Avenatti was originally the sole owner and manager of Global Baristas before Dempsey joined as a partner in Tully's Coffee Shops, according to a complaint filed by Dempsey against Avenatti in August 2013. Dempsey said in the complaint that Avenatti had promised to provide ALL funding for the deal. According to Dempsey, Avenatti didn't actually have the funds to buy Tully's. In the suit, Dempsey claims his business adviser found out through an internet search that Avenatti had borrowed $2 million with an "exorbitant" interest rate of 15% to fund the deal, sparking Dempsey's decision to sue his way out of the partnership.Global Baristas failed to pay $4,998,198 in federal taxes last year, according to a tax lien filed by the IRS in August. That is in addition to thousands of dollars in state taxes the company failed to pay over the years, according to more than 20 state tax liens filed in California and Washington. Most recently, in early April, Washington state issued a warrant claiming Global Baristas owed more than $721,000 in state taxes. Avenatti told Business Insider that, to the best of his knowledge, Global Baristas has paid the taxes it owed, though he also said it was not his responsibility.
Taxes aren't the only issue at play. Since 2013, 46 cases have been filed against Global Baristas US LLC and Global Baristas LLC (which owns 100% of Global Baristas US LLC) in Washington's King County Superior court.