Avenatti gives up control of his law firm after being accused of hiding millions

Wednesday, lawyer and CNN guest Michael Avenatti agreed to give up control of his law firm just hours after a former law partner, Jason Franks, filed papers claiming Avenatti had hidden millions in income to avoid paying a $10 million legal judgment owed to Franks. From the LA Times:

The agreement came after Frank asked a federal court Tuesday night to appoint a receiver to seize Eagan Avenatti and stop the firm from draining its assets…

During the year when Eagan Avenatti was under U.S. Bankruptcy Court protection, starting in March 2017, it was required by law to file monthly reports on its income and spending.

Avenatti signed the reports under penalty of perjury as the firm’s managing partner and majority owner.

But the reports did not disclose that Avenatti opened six bank accounts that received millions of dollars in legal fees during the bankruptcy, Frank claimed Tuesday in his court papers…

He used some of the money for personal expenses such as $13,000 in rent for his Century City apartment; a $3,640 payment on his Ferrari; $21,000 for Passport 420, an Avenatti company that owns a Honda jet; $150,000 for his troubled coffee company, Global Baristas; $53,600 for his ex-wife, Christine Carlin; and $232,875 for HTP Motorsport, his auto racing team, the records showed.

As is always the case with Avenatti, he claims he has done nothing wrong and says the whole story is “a big nothing.” But according to the LA Times, bank records submitted by Franks show Avenatti splitting payments for legal work between law office accounts which were disclosed and private accounts which, after some maneuvering, wound up paying Avenatti’s personal expenses.

Aventatti agreed to the receivership of his law firm yesterday and promised to help Franks get the $10 million he is owed in return for Franks withdrawing the court papers alleging bankruptcy fraud by Avenatti. But, again, Avenatti says his firm has never done better and is handling bigger cases than ever. I’m sure the dozens (hundreds?) of hours of CNN air-time hasn’t hurt his professional profile.