Ninth Circuit tosses Michael Avenatti's 14-year sentence for stealing from clients

LOS ANGELES (CN) — Disgraced attorney Michael Avenatti, who gained notoriety while representing adult film actress Stormy Daniels in her legal dispute with then-President Donald Trump, earned a rare legal victory Wednesday when a Ninth Circuit panel threw out his 14-year sentence for stealing millions of dollars from his former clients.

It is longest of three prison sentences the 53-year-old Avenatti is currently serving. He was given four years for stealing money Daniels was due for a tell-all book, and 30 months for trying to extort Nike.

“I am glad that the Ninth Circuit recognized the errors that wrongly increased Mr. Avenatti’s sentence,” said Margaret Farrand, a federal public defender who argued the case before the Ninth Circuit, in an email. Avnenatti’s lawyer, Dean Steward, who practices in Southern California, added in his own email that his client “looks forward to the full hearing ordered by the court.”

The three-judge panel found the trial judge in Orange County made a number of errors in sentencing the disbarred lawyer. For one thing, in calculating the amount of money Avenatti stole from his clients, the judge “should have accounted for the value of his legal services and costs, as well as the value of certain payments he made to victims,” the appellate judges wrote in their9-page ruling.

“By finding that Avenatti’s victims “lost” the full settlement value without accounting for Avenatti’s fees and costs, the district court enhanced Avenatti’s sentence based on pecuniary harm that did not occur, and did not ‘result from [Avenatti’s] offense,’” the judges wrote.

In addition, the panel found U.S. District Court Judge James Selna abused his discretion in refusing to “credit (and thus deduct from the losses) the value of payments Avenatti made to Geoffrey Johnson, Alexis Gardner, and Gregory Barela after he misappropriated their settlements. These too, should be accounted for on remand.”

U.S. Circuit Judges Michelle Friedland, a Barack Obama appointee, and Roopali Desai, a Joe Biden appointee, made up the panel along with U.S. District Judge Karen E. Schreier, sitting with the panel by designation from the District of South Dakota.

They did reject a few arguments Avenatti had made in his appeal, including the assertion that the Nike conviction wasn’t relevant conduct.

Avenatti’s first embezzlement trial ended in a mistrial, after Selna ruled federal prosecutors had failed to turn over relevant evidence to the defense team. Less than a year later, Avenatti pleaded guilty, admitting that he stole a total of $7.9 million from four different clients, and that he obstructed the IRS in their attempt to collect $3.2 million in payroll taxes from his coffee business. He had asked the judge for a six-year sentence. His lawyer, Steward, called the 14-year sentence he received “off-the-charts harsh and unfair.”

That sentence is now vacated. Selna will issue a new sentence, based on the Ninth Circuit’s ruling.

The U.S. Department of Justice declined to comment.

Avenatti’s rise to national prominence was nearly as swift as his downfall. He became a fixture on cable news shows while he was representing Daniels in her fight against a nondisclosure agreement that prevented her from discussing an affair she said she had with Trump 12 years earlier. He later filed a defamation lawsuit against Trump on her behalf over a tweet, which was thrown out on First Amendment grounds, thus saddling Daniels with a $300,000 bill for Trump’s legal fees. He was later convicted on one count of wire fraud for stealing money from her book advance.

Until today, Avenatti had had little luck in the appellate courts. In March, a Second Circuit panel rejected his appeal of that conviction, just as it had in 2023 for his conviction in the Nike case. In May, the U.S. Supreme Court left in place the Nike conviction.

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