Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 1 of 7 Page ID #:331 1 2 3 4 5 6 7 NICOLA T. HANNA United States Attorney LAWRENCE S. MIDDLETON Assistant United States Attorney Chief, Criminal Division JULIAN L. ANDRÉ (Cal. Bar No. 255120) Assistant United States Attorney Major Frauds Section 1100 United States Courthouse 312 North Spring Street Los Angeles, California 90012 Telephone: (213) 894-6683 Facsimile: (213) 894-6269 Email: Julian.L.Andre@usdoj.gov 8 9 10 11 12 13 BRETT A. SAGEL (Cal. Bar. No. 243918) Assistant United States Attorney Ronald Reagan Federal Building 411 West Fourth Street, Suite 8000 Santa Ana, California 92701 Telephone: (714) 338-3598 Facsimile: (714) 338-3708 Email: Brett.Sagel@usdoj.gov Attorneys for Plaintiff UNITED STATES OF AMERICA 14 UNITED STATES DISTRICT COURT 15 FOR THE CENTRAL DISTRICT OF CALIFORNIA 16 UNITED STATES OF AMERICA, SA CR No. 19-061-JVS 17 Plaintiff, 18 v. GOVERNMENT’S SUBMISSION REGARDING DEFENDANT MICHAEL JOHN AVENATTI’S REPRESENTATION ISSUES 19 MICHAEL JOHN AVENATTI, 20 Defendant. 21 Hearing Date: May 7, 2019 Hearing Time: 10:00 a.m. Location: Courtroom of the Hon. James V. Selna 22 23 In advance of the status conference scheduled for May 7, 2019, 24 in United States v. Michael John Avenatti, SA CR No. 19-061-JVS, 25 plaintiff United States of America, by and through its counsel of 26 record, the United States Attorney for the Central District of 27 California and Assistant United States Attorneys Julian L. André and 28 Brett A. Sagel, hereby submits the following statement setting forth Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 2 of 7 Page ID #:332 1 the government’s position regarding defendant MICHAEL JOHN AVENATTI’s 2 representation issues. 3 that if defendant has not yet retained counsel to represent him in 4 this matter, the Court should order defendant to fill out a financial 5 affidavit, immediately appoint counsel to represent defendant, and, 6 if appropriate, order defendant to contribute some or all of the 7 costs of his representation. 8 9 10 11 12 As set forth therein, the government submits This submission is based upon the attached memorandum of points and authorities, the files and records in this case, and such further evidence and argument as the Court may permit. Dated: May 6, 2019 Respectfully submitted, NICOLA T. HANNA United States Attorney 13 14 LAWRENCE S. MIDDLETON Assistant United States Attorney Chief, Criminal Division 15 16 17 JULIAN L. ANDRÉ BRETT A. SAGEL Assistant United States Attorneys 18 19 Attorneys for Plaintiff UNITED STATES OF AMERICA 20 21 22 23 24 25 26 27 28 2 Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 3 of 7 Page ID #:333 1 2 MEMORANDUM OF POINTS AND AUTHORITIES Defendant MICHAEL JOHN AVENATTI (“defendant”) is charged in a 3 36-count indictment with wire fraud; willful failure to pay over 4 withheld payroll taxes; endeavoring to obstruct the administration of 5 the Internal Revenue Code; willful failure to file tax returns; bank 6 fraud; aggravated identity theft; and making false declarations and 7 providing false testimony in bankruptcy proceedings. 8 “Indictment”).) 9 arraignment (“PIA”) without counsel (CR 23), this Court scheduled a (CR 16 (the After defendant appeared for his post-indictment 10 status conference for May 7, 2019, to address defendant’s 11 representation issues. 12 filing, the government has received no notice or other information 13 indicating that defendant has retained counsel or otherwise resolved 14 his representation issues. 15 (CR 22.) As of the date of the instant If defendant appears at the status conference without counsel, 16 the Court will undoubtedly inquire as to how defendant intends to 17 proceed. 18 valid reason why defendant has yet to resolve his representation 19 issues and is concerned that defendant will seek to use such issues 20 to unnecessarily delay this prosecution. 21 without counsel, regardless of defendant’s explanation as to why he 22 has yet to obtain counsel, the government believes the appropriate 23 course of action would be for the Court to immediately appoint 24 counsel to represent defendant going forward. 