Michael Avenatti, the high-octane litigator who represented adult film star Stormy Daniels in her infamous “hush money” lawsuit against then-President Donald Trump, was in debt and “desperate” for cash when he stole part of the actress’ book advance, federal prosecutors said at his fraud trial Monday.
During opening statements, Manhattan prosecutors said the publisher of Daniels' memoir agreed to pay her $800,000 but that Avenatti siphoned $300,000 of it by forging her signature on a letter to the publishing house.
Avenatti was “desperate for money” and his Newport Beach law firm was mired in debt when he took secret measures to collect the cash, assistant U.S. Attorney Andrew Rohrbach told jurors.
But Avenatti’s lawyers, in their own opener, claimed Daniels was the one who owed him. They said Avenatti helped her lock down a book contract, which was her longtime dream. They also tried to attack Daniels’ credibility by playing up her new project as a paranormal investigator who can communicate with haunted dolls and claimed she was an “unpredictable” and “uncontrollable” client who didn’t meet deadlines for her book.
Rohrbach said the 50-year-old trial lawyer —who became famous for ubiquitous cable TV appearances and sparring with Trump—used the forged letter to get Daniels’ publisher to send one installment of her money to a trust account controlled by Avenatti.
The prosecutor said Avenatti had promised “he wasn’t going to take a penny” from Daniels’ book deal but instead spent it on air travel, food, and personal expenses—all the while telling Daniels her publisher was stalling on making payments.
Avenatti was in such dire financial straits, Rohrbach continued, that he borrowed money from friends and used that loan to pay Daniels what she was owed, claiming the publisher finally paid up.
The jury will see Avenatti’s “lies in his own words,” Rohrbach said, adding that Daniels will take the stand and present dozens of text messages between her and the celebrity lawyer where he cast blame on the publisher. “The messages tell the whole story,” he said. Jurors can also expect to see bank and wire transfer records, as well as the allegedly forged letter he sent on Daniels’ behalf.
Then Rohrbach previewed part of Avenatti’s defense: that he will attack Daniels’ credibility because she is a porn actress and director turned paranormal investigator on TV.
Daniels assumes many roles as an entertainer, Rohrbach said. “She’s been in adult films, she’s on a show about paranormal activity, but adult actresses and paranormal investigators can be victims of fraud,” he argued.
This is Avenatti’s third criminal trial since federal prosecutors on both coasts charged him with an array of offenses including bank fraud, wire fraud, and extortion in 2019—about a year after his representation of Daniels catapulted him to stardom as a nemesis to then-President Trump and nearly led him to run for president.
Avenatti also made an enemy of Trump’s loyal fixer and personal lawyer Michael Cohen, who was convicted of violating campaign finance law after paying several women including Daniels to keep quiet about their dalliances with Trump.
On Monday, Cohen showed up in court to taunt Avenatti and made a spectacle of his appearance on Twitter.
I figured @MichaelAvenatti was so kind and gracious to use other peoples’ money to fly himself and @StormyDaniels to my hearing, the only decent thing to do is to reciprocate…so here I am at the courthouse!!! pic.twitter.com/3ZwisOunrN
— Michael Cohen (@MichaelCohen212) January 24, 2022
Behind the scenes of his relentless TV appearances and viral Twitter account, creditors were fighting Avenatti over a trail of debts, his ex-wife was battling him for child support, and his former clients were demanding answers on settlement monies they were owed.
In New York, Avenatti was sentenced to 2.5 years behind bars last July for attempting to extort shoe giant Nike for upwards of $20 million while representing a youth basketball coach. The disgraced lawyer cried during his sentencing hearing, telling the court, “I’ve learned that all the fame and notoriety in the world is meaningless. TV and Twitter mean nothing.”
One month later, Avenatti faced a California jury for allegedly embezzling millions of his clients' settlement money but a judge declared a mistrial after finding that prosecutors failed to turn over evidence including data from his erstwhile law firm’s bookkeeping software program.
Avenatti returned to Manhattan federal court this week on charges that he stole portions of Daniels' advance for her memoir Full Disclosure. He faces one count of wire fraud, which could land him up to 20 years behind bars, and one count of aggravated identity theft, which carries two years in prison.
Avenatti’s defense attorney, Andrew Dalack, argued that the embattled litigator didn’t steal from Daniels, whose birth name is Stephanie Clifford. Rather, it was Daniels who owed Avenatti for his zealous representation, Dalack said.
Dalack told jurors that per his fee agreement with Daniels, Avenatti was owed a “reasonable percentage” of her book proceeds; but instead of meeting her end of the bargain, Daniels decided to lie and “enlist federal prosecutors to go after Avenatti.”
“Michael Avenatti transformed a rather obscure adult entertainer into a household name,” Dalack said, adding that Avenatti did so through “enormous sacrifice” and “unrivaled commitment” to her.
