https://www.latimes.com/politics/la...an-whiteside-embezzlement-20190421-story.html
By Michael Finnegan
Apr 21, 2019 | 2:00 PM
Hassan Whiteside and Michael Avenatti. (AP)
When Hassan Whiteside of the Miami Heat wired $2.75 million to Michael Avenatti in January 2017, the pro basketball player intended most of the money to go to his former girlfriend, Alexis Gardner.
Avenatti was Gardner’s attorney. An actress and barista, she’d hired him just a few weeks before to negotiate a settlement of a potential lawsuit against Whiteside. It’s unclear what she would have alleged. Avenatti quickly struck a $3-million deal, and the $2.75 million was Whiteside’s first payment.
Avenatti, prosecutors say, was entitled to take just over $1 million in legal fees, leaving the rest for Gardner.
Instead, they allege, Avenatti hid Whiteside’s payment from her and immediately took $2.5 million to buy a share of a private jet.
The full story of Avenatti’s alleged embezzlement from Gardner came to light in bank records and in the April 10 indictment of the Los Angeles lawyer by a federal grand jury in Santa Ana.
The 36-count indictment, which spans an array of alleged financial crimes, identifies Whiteside as “Individual 1” and Gardner as “Client 2.”
“We entered into a mutually agreed upon settlement more than two years ago following the end of our relationship; a settlement that reflected Alexis’ investment of time and support over a number of years as Hassan pursued a career in the NBA,” Whiteside and Gardner told the Los Angeles Times in a statement released by his agent.
“It is unfortunate that something that was meant to be kept private between us is now being publicly reported. We have both moved on amicably and wish nothing but the best for each other.”
Gardner is one of five clients whose money prosecutors say Avenatti stole. One of the others, Geoffrey Ernest Johnson, was a mentally ill paraplegic man on disability who won a $4-million settlement but received just $124,000 from Avenatti.
The grand jury alleges that Avenatti embezzled about $4 million from another client, Michelle Phan, a makeup artist with 8.8 million YouTube followers.
Avenatti is also charged with dodging taxes, bank fraud, perjury and bankruptcy fraud. In a separate federal case in New York, he is accused of extortion and conspiracy in his alleged shakedown of Nike, the sportswear giant.
If convicted on all charges on both coasts, he faces a maximum penalty of 382 years in prison. Avenatti denies wrongdoing.
“No monies were ever embezzled from anyone and I look forward to all of the relevant documents and facts being presented at trial,” he said Sunday by email.
Citing his record of big verdicts and settlements, he said, “the clients complaining are a very small fraction of the thousands of clients I have serviced over my nearly 20 year career.”
On Twitter, Avenatti said he was looking forward to public disclosure of the reason Whiteside paid the settlement and “the inquiry by the @NBA and its commissioner.” Through his agent, Whiteside declined to comment.
Whiteside’s former girlfriend, Gardner, 27, graduated in 2013 from Marshall University in West Virginia, where he played basketball in 2009 and 2010. Her Facebook page includes several posts about Whiteside in 2014.
She moved to Miami a few months after Whiteside joined the Heat in late 2014. She has also lived in Los Angeles.
Whiteside, 29, played for the Sacramento Kings before he joined the Miami team. In 2016, he re-signed with the Heat for four years in a deal worth $98 million.
Michael Avenatti outside New York federal court after his March 25 arrest. (Don Emmert / AFP/Getty Images)
After the couple’s breakup, Gardner hired Avenatti. It was just over a year before he would become famous as the bombastic lawyer on the cable news circuit for adult-film actress Stormy Daniels, who was trying to break free from a nondisclosure pact that kept her from discussing her alleged 2006 affair with Donald Trump.
Avenatti was in deep financial distress. His Newport Beach law firm was on the brink of bankruptcy, his Seattle coffee business was starting to collapse, and authorities were dogging him for millions of dollars in unpaid taxes. Prosecutors allege the money he’d stolen from his client Johnson was gone. All the while, Avenatti was spending lavishly on sports cars, high-end watches and luxury travel.
Gardner’s settlement with Whiteside — Avenatti never gave her a copy — required the basketball player to pay her $2.75 million in January 2017, then the remaining $250,000 on Nov. 1, 2020, the indictment says.
Whiteside wired the $2.75 million on Jan. 25, 2017, to a client trust account at Eagan Avenatti. Rather than taking his fee of about $1 million, plus expenses, Avenatti kept all the money and misrepresented the settlement’s terms to Gardner, according to the indictment.
He told her the initial payment was entirely for attorney fees, and her money would be split into 96 monthly payments over the next eight years, prosecutors say.
Nick Hanna, U.S. attorney for the Central District of California, announces Michael Avenatti's indictment. (Allen J. Schaben / Los Angeles Times)
The State Bar of California requires attorneys to promptly notify a client when they receive settlement funds. After deducting their fees and expenses, lawyers must turn over the money at the client’s request.
The day after receiving the wire transfer from Whiteside, Avenatti shifted $2.5 million to a bank account of X-Law Group, the Echo Park firm of his close associate Filippo Marchino, bank records show.
At Avenatti’s instruction, according to prosecutors, Marchino immediately wired the $2.5 million to Honda Aircraft Co., LLC, for the purchase of Avenatti’s half share of a small HA-420 jet.
“At no time was Mr. Marchino or any member of The X-Law Group aware of the true source of the funds that were wired or the fraud that Avenatti was committing,” said David W. Gammill, a lawyer for Marchino and his firm.
Marchino, who now represents Gardner, was outraged by the allegations and will assist her “in the pursuit of her stolen money,” Gammill said. Marchino and his co-workers at X-Law Group “hope all victims of Avenatti, including themselves, can be made whole.”
Avenatti wound up making 11 payments to Gardner, misrepresenting them as Whiteside’s monthly installments, according to the U.S. attorney’s office in Los Angeles. By the time the payments stopped in June 2018, Avenatti had given her about $194,000, prosecutors say.
For the next nine months, they allege, Avenatti deceived Gardner, telling her that Whiteside was breaching the settlement by skipping payments.
Last month, the day before FBI agents arrested him in New York, Avenatti met with Gardner at his apartment in Century City and told her Whiteside would soon make up for all the missed payments, according to the indictment.
Avenatti declined to specify how much of the $2.75 million he took for legal fees and expenses, but said Gardner received “far more than $194,000 and we will prove it at trial.”
“We paid living expenses and other expenses for a long period of time as well,” he said. Contrary to what the indictment outlines, he said, Gardner got a copy of the settlement the day she signed it.
Within hours of Avenatti’s arrest, U.S. Treasury Department agents executed search warrants at his apartment and the Echo Park office he was then sharing with Marchino.
Stormy Daniels lawyer Michael Avenatti tested legal boundaries as his firm maneuvered into bankruptcy
Jun 01, 2018 | 11:05 AM
Agents also showed up at Santa Barbara Airport to seize the six-seat jet — just as the plane’s co-owner, infrared technology mogul William J. Parrish, was about to climb aboard for a flight.
Parrish has been tangled in years of legal disputes with Avenatti, his former attorney. Parrish sued him and won a $2.1-million judgment last year after Avenatti failed to repay a 2013 loan and did not show up in court to defend himself. Avenatti is appealing the judgment.
“Mr. Parrish was shocked when he arrived to use his jet and found out it was being seized by the IRS,” said Parrish’s attorney, Larry Conlan. “He already feels like he’s been victimized by Avenatti, and now he is being victimized again with the seizure of his property.”
Avenatti recalled that when he was Parrish’s lawyer, he won a $39-million settlement for him and a business partner.
“He has hardly been victimized,” Avenatti said.
Times researcher Scott Wilson contributed to this report.
By Michael Finnegan
Apr 21, 2019 | 2:00 PM
Hassan Whiteside and Michael Avenatti. (AP)
When Hassan Whiteside of the Miami Heat wired $2.75 million to Michael Avenatti in January 2017, the pro basketball player intended most of the money to go to his former girlfriend, Alexis Gardner.
Avenatti was Gardner’s attorney. An actress and barista, she’d hired him just a few weeks before to negotiate a settlement of a potential lawsuit against Whiteside. It’s unclear what she would have alleged. Avenatti quickly struck a $3-million deal, and the $2.75 million was Whiteside’s first payment.
Avenatti, prosecutors say, was entitled to take just over $1 million in legal fees, leaving the rest for Gardner.
Instead, they allege, Avenatti hid Whiteside’s payment from her and immediately took $2.5 million to buy a share of a private jet.
The full story of Avenatti’s alleged embezzlement from Gardner came to light in bank records and in the April 10 indictment of the Los Angeles lawyer by a federal grand jury in Santa Ana.
The 36-count indictment, which spans an array of alleged financial crimes, identifies Whiteside as “Individual 1” and Gardner as “Client 2.”
“We entered into a mutually agreed upon settlement more than two years ago following the end of our relationship; a settlement that reflected Alexis’ investment of time and support over a number of years as Hassan pursued a career in the NBA,” Whiteside and Gardner told the Los Angeles Times in a statement released by his agent.
“It is unfortunate that something that was meant to be kept private between us is now being publicly reported. We have both moved on amicably and wish nothing but the best for each other.”
Gardner is one of five clients whose money prosecutors say Avenatti stole. One of the others, Geoffrey Ernest Johnson, was a mentally ill paraplegic man on disability who won a $4-million settlement but received just $124,000 from Avenatti.
The grand jury alleges that Avenatti embezzled about $4 million from another client, Michelle Phan, a makeup artist with 8.8 million YouTube followers.
Avenatti is also charged with dodging taxes, bank fraud, perjury and bankruptcy fraud. In a separate federal case in New York, he is accused of extortion and conspiracy in his alleged shakedown of Nike, the sportswear giant.
If convicted on all charges on both coasts, he faces a maximum penalty of 382 years in prison. Avenatti denies wrongdoing.
“No monies were ever embezzled from anyone and I look forward to all of the relevant documents and facts being presented at trial,” he said Sunday by email.
Citing his record of big verdicts and settlements, he said, “the clients complaining are a very small fraction of the thousands of clients I have serviced over my nearly 20 year career.”
