Avenatti was arrested last night for allegedly doing fraud while on release before his trial for doing all of the other fraud
.@ncweaver posted the government's Motion for an Arrest Warrant and Order Revoking Pretrial Release against Avenatti
@ncweaver The motion says DOJ has probable cause to believe Avenatti committed mail fraud, wire fraud, and structuring to evade reporting
He's alleged to have removed/concealed/disposed of money and personal property to avoid it being seized to pay judgments
He's alleged to have removed/concealed/disposed of money and personal property to avoid it being seized to pay judgments
@ncweaver Saying Avenatti is buried in debt would be selling it short—the motion points to at least $21 million in debt to his former law partner, former clients, his wife, and the state of Washington
@ncweaver Just reading through the recitation of Avenatti's previous allegations of fraud and tax evasion is almost overwhelming. It's really amazing that it took this long for him to get indicted.
@ncweaver Moving on to his more recent crimes, Avenatti settled a case for $3 million in early May. Normally, the settlement would be paid to the firm's IOLTA account, then the firm would get its share.
Instead, Avenatti made sure $1 million was paid to himself, personally.
Instead, Avenatti made sure $1 million was paid to himself, personally.
@ncweaver He opened a new account to deposit the check, withdrew almost the entire $1 million in cashiers checks to various entities, including himself. In June, Washington got wind of the account and seized about $32k.
The cashier's checks sounds almost normal, but it's a classic technique to evade seizures and conceal large amounts of money. It's difficult to hide $500,000 in cash, pretty easy to hide a $500,000 cashier's check.
Although the largest check was made out to one of Avenatti's ex-wives, she turned around and issued a cashier's check for $250k to pay one of his lawyers and another for $500,000 directly to Avenatti.
Avenatti used that $500k to open another account to pay more attorney fees, then "began flipping cashier's checks to himself."
He would buy checks payable to himself to drain his accounts, then briefly redeposit the checks to withdraw money and issue himself new checks.
He would buy checks payable to himself to drain his accounts, then briefly redeposit the checks to withdraw money and issue himself new checks.
This is basically what it looks like—deposit $169k, withdraw two cashier's checks. Deposit one of those checks, withdraw $8000 in cash and another 2 checks. Deposit those, withdraw $6800 and three more checks... On and on
The repeated deposits and withdrawals of amounts below $10,000 are the basis for the new structuring allegations
I typically think structuring charges are bogus, but it's really hard to look at this and say it wasn't a scheme to avoid reporting requirements
I typically think structuring charges are bogus, but it's really hard to look at this and say it wasn't a scheme to avoid reporting requirements
And lest you start to sympathize with this guy shelling out hundreds of thousands in legal fees, that wasn't all he was paying. He also paid about $35k to keep up his Exclusive Resorts membership, an "elite private vacation club"
DOJ argues that this scheme is mail & wire fraud b/c it was devised to defraud his creditors, before & after indictment.
Avenatti "concealed and fraudulently transferred his assets in order to avoid paying his creditors the money to which they were - and are - legally entitled"
Avenatti "concealed and fraudulently transferred his assets in order to avoid paying his creditors the money to which they were - and are - legally entitled"
As I said, DOJ says the sub-$10k transactions constitutes illegal structuring, and the pattern of the transactions shows Avenatti's intent to evade the reporting requirements
The scheme is also alleged to constitute fraudulent concealment and money laundering under California law
Money laundering here is defined as transactions of sufficient amounts "with the specific intent to promote, manage, establish, carry on . . . any criminal activity"
Money laundering here is defined as transactions of sufficient amounts "with the specific intent to promote, manage, establish, carry on . . . any criminal activity"
Annnd because he was trying to prevent his money from being levied by the Washington Dept of Revenue, he's may have also committed a misdemeanor under Washington law
Impressive to see Avenatti commit crimes under fed law and two separate states in the same series of transactions
Impressive to see Avenatti commit crimes under fed law and two separate states in the same series of transactions
Because there is probable cause to believe he committed a felony while on release, there is now a rebuttable presumption that Avenatti poses a danger to the community and there are no conditions that will allow him to be released again
DOJ also argues, apart from the presumption, the overwhelming evidence of his fraudulent conduct while on pretrial release for other fraud shows "proves that defendant remains a substantial economic danger to the community."
"Moreover, the fact that defendant continues to go to great lengths to conceal his assets suggests that defendant may be engaged in further fraudulent conduct."
I'm not sure it's even necessary to say this, but DOJ tosses in a paragraph at the end to point out that it seems unlikely he'll comply with any conditions of release since all of this was in violation of the previous conditions
As one of @popehat's tweets shows, this puts his defense attorneys in a tough spot. If Avenatti has been committing fraud to pay his attorneys, it could now be an additional crime for his attorneys to use that money to fund his defense
@Popehat Avenatti just got remanded into custody to be transported to NY for his first trial starting next week. Judge Selna found there's probable cause to believe he committed wire/mail fraud and there's a danger he would engage in similar conduct if released.
