Former Colleague Says Stormy’s Lawyer Owes Him $2 Million

In this image from video, Michael Avenatti, attorney and spokesperson for adult film star Stormy Daniels, listens to a reporters’ question during an interview at The Associated Press, Wednesday, March 21, 2018, in New York. (AP Photo/Joe Frederick)

LOS ANGELES (CN) – Michael Avenatti, the attorney representing adult film star Stormy Daniels in her case against President Donald Trump, missed a $2 million payment on Monday as part of a settlement agreement with an attorney who used to work with his Newport Beach law firm, according to a lawsuit filed on Wednesday in Los Angeles Superior Court.

According to California-based attorney Jason Frank, the payment Avenatti missed was part of a settlement stemming from work Frank did for Avenatti’s firm Eagan Avenatti as an independent contractor, for which Frank says he was promised 25 percent of the firm’s annual profits and 20 percent of the fees he generated from clients.

Frank says Eagan Avenatti ducked arbitrating Frank’s claims after a “purported creditor” filed to put the firm in involuntary bankruptcy. According to Frank’s complaint, the bankruptcy judge said the “‘involuntary case has a stench of impropriety.’”

“‘I don’t have any real confidence that [Eagan Avenatti is] going to stay in this bankruptcy or any other bankruptcy, and that whether [the creditor] has some relationship with the firm that would have induced a collusive filing or Eagan Avenatti just got plain lucky and someone filed on the eve of arbitration,’” Bankruptcy Judge Karen Jennemann added, according to Frank’s complaint.

Jennemann then gave Eagan Avenatti two days to place itself into bankruptcy, which Avenatti did on behalf of the firm in March 2017, Frank says in the complaint. In December that year, Eagan Avenatti and Frank settled the case for $4.85 million – with $2 million due by May 14 and the balance 60 days later – and Avenatti guaranteed the agreement.

Frank says the first payment, which was due Monday, never arrived. He seeks $2 million plus interest, fees and costs, and a right-to-attach order. He is represented by Eric George of the LA firm Brown George Ross.

Avenatti represents Daniels in a lawsuit against Trump, Trump’s personal attorney Michael Cohen and a company Cohen set up to pay Daniels $130,000 in hush money ahead of the 2016 presidential elections.

In his ongoing media tour, Avenatti has called on Trump to disclose his financial statements and come clean on the payment made to Daniels. Daniels says Trump and Cohen tried to buy her silence about an affair she claims she had with Trump years ago, shortly after Trump married current wife and first lady Melania Trump.

Daniels sued Cohen and Trump to get out of the agreement, and on defamation claims over various things both have said about her and the hush agreement in the press and on Twitter. Her case, recently removed to Los Angeles federal court, has been stayed pending a criminal probe of Cohen.

Fox News reported Wednesday the State Bar of California is investigating a complaint filed in late March by Seattle-area attorney David Nold and is tied to Avenatti’s purchase of Tully’s Coffee several years ago through an entity called Global Baristas.

In the complaint, Nold says Avenatti and Global Baristas faced a lien for $5 million for federal taxes withheld from employees’ paychecks but not paid to the government.

Nold represents a company in a landlord-tenant dispute with Tully’s Coffee.

Avenatti told Fox News Nold’s complaint is “completely baseless” and called him “an unethical hack of a lawyer.”

He no longer holds any interests in Global Baristas.

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