Avenatti Wins Yet Another Extension To His Prison Release

By Hailey Konnath
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Law360 (October 16, 2020, 9:52 PM EDT) -- Embattled celebrity attorney Michael Avenatti will spend at least one more month free on home confinement as COVID-19 continues to ravage the country's prisons, a California federal judge ruled in an order entered Thursday, finding that Avenatti had shown good cause to extend his temporary release from prison.

Avenatti, who is accused of embezzling his clients' money, was set to return to prison Oct. 20. He has been at his home in Los Angeles since April, when he was released amid fears surrounding the pandemic. Since then, his return date has been pushed back several times.

On Wednesday, Avenatti told the court that he should get another extension, pointing out that coronavirus cases are still rising in California. He also said he has health conditions that put him at a higher risk from the virus, especially in prison, where he said the infection rate is 5.5 times higher than for the U.S. population.

U.S. District Judge James V. Selna granted his request later that day, though the order was not entered in the case docket until Thursday. Avenatti's release will now last until Nov. 17, according to the short decision.

The government had opposed the extension, arguing that Avenatti should receive no more extensions until Judge Selna rules on prosecutors' request to send him back to prison over "clear and convincing" evidence that he used a computer to draft court documents, in violation of his release conditions.

Prosecutors raised concerns in June that Avenatti was accessing the internet through a computer owned by his bail-release custodian and longtime friend Jay Manheimer. 

"In direct violation of this condition, defendant used Manheimer's computer to personally draft or edit pleadings in this case, including a status report in which defendant claimed that he could not prepare for trial in this matter because his release conditions prevented him from using a computer to review discovery or work on motions," prosecutors said.

A forensic report showed that Manheimer's computer had been used to create Microsoft Word documents and PDFs and to send and receive emails, although it could not be determined whether Avenatti prepared the documents, the government said.

Avenatti has slammed that bid, saying the government is relying on "unreliable and inadmissible data."

In July, Judge Selna said that the situation needed further investigation and extended his release to Sept. 21. His release was extended again late last month.

Prosecutors unveiled their indictment against Avenatti in April 2019, claiming 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.

Meanwhile, Avenatti was also 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 tax returns between 2014 and 2017 and failing to file returns for his law firms Eagan Avenatti LLP and Avenatti & Associates between 2015 and 2017.

Last month, Judge Selna contemplated splitting the December trial in two to try the wire fraud charges separately from the bank and tax fraud charges. Federal prosecutors argued that the charges are too entwined to try separately, but Avenatti's attorney, H. Dean Steward, agreed with the judge that the wire fraud charges should be severed.

Avenatti has also been found guilty of extorting Nike in a separate New York case. He also faces another federal prosecution in New York over his alleged theft of hundreds of thousands of dollars owed to high-profile client Stormy Daniels from her book deal.

Government representatives declined to comment and counsel for Avenatti didn't immediately return a request for comment Friday.

The government is represented by Julian L. Andre, Brett A. Sagel and Patrick R. Fitzgerald 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 Pete Brush, Reenat Sinay, Dave Simpson, Craig Clough and Stewart Bishop. Editing by Peter Rozovsky.

For a reprint of this article, please contact reprints@law360.com.

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8:19-cr-00061

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California Central

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April 10, 2019

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