Michael Avenatti sentenced to 14 more years, this time for embezzling millions from clients

Michael Avenatti, the high-profile civil attorney who gained fame and widespread cable-news exposure criticizing former President Donald Trump, was sentenced on Monday, Dec. 5, to 14 years in prison for stealing more than $10 million in settlement funds that should have gone to former clients.

U.S. District Judge James V. Selna, during a hearing at the federal courthouse in Santa Ana, also ordered Avenatti to pay more than $10.5 million in restitution, telling the former Newport Beach resident and one-time presidential aspirant that he has “done great evil for which he must answer.”

The 14-year sentence in the Orange County case comes on top of a combined five-year sentence Avenatti recently received in a federal court in New York for attempting to extort about $25 million from Nike and for stealing nearly $300,000 from adult-film actress Stormy Daniels, who Avenatti once represented in a legal dispute with then-President Trump.

The prison sentences mark a steep downfall for a once-successful lawyer who shot to fame for fiery denunciations of Trump on broadcast news and at one time mulled his own presidential prospects before facing the web of criminal allegations.

Avenatti — who had described himself as a “David” going after “Goliaths” by representing “thousands of little guys” — apologized Monday to the four clients he admitted stealing from, acknowledging that he misappropriated their money, misled them and violated their trust. It is unclear where those clients live; at least some will be somewhat reimbursed.

According to federal prosecutors, Avenatti hid the exact terms of large settlements from his clients, deposited the funds in a bank account he controlled, embezzled money from the funds and then lied to the clients to prevent them from discovering the theft.

At times, he falsely claimed agreements hadn’t been finalized, prosecutors said, or paid out smaller amounts as “advances” on settlements the clients didn’t know had already been approved.

Avenatti admitted stealing from a $4 million settlement for Geoffrey Johnson, who became a paraplegic from injuries he sustained at the Men’s Central Jail in downtown Los Angeles.

“Next to the incident that caused me to be paraplegic, meeting Michael and having him steal all my money is the worst thing that has ever happened to me,” Johnson told Judge Selna on Monday. “It is impossible for me to understand how someone as talented as Michael could do what he did.”

In 2016, Avenatti hid the terms of a $2.75 million settlement from Alexis Gardner, who he was representing in a lawsuit against her ex-boyfriend, former NBA player Hassan Whiteside. Avenatti spent much of the money from the settlement on a private plane, prosecutors said. At the time, Gardner was living out of her car.

“He was Goliath, he was the person stepping on all the small people who were innocent, who were suffering,” Gardner told the judge.

Avenatti also admitted to misappropriating funds from a $1.9 million intellectual-property settlement he reached with a Colorado company for Gregory Barela, and a $27 million stock repurchase agreement involving Michelle Phan, an early social-media influencer, and the cosmetics company Ipsy. The victims related to those settlement thefts did not speak at the sentencing.

Prosecutors also described Avenatti as a tax cheat, saying he spent years obstructing the Internal Revenue Service’s efforts to collect more than $3 million in payroll taxes from a coffee business he owned.

Avenatti’s first trial in Orange County ended in a mistrial on technical grounds, when the judge determined that federal prosecutors had not turned over some relevant financial evidence to Avenatti. The judge didn’t find any evidence of intentional misconduct by prosecutors, instead determining the failure to disclose the data had been an oversight.

Rather than face a re-trial, Avenatti opted to plead guilty earlier this year to four counts of wire fraud and one tax-related felony.

Assistant U.S. Attorney Brett Sagel on Monday told the judge that he didn’t believe that Avenatti was truly remorseful. The prosecutor said Avenatti always considers himself to be “the smartest guy in the room,” capable of talking his way out of any sign of trouble.

“He is all-in on doing whatever he can to enrich himself,” Sagel said. “He will steal from his clients, he will steal from the treasury. … The defendant isn’t a fighter, just a simple fraudster.”

Avenatti, who represented himself in his case, told the judge that he is “deeply sorry and remorseful for my criminal conduct,” adding that he knows he has thrown his career away and “brought shame against my family, my friends and my profession.” He argued that the sentence he was facing was too long compared to those received by other federal defendants, and spent several minutes listing off the clients he had helped through successful civil lawsuits.

“I am not an evil or vile man at my core,” Avenatti told the judge. “I am not a man who has lived a life of criminality, who has not helped others.”

U.S. Attorney Martin Estrada, in comments made outside the federal courthouse following the sentencing, said that by victimizing his own clients, Avenatti committed one of the worst types of crimes an attorney can to fund a lavish lifestyle that included a private jet and sports cars.

“When you step back and look at the big picture, what we have here is an individual who ran a very sophisticated Ponzi scheme,” Estrada said. “He stole money from his clients, and he lied to them to put them off. At the same time he was running this sophisticated tax fraud scheme that cheated the United States out of millions of dollars.”

Estrada noted that Avenatti’s refusal to pay his taxes ultimately led federal investigators to discover the fraud against Avenatti’s clients.