Avenatti​ Bilked Stormy, Prosecutors Allege

LOS ANGELES, CA — Celebrity lawyer Michael Avenatti cheated and stole from the Stormy Daniels, the very client who made him a household name, federal prosecutors are alleging.

In an indictment announced Wednesday by the United States Attorney's Office in Manhattan, prosecutors contend Avenatti misappropriated hundreds of thousands of dollars belonging to Daniels. The charges add yet another twist to the saga of the porn star and the president. It marks the end of the relationship that propelled both Avenatti and Daniels to fame while adding to the mountain of legal troubles for the attorney that took the president to court. It also means that the attorneys on both sides of the case between Daniels and President Donald Trump could end up in prison.

According to prosecutors, Avenatti is accused of taking more than $295,000 from Daniels, who is named in the indictment as "Victim-1" and was identified as the actress by a person with knowledge of the case, the Times reported. After helping her secure a book contract last year, according to the charges, Mr. Avenatti sent "a fraudulent and unauthorized letter" bearing Ms. Daniels's signature to her literary agent, demanding that a portion of the book advance be wired to a client trust account he controlled. Then he used that money to buy himself plane tickets, hotel stays, meal delivery, dry cleaning and pay for monthly payment on a Ferrari, alleged prosecutors.

Avenatti denied all of the charges against him on Wednesday.

"At no time was any money misappropriated or mishandled," he told The New York Times, saying that any funds related to the book were part of his representation agreement.

"She received millions of dollars worth of legal services, and we spent huge sums in expenses," he added, referring to Daniels, whom he said he had not represented since February. "She directly paid only $100 for all that she received."

When Avenatti took on Daniels's case against the president in 2018, he adopted of strategy of antagonizing the president across the airwaves, appearing nightly on cable news to mock Trump and his personal attorney and fixer Michael D. Cohen. He sought to release Daniels, whose legal name is Stephanie Clifford, from a hush agreement she had signed before the 2016 election. As part of that deal, she accepted $130,000 and agreed to keep quiet about a sexual relationship she said she had had with Mr. Trump in 2006.

Both of the lawsuits Avenatti filed on behalf of Daniels were dismissed, and in one case she was ordered to pay Trump $293,000 in legal fees. But Daniels became famous in the process, and her story created further trouble for the president, culminating in Cohen's guilty plea last year to campaign finance crimes related to the hush payment.

Now Cohen is serving a three-year prison sentence. The same office that won Cohen's guilty plea — the public corruption unit of the United States Attorney's Office for the Southern District of New York — filed the new charges against Avenatti, which included aggravated identity theft.

The new charges add to numerous others filed this year. Avenatti was arrested in New York in March on extortion charges, accused of seeking millions from Nike in exchange for what he described as evidence of misconduct by company employees in the recruitment of college basketball players. On Wednesday, he was also indicted on those previously announced charges.

In a separate indictment filed in California this spring, Avenatti was accused of stealing millions of dollars from five other clients, one of them a paraplegic man who had won a $4 million settlement but received only a fraction of that in periodic payments that never exceeded $1,900. Avenatti was also accused of filing fake tax returns to a Mississippi bank, and of lying repeatedly about his business and income to an agent of the Internal Revenue Service, creditors, a bankruptcy court and a bankruptcy trustee.

Avenatti, who spent much of 2018 crusading against Trump on cable news shows and teasing a presidential run of his own, has called the cases against him politically motivated.

City News and Patch Staffer Paige Austin contributed to this report.