Michael Avenatti pleads guilty to tax fraud

Celebrity lawyer Michael Avenatti, who made his name as a fierce critic of President Donald Trump, has pleaded guilty to five felony offenses and admitted that he schemed to defraud four of his legal clients.

Avenatti, who has been suspended by the State Bar of California, pleaded guilty to four counts of wire fraud, each related to one of four matters in which he embezzled money that should have been paid to clients. He also pleaded guilty to one count of endeavoring to obstruct the administration of the IRC.

Sentencing is Sept. 19, when he will face a maximum of 83 years in federal prison.

He admitted guilt in each of the four legal matters discussed in a federal grand jury indictment that charged him with embezzling from clients.

Avenatti admitted that he received money on behalf of clients that went into client trust accounts, that he misappropriated the money and lied to the clients about receiving the money or, in one case, claimed that the money had already been sent to the client.

Michael Avenatti Photographer: Victor J. Blue/Bloomberg

Victor J. Blue/Photographer: Victor J. Blue/Blo

The charge of endeavoring to obstruct the administration of the Internal Revenue Code is one of 19 tax-related offenses in the indictment. Avenatti admitted that he corruptly obstructed IRS efforts to collect unpaid payroll taxes, which the government estimates amount to approximately $5 million and include payroll taxes that had been withheld from the paychecks of employees of the Avenatti-owned company that operated Tully’s Coffee.

He still faces 31 counts: six wire fraud charges, 18 tax-related charges; two counts of bank fraud related to alleged false statements he made in an attempt to obtain loans from a federally insured financial institution; one count of aggravated ID theft for misusing the name of a tax preparer in relation to the bank fraud; and four counts of bankruptcy fraud related to alleged false statements he made after his law firm was forced into bankruptcy.

The government is reviewing the case to determine how it will move forward.


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