SANTA ANA (CNS) - Federal prosecutors said in court papers Tuesday that they intend to dismiss all remaining counts on tax and bankruptcy fraud for embattled Newport Beach attorney Michael Avenatti, who pleaded guilty last week to multiple other fraud charges.
The prosecutors said that U.S. District Judge James Selna can impose a punishment that covers all of the alleged fraudulent conduct and, "Such a sentence would obviate the need for a trial on the remaining counts. Accordingly, the government expects to move to dismiss the remaining counts of the indictment after sentence is imposed."
Avenatti's advisory counsel, Dean Steward, said, "We look forward to presenting all of the positive factors about Mr. Avenatti at sentencing."
Avenatti on Thursday pleaded guilty to four counts of wire fraud and a single count of tax fraud, admitting he misappropriated funds from four clients. Sentencing is scheduled for Sept. 19.
He made an open plea to the court, meaning there was no agreement with prosecutors on a possible sentence. The charges potentially carry dozens of years in federal prison and restitution topping $10 million, but it will be up to Selna to determine the appropriate sentence. Avenatti said in court he expects the actual sentences to be far less than the maximum, although Selna will have the final say.
Prosecutors said previously that Avenatti ripped off at least five clients of nearly $10 million in settlement funds between January 2015 and March 2019 to bail out his law firm from bankruptcy, fend off creditors and spend money on himself. One of those clients was presented as evidence in his first trial, but Avenatti was not charged in his case.
Assistant U.S. Attorney Ranee Katzenstein told Selna that the government will seek about $9 million in restitution on the wire fraud and another $5 million for tax fraud. Avenatti said he believes the restitution owed is "drastically less than that."
The maximum punishment Avenatti could face is 83 years, but it is unlikely to ever be that strict.
Assistant U.S. Attorney Brett Sagel told reporters after Thursday's hearing that Avenatti "finally admitted" what authorities "have been saying for several years now."
Sagel added Avenatti committed "audacious acts" to "line his own pockets."
Avenatti, who catapulted to fame representing adult film actress Stormy Daniels in a nondisclosure dispute with then-President Donald Trump over an alleged sexual liaison, was convicted earlier this year of identity theft and wire fraud for getting Daniels' literary agent to send about $300,000 in advance money for her book "Full Disclosure" to a bank account the attorney managed.
He was also convicted of attempting to extort as much as $25 million from athletic apparel company Nike. In the Nike case, he was sentenced to two- and-a-half years in prison, and he was given four years in the Daniels case. Some of the time will be served concurrently, meaning he received roughly five years combined.
In court papers before his plea, Avenatti wrote that he attempted to negotiate a plea agreement with prosecutors without success.
"Despite repeated efforts over the last year by Mr. Avenatti and his counsel, including substantial efforts made in the last 30 days, defendant has been unable to reach a plea agreement with the government," he wrote.
"Mr. Avenatti wishes to plea in order to be accountable, accept responsibility; avoid his former clients being further burdened; save the court and the government significant resources and save his family further embarrassment."
Avenatti was still facing a retrial on additional tax and bankruptcy fraud charges. Selna granted a motion from Avenatti last year for a mistrial on the counts. The judge ruled that prosecutors failed to turn over relevant financial records to Avenatti and said he did not find any evidence of intentional misconduct, but the failure to turn over the records was tantamount to an oversight and enough to warrant starting over again with a new trial.
Avenatti won the right on the eve of his trial in Santa Ana last year to represent himself, with Steward acting as his advisory counsel.