Michael Avenatti says an an “internal ‘turf’ battle” over his three federal prosecutions that’s described in former Southern District of New York U.S. Attorney Geoffrey Berman‘s new book shows his convictions for defrauding Stormy Daniels and trying to extort Nike shouldn’t be counted against him when he’s sentenced in California next month for defrauding his law clients out of millions of dollars.
In a new brief, Avenatti’s standby counsel H. Dean Steward says “the highly unusual decision” to prosecute Avenatti in three actions simultaneously resulted from his “notoriety, the government’s desire to have three high-profile prosecutions of defendant” and the battle referenced in Berman’s book, Holding the Line: Inside the Nation’s Preeminent US Attorney’s Office and its Battle with the Trump Justice Department.
“This is improper and highly prejudicial,” Steward wrote. Steward is recommending six years to be served concurrently with the roughly five years Avenatti is serving for the New York cases, while prosecutors are calling for 17.5 years to be served consecutively.
As Steward’s brief highlights, Berman’s book offers the first public confirmation of a behind-the-scenes split between the Manhattan and Los Angeles offices of the U.S. Department of Justice over how to handle Avenatti’s cross-country criminal activity. Berman describes how he informed the DOJ leadership in Washington, D.C., of Avenatti’s imminent arrest in March 2019 on charges of trying to extort Nike, but “it turned out there was one other matter we had to deal with.”
“Federal authorities in California were a year into a tax and wire fraud investigation against Avenatti, and I was told to coordinate with Nicola Hanna, the US Attorney for LA,” Berman wrote.
The two now-former top prosecutors for the most populous and powerful of the country’s 94 federal court districts initially couldn’t agree, according to Berman, and now-former DOJ official Ed O’Callaghan “told me that we should stand down until the turf issue got settled.”
“Our interactions with Main Justice had been strained to say the least, and I thought O’Callaghan might have just been punishing the Southern District,” Berman wrote. “But over the weekend, I was able to reach an understanding with Hanna: if we arrested Avenatti on Monday, Hanna would announce their charges as well.” Both men were appointed under President Donald Trump but had decisively different tenures: Berman was fired in June 2020 after refusing to resign; Hanna left in January 2021 as President Joe Biden was preparing to take office.
Steward quoted the passage to support his argument that Avenatti’s convictions in the Nike and Daniels cases shouldn’t be considered criminal history at sentencing in his California case, which is scheduled for Nov. 7 before Senior U.S. District Judge James V. Selna in Santa Ana.
Steward takes issue with the book’s accuracy, writing in a footnote: “There are numerous erroneous ‘facts’ in the chapter, many of which are contradicted by the government’s own filings in the Southern District of New York and the evidence presented at trial.” But he uses the passages about the dueling prosecutions when addressing an issue that, because of U.S. Sentencing Commission guidelines, is critical to the legal issues Selna will be considering when deciding Avenatti’s sentencing.
Foremost is the total amount of money Avenatti stole from his clients, which prosecutors say is about $12.5 million but Avenatti argues is between $1.5 million and $3.5 million. But under the guidelines, defendants also face more time in prison if they have previous criminal convictions. Prosecutors’ sentencing recommendation for Avenatti argues both New York convictions should be considered as criminal history, which puts his standard sentencing range at nearly 22 years to slightly more than 27 years. If he’s considered to have no criminal history, his standard range is 17.5 years to nearly 22 years. As Steward notes in his brief, “The difference between the low end of these ranges is 52 months (i.e., 4 years and 4 months).”
That’s all based on prosecutors’ calculated offense level of 37, which assumes the judge credits Avenatti two offense levels for acceptance of responsibility. Assistant U.S. Attorneys Brett Sagel and Ranee Katzenstein are arguing he shouldn’t based on the current record, while seeming to leave open the possibility that Avenatti could do something at sentencing to change that.
Steward, meanwhile, is arguing for a much lower offense level of 27 , which would put Avenatti’s standard range at 70 to 87 months for someone in the first criminal history category under the sentencing guidelines. If Avenatti’s New York convictions are considered, the range bumps to 87 months to 108 months. Steward recommends 72 months to be served concurrently with Avenatti’s Nike and Daniels sentences.
