Michael Avenatti. AP Photo: Mark Lennihan

A Manhattan federal judge on Wednesday postponed the start of Michael Avenatti's extortion trial next week, after a judge in California ordered that he be held without bond amid new allegations of fraud and money laundering.

According to court papers, the U.S. Marshals Service was expected to transport Avenatti to New York later this week. However, his arrest and jailing in Los Angeles injected his extortion case with a fresh sense of confusion on the eve of a planned Jan. 21 trial, and kicked off a flurry of filings throughout the day as prosecutors scrambled to assess the impact.

U.S. District Judge Paul G. Gardephe of the Southern District of New York said earlier in the day that the developments had thrown the case into a state of "chaos" and threatened Avenatti's ability to communicate with counsel on a number of outstanding issues.

"It's clear that the trial date for Tuesday needs to be adjourned," he said on a conference call late Wednesday afternoon.

Gardephe said he wanted the trial to begin no later than Jan. 27, and ordered attorneys to meet again Friday morning in Manhattan.

Avenatti maintains that he is innocent and has pleaded not guilty in both cases.

Prosecutors from the U.S. Attorney's Office for the Central District of California detailed a series of financial crimes they said he committed while awaiting a May trial on accusations that he embezzled hundreds of thousands of dollars from his clients.

In court documents unsealed Wednesday, prosecutors there alleged that he had defrauded his creditors and took elaborate steps to hide $1 million he had received following his arrest last year by moving funds through various bank accounts and using cashier's checks to spend it. In total, Avenatti owed more than $10 million at the time, a tally that included several outstanding court judgments, prosecutors said.

He was arrested Tuesday night while attending a disciplinary proceeding at a Los Angeles courthouse.

"Since at least May 2019, defendant has brazenly attempted to defraud and conceal his assets from these creditors," prosecutors wrote in the filings.

Assistant U.S. Attorney Matthew Podolsky said Wednesday that the Manhattan U.S. Attorney's Office was not told about the arrest warrant ahead of time, but prosecutors were working with the Marshals Service to move Avenatti to New York as quickly as possible.

"This office had no role in investigating these allegations," Podolsky said Wednesday morning. "We frankly weren't aware … until after an arrest was made."

Avenatti's defense lawyers said Wednesday that the problems created by their client's arrest extended "far beyond" the trial's start date. It was not clear based on the allegations in California, defense attorney Jose Quinon said, whether Avenatti had any money to pay their expert and to fund technical assistance and witness travel.

Quinon said he needed time to discuss resources with Avenatti, but raised the possibility of indigency proceedings in New York, if no funds were available.

"The rug has been pulled from under us because this was absolutely, totally unexpected," Quinon said.

"On the eve of trial, we're just left naked out in the street," he said.

Avenatti is accused in New York of extortion, conspiracy and honest services wire fraud related to his representation of Gary Franklin, a California-based youth basketball coach who claimed to have damaging information about alleged payments Nike made to the families of college basketball recruits.

Nike has not been charged with any crimes and denies any wrongdoing.

According to prosecutors, Avenatti told Nike he would keep the alleged recruiting violations quiet, so long as the company agreed to settle his client's claims and pay Avenatti between $15 million and $25 million to head an internal investigation. Crucially, prosecutors said that Avenatti never told Franklin about Nike's offers to resolve the dispute without paying Avenatti or retaining him for an internal probe.

Avenatti rose to national prominence for his representation of Stormy Daniels, an adult film star who said she had an extramarital affair with President Donald Trump. Trump has denied those allegations.

An outspoken critic of Trump, he briefly flirted with a presidential run before becoming mired in a series of high-profile prosecutions.

In addition to the two cases in California and New York, Avenatti is also accused in Manhattan of skimming money on a book deal that was being paid to Daniels. Trial in that case is scheduled to begin in April.

Gardephe on multiple occasions Wednesday expressed frustration with the decision to arrest Avenatti so close to trial, and implored attorneys on both sides to work out their issues ahead of Friday's scheduled conference.

"It remains entirely unclear to me why it was decided to arrest Mr. Avenatti a week before the trial, based primarily on allegations that go back to last summer," the judge said during the afternoon call.

"That's created enormous disruption, so unless the parties cooperate constructively, I have no idea when this case gets tried," he said.

Gardephe is still expected to rule on a number of substantive pretrial motions, but he said those decisions must wait until Avenatti is moved to New York and has a chance to meet with counsel.

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