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Avenatti charged with embezzlement, fraud, cheating on taxes

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LOS ANGELES (AP) — Attorney Michael Avenatti has been charged in a 36-count federal indictment alleging he stole millions of dollars from clients, did not pay his taxes, committed bank fraud and lied in bankruptcy proceedings.

Avenatti, 48, was indicted late Wednesday by a Southern California grand jury on a raft of additional charges following his arrest last month in New York on two related counts and for allegedly trying to shake down Nike for up to $25 million.

The attorney best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump said Thursday on Twitter that he will plead not guilty to the California charges.

“I look forward to the entire truth being known as opposed to a one-sided version meant to sideline me,” he wrote.

The new charges do not include the New York extortion case alleging Avenatti demanded millions to stay quiet about claims he planned to reveal about Nike paying high school players. Avenatti has said he expects to be cleared in that case.

The 61-page Southern California indictment alleges Avenatti embezzled from a paraplegic man and four other clients and deceived them by shuffling money between accounts to pay off small portions of what they were due to lull them into thinking they were getting paid.

Avenatti, 48, is also charged with not paying personal income taxes, not paying taxes for his various businesses, including two law firms, and pocketing payroll taxes from the Tully’s Coffee chain that he owned, the indictment said.

Between September 2015 and January 2018, Global Baristas US, the company that operated Tully’s, failed to pay the Internal Revenue Service $3.2 million in payroll taxes, including nearly $2.4 million withheld from employees, the indictment said.

When the IRS put tax levies on coffee company bank accounts to collect more than $5 million, Avenatti had Tully’s employees deposit cash receipts in a little-known account, the indictment said.

Avenatti was also charged with submitting fraudulent tax returns to get more than $4 million in loans from The Peoples Bank in Biloxi, Mississippi, in 2014. The tax returns he presented to the bank were never filed to the IRS, prosecutors have said.

The charges are the latest major blow to a career that took off last year when Avenatti represented Daniels in her lawsuit to break a confidentiality agreement with Trump to stay mum about an affair they allegedly had.

Avenatti became one of Trump’s leading adversaries, attacking him on cable news programs and Twitter. At one point, Avenatti even considered challenging Trump in 2020.

But back home, his business practices had come under scrutiny from the IRS and a former law partner who was owed $14 million by Avenatti and the Eagan Avenatti firm, which filed for bankruptcy.

The indictment said Avenatti made false statements in bankruptcy proceedings by submitting forms under penalty of perjury that under reported income his firm received.

The most glaring example of deception and fraud was described in the indictment as scheming Avenatti allegedly did to deprive clients of money they were due from legal settlements or sales of stock and the actions he took to cover his tracks.

In a case involving one client, Avenatti allegedly funneled a $2.75 million settlement into his bank accounts and spent $2.5 million on a private airplane, the indictment said.

Although Avenatti was due a portion of settlement funds for his work, the charges said he paid only a fraction of the money clients were due in some cases and strung them along while they waited to be paid.

Avenatti allegedly drained a $4 million settlement he negotiated in 2015 on behalf of Geoffrey Johnson, who was paralyzed after trying to kill himself in the Los Angeles County jail, the indictment said. Johnson was referred to as “Client 1” in the indictment, but was named at a recent court hearing involving the money Avenatti was ordered to pay his former partner.

Until last month, Avenatti had only provided $124,000 over 69 payments to Johnson, the indictment said.

Two years after the settlement was reached, Avenatti allegedly helped Johnson find a real estate agent to buy a house. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said.

In November, when the U.S. Social Security Administration requested information to determine if Johnson should continue to receive disability benefits, Avenatti said he would respond, but didn’t because he knew it could lead to the discovery of his embezzlement, the indictment said. The failure to respond led to Johnson’s disability benefits being cut off in February.

After Avenatti was questioned about the alleged embezzlement during a judgment-debtor examination in federal court March 22, the indictment said he fabricated a defense for himself.

Avenatti had Johnson sign a document a day or two later saying he was satisfied with his representation, which the lawyer told him was necessary to get the settlement that had in fact been paid four years earlier, the indictment said.

When asked by The Associated Press last month about Johnson’s case, Avenatti said his client approved all transactions and accounting and had been kept in the loop.

“He has repeatedly thanked me for my dedication to his case and the ethics I have employed,” Avenatti wrote in an email response.

