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Michael Avenatti’s Law Firm Slapped With $10 Million Bankruptcy Judgment


Cable news mainstay and Stormy Daniels‘ attorney Michael Avenatti‘s law firm has been hit with a $10 million judgment in U.S. Bankruptcy Court.

According to Michael Finnegan, politics reporter for the Los Angeles Times, Avenatti’s law firm was handed that judgment on Tuesday morning. Finnegan also noted that Eagan Avenatti was admonished by a lawyer with the U.S. Department of Justice, Najah Shariff, for allegedly defaulting on back taxes that Avenatti himself had previously agreed to pay.

Finnegan tweeted the breaking news at 1:53 p.m. on Tuesday:

Last week, Finnegan reported that Avenatti had agreed to pay $4.85 million to Jason Frank, a former attorney at Avenatti’s law firm in Newport Beach, California. According to that report, a lawsuit recently filed in Los Angeles claimed that Avenatti failed to make the first installment of $2 million.

Frank’s lawsuit notes, “Avenatti has no valid excuse for failing to perform this obligation.”

According to Finnegan’s Tuesday report, Judge Catherine Bauer of the U.S. Bankruptcy Court in Santa Ana ordered the Eagan Avenatti law firm to pay $10 million to Frank. This judgment was apparently handed down after the missed $2 million payment noted above.

During the hearing on Tuesday, Bauer said, “At this point, that’s what’s appropriate.”

During that same hearing, Assistant U.S. Atty. Najah Shariff told Judge Bauer that the federal government would soon be filing a motion demanding payment of $2.4 million in back taxes, $1.3 million of which are alleged to have been payroll taxes withheld from employees but unlawfully kept from the U.S. government. According to the U.S. attorney’s office in Los Angeles, Avenatti’s firm has settled some $1.5 million of the total debt owed to the IRS.

In response to Finnegan’s tweet, Avenatti wrote, “Nonsense. Completely different law firm – no ties to Daniels case. Irrelevant. Over blown. Sensational reporting at its finest. Check the facts next time please and report accurately.”

Notably, Finnegan’s original tweet didn’t suggest anything in particular about Avenatti’s current or former law firms–the LA Times reporter simply noted that a law firm of Avenatti’s was hit with a judgment. Nor did Finnegan suggest the judgment had anything to do with Stormy Daniels.

It is unclear which aspect of Finnegan’s reporting that Avenatti termed “Nonsense.” We reached out to Avenatti for further clarification.

Regardless, the response from Avenatti suggests a marked shift in tone as of late. After numerous stories surfaced of Avenatti threatening reporters for critically reporting on him in recent days, Avenatti’s above response to Finnegan seems almost hospitable.

Law&Crime asked Avenatti for a statement on the LA Times‘ story. In response, he said:

Nonsense. Completely different law firm – no ties to Daniels case. Irrelevant. No judgment against me was issued. Who cares?

[image via screengrab/NBC]

Follow Colin Kalmbacher on Twitter: @colinkalmbacher

Editor’s note: This story has been edited for accuracy, to include a response from Avenatti and to fix a broken link.

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