Thread by @meghanncuniff

Good morning from the federal courthouse in Santa Ana, California, where I’m here for the 12th day of testimony in Michael Avenatti’s wire fraud trial. Follow this thread for updates from the courtroom.
⚖️🧵⚖️

Prosecutors and Avenatti and his standby counsel are in court now and Judge Selna just took the bench. Jury is due at 9. The judge is considering Avenatti's objections to the testimony of prosecution expert witness John Drum now.

https://twitter.com/meghanncuniff/status/1423791721100431364

Avenatti filed a supplemental objection over the weekend that Selna swiftly rejected (

https://twitter.com/meghanncuniff/status/1424830887888252937

) but Avenatti is reminding him of conversation they had Friday in which Avenatti said he'd be filing something. So Selna agrees to withdraw order striking the supplement.

Avenatti is making his case against Drum, but Selna cuts him off: "Sir, I've read the briefs and I appreciate if you're going to make new points, make them."
Avenatti objects to Drum relaying on other bank records that the court hasn't ruled are admissible.

This has to do with business records exception to hearsay objection. Avenatti says records are "woefully inadequate" in that they're not admissible, and government has burden to overcome that.

"Just to be clear, I'm talking about bank records the court has not ruled on yet," Avenatti said.
But Selna says this issue was addressed in a broad ruling last October regarding Drum's testimony.

Avenatti says Drum wants to testify about how the first $1.6 million of Geoff Johnson's $4 million settlement was spent, but Avenatti says it's irrelevant, should be rejected under Federal Rules of Evidence 403.
"I disagree. It's at least motive evidence," Judge Selna says.

"It's completely irrelevant," Avenatti says. He says the $1.6 million was an attorney fee, and he has no bearing on the case. "Case law is clear that the crime has to have an ending at some point," Avenatti said.
AUSA Alex Wyman responding now.

Wyman says there may have been legal route for Avenatti to get that $1.6 million through a proper accounting of costs and fees and communication with client, which didn't happen. One important fact regarding wire fraud charges: Wyman says they involve a misappropriation theory.

"We need to be able to prove that the money didn't end up with the victims," Wyman tells Selna. This is part of the fraud scheme narrative overarching the 10 wire transfers, as discussed in my @lawdotcom article from yesterday: bit.ly/3CA9VEa

Avenatti says Wyman is wrong when he said no money from the settlement could be transferred out without the client's approval. "There's no basis for that whatsoever and it reflects a fundamental misunderstanding of how plaintiff contingency cases work," Avenatti says.

Avenatti: “I’ve cross-examined a lot of financial experts over the course of my career, a lot, over 20, and I’ve never seen a situation like this,” referring to Drum’s $600,000 payment from the USA.
Selna: “You’re obviously entitled to draw that out and present it to the jury.”

Avenatti really wants to know where the numbers in Drum’s summaries came from. “The guy can’t just saw I got it from @QuickBooks. That’s like saying ‘I got it from a filing cabinet.’”
“I’m entitled to that information.”

But Judge Selna says Federal Rules of Evidence 1006 doesn’t require it. “They’re not entitled to tell you where each number came from. That’s not a 1006 violation.” law.cornell.edu/rules/fre/rule…

Avenatti protests, and Selna says, “Tell me where 1006 says not only does the government have to present you with the document that underlies the summary, but they have to tell you where each number comes from in the document.”

Avenatti says, “It could be that the documents he says support it don’t really support it, and that’s grounds for cross-examination.”
Selna says, “Ask the very questions you’ve indicated to us you’re going to ask. That’s cross-examination, and proper cross-examination.”

Selna says Drum’s testimony about where the money went “is an appropriate task for a forensic expert.”
“Government needs to establish that ultimately there was a misappropriation,” Selna said. And, “where some of the money went is directly relevant to motive and other issues.”

Judge Selna moves to Avenatti’s bid to reinstate the subpoenas for the New York federal investigators. He’s going to allow Avenatti to subpoena one but not both.

Judge said Agent Deleassa Penland's notes from her Jan. 9, 2020, interview with Avenatti’s ex paralegal Judy Regnier indicate they discussed the finances of the law firm.
“I believe her testimony would be sufficient, and testimony from Chris Harper would be cumulative.”

Avenatti must give 48 hours if he’s going to call Penland as a defense witness. Which of course he’s gong to - I just heard him tell prosecutors he’ll need her here on Friday.

OK, jury is seated and AUSA Alex Wyman is continuing his direct exam of Long Tram, a business associate of YouTube cosmetics star Michelle Phan. When we last left off on Friday, Tram was explaining his efforts to find a missing $4 million wire transfer Avenatti claims he sent.

Regarding transfer, "If it was not going to be that full amount, would you have expected him to tell you that?" Wyman asks. Yes.
When Avenatti said he was sending Phan's $8.1 million, "did he tell you there was only about $4.1 million of Ms. Phan's money left?"
"No," Tram answers

"And if that were true, would you have expected him to tell you that?" Wyman asks.
"Yes," Tram answers.
We heard a message Tram sent in which he says $8 million of Phan's money is "in the ether somewhere" and "we have been given the runaround for six weeks."