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Black Lives

Former Louisville Cop Pleads Guilty in Breonna Taylor Case

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FILE - This undated file photo provided by Taylor family attorney Sam Aguiar shows Breonna Taylor in Louisville, Ky. Taylor, a 26-year-old Black woman, was fatally shot by police in her Louisville, Ky., apartment in March 2020. A former Louisville police detective who helped write the warrant that led to the deadly police raid at Taylor's apartment has pleaded guilty to a federal conspiracy charge. (Courtesy of Taylor Family attorney Sam Aguiar via AP, File)

LOUISVILLE, Ky. (AP) — A former Louisville police detective who helped falsify the warrant that led to the deadly police raid at Breonna Taylor’s apartment has pleaded guilty to a federal conspiracy charge.

Federal investigators said Kelly Goodlett added a false line to the warrant and later conspired with another detective to create a cover story when Taylor’s March 13, 2020, shooting death by police began gaining national attention.

Taylor, a 26-year-old Black woman, was shot to death by officers who knocked down her door while executing a drug search warrant. Taylor’s boyfriend fired a shot that hit one of the officers as they came through the door and they returned fire, striking Taylor multiple times.

Goodlett, 35, appeared in a federal courtroom in Louisville on Tuesday afternoon and admitted to conspiring with another Louisville police officer to falsify the warrant. Goodlett briefly answered several questions from federal judge Rebecca Jennings Grady.

Taylor’s mother, Tamika Palmer, was in the courtroom Tuesday but did not speak after the proceedings.

Three former Louisville officers were indicted on criminal civil rights charges earlier this month by a federal grand jury. Goodlett was not indicted, but charged in a federal information filing, which likely means the former detective is cooperating with investigators.

Goodlett will be sentenced Nov. 22. Grady said there may be “extenuating circumstances” that may move the court to push back the sentencing date. Part of the plea hearing was also kept under seal and was not discussed in open court Tuesday. She faces up to five years in prison for the conviction.

She resigned from the department Aug. 5, a day after U.S. Attorney General Merrick Garland announced new federal charges in the Taylor case.

Former officers Joshua Jaynes and Kyle Meany were indicted on charges related to the warrant used to search Taylor’s home. A third former officer, Brett Hankison, was charged with using excessive force when he retreated from Taylor’s door, turned a corner and fired 10 shots into the side of her two-bedroom apartment. He was acquitted by a jury on similar state charges earlier this year. Jaynes, Meany and Hankison have all been fired.

The three former officers face a maximum sentence of life in prison if convicted on the civil rights charges.

Federal prosecutors said in court records that Jaynes, who drew up the Taylor warrant, had claimed to Goodlett days before the warrant was served that he had “verified” from a postal inspector that a suspected drug dealer was receiving packages at Taylor’s apartment. But Goodlett knew this was false and told Jaynes the warrant did not yet have enough information connecting Taylor to criminal activity, prosecutors said. She added a paragraph saying the suspected drug dealer, Jamarcus Glover, was using Taylor’s apartment as his current address, according to the court records.

Two months later, when the Taylor shooting was attracting national headlines, the postal inspector told a media outlet he had not verified packages for Glover were going to Taylor’s apartment. Jaynes and Goodlett then met in Jaynes’ garage to “get on the same page” before Jaynes talked to investigators about the Taylor warrant, court records said.

They decided to say Sgt. John Mattingly, who is identified in the court records as J.M., told them Glover was receiving packages at Taylor’s home, according to prosecutors. Mattingly was shot in the leg during the raid at Taylor’s apartment.

Meany, who signed off on the Taylor warrant and was still a Louisville police sergeant when he was indicted on Aug. 4, was fired by Louisville Police Chief Erika Shields on Friday.

Shields said in a statement that Meany has not yet had his case heard by a jury, but “he is facing multiple federal charges after a lengthy investigation by the DOJ” and should not “expect continued employment under such conditions.”

Hankison was the only officer charged who was on the scene the night of the killing.

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Crime

Lawyer’s Group Text Causes 2nd Florida Murder Case Mistrial

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FORT LAUDERDALE, Fla. (AP) — A prosecutor in a murder case complained about a judge’s ruling in a group text message that included the judge, resulting in a second mistrial for a man charged with killing his girlfriend’s young son. Now the defense wants the case dismissed altogether.

