Some attorneys have recently been in the news for infamous reasons. In particular, Michael Avenatti became famous as Stormy Daniels’ lawyer in the hush money lawsuit against Donald Trump until things went wrong. 

What did Michael Avenatti do? What is he being accused of?

He tried to defraud or extort Nike out of 20 to $25 million to bury the lead on improper payments to college athletes and or coaches that Nike’s involved in. That was after Stormy accused him of stealing money that was meant for her as part of her book advance. 

According to prosecutors, Michael had written letters to Stormy’s agent and had the money sent to his trust account for the law firm, then lied to Stormy Daniels that there were delays in the payment. Meanwhile, he pocketed that money for airfare, travel, food, and many of his expenses. He was never entitled to any part of that money. 

Unfortunately, many lawyers like Michael Avenatti have been reprimanded by the bar or convicted by a court for stealing. The most common form is stealing money from the trust account.

The trust account is an escrow account where an attorney keeps the money for the client and safeguards it until the resolution of the claim, medical bills, etc. Sadly, some lawyers illegally take money out of the trust account, hoping to pay it back. Some take their attorney fees in advance from the trust account, which is wrong. 

How do you protect yourself from being a victim of such attorneys that steal from their clients? 

You need to hire a firm with the resources to pay and retain the experts they need to show up at trials and not dip into your settlement funds prematurely. How do you know these types of firms, and what are some red flags to look for? 

Learn more in this episode of the David vs. Goliath podcast with elite civil trial lawyers Matt Dolman and his partner, Stan Gipe. They discuss the Michael Avenatti case, trust accounts, attorney misconduct, and what to consider when choosing a lawyer. 

In this episode: 

• [00:36] Stan Gipe and Matt Dolman introduce the topic of the day: Michael Avenatti and other attorneys in the news for the wrong reasons
• [01:20] What did Michael Avenatti do? What is he being accused of?
• [04:27] How Stormy Daniels discovered her lawyer was stealing from her 
• [05:28] Why was Michael Avenatti trying to extort money from Nike? 
• [06:29] The most common attorney misconduct in the Florida Bar  
• [07:10] What is a trust account, and why does it matter what your lawyer does with it?
• [08:15] The real reason some attorneys steal from trust accounts 
• [09:00] Protecting yourself against potentially fraudulent attorneys  
• [09:50] Why it’s a huge issue if a lawyer files for a personal bankruptcy
• [11:44] Always look into the reputation and credibility of your lawyer
• [13:44] Trust your spidey-sense 

Transcript

Welcome to another episode of the David Versus Goliath podcast. This is the Dolman Law Group Personal Injury Law Firm. I’m Matt Dolman. I’m here with my co-host, Stan Gipe.

Welcome, everyone. I think we’re here today to talk a little bit about some of the attorneys that are currently in the news. One in particular, a Mr. Avenatti.

Michael Avenatti, huh?

Might be familiar to a few people, at least a pretty household name at one point in time.

Yeah. At least three years ago when he was first introducing himself to the general public, he was on CNN every single night and sometimes on MSNBC as a voice against Donald Trump. And he had his, if you want to say 15 minutes of fame, as Stormy Daniel’s personal lawyer in the hush money lawsuit that was brought against Donald Trump and the nondisclosure agreement that she entered into. And let’s get into that. What did Michael Avenatti do? What is he being accused of?

Okay. Well, I guess we can say that what Michael Avenatti did is at least tried to defraud or extort Nike out of 20 to $25 million. Here’s what happens, okay? Michael Avenatti was, I don’t want to say a nobody, but because he was a successful attorney before this, okay? But on the national scene, he was somewhat of a nobody. We didn’t know him. I didn’t know him before Stormy Daniels, didn’t cross my radar. Well then he gets to prominence, okay? And then what happens? He gets to prominence on this Stormy Daniels thing and he’s going to ride this wave. And now he’s gotten involved in improper payments to college athletes and or coaches at Nike’s involved in, Nike. And what he’s going to do is basically bury the lead. According to stories, he’s going to kind of take care of this for Nike if they will retain him as a consultant for 20 to $25 million.

