The other attorney involved in the case was Mark Geragos. He hadn’t been charged with anything but it was believed that the conspiracy charges implicated him, i.e. that he and Avenatti were in the scheme together. Dropping those charges may be good news for Avenatti but it’s probably better news for Geragos.

Meanwhile, the feds also added a new charge of fraud against Avenatti:

Prosecutors had previously charged Avenatti with extortion, accusing him of threatening to publicize a claim by one of his clients, a basketball club coach, that Nike arranged for payments to elite college basketball recruits. Avenatti demanded that the athletic wear company pay the coach $1.5 million and pay himself more than $20 million, prosecutors said.

The new indictment adds a claim that Avenatti defrauded the coach. Prosecutors said Avenatti concealed the fact that Nike agreed to pay the coach to settle the case as long as it did not have to pay Avenatti, and instead continued trying to use the case for his own benefit.

Avenatti has also been charged with fraud in California for allegedly refusing to tell his own client that he had received a $4 million settlement.

The charge involving the paraplegic man says Avenatti drained a $4 million settlement paid out to the client by Los Angeles County, using “portions of the settlement to finance his coffee business or pay personal expenses,” the U.S. attorney’s office statement said.

“Avenatti concealed the receipt of the settlement from Client 1 and instead gave him periodic “advances” of no more than $1,900 and paid the rent for his assisted living facility,” the statement said.

Avenatti lied by telling that client as he was trying to buy a house that his settlement money was not available, causing him to fail to meet escrow, according to the indictment.

Similarly, when the California State Bar petitioned to have Avenatti placed on inactive status they cited a case in which he allegedly received a large settlement for a client in an intellectual property dispute but lied about when the money would be received so he could misuse the funds:

(1) on December 28, 2017, respondent provided Mr. Barela with a fabricated settlement agreement;
(2) between January 5, 201 8, and March 14, 201 8, respondent concealed the status 0f Mr. Barela’s settlement funds and intentionally and dishonestly misappropriated nearly $840,000 of Mr. Barela settlement funds for respondent’s own personal use;
(3) between March 10, 201 8, and November 201 8, respondent repeatedly responded to Mr. Barela’s inquiries concerning the status of his settlement funds with lies and evasions;
(4) respondent never provided Mr. Barela with an accounting of Mr. Barela’s settlement funds despite Mr. Barela’s multiple requests; and
(5) to date, respondent still owes Mr. Barela approximately $710,000.

I’m starting to see a pattern here and prosecutors did as well: Avenatti lied to his own clients about settlements. In fact, the charges in California and New York were coordinated on the grounds that Avenatti’s misuse of funds from multiple clients were all part of an interconnected fraud. As US Attorney Nick Hanna put it, “money generated from one set of crimes appears in other sets — typically in the form of payments to lull victims and to prevent Mr. Avenatti’s financial house of cards from collapsing.”

Avenatti’s trial in the Nike case is set for January.