IRS Arrests Michael Avenatti, Cutting State Bar Hearing Short
IRS agents arrested embattled attorney Michael Avenatti in Los Angeles late Tuesday during a break in a hearing before the California State Bar, the U.S. attorney’s office confirmed to Law360, saying he allegedly violated the terms of his pretrial release on charges he embezzled client funds.
Michael Avenatti’s arrest Tuesday cut short a hearing on whether his law license should be suspended while the California State Bar investigates disciplinary charges. (AP)
On a day that saw Avenatti fighting legal battles on both coasts, IRS agents arrested him in the lobby of the California State Bar at about 6 p.m. and removed him from the building. The arrest cut short a hearing on whether Avenatti’s law license should be suspended while the State Bar investigates disciplinary charges connected to allegations he stole a former client’s $1.6 million settlement payment.
A spokesman for the U.S. Attorney’s Office for the Central District of California told Law360 that IRS agents arrested Avenatti for allegedly violating the terms of his pretrial release in the embezzlement case that is pending in California federal court. The documents related to the alleged violation are under seal, the spokesman said.
Avenatti’s arrest comes the same day the attorney lost his bid to delay his upcoming trial in New York federal court on criminal charges he plotted to extort millions of dollars from Nike Inc. He is slated to go to trial Jan. 21.
Tuesday’s proceedings at the State Bar were a continuation of a hearing from December to determine whether Avenatti’s law license should be suspended while the bar investigates bringing disciplinary charges in relation to accusations that he embezzled a $1.6 million settlement payment to his former client, Gregory Barela Jr.
The California State Bar hearing was paused for nearly two hours on Tuesday while Avenatti attended the hearing in New York by telephone. After Avenatti finished that call, he took the stand in Los Angeles to testify that he has a hazy recollection of the details of the settlement agreement he negotiated on Barela’s behalf in an intellectual property dispute.
But Avenatti had trouble recalling specifics, explaining that he hasn’t had access to his Eagan Avenatti LLP files since federal prosecutors seized them as part of their investigation in the criminal matters.
Avenatti has stipulated that his former client was supposed to receive a $1.6 million payment on Jan. 10, 2018, with three additional payments of $100,000 made on Jan. 10 in 2019, 2020 and 2021. On the stand Tuesday, he denied allegations that he provided a falsified agreement to Barela that put the payment dates in March.
Avenatti said he can’t remember texting or emailing Barela that he had received the $1.6 million payment from the settling company, but was confident that Barela was informed of the payment. He said Barela is lying about not having been informed the money had been paid.
Following Avenatti’s arrest during the break on Tuesday, attorneys for the parties returned to the courtroom to discuss the next steps for continuing the hearing. Avenatti’s attorney Thomas David Warren of Pierce Bainbridge Beck Price & Hecht LLP told State Bar Judge Yvette D. Roland that his client was unable to return to the hearing due to events connected to the criminal matter pending against him in California federal court.
Judge Roland set a status conference for Feb. 10.
Counsel for the State Bar and Avenatti declined to comment on Avenatti’s arrest Tuesday evening.
The State Bar is represented by Eli David Morgenstern of the Office of Chief Trial Counsel.
Avenatti is represented by Ellen Anne Pansky of Pansky Markle Attorneys At Law and Thomas David Warren of Pierce Bainbridge Beck Price & Hecht LLP.