Adult film star Stormy Daniels has managed to keep her name in the headlines thanks to the media savvy of her controversial lawyer, Michael Avenatti.
Despite what it looks like on television, though, things haven’t been great for Avenatti. Rumors of “dubious business deals” and millions of dollars in unpaid taxes have recently surfaced. Avenatti’s wife has recently filed for divorce. And on Wednesday, he woke up to some of the worst news of all.
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A federal judge in California ordered Avenatti’s law firm to pay $10 million on Tuesday to a lawyer who claimed that the firm had misstated its profits and that he was owed millions. It’s the latest in a long line of money problems that have popped up for Daniels’ representative.
The shocking judgment came after Jason Frank, who used to work for Eagan Avenatti, alleged that that the law firm failed to pay a $4.85 million settlement he had reached in December. He said in court papers that the settlement was personally guaranteed by Michael Avenatti.
Frank had worked at Avenatti’s firm under an independent contractor agreement and was supposed to collect 25 percent of the firm’s annual profits, along with 20 percent of fees his clients paid, according to court documents. He resigned in May 2016 after alleging that the firm didn’t pay him millions of dollars that he was owed, misstated the firm’s profits and wouldn’t provide copies of tax returns and other financial documents.
After he resigned, Frank brought the case to a panel of arbitrators, who found that the firm “acted with malice, fraud, and oppression by hiding its revenue numbers,” according to a copy of the arbitration report included in court documents.
In December, Frank settled with Avenatti’s firm for a total of $4.85 million, which was supposed to include an initial $2 million payment and then a second payment for $2.85 million. The $2 million payment was supposed to be made by May 14, but Avenatti and his firm never paid, Frank said in court papers.
The settlement agreement included a clause that the firm couldn’t oppose a request for a $10 million judgment if the settlement payments weren’t made within three days of the due date. Frank did not immediately return a telephone message seeking comment on Tuesday.
The judgment is final and cannot be appealed, U.S. Bankruptcy Judge Catherine Bauer said in her ruling.
Court records in the bankruptcy proceeding also show Avenatti had personally agreed to pay about $2.4 million in back taxes and penalties. During Tuesday’s hearing, an assistant U.S. attorney said Avenatti had not made a payment that was due last week for unpaid taxes as part of the agreement that was reached in January.
Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles, said lawyers from that office represent the government in bankruptcy court when there’s a debt to a government agency, like back taxes or unpaid student loans.
Court documents say Avenatti is the “managing member and majority equity holder” of Eagan Avenatti and “solely owns and controls” another firm, Avenatti & Associates, which represents Daniels.
Daniels, whose real name is Stephanie Clifford, has used Avenatti to sure Trump over unproven claims of an affair in 2006.
The Associated Press contributed to this article