Thread by @meghanncuniff

I’m here at the Orange County federal courthouse, where Michael Avenatti just arrived for the opening day of his client theft trial. As I reported yesterday, he’ll be representing himself, w/ Dean Steward (right in photo) as standby counsel. I’ll tweet updates on this thread. 🧵

Avenatti told the @FoxNews cameraman as he was going in, “I’m pro se because I want the truth to be known.” (No comment from the attorney he knocked aside, Dean Steward.)

OK we just got started here in court. Judge Selna is asking Avenatti about objections to jury instructions filed last night and why they were late, and he got pretty testy with him about it.

Here's the full filing on Google Drive, which focuses on instructions regarding the California State Bar Rules of Professional Conduct. Avenatti doesn't want them mentioned. Tells Selna just now that bar rules are "irrelevant in this case." drive.google.com/file/d/1WZcJkL…

Selna was not having it. Onto the next pleading: this one from this morning. drive.google.com/file/d/1oGdmyK…

AUSA Brett Sagel is up now, complaining to Selna that Avenatti brought in a bunch of stuff for his opening statement that hasn't been disclosed and shouldn't be allowed. (There's a flip board etc.)

Sagel says the two people with Avenatti this morning are not connected to the public defense CJA panel, and he questions why court is paying for "three paralegals and an advisory counsel for him" when he can suddenly bring in his own tech advisors etc.

Sagel is telling Judge Selna he’s concerned Avenatti is going to bring up stuff in his opening that’s not allowed, such as Stormy Daniels. Selna says he trusts Dean Steward has informed Avenatti of the rulings on the motion in limine.

Avenatti told Selna he still objects to jurors wearing masks during trial. Selna not having it. “Next point! Noted,” judge says. (My @lawdotcom article on the mask issue: bit.ly/2TbAxcv) He also told Selna he’s gong to move for a mistrial after Sagel’s opening statement.

Courtroom space is limited, but we've still managed to get the essentials inside: @finneganLAT, @semeryOCR, Paul Andersen from City News Service and my favorite, Mona the sketch artist for @ABC7. Brett Sagel's wife and mother are also here. #familyaffair Jury just filed in.

Selna is reading a brief set of instructions to the jury before we get into opening statements. "In order for the defendant to be found guilty of wire fraud..." jurors must find false or fraudulent representations, intent to defraud. A lot of legalese here, obviously.

"Because the defendant was a licensed member of the State Bar of California...the ethical duties that the defendant owed clients are determined by California law," Selna tells jurors.

HOWEVER, Selna tells jurors that just because Avenatti failed to comply with state bar rules regarding client trust fund accounts doesn't mean he's guilty of wire fraud.

Selna tells jurors, "Ultimately, you will be asked to determine whether defendant violated the law, not whether he violated his ethical duties."

A lot of instructions here about client trust funds, and Cal State Bar obligations for security for the trusts, notification and accounting for clients etc.

OK, AUSA Brett Sagel is at the lectern now for his opening statement. "In 2011, Geoffrey Johnson was in a really bad place. He'd just suffered severe injuries..."

Geoff Johnson hired @MichaelAvenatti and his law firm Eagan Avenatti, and he trusted them. Avenatti got a $4 million settlement for Johnson, but he "did not tell Geoffrey Johnson" about it. "Defendant stole the entire amount of Geoffrey Johnson's settlement check," Sagel says.

“You will learn Geoff Johnson was the first of several clients of the defendant from whom the defendant stole their settlement money,” Sagel says. Sagel describes the other client victims. Alexis Gardner. Greg Barella. Michelle Phan.

“Each of their cases were different, but all of them trusted Michael Avenatti...They trusted defendant completely. Defendant violated their trust. Defendant stole their money," Sagel tells jurors.

Sagel is telling jurors what Avenatti told the federal judge overseeing Johnson's case, regarding the settlement. "Defendant never even told Geoffrey Johnson that the settlement was finalized."

This Geoff Johnson stuff first came out in a 2019 judgment debtor exam in LA federal court, late on a Friday afternoon. Avenatti went to Johnson's house after and had him sign something attesting to his ethics. (Then he flew to NY and was soon arrested for Nike extortion.)