On Twitter, Avenatti said he was looking forward to public disclosure of the reason Whiteside paid the settlement and “the inquiry by the @NBA and its commissioner.” Through his agent, Whiteside declined to comment.
Whiteside’s former girlfriend, Gardner, 27, graduated in 2013 from Marshall University in West Virginia, where he played basketball in 2009 and 2010. Her Facebook page includes several posts about Whiteside in 2014.
She moved to Miami a few months after Whiteside joined the Heat in late 2014. She has also lived in Los Angeles.
Whiteside, 29, played for the Sacramento Kings before he joined the Miami team. In 2016, he re-signed with the Heat for four years in a deal worth $98 million.
Michael Avenatti outside New York federal court after his March 25 arrest. (Don Emmert / AFP/Getty Images)
After the couple’s breakup, Gardner hired Avenatti. It was just over a year before he would become famous as the bombastic lawyer on the cable news circuit for adult-film actress Stormy Daniels, who was trying to break free from a nondisclosure pact that kept her from discussing her alleged 2006 affair with Donald Trump.
Avenatti was in deep financial distress. His Newport Beach law firm was on the brink of bankruptcy, his Seattle coffee business was starting to collapse, and authorities were dogging him for millions of dollars in unpaid taxes. Prosecutors allege the money he’d stolen from his client Johnson was gone. All the while, Avenatti was spending lavishly on sports cars, high-end watches and luxury travel.
Gardner’s settlement with Whiteside — Avenatti never gave her a copy — required the basketball player to pay her $2.75 million in January 2017, then the remaining $250,000 on Nov. 1, 2020, the indictment says.
Whiteside wired the $2.75 million on Jan. 25, 2017, to a client trust account at Eagan Avenatti. Rather than taking his fee of about $1 million, plus expenses, Avenatti kept all the money and misrepresented the settlement’s terms to Gardner, according to the indictment.
He told her the initial payment was entirely for attorney fees, and her money would be split into 96 monthly payments over the next eight years, prosecutors say.
Nick Hanna, U.S. attorney for the Central District of California, announces Michael Avenatti's indictment. (Allen J. Schaben / Los Angeles Times)
The State Bar of California requires attorneys to promptly notify a client when they receive settlement funds. After deducting their fees and expenses, lawyers must turn over the money at the client’s request.
The day after receiving the wire transfer from Whiteside, Avenatti shifted $2.5 million to a bank account of X-Law Group, the Echo Park firm of his close associate Filippo Marchino, bank records show.
At Avenatti’s instruction, according to prosecutors, Marchino immediately wired the $2.5 million to Honda Aircraft Co., LLC, for the purchase of Avenatti’s half share of a small HA-420 jet.
“At no time was Mr. Marchino or any member of The X-Law Group aware of the true source of the funds that were wired or the fraud that Avenatti was committing,” said David W. Gammill, a lawyer for Marchino and his firm.
Marchino, who now represents Gardner, was outraged by the allegations and will assist her “in the pursuit of her stolen money,” Gammill said. Marchino and his co-workers at X-Law Group “hope all victims of Avenatti, including themselves, can be made whole.”
Avenatti wound up making 11 payments to Gardner, misrepresenting them as Whiteside’s monthly installments, according to the U.S. attorney’s office in Los Angeles. By the time the payments stopped in June 2018, Avenatti had given her about $194,000, prosecutors say.
For the next nine months, they allege, Avenatti deceived Gardner, telling her that Whiteside was breaching the settlement by skipping payments.
Last month, the day before FBI agents arrested him in New York, Avenatti met with Gardner at his apartment in Century City and told her Whiteside would soon make up for all the missed payments, according to the indictment.
Avenatti declined to specify how much of the $2.75 million he took for legal fees and expenses, but said Gardner received “far more than $194,000 and we will prove it at trial.”
“We paid living expenses and other expenses for a long period of time as well,” he said. Contrary to what the indictment outlines, he said, Gardner got a copy of the settlement the day she signed it.
Within hours of Avenatti’s arrest, U.S. Treasury Department agents executed search warrants at his apartment and the Echo Park office he was then sharing with Marchino.
Stormy Daniels lawyer Michael Avenatti tested legal boundaries as his firm maneuvered into bankruptcy
Jun 01, 2018 | 11:05 AM
Agents also showed up at Santa Barbara Airport to seize the six-seat jet — just as the plane’s co-owner, infrared technology mogul William J. Parrish, was about to climb aboard for a flight.
Parrish has been tangled in years of legal disputes with Avenatti, his former attorney. Parrish sued him and won a $2.1-million judgment last year after Avenatti failed to repay a 2013 loan and did not show up in court to defend himself. Avenatti is appealing the judgment.
“Mr. Parrish was shocked when he arrived to use his jet and found out it was being seized by the IRS,” said Parrish’s attorney, Larry Conlan. “He already feels like he’s been victimized by Avenatti, and now he is being victimized again with the seizure of his property.”
Avenatti recalled that when he was Parrish’s lawyer, he won a $39-million settlement for him and a business partner.
“He has hardly been victimized,” Avenatti said.
Times researcher Scott Wilson contributed to this report.
