Michael Avenatti charged with fraud, money laundering

Michael Avenatti’s arrest late Tuesday stems from claims he’s been laundering money while out on bail, prosecutors revealed Wednesday — throwing his upcoming Nike extortion trial into chaos.

“We understand in substance that the allegations have to do with fraud, money structuring, money laundering and other crimes by the defendant while he’s been on pretrial release,” Manhattan federal prosecutor Matthew Podolsky told Judge Paul Gardephe during an emergency telephone conference following the embattled lawyer’s unexpected arrest.

Podolsky said his office was blindsided by Avenatti’s Tuesday arrest in California, where Avenatti is facing a separate trial for embezzling money from clients. Podolsky added that prosecutors in that office had told him they planned to seek detention for the lawyer pending trial.

Court documents unsealed Wednesday claim that Avenatti, while free on bail in May, illegally moved a nearly $1 million payment to his law firm to another account — in an attempt to hide the funds from creditors he owes upwards of $10 million.

The documents also accuse the firebrand lawyer of cajoling his ex-wife into using $50,000 of his money to buy a Mercedes in her name — which the lawyer and his personal driver predominantly used.

Prosecutors additionally claim Avenatti was withdrawing loads of cash and then redepositing it, all while staying below the $10,000 threshold that would require a bank to report the transaction to the feds.

Defense Attorney Scott Srebnick told the court the new accusations crippled his ability to prepare for Avenatti’s extortion trial, which was scheduled to kick off next Tuesday.

Prosecutors in New York have accused the attorney of trying to shakedown the sportswear giant for more than $20 million.

Srebnick said that since the new allegations involve moving money, he didn’t even know if he could direct his client to pay for witness travel or other expenses.

Gardephe declined to rule on whether he would push back the trial, and indicated the parties would speak later Wednesday following Avenatti’s appearance in a California courtroom.“The arrest of Mr. Avenatti has essentially thrown this trial into chaos,” Gardephe agreed. “Mr. Avenatti has been out on bail in the California case for a long time. There are certain questions in my mind about why it was necessary to raise questions about bail violations so close to trial.”

Earlier Wednesday, Gardephe denied a motion from Aveantti’s defense team to dismiss the New York case against him, alleging vindictive prosecution.

https://nypost.com/2020/01/15/michael-avenatti-charged-with-fraud-money-laundering/