"Just constant excuses," Tram testifies.
"Who were those excuses coming from?" Wyman asks.
"Mr. Avenatti," Tram answers.
Wyman asks who was giving him the runaround, and Tram says Avenatti and Judy Regnier.
Tram reads more emails aloud detailing his hunt for the $4 million.

(The courtroom public audience right now is me, two other reporters and a man and his young son and daughter, probably about seven or eight years old. I saw them at @OCSuperiorCourt checking out courtrooms yesterday. Nice civics lessons going on in here today.)

Tram contacted Avenatti's law partner Filippo Marchino about the transfer because “Mr. Avenatti's seemed very busy at the time."
This is May 2018. (Maybe Tram could have tried calling into Lawrence O'Donnell's show or something.)

Wyman asks if Phan got wire payments from Avenatti in early May. Yes, she got two. One for $4 million. The other for about $140k. These are the two transfers we've heard a lot of testimony about from previous witnesses.

Narrative is Avenatti lied and said the second transfer would be $4 million, too, and he sent just $140k so he could get a second transfer number to support his lie that two batches of $4 million were on the way, when actually only one was.

A reminder that the only people allowed to take photos of federal courtrooms are the website marketing people for the engineers who worked on the building, apparently. This set up as shown by @miyamotointl is the mirror opposite of Judge Selna’s courtroom.

^^^Jury and witness box are on the left in Selna's courtroom. Prosecutors are on left, with the table moved to face judge. Avenatti and counsel are on right, with table facing the jury. Jurors sit in the audience bench on the left as well as the box. Public is on the right.

We're still seeing texts and emails from Long Tram's dogged pursuit of Michelle Phan's $4 million. A lot of back and forth about the supposed missing $4 million wire transfer. Tram emailed Marchino on May 11, 2018: Your side will need to call into get the tracking number."

Tram included to Marchino email from Phan's bank showing what was needed to track the transfer. Wyman asks where Tram understood the tracking numbers came from
"Either Mr. Avenatti or City National Bank," Tram answers. Did number from Avenatti lead Tram to missing $4 million? No.

More messages between Tram and Marchino. One from Marchino ends with a reminder: "It's not my bank. It's Michael's bank."
Page 35 of the pack of correspondence. May 14, 2018. Tram asking for an update on the wire from Marchino. "Hey - sorry. None. Checking now," Marchino texts.

"Were you ever able to locate that missing second $4 million wire payment from the defendant?" Wyman asks.
"No," Tram answers.
"To your knowledge was there ever a second $4 million wire payment?" Wyman asks.
"No," Tram answers.

More questions about whether Tram would have expected Avenatti to tell truth about $4 million and whether there really was a transfer.
"Because that is Michelle's money," Tram testifies.
Now Wyman brings in the @NewportBeachPD. Tram filed a theft report about the missing money.

Now Wyman asks a series of questions about whether Phan is associated with Avenatti's hired law firms, Passport 420, Global Baristas, if she has a financial relation with someone named Geoff Johnson, or Greg Barela, or Alexis Gardner. All things Avenatti spent her money on.

"As Ms. Phan's business partner or COO, did you ever authorize the defendant to use Michelle Phan's money to pay the defendant's creditors?" Wyman asks.
"No," Tram answers. Same Q&A for coffee business, other clients etc. And that's the end of Wyman's direct.

Avenatti at the lectern for his cross-examination of Tram now.
"Mr. Tram, good morning. You have to answer audibly," Avenatti begins.
"Good morning," Tram responses.
(No one points out that 'good morning' isn't actually a question.)

Avenatti brings up Tram and Phan's early legal interests. "You wanted to get paid your money, you wanted to exit @IPSY because you were dissatisfied and Ms. Phan was dissatisfied?"
"Yes," Tram said.
But IPSY wasn't publicly traded, so it wasn't obligated to pay them.

A contentious fight ensued, but Selna sustains Wyman's objection over the details because the judge has limited what jurors can hear about the cases behind the settlements Avenatti is accused of stealing.

Avenatti going over @IPSY negotiations. "At that meeting, did the CEO of @IPSY say 'no problem, we'll give you @emcosmetics and we'll pay you $30 million'? Is that what happened?" Avenatti asks.
Selna sustains Wyman's objection under 403 and prior ruling regarding case details.

Avenatti just moved prosecutors' flip board over to the lectern. (After my confusion Friday about which flip board, I'm positive this is the USA's. Avenatti is asking Tram about numbers Wyman wrote regarding the five payments from Tram and Phan's deal with @IPSY.)

Avenatti asks if Tram recalls that he receive his money, as did Phan's sister in law. "You received your money right away?" Avenatti asks.
"Yes," Tram answers.
"And Michelle's money was not sent right way, correct?" Avenatti asks.
"Yes," Tram answers.

