Avenatti Likely To Remain Free Ahead Of Calif. Trial

By Lauren Berg
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Law360 (April 7, 2021, 6:53 PM EDT) -- Michael Avenatti's embezzlement trial in July will likely last at least 15 days, a California federal judge said Wednesday during a status hearing, indicating that the disgraced attorney should be able to stay in home confinement to aid his defense preparation.

During a brief remote hearing, U.S. District Judge James Selma noted that the first part of Avenatti's bifurcated trial over accusations he siphoned client funds, scheduled to begin July 13, will likely take at least 15 days to complete following jury selection from a 150-person pool. The judge warned the attorney that he probably won't grant any more delays.

In a joint status report filed Tuesday, Avenatti indicated he would ask for a continuance of the trial, which has already been delayed from its previous date in February. The attorney said COVID-19 still presents risks and complications that will impact jury selection and the government still hasn't forked over all discovery documents.

Prosecutors said Avenatti has a "pattern and practice of using delay tactics to avoid responsibility for his conduct" and argued that the government has already complied with its discovery obligations.

During Wednesday's hearing, Judge Selna said Avenatti is free to make a trial continuance motion but noted it is "highly unlikely" he will succeed in delaying the matter. The judge also said he believes the government has satisfied its discovery obligations.

And although the government wants Avenatti locked up again when his temporary release expires May 31, the judge said it makes more sense for the attorney to remain free and accessible to his counsel while they prepare for the trial. The judge noted there haven't been any issues with Avenatti's compliance since prosecutors said he improperly accessed the internet on a laptop.

Avenatti and the government have agreed that 12 jurors plus four alternates should be seated for the case.

Representatives for the parties declined to comment Wednesday.

The first trial will focus on 10 counts of wire fraud in connection with allegations that Avenatti siphoned money from five clients' settlement awards. The remaining counts — for bank and tax fraud related to various business operations — are currently set for trial Oct. 12.

Last month, prosecutors hit back at Avenatti's request to hold the government in contempt over a discovery dispute, saying the attorney hasn't offered any evidence that prosecutors have withheld exculpatory evidence. Prosecutors also said Avenatti's motion copied "nearly word for word" a motion from an unrelated case against former national security adviser Michael Flynn.

In the indictment against Avenatti announced April 2019, prosecutors claim he defrauded five of his former clients by lying to them about the details of settlements in their favor while using the money for his own ends.

Prosecutors say Avenatti used millions of dollars in ill-gotten funds to pay bankruptcy creditors and other clients from whom he had taken money.

In addition, Avenatti was stiffing the government on payroll taxes from his Tully's Coffee business to the tune of $3.2 million between 2015 and 2017, according to the indictment. He is also charged with failing to file personal income tax returns between 2014 and 2017 and failing to file tax returns for his law firms Eagan Avenatti LLP and Avenatti & Associates between 2015 and 2017.

Avenatti was found guilty last year of extorting Nike in a separate New York case. The attorney's sentencing, which was previously delayed until May because of a spike in COVID-19, is now set to take place in June, according to court records.

The government is represented by Brett A. Sagel and Alexander C.K. Wyman of the U.S. Attorney's Office for the Central District of California.

Avenatti is represented by H. Dean Steward.

The case is U.S. v. Michael Avenatti, case number 8:19-cr-00061, in the U.S. District Court for the Central District of California.

--Additional reporting by Cara Salvatore and Stewart Bishop. Editing by Stephen Berg.

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