Michael Avenatti Michael Avenatti. Photo: David Handschuh/ALM

A Manhattan federal judge is set to consider arguments in the coming weeks on Michael Avenatti's request to transfer a criminal case accusing him of stealing $300,000 from his former client, Stephanie Clifford, the adult film star who performed under the name Stormy Daniels, to a California federal court.

According to a court spokesman, U.S. District Judge Deborah A. Batts of the Southern District of New York set Aug. 22 as the date for Avenatti to file his Rule 21 transfer motion during a brief status conference Tuesday in one of two criminal cases currently pending against Avenatti in New York, Avenatti's attorney said. The government is scheduled to respond by Sept. 11.

Prosecutors alleged in a May 22 indictment that Avenatti, an outspoken attorney known for his criticisms of President Donald Trump, had diverted two payments of $150,000 from an advance on a book deal being paid to Clifford.

According to the indictment, Avenatti forged Clifford's name on a letter to her literary agent and instructed the payments to be sent to a bank account under his own control. Prosecutors said that Clifford did not know about the other bank account and that half of the diverted sum had never been repaid.

The indictment claimed that Avenatti had used the funds for a range of personal and professional purposes unrelated to his client, including paying employees of his law firm and coffee business and to pay for flights, hotels and dry cleaning.

Avenatti's attorney, H. Dean Steward, had asked Batts to combine the case with a sweeping action already pending in the U.S. District Court for the Central District of California, where Avenatti is accused of embezzling millions of dollars from other clients. The Rule 21 transfer motion, Steward said, was a threshold issue that should be decided before trial was scheduled in the case.

Prosecutors, however, said the case belongs in the Southern District of New York and are opposing the transfer motion.

The California case accuses Avenatti of 36 counts of tax fraud, bankruptcy fraud and other charges in connection with the alleged theft from former clients. In particular, he faces 10 counts of wire fraud for pocketing millions of dollars from more than $12 million he received during the past five years as part of four settlements, including one on behalf of a paraplegic client.

In addition to embezzling clients, the charges also include 19 counts of failing to file income tax returns, both personal and on behalf of his businesses, including his law firms, Avenatti & Associates and Eagan Avenatti, which filed for bankruptcy in 2017. The charges also include four counts of bankruptcy fraud against Avenatti for concealing assets, including $1.36 million in attorney fees from a settlement of litigation brought by ticket holders of the 2011 Super Bowl.

If convicted, he faces 333 years in federal prison, plus two more years of a mandatory consecutive sentence on an aggravated identity theft count related to the bank fraud allegations.

Steward, who represents Avenatti in both cases, said in a July 18 letter to Batts that the California action is locked in ongoing discovery disputes, and a trial date had not yet been set.

Avenatti, who has posted bond in both cases, is also currently awaiting trial in November on separate charges in New York stemming from an alleged extortion scheme to shakedown Nike just ahead of a quarterly earnings report in March. Avenatti has hired Miami-based attorneys Scott Srebnick and Jose Quinon to represent him in that case.

 

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