U.S. faults Michael Avenatti's 'lies' in Stormy Daniels fraud case

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By Luc Cohen

NEW YORK (Reuters) - Michael Avenatti "got tangled in his own web of lies" after stealing money from a former client, porn star Stormy Daniels, a U.S. prosecutor said on Wednesday in closing arguments at the fraud trial of the celebrity lawyer.

Avenatti countered that there was insufficient evidence of fraud, telling jurors during his closing argument in federal court in Manhattan that he was simply being paid for his work representing Daniels in litigation against then-President Donald Trump.

Avenatti is accused of routing nearly $300,000 in book proceeds destined for Daniels to an account he controlled in 2018. The 50-year-old attorney has pleaded not guilty to wire fraud and identity theft, and could face up to 22 years in prison if convicted. The trial is in its eighth day.

Daniels, whose given name is Stephanie Clifford, testified last week that Avenatti falsely led her to believe her publishing company was late in disbursing advances for her memoir, "Full Disclosure," when in fact he already had the funds.

"She thought he was her advocate. But he betrayed her, and he told lies to try to cover it all up," Assistant U.S. Attorney Robert Sobelman told jurors in his closing argument. "The defendant got tangled in his own web of lies. He got caught."

Avenatti -- who is representing himself despite not specializing in criminal law -- has downplayed his dispute with Daniels as a disagreement over legal fees that has no place in criminal court.

The Los Angeles-based lawyer has argued that the contract he signed to represent Daniels in cases against Trump entitled him to a reasonable portion of her book proceeds.

Their contract provided that Avenatti and Daniels would later agree on a dollar amount. Daniels said she paid Avenatti a symbolic $100 retainer, expecting him to finance legal costs through online crowdfunding.

In the trial's most memorable moment, Avenatti cross-examined Daniels, 42, about her interest in paranormal activities, in an effort to undermine her credibility.

"There is insufficient evidence, ladies and gentlemen, to show that Michael Avenatti ever intended to defraud Ms. Daniels or had a scheme to defraud Ms. Daniels," Avenatti told jurors on Wednesday.

"People expect to be paid for their work, no matter what you do," he continued. "There should be nothing controversial about that basic concept."

U.S. District Judge Jesse Furman, who oversees the trial, asked Avenatti to refer to himself in the third person in some contexts so he could not use his closing argument as a chance to testify.

No witnesses testified in Avenatti's defense. Had he chosen to testify, Avenatti would likely have faced tough cross-examination by prosecutors.

Daniels is known for receiving $130,000 in hush money from Trump's former personal lawyer, Michael Cohen, to keep quiet ahead of the 2016 election about sexual encounters she says she had with Trump, who denies they took place.

Avenatti successfully sued Trump to get Daniels out of the nondisclosure agreement.

The criminal charges related to Daniels are among a slew of accusations that have ended Avenatti's career as a lawyer.

Avenatti is appealing a conviction and a 2-1/2-year prison sentence for extorting Nike Inc, and faces dozens of charges in California that he cheated other clients and committed bank fraud, bankruptcy fraud and tax fraud.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder and Jonathan Oatis)