A federal bankruptcy judge has targeted Avenatti’s laws firm for legal action. This judge issued a restraining order, which blocked the firm from spending any fees it collects, due to more than $10 million in unpaid debts and back taxes.
The order covers the bank accounts of the lawyer who represented Brett Kavanaugh’s latest accuser, and it concerns 54 cases and millions of dollars.
This represented an extreme burden on the lawyer, who has seen his financial woes deepen, even as he has become a household name in the United States due to his involvement in various political intrigues and scandals.
Judge Bauer said that she didn’t want the lawyer to run out and buy a new house while he still owed more than $10 million in taxes and various unpaid debts.
Because of this, the lawyer for the former ‘adult film’ star, Stormy Daniels, would not be able to spend any money made in fees from 54 court cases, including the lawsuit that he filed against President Donald Trump on behalf of the ‘erotic actress.’
The ‘starlet’ raised more than $580,000 via crowdfunding, which was meant to pay for her legal representation.
It is unclear whether the lawyer, or his law firm, received any payment from that pool of cash thus far.
His law firm, Eagan Avenatti, emerged from Chapter 11 bankruptcy protection in March of this year, after it reached agreements to pay its creditors.
However, within months, the firm broke its promises to its creditors.
The firm missed a deadline in May to pay more than $440,000 to the Internal Revenue Service, which would have serviced their back taxes, penalties, and interest owed.
The law firm also missed a $2 million payment, which was personally guaranteed by attorney Avenatti, to Jason Frank, another attorney who used to work at the firm.
When Eagan Avenatti failed to make that payment, Frank sought, and won, a $10 million judgement against the law firm.
He says that, all told, he was cheated out of more than $15 million in pay by the legal organization, although Michael Avenatti claims that isn’t true.
He said that, while Frank had not been paid, there were ways that a ‘secured creditor’ could get paid without threatening to destroy the firm.
He described the injunction as a “personal vendetta,” as well as an action that was “frankly unnecessary.”
In an email, Avenatti said that he supported the order, because it did not include an order to automatically transfer fees collected by the firm in 54 cases until the $10 million judgment was paid in full.
Chenetz pointed out to Judge Bauer that the day after Eagan Avenatti’s bankruptcy case was settled, the lawyer decided to practice under the business name “Avenatti and Associates,” and abandon the old name.
Avenatti and Associates, which is entirely owned by its namesake, holds 75% of the equity in the deeply indebted firm.
Lawyer Michael Eagan, an attorney in San Francisco, California, owns the rest.
Bauer, during the hearing, voiced her concerns that Avenatti would find some way to collect legal fees without the money going through the firm.
Therefore, her order required that the firm had to notify the IRS, Frank, and the other creditors any time legal fees were paid to Avenatti, Eagan, Avenatti Eagan, or Avenatti and Associates, or any combination thereof.
Another lawyer who represented the attorney owed millions of dollars said that the ruling would allow them to track every dollar that came into the firms from those cases, until the $10 million ruling was settled.
While he might be a big star with the political left, it seems like Michael Avenatti is not a very decent person when it comes to paying his debts.