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Law & the Courts

Avenatti Indicted for Tax Dodging, Fraud, Stealing from Mentally Ill Client

Michael Avenatti speaks outside the U.S. District Court for the Central District of California in Los Angeles, Calif., September 24, 2018. (Andrew Cullen/Reuters)

Celebrity attorney Michael Avenatti was indicted by a federal grand jury Thursday on a host of financial and other crimes, including fraud, tax avoidance, and embezzling funds from clients, one of whom was a mentally ill paraplegic.

A Santa Ana grand jury charged that Avenatti created an extensive network of shell corporations to embezzle millions of dollars from five of his clients, the Los Angeles Times first reported. One of those clients, Geoffrey Ernest Johnson, a mentally ill paraplegic, won a $4 million settlement from Los Angeles County, which Avenatti hid from him for years, according to the indictment.

Johnson was awarded the settlement after paralyzing himself by jumping from an upper floor of the jail in which he was being held. Avenatti never informed Johnson of the $4 million settlement, and instead funneled it to GB Autosport, LLC — a company he established to manage his race-car team — and to his failed coffee company, Global Baristas LLC. He subsequently paid out small installments to Johnson and told him they were “advances” on the county settlement that he had not yet received.

The deception eventually led the Social Security Administration to revoke Johnson’s disability payments as he was unable to provide information about the settlement.

Avenatti, who was elevated to national fame by his near-nightly appearances on CNN and other cable outlets, also allegedly concealed another $2.75 million settlement from a client, which he used to purchase a private jet that has since been seized by federal authorities.

The embattled attorney was previously indicted in California on bank- and wire-fraud charges and in New York on extortion charges related to an alleged attempt to blackmail Nike, but the indictments handed down Thursday represent a dramatic escalation of his legal troubles: They could result in a maximum sentence of 335 years in prison.

Avenatti, who was released on $300,000 bond, maintained his innocence in a Thursday tweet.

“I am entitled to a FULL presumption of innocence and am confident that justice will be done once ALL of the facts are known,” he wrote moments after the new charges were announced.

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