25 The government, however, does not believe that there is any Thus, if defendant appears First, the trial in this matter is currently set for June 4, 26 2019. 27 is critical that defendant be represented by counsel immediately so 28 (CR 23.) With the initial trial date only four weeks away, it Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 4 of 7 Page ID #:334 1 that this prosecution can proceed in a timely and appropriate 2 fashion. 3 Second, there is a strong public interest in ensuring that this 4 case proceed to trial as soon as possible. The Indictment alleges 5 that the victims of the wire fraud counts in this case have lost 6 millions of dollars as a result of defendant’s fraudulent conduct; 7 they have a statutory right to have this case proceed and these 8 allegations be resolved without unnecessary delay. 9 § 3771(7). 18 U.S.C. Indeed, one of defendant’s alleged victims, Client 1, had 10 been dependent on defendant for basic living expenses for the last 11 four years and recently lost his Supplemental Security Insurance 12 benefits as a result of defendant’s conduct. 13 ¶ 7(j).) 14 particularly heightened here because a number of other cases 15 involving defendant will likely be delayed pending resolution of this 16 prosecution. 17 extortion-related criminal charges pending against defendant in the 18 Southern District of New York, United States v. Avenatti, No. 1:19- 19 MJ-2927 (S.D.N.Y) (the “SDNY Prosecution”), 1 and a civil judgment- 20 debtor case involving defendant’s law firm pending in this district, 21 In re Eagan Avenatti, No. 8:18-CV-1644-VAP (C.D. Cal.) (the 22 “Judgement-Debtor Case”). 23 24 (See Indictment Additionally, the public’s interest in a speedy trial is These cases include, among others, the separate Third, defendant has already had a substantial period of time to resolve his representation issues in this matter. Defendant made his 25 26 1 27 28 The government understands that defendant has not yet retained counsel to represent him in the SDNY Prosecution either. On or about April 25, 2019, defendant waived his right to be charged by information or indictment for an additional 30 days so that he could obtain counsel. See SDNY Prosecution, Dkt. 7. 2 Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 5 of 7 Page ID #:335 1 initial appearance in this case six weeks ago on March 25, 2019. (CR 2 13; CR 15.) 3 on April 1, 2019, and had retained counsel representing him at that 4 time. 5 2019, nearly one month ago. 6 stated that he was in the process of “finalizing” his representation. 7 Defendant also appears to have the financial wherewithal to Defendant made his initial appearance in this district (CR 10.) The indictment in this case was filed on April 10, (CR 16.) 8 retain counsel. 9 counsel in other litigation matters. Indeed, at PIA defendant Defendant is currently represented by retained See, e.g., In re The Trial 10 Group, LLP a/k/a Eagan Avenatti, LLP, No. 8:19-BK-10822-CB (C.D. 11 Cal.); In re Eagan Avenatti, No. 8:18-CV-1644-VAP (C.D. Cal.). 12 Defendant recently stated in a nationally-televised interview on CNN 13 that he is “not broke” and is not having any money problems. 2 14 Sara Sidner, After a year in the spotlight, Michael Avenatti claims 15 “I’ve been humbled”, CNN (Apr. 27, 2019, 5:19 p.m.), 16 https://www.cnn.com/2019/04/26/politics/michael-avenatti- 17 humbled/index.html. 18 as April 2019 defendant was renting a luxury condominium for 19 approximately $11,000 per month. 20 See The government also understands that as recently Additionally, on April 26, 2019, the Friday before defendant’s 21 Monday PIA, defendant posted the following message on Twitter.com: 22 “Please note that I will be severely limiting my tweets regarding 23 either criminal case as we prepare for trial across the coming months 24 or more. I am very fortunate to have some of the best lawyers in 25 26 27 28 2 To the extent defendant’s public statements are accurate, defendant should be required to make a full contribution for any legal services that have been or will be provided to him by appointed counsel. To the extent these public statements are inaccurate, there is no reason why defendant should not seek the immediate appointment of counsel. 