The U.S. Probation Office is recommending a 151-month sentence to be served concurrently with the New York convictions, which prosecutors said makes it “an extraordinarily lenient sentence of effectively 91 months.”
The probation report is not filed publicly, but its quoted extensively in both sentencing memos, with prosecutors writing that the probation officer based her recommendation on her belief that “the instant federal matter is an exponential punishment from past judgments” and that running the term in this case consecutively to the New York terms would be “an unreasonable incremental punishment.”
“This conclusionary assertion should be rejected. It is true that defendant’s sentencing exposure in this case is greater than the sentences imposed in the New York cases but that is appropriate given the different facts,” prosecutors wrote. “For example, here, the wire fraud victims’ losses exceeded $12 million dollars and the tax loss exceeded $3 million, and there were multiple victims who suffered substantial financial hardship and at least one vulnerable victim, a paraplegic client; the victims in the New York cases were a massive corporation whose losses were only its attorney’s fees ($259,800) and a single individual whose actual losses were under $150,000.”
They don’t address Berman’s book, but federal agents in Los Angeles have emphasized that their investigation into Avenatti began long before he became famous for suing Trump on behalf of Daniels, also known as Stephanie Clifford, in 2018. The Internal Revenue Service had been investigating Avenatti for unpaid taxes since 2015, with court documents describing a series of investigative steps that led to more lies and concealment by Avenatti concerning both his Global Baristas coffee venture and his law firm, Eagan Avenatti LLP.
The investigation was referred to the IRS’ criminal branch on March 19, 2018, shortly after Avenatti filed Daniels’ first lawsuit against Trump over their non-disclosure agreement.
But U.S. Treasury Special Agent Remoun Karlous noted the lawsuit’s timing in a January 2020 declaration, emphasizing it was filed “well-after the EA LLP IRS collection case began in September 2015 and the GBUS IRS collection case began in September 2016.” Karlous said an IRS agent first discussed a fraud referral “in September 2017, approximately six months before the Clifford lawsuit was filed.”
As Berman’s book describes, federal prosecutors in Los Angeles announced their charges against Avenatti the same day New York prosecutors announced his arrested in the New York case on Monday, March 25, 2019. Behind the scenes, agents on the California case had worked over the weekend securing an arrest warrant from U.S. Magistrate Judge David McCormick as well as search warrants to execute that day, including at the home of Avenatti’s paralegal, and they arrested Avenatti not on a grand jury indictment but through a charging complaint. The 36-count indictment was filed about three weeks later on April 10, 2019.
Meanwhile, Daniels’ new lawyer, Clark Brewster, had notified New York federal prosecutors on Feb. 28, 2019, that Avenatti had stolen money meant for Daniels through the contract for her book, Full Disclosure, according to an email obtained by Law&Crime. Avenatti was indicted in that case on May 22, 2019.
Prosecutors’ new memo quotes U.S. District Judge Jesse Furman of the SDNY when he sentenced Avenatti in February, as the judge specifically rejected Avenatti’s request not to consider his Nike convictions as applicable criminal history.
“Judge Furman found that defendant’s criminal history score was not overstated,” according to the memo.
And if prosecutors had charged Avenatti together he “almost certainly would have for, and probably been granted, a severance.”
However, prosecutors’ recommendation also in a way gets around the argument about criminal history by recommending a sentence that’s within the guidelines range for someone with no criminal history: 210 months, or 17.5 years.
Their memo details several reasons he deserves additional prison time, such as his abuse of trust and the financial harm he caused his victims, but it doesn’t explain the recommendation for a sentence below the calculated guidelines beyond saying: “In short, defendant’s crimes were exceedingly serious and caused widespread harm. Such significant misconduct warrants a correspondingly significant term of imprisonment.”
They also dismantled Avenatti’s cable TV persona “as someone who represents ‘Davids’ versus ‘Goliaths’, as a ‘fighter’ for the little guys and a person who gives ‘people who had no chance a fighting chance.'”
“In fact, defendant did not and does not fight for anyone but himself,” prosecutors wrote.
More coverage of the sentencing recommendations, with links to each brief, can be found here.
(Images: Avenatti photo via Drew Angerer/Getty Images; Berman photo by JOHANNES EISELE/AFP via Getty Images)
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