Sagel is telling jurors about small payments Avenatti gave Johnson, $1,000 or so, while withholding $4 million settlement. Johnson wanted a specialized wheelchair etc, and he was begging Avenatti for money. Avenatti's ex office manager Judy Regnier is going to testify about this.

Johnson wanted to buy a handicapped accessible house. Avenatti told him he could but it on an all-cash basis with the settlement money, even though that money was long gone, Sagel tells jurors. "Geoffrey Johnson never got a house, and the defendant continued to lie to him."

Sagel is talking about the LA judgment debtor exam. (Such a blast from the past. Jacob Wohl was there.) And how Avenatti drag raced to Johnson's house afterward. "Defendant continued to lie to Geoffrey Johnson, and Geoffrey Johnson still got none of his settlement money."

Sagel moves onto the next alleged client victim, Alexis Gardner. She was "essentially homeless" when she met Avenatti. He got a $3 million settlement for her. (@finneganLAT did a great article on this: latimes.com/politics/la-na…)

Avenatti never showed Gardner the *real* settlement details. He got $2.75 million in a client trust account and promptly transferred it to another attorney trust account, who was instructed to buy a private jet with it. (This is the Honda 420 jet.)

Avenatti lied to Gardner for years and told her her ex boyfriend needed to pay. Really, Avenatti was the one making payments to her under the guise that it was from her ex, while he kept her full settlement, Sagel tells jurors.

Sagel is displaying text messages between Avenatti and Gardner. She's wondering where her money is, saying they don't seem to send anything unless Avenatti pushes out to them.

"Hi Michael, just checking in. I still haven't received my deposit," Gardner says in one text. Avenatti replies "That's a problem" and says he'll check on it. In another, Avenatti vows to find out "what the hell" is going on.

Ms Gardner confided about her financial troubles to Avenatti. Sagel telling jurors that these financial problems were actually all Avenatti's doing. Onto the next alleged client victim, Greg Barella.

While Geoff Johnson got the most attention, Barela is the original Avenatti client victim in that he complained of theft first. Hired Larson O'Brien law firm in LA and filed a complaint with JAMS (in accordance with arbitration agreements) in January 2019. dailyjournal.com/articles/350999

Regarding Michelle Phan, Avenatti also lied to her about her settlement money. He even met her at a party and went to lunch with "and provided her more lies about why he didn't give her her money" and never told her he'd spent almost half of it.

Sagel says all these clients thought Avenatti did a great job. They trusted him, and they thought he was truthful with him about their money. "Defendant lied and stole from each of his clients."

"Ladies and gentlemen, at the end of this case, the evidence will conclusively show that the defendant knowingly defrauded his clients" by making false statements, Sagel says.

That's it for Sagel. We're on a 10-minute break, then Avenatti is up for his opening statement.

Jury is back in the courtroom and Avenatti is at the lectern. We're waiting for Judge Selna to take the bench.

Judge Selna: "Mr Avenatti would you like to address, the jury?" Avenatti: "I would, your honor."

“Good morning. A few days ago, Mr. Sagel and Mr. Wyman introduced themselves to you, and they told you that they represented the United States of America," Avenatti says.

"Ladies and gentlemen, for over 20 years, I, too, have represented the United States of America, and I have done it one citizen at a time,” Avenatti says.

Avenatti: “No crime was committed by me, and I never intended to steal or defraud any client of any money at all. Not last week. Not last month. Not last year. Never. I have pled not guilty for one reason: because i am not guilty.”

"Let's start with Geoffrey Johnson," Avenatti says. Speaking loudly and slowly, Avenatti is describing a meeting Johnson had with prosecutors and federal agents in which he said he'd received notice of his settlement.

Johnson was at a care center, and Avenatti's firm paid for all of it. Avenatti tells jurors: "Every trial is a fight for credibility, and this trial will be no different."

Avenatti says Sagel told jury he stole Johnson’s entire settlement, but the evidence will show that “that, like this, is completely false.” On to Alexis Gardner.