April 4, 2019. Tram is interviewed by feds, including case investigators and AUSA Brett Sagel. Avenatti asks if he remembers telling them that he didn't know why Phan's payments were delayed. Avenatti asking if he was told he had to tell the truth or could be charged with a crime

Tram says he doesn't remember the details. Selna sustains objection for asked and answered, so Avenatti asks to approach to, like he does so often, refresh the witness' recollection. He gives Tram the transcript of his interview with feds.

Tram reads it and says he remembers the first part but says he doesn't remember being told he could be charged with a crime, but he's not disputing. (This is a good example of Avenatti spending a lot of time to refresh witness recollection of seemingly minor points.)

"Now Mr. Tram, you knew exactly why Ms. Phan's money was not paid immediately upon the first set of payments, didn't you? Yes or no?" Avenatti asks.
Tram asks court reporter to re-read question.
"At the time I didn't," Tram answers.

Avenatti says didn't they not want money immediately for tax reasons. Yes, Tram answers.
"Sir isn't it true that in an effort to avoid paying taxes on a majority of the money received" you wanted it sheltered in a company?
"That was your suggestion," Tram answers.

Selna strikes as non responsive. stricken as non response. But Avenatti keeps going and establishes that Divinium Lab was created to help Phan so she wouldn't have to pay income taxes on $20 million.
Now we're seeing emails from @IPSY about the payments.

Avenatti: When government asked Tram why he wanted the money to go into Avenatti's client trust account, he didn't mention anything about tax treatment.
"I don't recall," Tram said.

"You told the government it was because you wanted a paper trail," Avenatti said, doing air quotes around paper trail. "Didn't you?"
Yes, Tram says.
Avenatti establishes Tram didn't say anything about tax treatment to feds.

Avenatti brings up March 8, 2018 email from Tram. "I responded that same day because I was hot to get my hands on your money right?" Selna sustains Wyman's argumentative objection.
"Sir, I responded within minutes, didn't I?" Avenatti asks.
"No," Tram answers.

Avenatti goes through a line of questioning on this - "Well, within a couple hours, right?" "No," Tram answers. And it becomes clear he's making a point that he actually didn't respond for a few days, despite prosecutors saying he was hot for the money.

Avenatti slips in: "You understood at the time I was dealing with another matter in New York, correct?"

Later, "I responded right away and said make sure they have my wire transfer information because i want the money in my account?" Avenatti asks.
Selna overrules Wyman's 403 objection.
"No," Tram answers.

"You don't owe me any money," Tram tells Avenatti.
Avenatti confirms Tram believes he's received everything he's owed.
"Yes," Tram answers. And he had as of April 2018.

"So if someone were to say that I had stolen your money, Mr. Tram's money, or the firm had stolen your money, Mr. Tram's money, that would not be true, correct?"
"Yes," Tram answers.
"Meaning yes, it would not be true?" Avenatti asks.
"Yes it would not be true," Tram answers.

And now we're on a 15-minute break. Avenatti just told Selna he has about 45 minutes left in his cross of Tram.

Regarding the trial with Judge Staton down the hall, it can't catch a break. You heard here last week that two jurors were dismissed for sleeping in court. Now the entire thing is on hold because a (vaccinated) juror tested positive for covid.

https://twitter.com/meghanncuniff/status/1423313552257929216

Alright, our leisure time is over and the jury is back in the courtroom. Avenatti is continuing his cross of Long Tram, a close business associate of cosmetics guru Michelle Phan.
Avenatti asks about Tram buying him a gift.

Tram says he doens't remember that. Aveantti says it was something for him to use. Avenatti asks if he remembers asking him when he'd be back from New York. "I'd purchased something and offered for you to use it," Tram said. It's March 2018.

"What you purchased for me to use was a B-6 fully armored against grenade landmines and assault rifles Suburban SUV. Complete with a smokescreen system and electrified door handles."
"Is that right?" Avenatti asks.
"Yes," Tram answers.

"And did I ask you to purchase that?" Avenatti asks. No.
"That was something you went out and purchased with the idea that I would use it, right? Yes or no, sir?" Avenatti asks.
"I didn't know," Tram answers.

"So you just went and purchased it on your own and afterward thought, I'll give it to Michael Avenatti to use?" Avenatti asks.
"Yes," Tram answers.
"And why did you decide that I needed such a thing?" Avenatti asks.
Judge Selna sustains Wyman's relevance objection.

Avenatti asks about him and Tram seeing each other in the midst of Tram supposedly suspecting Phan's money had been stolen.
"Where did we see each other?" Avenatti asks.
"Bill Maher. You were a guest on @billmaher," Tram answers.

Tram attended Avenatti's interview with @BillMaher.
"Did you ask me anything about any alleged missing money or wires at that event, sir?" Avenatti asks.
"I don't recall," Tram answers. (Avenatti didn't ask if Maher asked him about it, but, spoiler: He didn't.)

Avenatti is now deep into his standard line of questioning for witnesses about how their methods for preserving texts for investigators, and whether they included everything.

