Stormy Daniels lawyer Michael Avenatti tested legal boundaries as his firm maneuvered into bankruptcy
Michael Avenatti was caught in a downward spiral of financial trouble last year when Jerry Tobin, an unlikely savior, came to the rescue. Tobin, who has a long arrest record and sports a mohawk in his mug shots, showed up at a UPS Store in Orlando, Fla., put down two $100 bills and rented a mailbox. The next day, using his new anonymous address, Tobin filed a court petition to force Avenatti’s Newport Beach law firm into bankruptcy. The firm, Eagan Avenatti, owed him $28,700, Tobin claimed. It was just what Avenatti needed, exactly when he needed it.
The bankruptcy triggered an automatic halt to a nasty, high-stakes arbitration between Avenatti’s firm and Jason Frank, a lawyer who used to work there. If Eagan Avenatti were to lose, it could be forced to pay Frank more than $14 million. U.S. Bankruptcy Judge Karen Jennemann immediately questioned whether Eagan Avenatti was colluding with Tobin on a bad-faith bankruptcy aimed at stalling the arbitration — or “just got plain lucky.” She dismissed Tobin as a “screwy small creditor” who couldn’t, on his own, figure out how to initiate the rarely used involuntary bankruptcy process. “We have an involuntary case that has a stench of impropriety,” she said. Avenatti, who would vault to fame a year later as the attorney for porn star Stormy Daniels, denied the firm played any part in Tobin’s petition.
The story of how Avenatti ran his firm as it maneuvered into bankruptcy tells a lot about the way he operates, testing legal and ethical boundaries. He owns 75% of Eagan Avenatti; 25% belongs to San Francisco lawyer Michael Eagan. The firm’s bankruptcy ended in March, but its failure to honor the settlement terms has proved costly. Eagan Avenatti was hit with a $10-million judgment last week after Avenatti broke his promise to start paying $5 million to Frank, who alleged in arbitration that the firm cheated him out of his earnings. Avenatti withdrew the request Wednesday after the judge told him he’d have to stop his “publicity tour.” With scathing rhetorical assaults on Cohen and the president, Avenatti, 47, has been a constant presence on cable news in the three months since he filed Daniels’ suit to void her nondisclosure pact. His tactics have stirred controversy, most recently his release of a report about Cohen’s private banking records. It mistakenly included transactions of men named Michael Cohen who had nothing to do with Trump.
https://www.latimes.com/politics/la-na-pol-avenatti-bankruptcy-florida-20180601-story.html