3 Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 6 of 7 Page ID #:336 1 America advising me.” 2 or to date, would appear to signify that defendant either does not 3 have the resources to obtain counsel, or is not retaining counsel for 4 purposes of delay. 5 reason why defendant has been unable to resolve his representation 6 issues thus far, there is no reason for the Court to delay appointing 7 counsel if defendant appears at the status conference without 8 counsel. 9 Defendant’s failure to retain counsel by PIA, Because there does not appear to be any valid Finally, the government is concerned that defendant will use his 10 representation issues to delay this prosecution unnecessarily. 11 Defendant has a pattern and practice of using delay tactics to avoid 12 responsibility for his conduct. 13 Indictment, defendant repeatedly sought to lull his former legal 14 clients in an effort to prevent them from discovering that he had 15 embezzled their money. (See Indictment ¶ 7.) 16 repeatedly sought to impede and obstruct an Internal Revenue Service 17 (“IRS”) collection action relating to defendant’s company, Global 18 Baristas US LLC (“GBUS”), in an effort to avoid having to pay to the 19 IRS the payroll taxes that GBUS had withheld from its employees 20 paychecks. For example, as alleged in the Similarly, defendant (See Indictment ¶¶ 10-26.) 21 Defendant has also repeatedly sought to delay civil or 22 bankruptcy proceedings in which defendant and/or defendant’s law 23 firm, Eagan Avenatti LLP (“EA LLP”), were involved. 24 on March 7, 2019, defendant filed a bankruptcy petition on behalf of 25 EA LLP in In re The Trial Group, No. 8:19-BK-10822-CB. 26 appears to have been filed for the specific purpose of delaying a 27 judgment debtor exam of defendant that had been scheduled for March 28 8, 2019, in the Judgment-Debtor Case. 4 Most recently, This petition Defendant, however, did not Case 8:19-cr-00061-JVS Document 26 Filed 05/06/19 Page 7 of 7 Page ID #:337 1 have authorization to file such a petition because in February 2019 2 defendant stipulated to the appointment of a receiver who had 3 complete authority to oversee EA LLP’s business affairs, including 4 the decision to file for bankruptcy. 5 CV-1644-VAP, Dkt. No. 53 (Feb. 12, 2019). 6 Bauer, United States Bankruptcy Judge, dismissed the bankruptcy 7 petition for this very reason and issued an Order to Show Cause to 8 determine whether defendant should be sanctioned for this conduct, 9 which Judge Bauer scheduled for May 8, 2019. 3 10 11 In re Eagan Avenatti, No. 8:18The Honorable Catherine E. In re The Trial Group LLP, No. 8:19-BK-10822, Dkt. Nos. 35, 39. In conclusion, the government submits that if defendant appears 12 at the statue conference without counsel the appropriate course of 13 action would be for the Court to order defendant to submit a 14 financial affidavit, immediately appoint counsel to represent 15 defendant in this matter, and, if appropriate, order defendant to 16 contribute some or all of the costs of his representation. 17 defendant later obtains retained counsel, retained counsel can be 18 substituted in to represent defendant at that time. 19 government recognizes that defendant has a right to be represented by 20 retained counsel if he so choses, defendant should not be allowed to 21 delay this case indefinitely while he resolves his representation 22 issues. If Although the 23 24 25 3 26 27 28 On April 17, 2019, defendant filed a motion to stay the contempt proceedings and the May 8, 2019, Order to Show Cause hearing pending resolution of this criminal prosecution. In re The Trial Group LLP, No. 8:19-BK-10822, Dkt. No. 45. As of the date of the instant filing, defendant’s motion to stay was still pending before the bankruptcy court. As noted above, defendant is represented by retained counsel in the bankruptcy proceedings. 5