Skip to main content

Michael Avenatti: Possible Presidential Candidate Accused of Being a Deadbeat

October 31, 2018

Posted in Business Litigation, Civil Litigation

Newport Beach attorney Michael Avenatti has made headlines because of his representation of porn actress Stormy Daniels in her legal disputes with President Trump but lately the news hasn’t been good locally. So bad Avenatti might call it fake.

A court order issued last month in Los Angeles Superior Court stated Avenatti owes $4.85 million to a former colleague, Jason Frank, at his former law firm, Eagan Avenatti. Less than an hour later a judge in Orange County ordered Eagan Avenatti be evicted from their office space because they hadn’t paid the last four months’ rent. During the proceeding an employee of the landlord, the Irvine Company, testified the firm’s rent checks had bounced, reports the Los Angeles Times.

While these proceedings went on Avenatti was heading across the country to New Hampshire for his third visit to the Granite State ahead of the 2020 presidential primaries. Avenatti is reportedly exploring a run for the Democratic nomination.

Eagan Avenatti emerged from federal bankruptcy in March after Avenatti promised the firm would pay millions of dollars owed to Frank and other creditors, including the IRS. The firm has defaulted on nearly every payment.

Frank has aggressively pursued Avenatti for good reason. The two are in federal court disputing the collection of a $10 million judgment Frank won against Eagan Avenatti in May. Avenatti has been the managing partner of Eagan Avenatti since the firm started in eleven years ago.

Avenatti recently informed a U.S. Bankruptcy Court judge that his other firm, Avenatti & Associates, wholly owned by Avenatti, acquired 100% of the equity in Eagan Avenatti. But he told the Times last month he doesn’t own Eagan Avenatti but refused to say who does.

He claimed whatever he owes Frank should be deducted from the $12 million Frank owes him. Avenatti accuses Frank of fraud but has not filed any legal action against him. When Frank and two other attorneys left Eagan Avenatti to start their own firm some clients joined them, angering Avenatti. Frank claims Eagan Avenatti cheated him out of millions of dollars in compensation.

Eagan Avenatti agreed to pay Frank $4.85 million as part of the bankruptcy settlement. Avenatti guaranteed if the firm failed to meet deadline for paying Frank, which it did, he would personally pay him. Frank sued Avenatti to enforce that guarantee and won the case last month.

In the eviction trial, 520 Newport Center Drive LLC, part of the Irvine Co., claimed Eagan Avenatti missed $213,254 in rent payments over the last four months. The proceedings were smooth sailing because no one from Eagan Avenatti showed up to participate or defend the firm.

Superior Court Judge Robert J. Moss ordered the firm to vacate the premises, pay the Irvine Co. the full amount of overdue rent and canceled the remaining three months of the lease. If the firm fails to move out the Orange County Sheriff’s Department would enforce the eviction.

As powerful as the legal system can be, it can also be manipulated and gamed by those owing money to others to delay that day of financial reckoning for as long as possible. Whether you’re a commercial landlord or your business is a partnership, there are steps you can take to reduce the chances of legal gamesmanship by those unwilling or unable to pay what they owe.

If you have concerns about debts owed to you or debts you owe to others, contact my office so we can discuss your concerns, what you can do and how I can help.