A former client of Michael Avenatti alleges the celebrity lawyer secretly pocketed his money after helping him secure a settlement, then tried to lend him back some of the funds with 10 percent interest. That client, Gregory Barela, made the allegations in a statement of claims filed with Judicial Arbitration and Mediation Services (JAMS), a private arbitration organization. Barela’s lawyer provided the claim, which is not public, to The Daily Beast.
“Avenatti was operating his law firm in a Ponzi scheme like manner, taking settlement proceeds received for clients to pay off debts, pay the other individual Defendants’ salaries and bonuses, and fund his lavish lifestyle, while telling clients that the settlement proceeds had not been received or would be received at a later date,” says the claim, which also targets two other lawyers at Avenatti’s firm.
Avenatti vehemently disputes the allegations.