Feds Say Ex-Firm of Stormy Daniels' Lawyer Owes Unpaid Taxes

Feds Say Ex-Firm of Stormy 

July 4, 2018, at 7:39 p.m. 

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FILE - In this May 30, 2018, file photo, Michael Avenatti, attorney for porn actress Stormy Daniels, talks to the media after a Federal Court hearing, in New York. The Justice Department says Avenatti, made "misrepresentations" in a bankruptcy case involving his former law firm that owes more than $440,000 in unpaid federal taxes. Avenatti said Wednesday, July 4, 2018, he doesn't owe any money personally and called the court filing "politically motivated." (AP Photo/Richard Drew, File) THE ASSOCIATED 

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BY MICHAEL BALSAMO, Associated Press

LOS ANGELES (AP) — The Justice Department says Stormy Daniels' lawyer, Michael Avenatti, made "misrepresentations" in a bankruptcy case involving his former law firm that owes more than $440,000 in unpaid federal taxes.

Avenatti's former firm, Eagan Avenatti LLP, had agreed in January to pay about $2.4 million in back taxes and penalties as part of a resolution of a bankruptcy case involving the firm.

Court documents show some of the money was paid, but attorneys for the government said in May that the firm still owed a portion of the unpaid tax money.

On Tuesday, the U.S. attorney's office in Los Angeles filed a motion asking a federal judge to compel the payment of $440,291 in unpaid taxes and more than $11,700 in interest. Lawyers from the U.S. attorney's office represent the government in bankruptcy court when there's a debt to a government agency, like back taxes or unpaid student loans.

Avenatti, who has garnered national attention as the attorney for Daniels, the porn actress who is suing President Donald Trump following an alleged 2006 affair, said Wednesday that the court filing was "part of a smear campaign" and stressed that he doesn't personally owe any of the money.

"There is no question this is politically motivated," he said. "I do not owe anything personally. And any representation to the contrary is completely false."

Lawyers for the government said they had attempted for months to contact Avenatti and his lawyer to settle the debt but were ignored. They allege Avenatti and his former firm "deliberately made no attempts to pay the delinquent amount."

Court documents say Avenatti is the "managing member and majority equity holder" of Eagan Avenatti and "solely owns and controls" another firm, Avenatti & Associates, which represents Daniels.

"The debtor and its responsible officer Michael Avenatti have deliberately made no attempts to pay the delinquent amount which they previously agreed to do by stipulation," Assistant U.S. Attorney Najah Shariff wrote.

Avenatti and his former firm "made misrepresentations to the detriment of the United States" that should not be condoned by the court, Shariff said in the motion.

U.S. Bankruptcy Judge Catherine Bauer set a hearing for July 25.

In May, Bauer ordered Eagan Avenatti, LLP to pay $10 million to Jason Frank, a lawyer who claimed that the firm had misstated its profits and that he was owed millions.

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Associated Press writer Catherine Lucey in Washington contributed to this report.