SANTA ANA, California –

Michael Avenatti pleaded guilty Thursday to five felony offenses and admitted that he engaged in a scheme to defraud four of his legal clients, according to officials.

            Avenatti, who has been suspended by the State Bar of California, specifically pleaded guilty to four counts of wire fraud – each related to one of four matters in which he embezzled money that should have been paid to clients – and one count of endeavoring to obstruct the administration of the Internal Revenue Code.

            U.S. District Court Judge James V. Selna scheduled a sentencing hearing for Sept. 9. Avenatti faces up to 83 years in federal prison.

            Avenatti admitted guilt in each of the four legal matters discussed in a federal grand jury indictment that charged him with embezzling money from clients.

Avenatti admitted that he engaged in the conduct charged in the four counts of the indictment.

This includes the following:

  • Receiving money on behalf of clients into client trust account
  • Misappropriating the money
  • Lying to the clients about receiving the money or, in one case, claiming that the money had already been sent to the client.

            The charge of endeavoring to obstruct the administration of the Internal Revenue Code is one of 19 tax-related offenses in the indictment.

In relation to the tax count he pleaded guilty Thursday, Avenatti admitted that he corruptly obstructed and impeded the IRS’s efforts to collect unpaid payroll taxes.

The government estimates amount to approximately $5 million and include payroll taxes that he been withheld from the paychecks of employees of the Avenatti-owned company that operated Tully’s Coffee.

            After pleading guilty Thursday, Avenatti still faces a total of 31 counts – six wire fraud charges, 18 tax-related charges, two counts of bank fraud related to alleged false statements he made in an attempt to obtain loans from a federally insured financial institution, one count of aggravated identity theft for misusing the name of a tax preparer in relation to the bank fraud scheme, and four counts of bankruptcy fraud related to alleged false statements he made after his law firm was forced into bankruptcy, officials stated.

            The government is reviewing the case to determine how it will move forward after Thursday’s guilty pleas.

In the event that the government elects to proceed on the remaining counts, Judge Selna will vacate the September 19 sentencing date, according to authorities.

            IRS Criminal Investigation conducted the investigation into Avenatti.

          Assistant United States Attorney Brett A. Sagel of the Santa Ana Branch Office and Ranee A. Katzenstein of the Major Frauds Section are prosecuting this case, according to authorities.

By Raul

Raul Hernandez is a former journalist. He has worked as a newspaper reporter for more than 30 years at the El Paso Herald-Post, El Paso Times, Press Enterprise in Riverside, California and the Ventura County Star in California. He was a court reporter for more than 20 years.