"There are many more text communications between you and me other than what are included in 278, correct?" Avenatti asks, referring to the exhibit number.
"It depends on how you define 'many,'" Tram answers.

"More than 25?" Avenatti asks.
"Can't say for sure," Tram answers.
"What's your best estimate, sir?" Avenatti asks.
"I don't have an estimate," Tram answers.
"So you don't know if it's more or less than 25?" Avenatti asks.
"I don't," Tram answers.

Avenatti asks about texts between Tram and Filippo Marchino. Tram says he's know Marchino for 15 years, so there are a lot of texts. He tells Avenatti prosecutors first asked to see other texts between him and Avenatti in June of this year.

Now we're hearing about calls Tram placed to Avenatti that he told the feds ere "to get his vehicle back" (That's that Batman car or whatever Avenatti testified from the lectern about a few minutes ago.) Tram admits he didn't ask Avenatti about the missing money in those calls.

"Sir, you predominantly dealt with Mr. Marchino and Ms Regnier related to these wire transfers in 2018 isn't that true?" Avenatti asks.
"Yes," Tram answers.
"More so than me, isn't that correct?" Avenatti asks.
"Yes," Tram answers.

Tram did so because he knew Marchino better than Avenatti, and because "you understood that I was very busy," Avenatti said.
Avenatti just pulled his flip board (his, not the USA's) over to the lectern and is writing.

Avenatti holds the flip board up slightly for Tram. "You see that, sir?"
"Yes," Tram answers.
He's also got emails displayed on the overheard. In one, paralegal Judy Regnier says she's asked the bank to put a trace on it, meaning the wire transfer.

"Now in the month of April and March 2018, you understood that I was spending more time in New York than I was in California, correct?" Avenatti asks.
"I don't know if it was more, but it was substantial," Tram answers.
"It was a lot, correct?" Avenatti asks.
"Yes," Tram answers.

Avenatti trying refute Regnier's testimony that he hand typed message about wire transfer on her computer. Wyman objected, said Avenatti is testifying from lectern, but Selna said let him finish his question.
Avenatti is saying he couldn't have done so if he was in New York.

Avenatti gets Tram to say, "It would not be possible if you were not in California." Now he's asking if Tram was aware of all correspondence regarding the wire, if he knows what bank told Avenatti and Regnier. No to all. But he remembers one conversation about it.

"What was the date of this alleged conversation, sir?" Avenatti presses Tram about properly relaying the details of that conversation to federal investigators. Now Avenatti is asking about texts Wyman went over in direct.

A bunch of texts between Tram and Marchino on May 9, 10 and 11 as Tram tries to find the $4 million.
"You didn't send me a single text message on May 9, May 10, May 11 or May 12 or at any other point until may 24. Isn't that true sir, yes or no?" Avenatti asks.
"Yes."

And then, it was to get his car back, not to ask Avenatti about money. Avenatti asks if the reason Wyman didn't ask Tram about any texts with Avenatti between that is because none exists. Tram says yes.

"Did you provide all of your cellphone bills for the year of 2018?" Avenatti asks.
"Yes," Tram answers.
"Who was your carrier at the time?" Avenatti asks
"@ATT," Tram answers.

"Sir, in April and May of 2018, you were predominately relaying on Mr. Marchino to get back to you related to the payments, is that true?" Avenatti asks.
"Yes," Tram answers.

Avenatti: "This is my last question: As you sit there today, do you believe that you have other text messages presently in your possession, meaning not physically here...other text messages with me beyond what is included in exhibit 278?"
"Yes," Tram answers.

"But those have never been given to the government, right?" Avenatti asks, which is another question.
"No," Tram answers.
"Meaning I'm correct?" Avenatti asks a second question.
"Yes," Tram answers.
"Pass the witness," Avenatti says.
Wyman up now for re-direct.

Wyman goes over with Tram the fact that the tax shelter set up Avenatti discussed was Avenatti's idea, and Tram was following his advice. Now we're hearing about documents Avenatti asked Tram about.

"Did any of the other documents in his matter entitle the defendant to extra attorney fees?" Wyman asks.
"No," Tram answers.
Same Q & A for whether Avenatti was entitled to take $4 million from Michelle Phan.
Avenatti up for re-cross now.

Avenatti asking Tram about his testimony that Avenatti had a call with the bank, then told him bank had wired the money to the wrong account.
"You weren't on the phone with me and the bank, were you?" No.

Avenatti asks if Tram's testimony is that Phan's business advisors never told him to put payments in Phan's Divinium Labs "in order to avoid taxes." Rephrases to ask who else was on call when they were talking about taxes. Tram says Phan's adviser Jamie Cottage.

OK, Tram is now off the witness stand. Next prosecution witness is Mark Horoupian, a lawyer with Sulmeyer Kupetz. He's been there for 26 years doing bankruptcy work. "I'm a certified specialist, and that's the focus of my job." sulmeyerlaw.com/professionals/…

Avenatti was Horoupian's client, and Horoupian's firm used to sublease office from Eagan Avenatti in Newport Beach.
ASUA Brett Sagel: "Do you know who was acting as the managing partner on behalf of Eagan Avenatti" during bankruptcy?
"I believe it was Mr. Avenatti."

