"Mr. Avenatti is facing serious criminal charges alleging he misappropriated client trust funds for his personal use and he defrauded a bank by submitting phony tax returns in order to obtain millions of dollars in loans," U.S. Attorney Nick Hanna said.
Hanna's office said Avenatti allegedly defrauded a bank in Mississippi by submitting to that bank fake tax returns to get three loans totaling $4.1 million for his law firm and coffee business in 2014.
The tax returns indicated that he had "substantial income even though he had never filed any such returns with the Internal Revenue Service," the prosecutor's office said. "The phony returns stated that he earned $4,562,881 in adjusted gross income in 2011, $5,423,099 in 2012, and $4,082,803 in 2013. ... Avenatti allegedly also claimed he paid $1.6 million in estimated tax payments to the IRS in 2012 and paid $1.25 million in 2013."
"In reality, Avenatti never filed personal income tax returns for 2011, 2012 and 2013 and did not make any estimated tax payments in 2012 and 2013," Hanna's office said.
"Instead of the millions of dollars he claimed to have paid in taxes, Avenatti still owed the IRS $850,438 in unpaid personal income tax plus interest and penalties for the tax years 2009 and 2010. Avenatti also submitted a fictitious partnership tax return for his law firm," the investigators said.
U.S. Attorney for Los Angeles Nicola Hanna said, "On his Twitter account, Mr. Avenatti describes himself as 'Attorney, Advocate, Fighter for Good.' But the allegations in this case describe something different: A corrupt lawyer who instead fights for his own selfish interests by misappropriating close to $1 million that rightfully belong to one of his clients."
On Tuesday, Avenatti took to Twitter to thank his supporters.
"I want to thank all of my supporters for your kind words and support today. It means a lot to me. I am anxious for people to see what really happened. We never attempted to extort Nike & when the evidence is disclosed, the public will learn the truth about Nike's crime & coverup."
Read the New York federal criminal complaint against Michael Avenatti: