Court reviews Avenatti appeal of Stormy Daniels fraud conviction

Former attorney Michael Avenatti exits after the guilty verdict at the United States Courthouse in New York
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By Jonathan Stempel

NEW YORK (Reuters) - A federal appeals court on Friday considered whether to overturn disgraced celebrity lawyer Michael Avenatti's conviction and four-year prison sentence for defrauding his best known client, the porn actress Stormy Daniels.

During oral arguments, a panel of the 2nd U.S. Circuit Court of Appeals in Manhattan expressed sympathy with arguments by Avenatti's lawyer and a federal prosecutor as to whether the trial judge improperly pushed jurors to find Avenatti guilty.

Avenatti was convicted in February 2022 of wire fraud and identity theft over an alleged scheme to steal nearly $300,000 in book contract proceeds from Daniels, and forging her signature on a letter to her literary agent.

Daniels was paid $130,000 just before the 2016 presidential election not to discuss a sexual encounter she claimed to have had a decade earlier with Donald Trump, who won the election.

Trump has denied the encounter took place, and now faces criminal charges related to the payment. Daniels' real name is Stephanie Clifford.

In Friday's hearing, Avenatti's lawyer Kendra Hutchinson said trial judge Jesse Furman improperly instructed jurors at great length about lawyers' ethics, making it seem that Avenatti's violations justified the fraud conviction, and in calling the misappropriation of client funds a "particularly serious" violation.

She also said Furman wrongly pushed a holdout juror in open court to change her mind, after receiving a jury note saying the juror was "acting on a feeling" and refusing to review evidence. He invited jurors to send another note if this persisted.

"When you have such an acrimonious note like this, and such a public shaming of a juror, really, he could only have granted a mistrial," Hutchinson said.

Circuit Judge Steven Menashi appeared skeptical. "It seems like you're saying whenever there's any note singling out a juror for anything, you have to declare a mistrial," he said.

But later, when questioning prosecutor Matthew Podolsky, Circuit Judge Eunice Lee said "it's a little different" when a judge suggests "hey, if someone's not doing what they're supposed to do, come let me know."

The appeals court did not say when it will rule.

Avenatti represented Daniels when she sued Trump to get out of a nondisclosure agreement she claimed was void. He also often criticized Trump on cable TV and Twitter, now known as X.

Furman allowed part of Avenatti's four-year sentence to overlap his 2-1/2-year sentence from his February 2020 conviction for extorting Nike, for a combined prison term of five years.

Avenatti is serving a total of 19 years in prison, including 14 years after he pleaded guilty in June 2022 to cheating four other clients out of millions of dollars.

He is appealing that sentence. Last August, the 2nd Circuit rejected his appeal of the Nike conviction.

The case is U.S. v. Avenatti, 2nd U.S. Circuit Court of Appeals, Nos. 22-1242, 22-2550.

(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)