Avenatti says Gardner was indeed homeless, and his firm made sure she had a place to sleep at night. "We took money out of our own pocket to assist them with their lives and with their cases," Avenatti says of his clients.

"The evidence will show that the government does not want to focus on any of those points," Avenatti tells the jury. Onto Greg Barela.

Avenatti: "You will hear evidence of Mr. Barela's significant criminal record" including defrauding people. (This is his own former client he's talking about here.)

“Ladies and gentlemen, this case didn’t start with a crime. It started with a target,” Avenatti says. Judge Selna interjects: “Mr. Avenatti, tell the jury what you’re going to prove.” Avenatti: “And the evidence will show that.”

“The evidence will show that my family has a long history in Southern California. Over 100 years. When my ancestors immigrated from Italy in hope of a better life. I grew up in Utah..” Sagel objects, and Selna sustains.

Avenatti gets into how his firm operated. “We represented the Davids v. the Goliaths. We did it across the country, and the evidence will show were blessed to do it very well.”

“We gave people who had no chance a fighting chance. We did it by doing exactly what I’m doing right now, but in a civil context. In civil cases,” Avenatti tells jurors.

“We also took money from our own pocket to pay the expenses along the way. To pay for Mr. Johnson’s medical care, which was extremely expensive," Avenatti says.

Avenatti: “To pay for Ms. Gardner’s living expenses so she could eat and be comfortable while we worked on her case. We generally asked for nothing, nothing from our clients up front. Not a penny.”

Avenatti: “We bore all the risk. What do I mean by that? I mean if the case went south and there was no recovery, the client would be out nothing.”

Avenatti tells the jury, “We were attempting to make chicken salad out of chicken scratch” by way of civil litigation. “We took cases no one else would touch because they’re too risky.”

Avenatti: “When you litigate cases of this complexity, of this magnitude, of this duration, in order to stay in the game, in order to keep that case going, in order to give that client a fighting chance, you have to spend money.”

https://twitter.com/meghanncuniff/status/1417906485686784004?s=20

Avenatti: “You have to hire experts. Experts sometimes cost hundreds of thousands if not millions of dollars, as absurd as that may seem.”

Avenatti tells jurors, “This case is about math.”
“This case is about how you calculate what a client is due after their settlement is received,” Avenatti says.

Avenatti tells jurors it's the government's burden to prove each and every dollar amount "to the dollar." "Close is not good enough. To the dollar, ladies and gentlemen,” Avenatti says.

“And the evidence will show that despite working on this case for well over two years, despite all the resources and the agents of the federal government, they still don’t have the numbers right. It doesn’t add up,” Avenatti says.

Avenatti says the prosecution’s hired expert’s work, much like the government’s investigation into him, “has been plagued by sloppiness and a lack of detail.” “We will show that it is smoke and mirrors.”

Avenatti says what he shows them about the expert’s work “will require an acquittal. A finding of not guilty, because this is not a civil case or a sate bar proceeding. This is a serious criminal matter.”

Avenatti ends by telling jurors at the end of the trial, they’ll be obligated to find him not guilty “because that’s exactly what I am.” And he’s done.

Judge Selna is reading jurors a covid instruction he forgot to read earlier. Don't infer anything from witnesses with or without masks. Don't come to court if sick. Now it's the first witness.

First witness is lawyer Patrick McNicholas, a plaintiff's lawyer with McNicholas & McNicholas, LLP in Los Angeles. He worked with Avenatti's firm on the Geoff Johnson case. He IDs Avenatti as the lead trial attorney. mcnicholaslaw.com/client-testimo…

Sagel's co-counsel Alex Wyman is questioning McNicholas. They're going over the basics of the case, explaining things like contingency fee cases, which is what Johnson's case was. McNicholas says Eagan Avenatti was to get 75 percent, and his firm was to get 25 percent.

He was brought into assist because he'd worked cases like this before. EA lawyers would call him to discuss legal theories, and McNicholas went to a mediation with Avenatti. McNicholas says he never personally spoke with Johnson. (I'm sure Avenatti will focus on that in cross.)

