Disgraced Lawyer Michael Avenatti Pleads Guilty to Federal Fraud and Tax Charges

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Disgraced lawyer Michael Avenatti entered a guilty plea on Thursday in a California federal court on wire fraud and tax-related charges.

Avenatti, who represented himself during the criminal proceedings, changed his plea from “not guilty” to “guilty” on four counts of wire fraud and one count of obstructing the administration of the Internal Revenue Code.

He entered his guilty plea despite not reaching a deal with federal prosecutors, meaning he could be sentenced to the statutory maximum of 83 years in prison.

United States District Judge James Selna set Avenatti’s sentencing for September 19, but that could be vacated if federal prosecutors decide to go forward with 31 other counts he is facing.

The decision on whether prosecutors will go forward with the remaining counts is expected next week. The additional charges include multiple wire fraud, bank fraud, bankruptcy fraud, aggravated identity theft, and tax charges.

On the four counts of wire fraud, Avenatti admitted he embezzled money from his legal clients by misappropriating their money and lying about receiving it or falsely claiming he sent it to them already.

Avenatti also admitted that he “corruptly obstructed and impeded the IRS’s efforts to collect unpaid payroll taxes,” which the federal government estimates to be about $5 million.

Avenatti will reportedly have to pay $1 million in fines and $14 million in restitution. In court on Thursday, Avenatti reportedly told the judge he “misappropriated and misused” client funds and “acted corruptly” in his dealings with the IRS.

“The financial investigation conducted by the IRS details a man who allegedly failed to meet his obligations to the government, stole from his clients, and used his ill-gotten gains to support his racing team, the ownership of Tully’s coffee shops, and a private jet,” the IRS’s Acting Special Agent in Charge Ryan L. Korner said after a grand jury indicted Avenatti on the charges in 2019.

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