Michael Avenatti outside the Daniel P. Moynihan Courthouse in Manhattan after an April 2018 hearing. Michael Avenatti outside the Daniel P. Moynihan Courthouse in Manhattan after an April 2018 hearing. Photo: David Handschuh/NYLJ.

An attorney for Michael Avenatti this week told a Manhattan federal judge that a criminal case accusing the embattled lawyer of stealing $300,000 from his former client, adult film star Stephanie Clifford, known as Stormy Daniels, belonged in a California federal court, where prosecutors said they were prepared to try the charges as a part of a sprawling wire fraud case.

In a motion filed Thursday and docketed Friday, H. Dean Steward argued that the case against his client was "virtually identical" to a case in the Central District of California, where Avenatti was indicted in April on 36 counts of misappropriating funds from five clients.

One month later, Avenatti was charged in the Southern District of New York with diverting two payments of $150,000 from an advance on a book deal being paid to Clifford.

"Both indictments allege that Mr. Avenatti received funds related to the settlement of cases on behalf of clients, did not timely remit the full share of the settlement amount owed to his clients, and then lulled clients into believing that the settlement funds had not yet been received," Steward said in the Rule 21 transfer motion.

"There is no principled reason that these cases—which both include claims for wire fraud, which both allege misconduct by Mr. Avenatti in the Central District of California, and which will undoubtedly share many of the same issues, documents, and witnesses—should be tried in different federal districts," he said.

In the Southern District, prosecutors have alleged that Avenatti, an outspoken attorney known for his criticisms of President Donald Trump, had 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. The government said that Clifford did not know about the other bank account and that half of the diverted sum had never been repaid.

According to the indictment, 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. He has pleaded not guilty to the charges.

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 in that case, 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 said in the motion that the case involving Clifford could have been filed in California, where most of the evidence and witnesses reside. The filing also cited a statement from the U.S. Attorney's Office in Los Angeles that said, if the motion were granted, prosecutors there would be "prepared to try the charges pending in the SDNY Fraud Case either in a consolidated proceeding with the current charges or immediately after the trial in this case."

Prosecutors in the Southern District have resisted the transfer motion, arguing that the case belongs in Manhattan.

In New York, Avenatti also stands charged in a separate case of trying to extort athletic apparel giant Nike Inc. by threatening to go public with supposedly damaging information if the company didn't pay him up to $25 million. Trial in that case is currently set to begin in November.

Read More:

Michael Avenatti's Attorney Says He'll Subpoena Nike in Defense Against Extortion Case

Avenatti Argues Litigation Privilege Bars Prosecution on Nike Extortion Charges

Citing Indictments, California State Bar Moves to Suspend Avenatti

Michael Avenatti Charged With Fraud, Stealing From Ex-Client Stormy Daniels in New Indictments