was led out of the State Bar Court in Los Angeles by federal agents on Tuesday evening.

The arrest occurred outside the disciplinary hearing in which the State Bar of California has accused the hard-charging, tough-talking attorney of using a doctored document to scam a client out of nearly $840,000, funneling money from a lawsuit settlement fund to his own personal use.

The State Bar of California, the official attorney licensing agency, has sought to put Avenatti on “involuntary inactive status,” setting in motion a timeline for disbarment proceedings.

During a break in testimony, members of the United States Attorney’s Office for the Central District of California, who are prosecuting Avenatti in a separate criminal matter in Orange County, parleyed with Avenatti’s team of lawyers and took the lawyer into custody.

Avenatti had remained free on bail from both his New York  and Orange County trials while dealing with this issue in California. Among the conditions of that bail was the requirement not to commit any more federal crimes, but that raises another question. If federal prosecutors needed to enforce bail conditions, one would expect that US Marshals would have been sent to collect Avenatti. Why did the IRS get involved this time instead?

Avenatti was arrested by IRS agents on allegation of violating the terms of his pre-trial release, said Thom Mrozek, spokesman for the Los Angeles U.S. attorney’s office.

The documents were under seal, so Mrozek could not provide details on the allegations. …

The court filing did not make it clear what Avenatti allegedly did to violate bail. California court filings on the matter were not available Tuesday evening.

A message seeking comment was left with Avenatti’s attorneys.

The answer appears to be that the DoJ needed the IRS to track Avenatti’s financial adventures. The Los Angeles Times reports that a new indictment accuses Avenatti of trying to hide a million bucks from his ex-wife through even more fraud, and they suspect that he has more hidden away in Italy:

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Los Angeles attorney Michael Avenatti engaged in fraud and money laundering to hide $1 million from one of his ex-wives and other creditors after his March arrest, federal prosecutors allege in newly filed court papers. …

In documents filed in the federal court, they allege that Avenatti received the $1 million in legal fees in April as part of a client’s settlement, but concealed the money from his second ex-wife, Lisa Storie Avenatti, his former law partner Jason Frank, tax authorities and other creditors. …

In the court papers, prosecutors described elaborate steps taken by Avenatti to hide the $1 million by shifting it through multiple bank accounts and using cashiers checks to spend it.

Avenatti, who is scheduled to go on trial next week in New York federal court for allegedly trying to extort sports giant Nike out of more than $20 million, used the money to cover rent on his luxury apartment in Century City, pay his legal bills and buy a $50,000 Mercedes, according to the court documents.

Read the whole report from Michael Finnegan, which describes a byzantine effort from Avenatti that involves using one ex-wife to defraud another. The indictment suggests that Avenatti also used a girlfriend’s trip to Tuscany to potentially hide other assets. He owes Ex-Wife #2 well over two million dollars, along with debts to his former partner and a client Avenatti allegedly defrauded, so he has plenty of reasons to hide any cash that comes his way. And the IRS likely has the best forensic accounting to find it, too.

At this point, Avenatti will likely find himself behind bars for the duration of his trials. This kind of track record will make a federal judge very nervous about setting bail anywhere near a level that Avenatti can meet. As always, Avenatti will likely have entertaining answers of his own for the media, assuming he’s allowed to step outside of the building to provide them.

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