Broward County Judge Peter Holden refused to allow a 911 call as evidence against Corey Gorden, who is accused of killing the 3-year-old in 2015 and returning him in his car seat to his mother as if nothing had happened.

Assistant State Attorney Katya Palmiotto then sent a text complaining about the ruling to a group of current and former homicide prosecutors, the South Florida SunSentinel reported.

“Holden just sustained their objection and wouldn’t let us put the 911 call in as hearsay,” she wrote.

As a former homicide prosecutor who was appointed to the bench in 2018, the judge remained in the group chat. And lawyers are prohibited in criminal cases from talking with the judge if the defendant’s lawyers are not present.

Defense lawyer Michael Gottlieb filed for mistrial on Wednesday, saying in a summary that the 15-year veteran prosecutor had been overheard saying she messed up “real bad.”

“The judge was visibly upset and appeared angry,” Gottlieb wrote.

Holden grilled the prosecutor about the text message before declaring a mistrial.

In May, another judge declared a mistrial when prosecutors asked a witness about Gorden’s refusal to give a statement. Criminal trial jurors are not permitted to consider the defendants silence as proof of guilt.

Holden has not set a hearing on Gottlieb’s motion to dismiss the case.

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Crime

Uvalde Schools Look to Fire Chief Arredondo After Shooting

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FILE - Uvalde School Police Chief Pete Arredondo, third from left, stands during a news conference outside of the Robb Elementary school in Uvalde, Texas Thursday, May 26, 2022. The district’s superintendent said Wednesday, June 22 that Arredondo has been put on leave following allegations that he erred in his response to a mass shooting at an elementary school that left 19 students and two teachers dead. (AP Photo/Dario Lopez-Mills, File)

UVALDE, Texas (AP) — Facing massive public pressure, Uvalde’s top school official has recommended the firing of the school district police chief who was central to the botched law enforcement response to the elementary school shooting nearly two months ago that killed two teachers and 19 students.

The South Texas city’s school board announced Wednesday that it will consider firing Chief Pete Arredondo at a special meeting Saturday. Arredondo has been accused by state officials of making several critical mistakes during the May 24 mass shooting at Robb Elementary School.

School officials have previously resisted calls to fire Arredondo. The announcement comes two days after a meeting where the school board members were lambasted for more than three hours by members of the public, who accused them of not implementing basic security at Robb, of not being transparent about what happened and of failing to hold Arredondo to account for his actions.

 

 

Confronted with parents’ vociferous demands to fire Arredondo and warnings that his job would be next, Superintendent Hal Harrell said Monday that the police chief was a contract employee who could not be fired at will. The agenda for Saturday’s meeting includes the board discussing the potential firing with its lawyer.

Arredondo, who has been on leave from the district since June 22, has faced blistering criticism since the massacre, most notably for not ordering officers to immediately breach the classroom where an 18-year-old gunman carried out the attack. If fired, Arredondo would become the first officer ousted from his job following the deadliest Texas school shooting in history.

 

 

Although nearly 400 officers from various agencies were involved in the police response that took more than an hour to confront and kill the shooter, Arredondo is one of only two known to have faced discipline. His attorney did not immediately respond to requests for comment.

The move to potentially fire the chief follows the release of a damning 80-page report by a Texas House committee that blamed all levels of law enforcement for a slow and chaotic response. The report found that 376 law enforcement officers massed at the school, with more than half coming from state and federal agencies, but that they “failed to adhere to their active shooter training, and they failed to prioritize saving innocent lives over their own safety.”

According to the committee, Arredondo told lawmakers he didn’t consider himself the on-scene commander in charge and that his priority was to protect children in other classrooms. The committee report called that decision a “terrible, tragic mistake.”

Body camera footage released by the Uvalde officials shows Arredondo in the hallway trying multiple sets of keys on other classroom doors, but not the one where the massacre took place. The classroom door could not be locked from the inside, but there is no indication officers tried to open the door while the gunman was inside.

“Our thought was: ‘If he comes out, you know, you eliminate the threat,’ correct?” Arredondo told the committee, according to the report. “And just the thought of other children being in other classrooms, my thought was: ‘We can’t let him come back out. If he comes back out, we take him out, or we eliminate the threat.’”

Arredondo, 50, grew up in Uvalde and spent much of his nearly 30-year career in law enforcement in the city. He took the head police job at the school district in 2020 and was sworn in as a member of the City Council in a closed-door ceremony May 31. He resigned from his council seat July 2.

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