Sagel goes over now Horoupian would get docket notifications for the bankruptcy case. Now we're hearing about how Avenatti filed a declaration saying "he believed dismissal of the bankruptcy case would be in the best interest of the law firm."

Horoupian says, "Sitting right here today don't remember the exact pleading" or what was filed.
So Sagel uses the pleading to refresh his recollection.

Sagel is asking Horoupian about the Jan. 30, 2018, motion to dismiss the bankruptcy, and if it included certain conditions Avenatti would need to meet to get it dismissed. (This is the case that first got me following Avenatti's judicial saga for @LADailyJournal.)

"What is the relief requested by this motion?" Sagel asks.
"It was two fold. It was to approve the settlement between Eagan Avenatti and Mr. Frank's law firm among others and also in conjunction with that to dismiss the bankruptcy case," Horoupian answers.

This is when things really started getting dicey for Avenatti. He owed Frank a lot of money, and Frank and Andrew Stolper (AUSA) were going after him for it. And this was all unfolding in the midst of the @StormyDaniels saga, and Avenatti's head-spinning cable TV storm.

On the off chance someone would ask him about all this debt, Avenatti's go-to response seemed to be simply that the debt was bogus, and he didn't have to pay it because it would be overturned on appeal. But as Sagel is going over now with Horoupian, this debt was very real.

Horoupian is going over attorney fees and other transactions related to the bankruptcy. He got $2.8 million in the firm's client trust account in relation to the bankruptcy, and he distributed all of it.

Exhibit 392 is a copy of a check the firm wrote to the IRS, which at that point was after Avenatti over unpaid taxes related to his Tully's coffee venture up in the grand wonderland that is the Pacific Northwest.

The check was $1.5 million. After a line of questioning, I'm realizing where this is going -- Avenatti used client money to send $2.8 million to Horoupian, because that's how important getting the bankruptcy dismissed was. He had to pay the money to get it dismissed.

Sagel asks Horoupian if Avenatti told him he used client money to send him the $2.8 million, $1.5 million of which went to the IRS.
"I think whether he told me or not would be covered by attorney-client privilege," Horoupian answers.
Sagel ends with that.

The jury just left for lunch. With them gone, Avenatti is raising issues about his objections to exhibits, as laid out in lucky document number 666 (tweeted below). Selna says come back at 1:15 and we'll talk about it then. So we're on a break until then.

https://twitter.com/meghanncuniff/status/1424470277644197890

While we’re on a break, check out my @lawdotcom article on another important criminal case here in Orange County: 'Prosecutor's Office Hid Key Evidence': Orange County Judge Overturns Murder Conviction in Ongoing Jail Informant Scandal bit.ly/37AL3Od

OK we're back in court early so Judge Selna can consider Avenatti's objections to exhibits for the upcoming witness. AUSA Alex Wyman saying government is now only going to offer one of the exhibits as evidence, a summary chart of the wire transfers.

Avenatti just did something very unusual for him: He asked for a minute to consult with his standby counsel Courtney Cummings Cefali. They're chatting now at the defense table.

Avenatti has the disclosure dates related to the exhibit, says exhibit shouldn't be allowed because of late disclosure. He also says if prosecutors use the exhibit with the summary witness, he'll use the ones they don't use as impeachment material during cross.

Judge Selna says the exhibit was properly noticed: "I believe that given the limited number of supporting documents, the government provided reasonable notice in sufficient time for Mr. Avenatti to review the documents underlying the summary."

Selna acknowledges some case law says Federal Rules of Evidence 1006 requires summaries to be released "that case law is out there, but it's not what the statute says."

COVID issue: Avenatti subpoenaed a woman who used to work in his firm, and she called prosecutors and said she’s testified positive for covid. “Her positive test was on Aug. 5,” Sagel tells Selna.
“She’s not going to come into this courtroom having tested positive,” Selna says.

Avenatti says she’s a very important witness and he requires her testimony. “We’re happy to explore alternative arrangements, but it came to news to use that she had recently tested positive, because what we were told was that she had gotten over it.”

Avenatti says his paralegal who served the subpoena has since tested negative for covid.

Selna asks for a declaration about the witness's current condition. We've got a few days to sort this one out, so I imagine we'll be hearing more later.

Now the jury is back and Avenatti is cross-examining his former bankruptcy lawyer Mark Horoupian, a partner at SulmeyerKupetz. Avenatti is asking about his ex partners turned creditors/arch nemesises, Scott Sims, Jason Frank and Andrew Stolper.

Avenatti asks Horoupian if one of the reasons for the firm's bankruptcy was the three attorneys had tried to steal cases from the firm. But Selna sustains Sagel's relevance objection.

Avenatti tries again: "Mr. Horoupian, who is Andrew Stolper?"
But he doesn't get very far.
"Same objections, your honor," Sagel says.
"Sustained," Selna says.