And that was after the Stormy Daniels incident, which is he’s being accused of. And that trial is starting this week, it actually started this morning with opening statements I believe in Manhattan. And what he’s being accused of is stealing money that was meant for her as part of her book advance. And he wrote letters to the publisher and had the money sent to his own personal trust account for the law firm, then lied to Stormy Daniels saying that there were delays in the payment. Meanwhile, he pocketed that money for airfare, so for travel, food, and a lot of his personal expenses that the United States attorney is arguing that he was heavily in debt and had a desperate need for a cash infusion. So he stole it from Stormy Daniels.

Yeah. What it looks like, from what I’ve been able to tell, it looks like Stormy Daniels was entitled to about $800,000 as an advance for authoring that sort of tell-all book about the Donald Trump story. This advance was to be made in four separate payments, $200,000 each, less the commission for her agent. Based on the numbers I’ve seen go across and transfer from accounts, it appears that the agent’s commission on these was about 25%. So publisher pays the agent who then forwards the money onto Stormy Daniel. She gets the first check forwarded to her account, gets the money. Life is good. Before the second check comes, according to the prosecutors, Michael Avenatti forged Stormy Daniels’ name on a letter to her agent saying, “Send the money to this other account.” Okay? Which was Michael Avenatti’s own account that Stormy Daniels knew nothing of. So apparently, 297,000 got transferred to this account, according to prosecutors, which would’ve been 400,000 less the 25% commission for the agent, and a small fee for transferring the money. So the 297,000 went to Avenatti’s account.

This is after he promised he would never take a penny from the book sale.

Oh, yeah. Yeah. He wasn’t entitled to any of this money, according to prosecutors. So this gets transferred to his account. Stormy Daniels kind of gets suspicious after being led on a little bit of a wild goose chase about what’s happening to the money. Where it’s at, et cetera. So she calls up, chases the checks down, figures out it’s in Michael Avenatti’s account. And he goes ahead and pays her one of the two payments that he had misappropriated. So she gets one of those payments back, which should be about 150,000, but he never gave her the other one. And during this whole time is right when… when these checks were coming through and when Michael Avenatti was doing this was right when he was going through all these personal crises he was having. The Nike extortion, if I remember correctly, I believe there was a chain of coffee shops he might have owned.

They went belly up.

Yeah.

And he had a judgment against him from one of his ex law partners, too.

Yeah. So I think this is one of those the walls were caving in, things were happening, and he was looking at this Nike thing as his big out, okay? And this is my speculation. I don’t know, this isn’t fact or verified or anything. My own speculation is he sees this Nike thing as his light at the end of the tunnel.

Yeah, yeah.

If he can pull that off, he’ll be able to pay off everything, take care of whatever he’s done, life will be good. If he’s got to rob Peter to pay Paul until that check comes, so be it, okay? But he’s an attorney. Matt, we’re attorneys. You really can’t do that stuff. You can’t play fast and loose like that when you’re an attorney.

No. I mean if we look every single month of the Florida Bar Journal, which has a couple pages that are dedicated to attorneys that have engaged in conduct that is unbecoming of a lawyer and have been in some way reprimanded or penalized by the Florida Bar. The most common occurrence is the lawyer who steals money from the trust account.

Yeah.

It’s a client trust account that money is meant to keep money for the client and safeguard it in a trust account until the resolution of the claim, resolution of medical bills, whatever have you. It’s an escrow account. And we often see lawyers that take money out of the trust account hoping to pay it back, cover maybe shortfalls in payroll or office needs or personal needs. Some of these lawyers live beyond their means like Michael Avenatti. And then they’re hoping to replace it at some point. And that becomes a very dangerous and perilous game that should never have been started in the very first place is we have a duty to our clients to preserve that money in the trust account for the benefit of, again, the client.