Wyman is asking McNicholas about special needs trusts. "It's for the protection of the client," McNicholas said. "It prevents third parties from being able to reach that money." McNicholas is describing the kind of clients who'd be good candidates for these trusts.

McNicholas is detailing Johnson's $4 million settlement and the associated documents. Avenatti has lodged a couple successful objections. Wyman just displayed a document and asked McNicholas if he knows if that's Johnson's real signature. McNicholas says he doesn't.

Government allegation here, of course, is that Avenatti forged that signature. Regarding another document, Avenatti: "Before that document is in evidence, I don't think it's appropriate for the witness to describe it to the jury." Selna sustains.

Just FYI everyone, I have seen the “fool for a client” quote over and over and over again so you really don’t need to tweet it at me. Really, you don’t. I promise. Thanks so much.

McNicholas says the Eagan Avenatti firm was entitled to $1 million something (I missed the exact figure, sorry) from the Johnson settlement, with additional cost recovery. He says he typically provides accounting of settlements to clients.

No further prosecution questions fo McNicholas, so that means Avenatti gets to cross examine him now. But Judge Selna is dismissing the jury for lunch right now. Back at 1:30.

Avenatti just moved for a mistrial based on his prior objections about covid-19, as well as the jury instructions about the state bar rules. "I make these objections to preserve the record." Selna denies the motion. And now we're on lunch. 🌮

https://twitter.com/meghanncuniff/status/1417895194771394567

We’re back, and Avenatti just started his cross exam of McNicholas, who worked with him on the Geoff Johnson case. Avenatti remarks that it’s been a while since they saw each other.

Avenatti: “Did you do anything unethical or illegal related to Mr. Johnson’s settlement?”
McNicholas: “No.”
Avenatti: “You’re certain of that?”
McNicholas: “Yes.”

Avenatti walks McNicholas through his costs and other expenses for Johnson settlement, and the attorney fees he got. $350k or so. Avenatti is trying to show that Sagel is wrong when he says the entire $4 million settlement was stolen.

Avenatti: “Isn’t it true that Michael Avenatti did not steal the entire $4 million Johnson settlement check?”
McNicholas: “As defined, I would agree with that.”
A win for Avenatti there. Now he’s asking McNicholas about his talks with prosecutors.

This focus on McNicholas' talks with prosecutors reminds me of the @SkaddenArps team's defense of CEO James Mazzo in the insider trading saga with Doug DeCinces. Huge focus in 2nd trial on DeCinces' deal with USA. Avenatti is following a similar blueprint with McNicholas.

Notable: Avenatti likes to say ‘strike that’ when he wants to back up and start a question over. But it’s not like the court reporter strikes anything when attorneys say that. They just write “strike that” and keep transcribing.

Avenatti is really focused on the details of McNicholas’ meetings with prosecutors. Asks him to ID the documents he reviewed with the government just two weeks ago.

“Did you feel that meeting was necessary?” Avenatti asked.
“Definitely,” McNicholas answered.
“Why? Why was it necessary?” Avenatti asked.
Prosecutor Wyman objects for relevance, but Judge Selna overrules. This is going pretty well for Avenatti.

McNicholas said he needed to refresh his memory and go over details. Avenatti now: Does the figure $4 million appear anywhere in the agreement. McNicholas says yes, so Avenatti says show me. McNicholas reads sentence aloud.

"Was this settlement agreement ever confidential?" Avenatti asks, waving the settlement in the air. McNicholas says no. (It involves a public entity, LA County, so it can't be.) McNicholas is obviously curious where Avenatti is going with this.

Avenatti says isn't it true that anyone from the public could go and access this settlement and the documents? “Are you aware of any evidence that suggests that Mr. Johnson would not have access to these documents on the public record?”

McNicholas points out that Johnson was a paraplegic and might have still been in jail.
“Sir, you didn’t know if your own client was in jail?” Avenatti asks.
“No,” McNicholas answers.