“When Ms. Daniels doesn’t get her way… she turns on people closest to her. She makes false accusations against people she’s known for years,” Dalack told the jury.
Daniels needed $300,000 from Avenatti, Dalack argued, because she owed as much in attorney’s fees after losing a defamation lawsuit against Trump. Dalack claimed that Daniels asked Avenatti for help in hiding funds from her estranged husband, so she closed her bank account, leading Avenatti to tell her publisher to send payments to a client trust account he controlled.
Dalack then took aim at Daniels’ most recent ghost-hunting project, Spooky Babes. “She began claiming she could speak to dead people” and “interact with a haunted doll named Susan who walks, talks, and plays the piano.”
Talking to dolls isn’t always unusual, Dalack said, and children do it all the time.
“But when the dolls talk back to you, that’s a problem,” Dalack quipped.
Daniels was Avenatti’s star client in early 2018, when she sued Trump to invalidate a nondisclosure agreement she inked with his camp in the runup to the 2016 presidential election. Daniels, who claims she had a sexual encounter with a married Trump at a Lake Tahoe golf tournament in 2006, received $130,000 to keep quiet about the alleged affair. Cohen helped to arrange the “hush money” deal, and she later sued him for defamation.
Prosecutors say Avenatti used Daniels’ book money to bankroll his lavish lifestyle—including a monthly car payment on a Ferrari—and pay employees of his law firm and moribund coffee company Global Baristas. According to the indictment, “When [Daniels] inquired about the status of [her] advance fees, Avenatti repeatedly lied to [her], including by stating that he was working on getting fees from [her] publisher, when, in truth and in fact, Avenatti had already received the fees and spent them on his own personal and professional expenses.”
On Monday, the government’s first witness was New York literary agent Luke Janklow, who represented Daniels in her book deal with St. Martin’s Press and testified about his communications with Avenatti and Daniels.
Janklow said Daniels had contacted him multiple times claiming St. Martin’s failed to pay her installments of her book advance, while Avenatti advised him to ignore her and to come to him with any concerns moving forward.
The agent testified that Avenatti asked him to push the publisher to provide Daniels’ fourth payment early because she was “worried about her well-being” and needed to pay for security while promoting the book.
Janklow said he told Avenatti he was “uncomfortable” ignoring his Daniels’ questions about money but that Avenatti was “insistent, urgent, [and] forceful” about him not communicating with her.
According to Janklow, when he finally did speak to Daniels directly and then informed Avenatti that she claimed not to have received her third installment of money, Avenatti answered, "This is bizarre. She must be confused."
In February 2019, Daniels told Janklow to no longer discuss her business matters with Avenatti because he was no longer her lawyer.
Still, on cross-examination, Janklow was presented with his chummy text exchanges with Avenatti—during which they discussed problems with Daniels’ ideas for her book title and cover and bashed her friend and PR manager Denver Nicks. They also texted about the publisher being upset that Daniels was doing press interviews when she wasn’t supposed to under her book contract.
At one point, Janklow texted Avenatti, "Not everyone is a stone-cold motherfucking professional like us."
Janklow claimed Avenatti told him that Daniels was “insane” and that “she’s a porn actress, she doesn't understand the real world.”
“Fucking deluded clowns,” Janklow texted Avenatti about messages he received from Nicks inquiring about Daniels’ book money. “Can’t believe you have to deal with this.”
When Daniels appeared on Don Lemon’s show on CNN at one point, Avenatti texted Janklow, “Stormy is off the reservation. Call me ASAP.”
“I know. She's really tricky and untrustworthy,” Janklow replied, adding, “She is impulsively mercenary.”
Asked by the defense about his texts, Janklow said he was only talking about her behavior regarding the publisher's publicity rules.
Janklow also sent copies to Avenatti of certain texts he'd sent Daniels, including a message about his other client, actress Sharon Stone, supporting Daniels. “Sharon Stone wants you to know she loves you,” Janklow texted Daniels, adding that the Hollywood star claimed she was going to wear a Team Stormy shirt to an event.
The agent also name-dropped another pal, Anderson Cooper, claiming the CNN broadcaster introduced him to Avenatti in March 2018. Within days, Avenatti and Janklow had meetings set up with book publishers for Daniels.
Janklow said Cooper told him Avenatti was a “dynamic, energetic guy” and “thought I’d like him and there might be a book in it.”
Meanwhile, in another message to Avenatti, Janklow said, “If [Daniels] was smart, she’d be planning for her life beyond this,” referring to her strip club tours. Janklow testified he told Daniels that if her book was done correctly, it would “vault her into a different life” because she was a “feminist icon.”
“I was sad about that,” Janklow testified, apparently referring to her decision to continue focusing on the adult entertainment industry.
The defense will continue Janklow’s cross-examination on Tuesday morning.
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