Exactly, Matt. I mean, the money in my trust account is no more my money than the money in my bank account belongs to my bank.

Yeah.

Right? I mean, I’m just holding this for the client. It’s not my money, okay? If I deposit money at Bank of America, it doesn’t become the bank’s money. It’s still my money, okay?

We know of lawyers and we hear about lawyers all time, Stan, take the money. They take their attorney fee in advance.

Oh.

We know of a lawyer that is in the community. We can’t bring up his name, but was nailed by the Florida Bar on 67 different occasions he used client signatory authority for his client, pretend to be the client. Took his own attorney fee in advance of the actual resolution of the medical bills. So he was not entitled to the money yet, but took it against the trust account.

Yeah. I mean, this happens. And you got to understand, okay, for a bank to steal your money, a lot of stuff has to happen, okay? For an attorney to steal your money, he just has to go to the bank and steal it.

It’s very easy.

So yeah, all he’s got to do is sign his name on the check and it’s gone.

I mean, we’re a big law firm. We represent currently over a thousand clients throughout the nation. At any given time, I have a few million dollars sitting in my trust account of client money. That’ll be very tempting for an individual who’s living beyond their means to rob from that account or take that money from the account hoping to pay it back at a later date. It’s a foolish game, obviously. It’s illegal. But we see too many lawyers that use that temptation. And unfortunately, succumb to the temptation based on financial needs or office needs.

Yeah. Hell, you got financial needs. You got office needs. I mean, crap, at times it can be drug habits. There are all different kinds of issues that cause attorneys to go awry and steal money from trust accounts, okay? What you got to realize is you need a firm that at least has the resources, okay, to spend the money on the experts. The one who’s not robbing Peter to pay Paul. The one with the ability to go out there and retain people. Ability to go out there, get the necessary testimony they need. Pay the people that need to show up at trials. And not dip into client settlement funds prematurely.

And if they are, okay, they need the money more than the client. If your attorney, if you don’t have an attorney with the resources to try the case, that attorney is just trying to figure out what he needs to do to get you to yes, so he can get paid. He’s not trying to get the most money. He’s trying to figure out how he can convince you that you’re at the point where you can get the most money so he can get you to say yes and get his cut.

Hence, why it’s a huge issue if a lawyer files for a personal bankruptcy. I don’t know if you knew that. With the Florida Bar, oftentimes they’ll require even a hearing for that. And the reason being is to see if you are solvent enough financially that you can operate a trust account or be trusted in a safeguarding of money if you have it in any type of official capacity at a law firm where you would have any access to the funds.

Yeah, absolutely. I mean, attorneys go down for this. They go down for unsupervised bookkeeping where the bookkeeper gets involved and takes stuff. But absolutely. And look, it can be a temptation like any other. I mean, it’s money, okay? You just, as an attorney, it’s like a line you can’t cross. It’s just one of those indelible lines. You can’t dip into the client’s funds.

So in this particular case of Avenatti, I guess his defense is going to be to attack the credibility of Stormy Daniels. And she’s a former porn, or I don’t know if she’s currently doing porn, but she’s a former porn actress. And now she is a paranormal investigator on a television show. And I got in the opening statement this morning, the United States attorney said that those who engage or study paranormal activity and porn stars are still, they have the same exact rights as any other citizen. And you still cannot steal from them. But I don’t see what other defense Michael Avenatti has to this case.

I don’t know where he gets out of it. My understanding is it’s pretty clear that he forged her signature on this document. The real question would be, I guess, authority to sign. And I think that’s potentially where it turns. From what I’ve read, Mr. Avenatti is supposedly entitled to zero money from the book deal, that he was supposed to get nothing from that. If that’s the case, I don’t know how he would possibly justify diverting the funds to his own account.