Avenatti is having Horoupian go over a document with Frank and Stolper's signatures. "Why did Andrew Stolper sign this document?"
But Sagel objects for relevance and beyond the scope, and Judge Selna sustains.

Avenatti asks, At the time you reviewed the document, you knew Andrew Stolper had been pushed out of the U.S. Attorney's Office for prosecutorial misconduct?
Sagel says objections and squeezes in "and was hired by defendant" before restating his objection louder. Selna sustains.

Selna tells Avenatti: "I believe this is the second perhaps the third time you've put that question to the witness. I'd direct you to not put the same question" to him again.

So Avenatti gets into a line of questioning about Horoupian's lack of knowledge about the creditor situation, to try to show that Horoupian didn't know for sure if Avenatti making that $1.5 million IRS payment would have for sure ended the case.

Avenatti ends with that, but prosecutors don't seem concerned: Sagel has no re-direct.

Next witness is David Sheikh, a lawyer at Lee Sheikh Megley & Haan LLC in Chicago. leesheikh.com/lawyers/david-…

Sheikh represented Brock USA in the intellectual property dispute with Greg Barela, who as we know was represented by Avenatti. This is the case that resulted in Barela’s settlement.

Sheikh is going over what we already know: This dispute went to mediation in Colorado in 2017. They didn't reach a final resolution, but they agreed to continue negotiating. Sheikh describes "shuttle diplomacy" with mediator. "I think there may have been some emails involved."

Sagel gives Sheikh an exhibit of emails between him and Avenatti.
"Each of the emails in the string were written by either you or the defendant, is that correct?" Sagel asks.
"Yes, these are emails between me and Mr. Avenatti," Sheikh answers.

The packet of emails is exhibit 175, and it's now in evidence. Sagel is going to go through the emails now. "If we can just start at the top of page 1 and we'll kind of go through this," Sagel says. It's December 2017.

Shiekh reads aloud an email he sent to Avenatti (it begins "Michael,") that details the settlement and the payment terms. In another email on Dec. 20, 2017, Shiekh says Brock USA will pay $1.9 million to Barela, with $1.6 million coming by Jan. 10, 2018.

We've heard this all before through Barela's testimony, and some through Regnier and Marchino. But Sheikh is able to neatly fit it all together. Sagel is asking about changes in the deal, like upping the initial payment by $100k.

And we get a minor example of saying "lawyers aren't supposed to ask questions if they don't know how the witness is going to answer."
"Who wanted more money paid up front?" Sagel asks.
"Mr. Barela," Sheikh answers.
Oops. So Sagel asks if Sheikh was talking directly to Barela.

Sheikh says no, he was dealing directly with Avenatti.

Sagel moves on to an email "with an attachment that you sent Defendant." It's Friday, Dec. 22, 2017. Title of attachment? "Barela Brock Confidential Settlement Agreement." It's a Word document.

Sagel asks Sheikh if it was a WordPerfect document. Sheikh says no, it was Microsoft Word. Sagel reveals the archaic interworkings of the Central District of California: "The judge knows why I said WordPerfect because we're in the last place that uses WordPerfect."

Just had to wave a courtroom security officer out of here because music was playing from his phone or walkie talkie and he didn't realize it. Kept coming over and acting like he didn't know what the issue was. Then he went out in the hall and came back, and the music stopped.

Sagel is going over a change in the agreement made by Avenatti. It's about a client trust account, and the account number is stricken. Shiekh said he talked to Avenatti about this, and Avenatti said the account hadn't been created yet.

We just saw emails and attachments between Avenatti and Shiekh with the confidential settlement agreement. This is Thursday, Dec. 28, 2017.

Sagel has finalized agreement on the overhead. "This document has the Jan. 10 dates in it," Shiekh says.
"Was March 10 ever part of the settlement agreement between Brock and Barela?" Avenatti answers.
"No," Shiekh answers.

But as we've heard, Avenatti had different document for Barela that claimed payment was due March 10.
Sagel asks if there was anything that prevented Avenatti from sending this final agreement to his client.
"No," Shiekh answers.

"Did you provide a copy of the fully executed settlement agreement to your client?" Sagel asks.
"Absolutely," Shiekh answers.
Sagel asks what that means for the case. Sheikh says it ends it.

Tuesday, Jan. 2, 2018. Avenatti emails Shiekh about the Barela-Brock settlement. Shiekh reads aloud: "David, below please find the wiring instructions. Please confirm receipt and that we are on track."
Shiekh needed the info so he could transfer the settlement payment.

Shiekh confirmed Brock USA paid $1.6 million to Avenatti's trust account on Jan. 5, 2018.
After that, "Did you have any further dealings with Michael Avenatti?" Sagel asks.
"I did not," Shiekh answers.

Sagel asks if he had any reason to talk to Avenatti after that. Selna overrules Avenatti's speculation objection.
"No," Shiekh answers.
A few more questions that include Sheikh answering, "No, because Brock had fully paid."

