Judge Orders Weekend Search for Michael Avenatti's Alleged Missing Financial Data
Avenatti has a mistrial motion pending related to prosecutors' failure to disclose the data to him, and the judge said he can't move forward without determining what information, if any, exists.
August 20, 2021 at 08:25 PM
5 minute read
Criminal LawA federal judge on Friday ordered prosecutors to allow Michael Avenatti access to his law firm's servers this weekend so he can search for financial records he's made central to his defense against a wire fraud scheme alleging client embezzlement.
U.S. District Judge James V. Selna of the Central District of California said Avenatti is to direct searches "with the government fully present" for a software program called Tabs—the formal name is Tabs3—that his firm's attorneys used to track their time and expenses. Avenatti has a mistrial motion pending related to prosecutors' failure to disclose the data to him, and Selna said he can't move forward without such an inquiry. The judge ordered everyone to return to court at 10:30 a.m. Monday.
One of the main parts of the government's showing "is documentary financial data," Selna said during the 25-minute hearing. "We need to know whether all that has been produced."
The jury is due back at 9 a.m. Tuesday for the 19th day of testimony; Selna on Thursday canceled Friday's scheduled trial day in order to address the Tabs issue.
Assistant U.S. Attorneys Brett Sagel and Alex Wyman say the data is irrelevant, because they've already incorporated Tabs data for two of the four settlements at issue in the case, and Avenatti never provided any client with proper accountings or payment terms. The information was included in emails from Avenatti's paralegal. Co-lead investigator Remoun Karlous, a special agent with the U.S. Treasury, testified Wednesday that one of the other settlements wouldn't allow for significant costs and fees. The fourth didn't allow for them at all because Avenatti was due a flat 7.5% fee.
Avenatti said Friday the issue for the Tabs summaries already entered as evidence is, "do they reflect the most current data as reflected in the database? And that's what we're trying to answer."
After federal agents seized his firm's computer servers in March 2019, Avenatti was allowed to search them through a government agent, with prosecutors pre-approving what he could be given. Avenatti never asked for the Tabs data then, and Sagel told the judge Friday, "Why is it coming up now?"
"Sir, I don't care that it comes to a fine point here," Selna replied. "There's no question that many, many times Mr. Avenatti has challenged the sufficiency of the government's production in terms of various doctrines."
Selna says he accepts "for present purposes" that prosecutors don't have the data, but he said that doesn't answer his "bottom-line question," which is was it part of the documents seized in the search.
"That's the question I need to answer," the judge said. "You may have to work over the weekend, but so be it."
Avenatti has said prosecutors were obligated to produce the data regardless of a specific request, but he also obtained an order from Selna in January reminding prosecutors of their "continuing obligation to produce all information or evidence known to the government that is relevant to the guilt or punishment of a defendant, including, but not limited to, exculpatory evidence." Avenatti argues that should include the Tabs data, particularly after Karlous acknowledged during Avenatti's direct exam of him that Avenatti's paralegal told him in July 2019 the firm used Tabs to track expenses.
The issue involves the so-called taint team process within the U.S. Department of Justice, which outlines how prosecutors are to handle possible attorney-client privileged material seized in investigations. Selna on Friday heard from Assistant U.S. Attorney Patrick Fitzgerald, who led the taint team that searched Avenatti's law firm's servers. Prosecutors were not involved; they obtained materials through Fitzgerald's team after the team reviewed everything and separated out privileged client communications and other information.
"Until very, very recently, we were never asked to produce Tabs information using that terminology," Fitzgerald said. Previous searches focused on the individual clients at issue in the case, he said.
Fitzgerald told Selna the U.S. Attorney's Office searched the servers Thursday for Tabs data and identified some client reports, including the two already entered as exhibits in trial but none relevant to the other two settlements. He said he found no database or body of information that could constitute a Tabs database.
"When we ran Tabs as a standalone search term, we could not find anything that fell within that parameter," Fitzgerald told Selna.
Avenatti said he's "highly confident" something is there.
"They've done word searches. Word searches don't uncover databases. Word searches uncover emails and that sort of" thing, he said.
As they were leaving Selna's courtroom, Avenatti served Fitzgerald with a subpoena. Fitzgerald told him he's not following the proper procedure and there are "regulations." Avenatti asks what the regulations are and Fitzgerald says, "I'm not your counsel, counsel. Come on."
Fitzgerald then told Avenatti they are "Touhy regulations," referring to Department of Justice regulations under United States ex rel. Touhy v. Ragen.
Avenatti retorted with a 2006 U.S. Court of Appeals for the Ninth Circuit case, United States v. Bahamonde, which he said says those regulations don't apply in criminal cases.
"Have a good weekend," Fitzgerald responded.
Fitzgerald asked Sagel on the way out: "You want me to take the subpoena?"
"No. You can do whatever you want with it," Sagel said.
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