Stormy Daniels attorney, 47-year-old Michael Avenatti is now facing significant legal troubles of his own and may find himself in need of counsel. Avenatti faced allegations of dubious business dealings as the owner of a flailing coffee chain. Since his investment firm bought bankrupt Tully’s Coffee for $9.15 million at auction five years ago, Avenatti’s company has been named in more than 50 different state and federal legal complaints, including commercial lawsuits, breach of lease actions, as well as warrants for unpaid taxes, according to court records.
Tully’s has shuttered the doors of multiple stores leaving employees jobless, landlords unpaid, and customers left holding worthless loyalty cards. And the list of grievances against Avenatti continues to grow ever longer. Now a complaint has been submitted to the California State Bar Association — with a copy sent to the U.S. Attorney’s Office in Seattle. Attorney David Nold of Bellvue, Washington alleges Avenatti carried out an illegal “pump and dump” scheme through his Washington state-registered Tully’s ownership firm, Global Baristas US, LLC.
The complaint accuses Avenatti of fleecing nearly $6 million in federal and state tax withholdings while he ran the company. The money was intended to be held in trust for payment of quarterly taxes from the paychecks of Tully employees. The complaint also claims Avenatti fraudulently transferred $100,000 from Tully’s operation last year in an effort to retain counsel for his California law firm’s unrelated bankruptcy.
Nold is representing Bellevue Square, Ellenos yogurt and multiple other clients that have recently sued the Tully’s firm, states – “Michael Avenatti’s actions in connection with Global Baristas US, LLC have caused significant damage to the State of Washington, the federal government and numerous private entities and they implicate his fitness to practice law.”
Trending: Stormy Daniels Just Got Rude Awakening From The FBI! OUCH!
The complaint, first reported by The Seattle Times, said Avenatti and Global Baristas faced a lien for unpaid federal taxes worth roughly $5 million, claiming taxes were withheld from workers’ paychecks but not paid to the government. The complaint called into question Avenatti’s “fitness to practice law.
Fox News confirms that the California State Bar is indeed investigating Avenatti. ‘According to the state bar’s website, an investigation is launched based on a complaint only if the state bar attorney ‘sees evidence of a serious violation.’ But Avenatti told Fox News on Wednesday that the complaint is ‘completely baseless’ and called Nold an ‘unethical hack of a lawyer.’
Nold, who filed the initial complaint, represents Bellevue Square, which has been in a landlord-tenant dispute with Tully’s Coffee. The Superior Court for the State of Washington found Nold to be in ‘contempt of court’ following an ‘intentional disobedience of a court order.’ Nold disclosed Avenatti’s deposition transcript to The Seattle Times, according to a court filing obtained by Fox News.
‘The court ruled that I should not have given the full Avenatti deposition transcript to the news media,’ Nold told Fox News last week. ‘The court found nothing wrong with sending the bar complaint.’
Since the coffee chain purchase, Tully’s has shuttered its stores (though the closures were described as temporary) as Global Baristas has dealt with numerous lawsuits.”
Not only is Avenatti being investigated by the California State Bar, he is also being sued by a former law partner over an alleged breach of contract. Former law partner Jason Frank filed a complaint this week in Los Angeles Superior Court claiming that Avenatti owes him $2 million for failing to make good on a settlement agreement for a previous dispute.
Frank alleges in his complaint that he worked under an independent contractor arrangement with the firm, whereby he was to get 25% of the firm’s annual profits and 20% of his client’s fees, as well as copies of the firm’s tax returns and other financial records. The lawsuit accuses the firm of misstating their profits, not giving Frank copies of the records as required, and failing to pay him money that was due him under their contract. As a result, in February 2016 Frank filed a demand for arbitration and resigned from the firm that May
The arbitration panel found that Avenatti’s firm had “acted with malice, fraud and oppression by hiding its revenue numbers,” and issued sanctions against the firm for not following discovery orders. The case was set to go to an arbitration trial in March 2017, and Avenatti was scheduled for a March 3, 2017 deposition, according to the lawsuit. Frank states that just two days prior to the scheduled deposition, someone under the name “Gerald Tobin” filed an involuntary bankruptcy petition against the firm. The firm claims this action prevented the deposition and trial from taking place on the scheduled dates.
Frank alleges that the arbitration panel found that Avenatti’s firm had “acted with malice, fraud, and oppression by hiding its revenue numbers,” and issued sanctions against the firm for not following discovery orders. The case was set to go to an arbitration trial in March 2017, and Avenatti was scheduled for a March 3, 2017 deposition, according to the lawsuit. Frank states that two days before the deposition, someone under the name “Gerald Tobin” filed an involuntary bankruptcy petition against the firm, which the firm claimed prevented the deposition and trial from taking place at that time.
According to Law & Crime: “According to Frank’s lawsuit, a judge then gave Avenatti until March 10, 2017, to consent to Chapter 11 bankruptcy, saying that the involuntary petition ‘has a stench of impropriety.’ Avenatti indeed consented to bankruptcy, and in December 2017, Frank and the firm reached a settlement agreement, whereby the firm would pay Frank $4.85 million the lawsuit says. According to the complaint, the agreement depended on the bankruptcy court accepting the terms and dismissing the bankruptcy case, which it did on March 15, 2018.
The agreement called for Frank to be paid $2 million within 60 days of the March 15 dismissal, which Frank claims did not happen (the settlement agreement called for the remaining $2.85 million to be paid within 120 days of the dismissal).
Frank claims that Avenatti is liable for the unpaid money because the settlement called for him to personally guarantee the payment, which he did through a separate agreement.”
Avenatti states of the lawsuit:“Frivolous and baseless. Who cares
Frank’s attorney, Eric M. George states of the lawsuit: “Michael Avenatti’s law firm entered into a crystal clear written settlement agreement to resolve a prior lawsuit brought by Jason Frank, his former law partner. The settlement agreement was approved by a federal court and was a condition of his law firm exiting bankruptcy. Under this settlement, Mr. Avenatti’s law firm was required to pay Mr. Frank $4.85 million, all of which was personally guaranteed by Mr. Avenatti.
Mr. Avenatti’s law firm was required to make the first $2 million payment under the settlement to Mr. Frank on Monday, May 14. Mr. Avenatti’s law firm failed to make its required payment, and Mr. Avenatti himself failed to honor his personal guarantee obligation.