Sagel asks Shiekh about getting contacted by Barela's new lawyers about the settlement and whether Brock had paid. He gave them a copy of the settlement agreement after confirming they really were Barela's lawyers and would abide by confidentiality of agreement.

No further questions from Sagel. Avenatti headed to the lectern now for cross-examination.

Avenatti: "Good afternoon."
Shiekh: "Good afternoon."
Avenatti: "Please turn to page 187."

That's exhibit 187. It includes the fully executed Brock USA-Greg Barela settlement.
"Your client has continued to adhere to this document as the fully executed settlement agreement, correct?" Avenatti asks.
"I believe so, yes," Shiekh answers.

Avenatti: And pursuant to this document, your client made $100k to Barela on Jan. 10, 2019, correct?
Yes.

"And did Mr. Barela accept that payment of $100k pursuant to this agreement?"
"I believe he did although I recall in my discussions.."
Selna strikes last part at Avenatti's request.

Avenatti gets a little testy with Shiekh: "Sir just answer my questions. This will go a lot easier if you just answer my questions."

Avenatti goes over final $100k payments with Shiekh and confirms Brock USA paid them to Barela.
Avenatti asks if Shiekh has first hand knowledge of which exactly document Barela signed, and Shiekh acknowledges this.

Avenatti asks if Shiekh knows Barela swore under oath that he had actually signed the agreement. Shiekh didn't know that, Barela and prosecutors didn't tell him, nor did Barela's new lawyers.

Avenatti asks if Mr. Barela or his lawyers ever inform you, 'Hey, you know I didn't sign that agreement" so he doesn't want the remaining payments." He rephrases after confusion from Shiekh about compound question.

"I have a tendency to do that sometimes. I'm sorry. Let me try to clean it up," Avenatti said. He asks again, and Shiekh confirms that no, Barela never told him he didn't think the agreement was valid because he hadn't signed it.

Avenatti asks Shiekh if it's fair to say they used to contentiously battle.
"I see you smiling. Is that fair - you and I would go around and round on various issues and it would be fairly contentious?" Avenatti asks.
Shiekh agrees.

Avenatti following up on Sagel asking Shiekh about receiving only signature pages from Avenatti when working on the final settlement. Shiekh said in direct he didn't know why Avenatti did that, but it wasn't uncommon.

Avenatti shows correspondence in which Shiekh asked for the signature pages, refuting earlier testimony that he didn't know why Avenatti sent only the signature pages. And now we're on the 15-minute afternoon break.

Thread broke, continues here:

https://twitter.com/meghanncuniff/status/1425214919314612225

Thread broke, continues here:

https://twitter.com/meghanncuniff/status/1425216815525875714

A common complaint during trial is how cold it is in the courtroom. (I'm not cold, for the record.) "I can see the headlines now: Legal team found frozen to death in courtroom," says Avenatti's standby counsel, Dean Steward.

OK, jury is back and Avenatti is continuing his cross-examination of David Shiekh, the Chicago lawyer who represented Brock USA in the dispute with Avenatti's ex-client Greg Barela. He told Sagel he has about 45 minutes left.

Avenatti asks Shiekh about Frank Azar, an attorney in Colorado who also represented Barela. fdazar.com
"You have no idea how much money Mr. Azar was paid or not paid in connection with Mr. Barela's matter do you?" Avenatti asks.
"I do not," Shiekh answers.

Avenatti asks if he recalls an attorney at Eagan Avenatti, John Arden, was handling the day to day of Barela's case. He was at mediation.
"Is it fair to say at the mediation we didn't have a lot of joint sessions?" Avenatti asks.
"I think that's fair to say, yes," Shiekh answers

Avenatti highlighting email he sent Shiekh. He's telling him he wants settlement terms in writing so he can converse with Barela about them. "We never accepted this, nor did we convey we would not counter it," Avenatti wrote in the email.

Three hours later, Avenatti sends revisions. He asks Shiekh now: You have no idea what if any communications occurred" with Barela during that three hours. Shiekh acknowledges that's true.

Avenatti is focusing on the tentativeness of the deal. Nothing was final until he talked with Barela and signed. But he and Shiekh had a "binding settlement agreement." A lot of questions about this over the last few minutes.

Avenatti asks if Shiekh's position is even if nothing was signed, the agreement was final because the settlement wasn't contingent on any signature at the moment. Even without signatures "we still had a binding agreement, correct?"
"Correct," Shiekh answers.

Avenatti asks if at the time, did Shiekh think he was doing anything illegal or wrong. Shiekh says "I don't understand..." and Selna strikes everything he says after that. Court reporter read question aloud.
"No," Shiekh answers. He didn't think he was doing anything illegal.

Avenatti asks something like, if you get wire instruction two weeks earlier, do you generally send wire earlier than agreed upon with client?
"I don't understand the question. It's kind of all over the place again," Shiekh says.

