A federal judge in California has granted disgraced lawyer Michael Avenatti a mistrial in a case accusing him of siphoning millions from his own clients.
On Tuesday, Judge James V. Selna ruled that federal prosecutors in Santa Ana failed to turn over evidence to Avenatti before his wire fraud trial—including data from a law firm bookkeeping software program called Tabs, or Tax and Bookkeeping Solutions.
Selna set a new trial date for Oct. 12, along with a pretrial conference for Sept. 2, according to Meghann Cuniff, a local reporter live-tweeting Avenatti’s second of four criminal trials.
Outside the courthouse, Avenatti told a gaggle of reporters: “Today is a great day for the rule of law in the United States of America.”
“This has been an incredibly difficult journey for my family, for my children for my friends and lastly, for me. I am extremely thankful to Mr. Steward, Ms. Cummings Cefali and our entire team for standing by me and advocating tirelessly on my behalf," Avenatti said.
— Meghann Cuniff (@meghanncuniff) August 24, 2021
Avenatti is accused of embezzling settlement funds from five clients, including Geoffrey Johnson, a paraplegic man who’d suffered an injury in a Los Angeles County jail, as well as beauty vlogger Michelle Phan and her associate Long Tran.
The mistrial breaks the government’s momentum in its criminal cases against Avenatti, who skyrocketed to fame as attorney to porn actress Stormy Daniels, who was fighting former President Donald Trump in 2018 over a hush money agreement.
On July 8, Avenatti was sentenced to two-and-a-half years behind bars after a New York federal jury convicted him of hatching a plot to extort millions from Nike.
Weeks later, the first leg of his California trial began. “This case is about math,” Avenatti told jurors during opening statements. “This case is about how you calculate what a client is due after their settlement is received.”
This math-centered defense gave him the boost he needed for a new trial.
According to Avenatti’s Aug. 15 motion for a mistrial, his former office manager Judy Regnier testified that his former firm Eagan Avenatti used two different programs—QuickBooks and Tabs—to calculate how much money a client is owed.
The filing states that before trial, Avenatti requested access to the Tabs data, which the government never produced. Avenatti also claims that prosecutors provided one version of QuickBooks data “although it is unclear where it came from or whether it was even the most-recent version kept by the law firm.”
Avenatti, who represented himself at trial, requested the court dismiss the indictment or declare a mistrial. “The government suppressed this material information and failed to produce it for years despite its obvious importance and their clear obligation to do so,” Avenatti’s motion states. “As of this filing, their failures continue.”
In response, prosecutors claimed that Avenatti “now claims the Tabs data is critical for his defense” but “never once in numerous filings over two years mentioned Tabs data even after the government specifically identified it in a prior filing.” Instead, they claim, Avenatti had only sought “unfettered access” to his law firm’s servers.
Avenatti’s “motion makes clear, however, that the first time [Avenatti] ever asked specifically for Tabs data was on August 12, 2021,” prosecutors added.
On Aug. 19, Avenatti replied to the government’s opposition, saying that his defense has suffered “without access to these exculpatory materials.”
“Without knowing the precise calculations contained in both the Tabs and the QuickBooks data, it is impossible to know the costs, fees, expenses and other hourly work performed in connection with each of the alleged victims,” Avenatti wrote in the filing.
The next day, Selna ordered the Department of Justice’s privilege review team to allow Avenatti to search for financial data on the Eagan Avenatti servers.
On Monday, the defense provided Selna with a preliminary report on the Tabs data and alleged some of it was missing. “There are additional files that have yet to be produced,” Avenatti stated in a court filing. “It is presently unclear as to when the remaining Tabs data will be provided to the defendant.”
Avenatti claimed the Tabs data revealed “numerous payments made for the benefit of at least two of the clients mentioned in the indictment shortly after settlements were received and yet the government nor its expert ever accounted for these payments.”
At a hearing on Tuesday, Selna pointed to Regnier’s 2019 interviews which reference Tabs and said the feds were “fully on notice about the significance” of the data.
Selna told the courtroom that he found no intentional misconduct on the part of prosecutors or the privilege review team in withholding materials from Avenatti but that there were “shortcomings” in the discovery review process.
“I find that prejudice occurred here in a number of ways,” Selna concluded