Paraplegic Man Sues Michael Avenatti For Allegedly Embezzling $4M Settlement
SANTA ANA (CBSLA) – A paraplegic man Thursday filed a lawsuit against his former attorney, the embattled Michael Avenatti, claiming that Avenatti embezzled a $4 million settlement from him which had been secured against Los Angeles County back in 2015.
In April, a Santa Ana federal grand jury brought 36 counts of embezzlement, bank fraud and theft against Avenatti, with one of those counts alleging that the 48-year-old Century City attorney had stolen $4 million from Geoffrey Johnson, a paraplegic man with mental health issues.
"Unfortunately, he defrauded Mr. Johnson, and he took that $4 million without disclosing that to Mr. Johnson," Johnson's attorney Daniel Callahan told reporters at a Santa Ana news conference Thursday. "And he then engaged in a four-year cover up."
According to Callahan, the ordeal began when Johnson was arrested in April 2011. While in L.A. County jail he attempted suicide twice. On the second attempt, according to Callahan, he fell from a second floor and became paraplegic.
Johnson was eventually released from jail several months later without being charged with a crime.
In October 2012, Avenatti filed a lawsuit against L.A. County on behalf of Johnson. In January 2015, the case was settled for $4 million.
However, Avenatti allegedly never told Johnson about the settlement.
"Rather, he (Avenatti) told him there was an agreement to settle," Callahan said. "However, (Avenatti said) 'it's confidential, payments will be made over a 10-year period quarterly, and there has to be a special needs trust acceptable by the county to be entered by Mr. Johnson.' None of that was true. The money was already paid out to Mr. Avenatti...this was all a fabrication and a lie."
When Johnson lost his Social Security benefits, Avenatti made 65 payments to Johnson ranging from $900 to $1,900 a month to the tune of $124,000. According to prosecutors, Avenatti took the rest of the money and put it towards financing a coffee business.
"On a one-to-100 scale, the despicability of his conduct ranks a thousand," Callahan said. "It is unheard of. I have never personally never of such atrocious breaches of fiduciary duty in my entire 40-year career as an attorney. It is off the charts bad. It is hideous."
On March 22, 2019, Avenatti made statements under oath in a judgement debtor exam in which he said that he had paid Johnson. That same day, he rushed to Johnson's home and told Johnson that the county had finally approved the settlement, Callahan says.
The following day, March 23, had Johnson sign documents and a confidentiality agreement. On March 24, he also had him sign a client testimonial.
On March 25, Avenatti was arrested in two separate federal cases out of Santa Ana and New York. The Santa Ana case alleges that he stole more than $12 million in settlement money from five of his clients, including Johnson, failed to file income tax returns, failed to pay millions in taxes, submitted fraudulent loan applications and concealing assets from bankruptcy court.
The New York case alleges that Avenatti attempting to extort more than $20 million from athletic equipment giant Nike over claims he had evidence that Nike employees funneled illegal payments to top high school basketball prospects and their families.
"I hope we can send a message to lawyers like Mr. Avenatti and his firm that they won't get away with victimizing people like me," Callahan said in a statement.
In a statement released to CBSLA, Avenatti denied any wrongdoing in either case:
"This is old news and was first reported on almost two months ago. Mr. Johnson's claims are categorically false and frivolous, and his case will be thrown out of court. He previously agreed on numerous occasions, including in multiple detailed writings which he reviewed, initialed and signed (after a different lawyer reviewed), that I conducted myself ethically at all times, he was kept informed about all aspects of his case, he was provided all monies when due, he had been advanced huge sums for his living and medical expenses, he had received a proper accounting, and he was extremely thankful for my assistance, which was provided after no other lawyer would take his case.
"Any claim that Mr. Johnson was 'tricked' into signing documents that he fully read and understood is absurd. But for my assistance, Mr. Johnson would have been convicted of the multiple crimes he was charged with relating to his alleged assault of a nurse and would have been destitute six years ago. We paid his medical expenses and living expenses for years prior to any settlement. And we provided him with settlement monies after we deducted our contingency fee and the huge costs associated with his case as we were entitled to. He clearly is disturbed and it is unfortunate that he is being used by his Republican Trump supporter lawyer and others as part of a 'pile on' publicity stunt to smear me."
Avenatti remains free on $300,000 bond.