Avenatti tries again. First payment was Jan. 10, 2018. If Brock USA had transfer info two weeks earlier, would they have sent the money then? Avenatti says if he calls the Brock USA leader as a witness, will he say he'd pay it early? A lot of confusing back and forth.

Avenatti asks if Brock was so eager to make the payment, why didn't they send it after binding agreement? Shiekh says it's because they didd't have the wire info. So Avenatti is asking, if Brock had wire instructions, they would have immediately made payments?
"No," Shiekh says.

After a lot of this, Avenatti asks Shiekh: "Sir did you ever represent to any court of law that 'something fishy was going on' with Mr. Barela?"
Selna sustains Sagel's objection and tells Avenatti, "Next topic, please."

We're hearing about a change Avenatti made in the agreement, regarding an account he needed to create for Barela's settlement.
Avenatti: "Do you have any evidence to suggest to you that that was inaccurate at the time?"
Sheikh: "That what was inaccurate?"

Avenatti: "That an account was going to be crated to receive the funds."
Sheikh: "No."

Avenatti asks Sheikh: "Sir, do you know if Mr Runkles read the agreement?"
Yes, he read it.
(I like how Avenatti is basically pulling a Judge Carter here and threatening to call a CEO into court because he doesn't like the answers he's getting from his lawyer.)

Avenatti ends by asking Sheikh if, after the $1.6 million was paid, if he had any idea what correspondence Avenatti had with Barela. Shiekh says no.
"Thank you. Pass the witness, your honor," Avenatti says.

Sagel on re-direct asks Shiekh series of qs including: "If you were to fail to tell your client that you receive $1.6 million in settlement money on behalf of the client, do you think there's something unethical about that?" Selna sustains Avenatti's objection and Sagel sits down

For re-cross, Avenatti asks Shiekh: "Do you have any firsthand knowledge of me lying to any client, ever?"
"No firsthand knowledge, no," Shiekh answers

Judge Selna just dismissed the jury for the day. Avenatti talking about the logistics of his case right now, says it'll be about four days. Offers his paralegal up for testimony about subpoenas, which he said some witnesses are dodging.

Avenatti tells the judge he wan't to be clear, and "I want to make sure we don't have any hiccups related to the order of witnesses."
"If you want to be really clear, just put it in a declaration," Selna says.

AUSA Alex Wyman says the "timing in this case has been a bit of a moving target" because cross is always longer than expected. Avenatti estimated 30 minutes for Shiekh and Wyman says it went much longer. Selna has the exact time: One hour and 15 minutes.

Wyman says they have a couple short witnesses, then Michelle Phan for about an hour, then an FBI summary witness and government expert John Drum. Avenatti says his cross of Drum will be four hours.

Selna tells Avenatti it sounds like we won't get to his case until "Thursday afternoon or maybe even Friday."
"That's what it sounds like to me as well, your honor," Avenatti answers.
Avenatti asks to start his case Friday, but Selna tells him to have witness ready for Thursday

"Especially in a trail of this length, I like to use up every single" minute of the day, the judge says.
Now Avenatti is asking to call John Arden as a defense witness during the prosecution's case, to accommodate Arden's schedule.

Sagel says Avenatti didn't give Shiekh courtesy, but Selna says, “I don’t believe in tit for tat.” However, he belives prosecutors have the right to put on an uninterrupted case, so Avenatti can't call Arden until it's his case.

Prosecutors say Avenatti is trying to subpoena an employee of expert John Drum’s company. Selna is not against this subpoena though. Avenatti says the employee is dodging it. Judge tells him: “Sir, if you think there’s misconduct afoot, document it and bring it to me.”

Now we're hearing about Avenatti's attempts to get the New York federal investigator on the stand. Says CA feds basically told him to pound sand and deal with New York. Sagel says he's contacted SDNY to see how they want to handle this, through them or through Avenatti.

We're hearing about Avenatti wanting to subpoena another NY federal agent, and Sagel is suggesting Avenatti file a brief explaining why the agent shouldn't fall under his ruling this morning i.e., only one agent is going to testify.

The day ends with Sagel telling Selna: "Defendant makes these statements as if he's acting in good faith" but Selna cut him off: "I don't want to get into that."
So, we'll see briefs on this new subpoena issue tonight, I think.

And that's it for the day. Attorneys are packing up and I'm heading out into the hallway to finish up.

And with that, I’m out of here. Thanks for following along. Check back tomorrow about 8:30 am for another thread, and remember I’ve posted archived threads that I’ll re-up tonight.

Avenatti just filed that declaration from his paralegal regarding her serving a subpoena on a former law firm employee who said she'd "just gotten over Covid-19." Question is is she still positive. Selna has already said she's not coming into court w/ a positive Covid diagnosis.

New filing tonight from prosecutors trying to quash Avenatti's subpoena for third New York agent, as discussed after court today. They're saying Avenatti lied to Judge Selna about when he served the agent and why he didn't include it in the filing Selna addressed this morning.

Here's a Google Drive link to the full document: bit.ly/2U5QhhG Earlier tweets in this thread track some of the courtroom discussion about this.

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