This is why it’s so important to look into the reputation and credibility of your lawyer. If a lawyer has a current investigation, like from the Florida Bar. Let’s say the Florida Bar was investigating me. Well, can prospective consumers find that out? Or is it only decisions that have been made about your disciplinary history in the past?

I’m pretty certain it’s just decisions that have been made, because the Florida Bar could investigate someone and determine that they didn’t do anything wrong.

Now, I get that. I’m just trying to think, was there a way for consumers, like a Stormy Daniels, a safeguard herself at the situation at the time of hiring Michael Avenatti, because in all outward appearances, man’s a success story. Graduated first in his class from George Washington University School of Law. Held a very prominent clerkship for a federal judge. Then worked at, I think it was O’Melveny & Partners out in California. One of the biggest law firms out in Los Angeles. And he just had a blue chip background. And to someone who’s not sophisticated, they might think this is the best lawyer out there. And was there any signals, was there a smoke screens, anything that anyone could tell that this guy may have had any inclination he would steal from his clients? That he was living his means. That his wife actually had a $100,000 a month American Express bill that she was literally just a spend thrift. That’s at least the allegations had been made leveled against him by his former partner. So was there anything else out there?

You check the bar website, the bar will tell you if your attorney’s been reprimanded, if your attorney’s got things going on, the Florida Bar. I can’t tell you what all states do. I don’t know if California, if their bar website shows active investigations or not. I don’t believe Florida does. I think we just talk about reprimands and when people have already been sort of found guilty of doing something wrong.

I guess another suggestion, maybe look at a public record search or see if your attorney has been subjected to a lawsuit. Michael Avenatti at the time was being sued by his ex-partner. And also some of the individuals who invested in the coffee business.

Absolutely. And the other thing I’ll tell you, and this may sound… trust your spidey sense, okay? People pick up on this, okay? And I’m an expert in trying cases, okay? I’m an expert in doing a lot of stuff. Doesn’t mean that, if someone talks to you and you feel like they’re full of crap, that they’re not. I mean, that you may be sitting there talking to an attorney, he could be full of crap and you pick up on it. So if it doesn’t feel right, ask the attorney to question. Ask him to explain it. Ask him why.If it doesn’t make sense, why would that be the case? That doesn’t make sense at all. Have him explain what’s going on to you.

Exactly.

But don’t let him over talk you and make you think that you’re too dumb to ask the question or that you just don’t understand what’s going on, because there are some complex legal concepts we deal with. But for the most part, when you break it down, there is nothing my clients can ask me about their claim that I can’t plane at a level they can understand it. So if you’re asking your attorney and it’s just not making sense, you may be correct if you think there’s something funny going on.

Oh, always trust your gut instinct.

Absolutely.

100%. So I think we pretty much covered this area. I mean, I wanted to touch on Michael Avenatti and the conduct of lawyers, how they handle their trust account and our duty that we owe to the client and to the Florida Bar as licensed Florida lawyers.

Yeah. It’s kind of one of the most sacred duties we have. We cannot mess with the client’s money.

Yeah. The trust accounts are a holy grail, if you will. So this wraps up another episode of the David Versus Goliath podcast. I’m Matt Dolman. Stan, another great show.

Absolutely. Always a pleasure. If anyone needs anything at all, any other time when you get any legal question, dolmanlaw.com is a fantastic online resource. One of the most robust websites on the internet. I believe, right now, we’re the second most traveled personal injury website in the nation, okay? So if you need anything, most of the information you’re going to seek is going to be out there. I mean, it’s got thousands and thousands of pages of content. So anything you need, go out to dolmanlaw.com. You can find us and you can get to us from there. Matt, how else can they reach us?

Email matt@dolmanlaw.com. That’s D like in David. O-L-M-A-N law.com. Stan’s at stan.gipe@dolmanlaw.com. Or 24 hours a day you could reach us toll free at 83355-CRASH. Well, thank you again for listening to this episode, and I wish you a great day.

Yeah. Looking forward to the next one.

Yes, sir.