That might have sounded like it went OK for Avenatti, but keep in mind prosecutors say he forged Johnson’s signature and repeatedly lied to him. (The fact that the settlement he was being lied to about is a public record might not be relevant in the end.)

Avenatti is displaying a $350k check McNicholas got on April 1, 2015, for attorney fees in the Johnson case. Now he's showing the check McNicholas got to reimburse him for costs incurred working the case.

Avenatti has a real bulldog tone with McNicholas. Nearly barking questions at him right now. Asking him about his experience with accounting as an equity partner, emphasizing that McNicholas didn’t handle that stuff.

Avenatti asks McNicholas if he's a successful trial lawyer, but Wyman objects for relevance and Selna sustains. So Avenatti backs up and asks McNicholas about his background. How many cases was he working when he had Johnson case? 50-60, he answers.

Avenatti asks if McNicholas has any idea how much money Eagan Avenatti firm advanced to Johnson. McNicholas says he doesn’t.
“Did anyone from the government ever ask you that question?” Avenatti asks.
“No,” McNicholas answers.

Avenatti is going over McNicholas' itemized costs in the Johnson case. Money for an Uber, photo copies, etc. Avenatti made sure to note that McNicholas made sure to be reimbursed for an Uber for Johnson.

Avenatti notes that McNicholas charged Johnson 25 cents a page for photo copies “including one entry for 50 cents.”
“That’s right,” McNicholas says.

“You’re not embarrassed about billing Mr. Johnson for any of these costs are you?” Avenatti asks.
“No,” McNicholas answers.
“Why aren’t you embarrassed?” Avenatti asks.
Wyman objects for relevance, and Selna sustains.

McNicholas says it’s customary to keep track of everything, “whether it’s large or small, and then include it on the case accounting sheet” which is missing here. but Aveantti says no, the question was is this billing unusual?

McNicholas: “I would say that’s not unusual.”
“In fact, that’s what you did in connection with Mr. Johnson’s case, but that doesn’t make you unethical, does it?” Avenatti asks.
“No, it does not,” McNicholas answers.

“And in your mind that doesn’t make you a criminal either?” Avenatti asks.
“No, it does not,” McNicholas answers.

Avenatti just grabbed his flip board and displayed it for McNicholas. It’s a list of how Avenatti says attorneys calculate settlement payments and costs. He's going over everything with McNicholas.

Re: attorney fees: "If we put the money in a trunk of a car" drove to Vegas and put it all on black, "would that be criminal conduct in your experience, sir?" Avenatti answers.
"No," McNicholas answers.

Avenatti asks McNicholas about Johnson’s lawsuit. McNicholas says he knows it was filed by @Callahan_Blaine and names various defendants. Avenatti’s old partner turned creditor, Jason Frank, is one of them.

Avenatti asks McNicholas, “Mr. Frank is a close friend of yours, isn’t he?”
“He is,” McNicholas answers. Wyman objects for relevance, and Selna says move on

Avenatti tells Selna the Frank question goes to bias of the witness, but Selna again says move on.
“Am I precluded from asking any questions about Jason Frank?” Avenatti asks the judge.
“For the time being, yes,” Selna answers.

Avenatti ends his cross of McNicholas by asking that, as he sits here today, he can't say if Avenatti did anything illegal regarding Johnson's settlement, can't he? And McNicholas says yes, that's true. Not a bad showing for Avenatti, but remember, Sagel gets to re-direct next.

We're back and, my bad, it's not Sagel who's doing re-direct of McNicholas, it's AUSA Alex Wyman. He's up now.

Wyman asks McNicholas if he knows where the money behind his $350,000 check came from. McNicholas says he doesn't. This gets into prosecutors' argument that entire settlement was stolen.

Regarding Avenatti's questions about the Johnson settlement being a public record, Wyman asks if McNicholas typically lets his clients learn of their settlements from public records. Avenatti objects as argumentative, but Selna overrules. McNicholas answers no.

Did McNicholas think Johnson would get $0 from settlement? No. Did he expect him to get substantial money? Yes.

Now Avenatti up for re-cross. Asks McNicholas if he knows anything about Avenatti's case costs and expenses. No. Also focuses on fact that McNicholas never talked to Johnson.

Avenatti: "The amount of money Mr. Johnson was due, if any, was a direct result of items 1 through 6 on this chart, isn't that true?" Pointing to flip board with rundown of settlement payout calculations. McNicholas says yes.

Next witness is Thomas Hurrell, a civil defense lawyer at Hurrell Cantrall in Los Angeles. He represented LA County in the Geoff Johnson lawsuit. hurrellcantrall.com/meet-our-lawye…

Hurrell's testimony is obviously aimed at establishing for jurors that Avenatti just flat-out forged Geoff Johnson's signature on a settlement document. Baby steps to get there, but we're getting there.

Wyman is displaying emails between Hurrell and Avenatti about the settlement. In one, Avenatti asks about the settlement and says he's "trying to get Geoff taken care of." Hurrell tells him LA Board of Supervisors will be considering the settlement soon.

Wyman displays the settlement agreement on the overhead.
"Do you now whether that is Mr. Johnson's actual signature?" Wyman asks.
"No, I do not," Hurrell answers.
"Does the agreement call for quarterly payments to Mr. Johnson?" Wyman asks.
"No," Hurrell answers.

Now we're seeing the $4 million check LA County sent Avenatti for Johnson. "And at that point, was the case finished for all intents and purposes?" Wyman asks. "Yes," Hurrell answers.

"Nothing unusual about having money sent to an attorney trust account is there?” Avenatti asks on cross.
“No,” Hurrell answers.
And how long have you been practicing sir, in litigation?” Avenatti asks.
“36 years,” Hurrell answers. Has represented LA County for about 25.

Avenatti hammers on fact that county gets sued all the time, and settlements are handled by lawyers, and putting money in client trust accounts is very common. Asks if it's unusual fo lawyers to be pushing for settlement money. Hurrell says no, they want it as quick as possible.

"Did I ever say we've gotta file this stuff confidentially because I don't want people to see this?" Avenatti asks. "No," Hurrell answers.

Avenatti is going over their communications with the court regarding the placement of the settlement on the LA County Board of Supervisors' public agenda.

He's obviously trying to focus on the fact that this settlement was totally out in the open and public, but it really doesn't address the core allegations from prosecutors about Avenatti lying to Johnson.

Avenatti is asking Hurrell about his interactions today with the previous witness, McNicholas. Says McNicholas was an under oath witness when Hurrell talked to him during a break. (This is pointed stuff, but Hurrell and McNicholas may not come across as likely co-conspirators.)

Avenatti: Wyman “walked you through all the documents” shown today. Hurrell says yes.
Big difference between this and Skadden’s insider trading defense for CEO: They focused on WHY witnesses would lie about defendant. We’ve seen nothing of that here in Avenatti’s questioning.

Final questions from Avenatti: Does Hurrell know how much money Geoff Johnson was ever owed? Hurrell says no, he doesn't."

“Sir as you sit there today, do you have any idea one way or the other whether I did anything unethical or illegal in connection with Mr. Johnson’s settlement?” Avenatti asks.
“I don’t have any knowledge of that,” Hurrell answers.

Avenatti says Hurrell is aware of no "evidence that I ever did anything illegal, to the best of your knowledge?" Hurrell: "That's right."
"Nothing further," Avenatti said.

After the jury went home for the day, Judge Selna emphasized to attorneys that witnesses under oath cannot discuss the substance of their testimony with anyone, in an apparent nod to some of Avenatti's cross exam questions.

They're talking about the logistics now for tomorrow. Prosecutors expect to call Geoff Johnson as a witness. Avenatti said he wants Johnson seated on the witness stand before the jury comes in, because his disability could make getting into the witness stand difficult.

Avenatti: “There’s no allegation that anything I did or didn’t do led to his medical condition, and I think it’s highly prejudicial to let him take the stand” in front of jury. Prosecutors don’t object, and Selna agrees that’s how they’ll do it.

Alright everyone has filed out for the day. Check back tomorrow morning about 9 for another thread.