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October 23, 2024

Ninth Circuit panel reverses 168-month sentence of Michael Avenatti based on various guideline issues

As reported in this Courthouse News Service piece, "Michael Avenatti, who gained notoriety while representing adult film actress Stormy Daniels in her legal dispute with then-President Donald Trump, earned a rare legal victory Wednesday when a Ninth Circuit panel threw out his 14-year sentence for stealing millions of dollars from his former clients." Here is more about the ruling:

It is longest of three prison sentences the 53-year-old Avenatti is currently serving. He was given four years for stealing money Daniels was due for a tell-all book, and 30 months for trying to extort Nike....

The three-judge panel found the trial judge in Orange County made a number of errors in sentencing the disbarred lawyer.  For one thing, in calculating the amount of money Avenatti stole from his clients, the judge "should have accounted for the value of his legal services and costs, as well as the value of certain payments he made to victims," the appellate judges wrote in their 9-page ruling.

"By finding that Avenatti’s victims “lost” the full settlement value without accounting for Avenatti’s fees and costs, the district court enhanced Avenatti’s sentence based on pecuniary harm that did not occur, and did not 'result from [Avenatti’s] offense,'" the judges wrote.

In addition, the panel found U.S. District Court Judge James Selna abused his discretion in refusing to "credit (and thus deduct from the losses) the value of payments Avenatti made to Geoffrey Johnson, Alexis Gardner, and Gregory Barela after he misappropriated their settlements. These too, should be accounted for on remand."

U.S. Circuit Judges Michelle Friedland, a Barack Obama appointee, and Roopali Desai, a Joe Biden appointee, made up the panel along with U.S. District Judge Karen E. Schreier, sitting with the panel by designation from the District of South Dakota. They did reject a few arguments Avenatti had made in his appeal, including the assertion that the Nike conviction wasn't relevant conduct.

The full (unpublished) opinion is available at this link.

October 23, 2024 at 05:29 PM | Permalink

Comments

The three-judge panel found the trial judge in Orange County made a number of errors in sentencing the disbarred lawyer. For one thing, in calculating the amount of money Avenatti stole from his clients, the judge "should have accounted for the value of his legal services and costs, as well as the value of certain payments he made to victims," the appellate judges wrote in their 9-page ruling.

"By finding that Avenatti’s victims “lost” the full settlement value without accounting for Avenatti’s fees and costs, the district court enhanced Avenatti’s sentence based on pecuniary harm that did not occur, and did not 'result from [Avenatti’s] offense,'" the judges wrote.

Hmmmmm. So he's entitled to credit for fees?? I call BS.

Posted by: federalist | Oct 24, 2024 10:16:25 AM

Did you read the opinion, federalist? Do you understand the facts and sentencing law it cites?

Posted by: Doug B | Oct 24, 2024 12:01:59 PM

Nope. Did not. My view is that it does not lie in the mouth of a lawyer who steals from clients to argue that he is entitled to credit for the fees he would have earned. I don't think you need to read the opinion to come to that view. As for money that actually went to clients--of course, he is entitled to credit for that.

Posted by: federalist | Oct 24, 2024 12:39:04 PM

Obviously, there would not have been settlement money to fight about if Avenetti had not done real legal work; and at the time he was a licensed attorney entitled to charge fees for legal work. Either his contingent fee agreements with the clients apply (33% or 40% contingent fees) or he would be entitled to a quantum meruit recovery for the fair market value of those legal services. So, for Relevant Conduct purposes, the losses were not the gross amounts of the settlements, but, rather, were those sums reduced by Avenetti's legal fees and expenses. This seems like a no-brainer. It is hard to believe that the Probation Officer and the District Judge made this simple mistake. It is also notable that Avenetti appears to have represented himself PRO SE on this appeal in which he prevailed. With skills like this, he ought ot be able to do prison legal work for other inmates for bags of coffee, and food, shoes and clothes from teh commissary!

Posted by: Jim Gormley | Oct 24, 2024 1:21:08 PM

federalist: sometimes I forget that you do not really care about actual law, just about spouting your "view." Ignorance is bliss, I suppose.

Posted by: Doug B | Oct 24, 2024 2:04:21 PM

Lawyers who steal from their clients should not get any credit for fees they "earned," as they so warped the client-lawyer relationship. They violated the fundamental duty of loyalty, and a lawsuit is not a picnic for the client, so to go through all that, only to have the lawyer steal. Nope. No credit for fees.

Posted by: federalist | Oct 24, 2024 2:15:52 PM

More displays of ignorance about sentencing law. Not sure if this is sad or funny.

Posted by: Doug B | Oct 24, 2024 2:30:36 PM

Why--because I don't think a lawyer who steals from his client should be heard to claim that loss has to be discounted by fees claimed to be earned by the lawyer? What's the FMV of services from a lawyer who steals from clients? I would argue "zero."

Posted by: federalist | Oct 24, 2024 3:39:06 PM

Have you read the opinon now, federalist? The Ninth Circuit speaks to some of these matters, citing actual law.

Posted by: Doug B | Oct 24, 2024 4:32:09 PM

'I forget that you do not really care about actual law, just about spouting your "view."'

That approach goes much, much farther when one hangs on it the label of "originalism".

Posted by: Frank Fosdick | Oct 24, 2024 4:59:50 PM

Citing the restatement, which in my opinion, isn't persuasive in this case. A lawyer that steals from his client would forfeit all fees in most, if not all, jurisdiction. So once he did that, the loss is now the full boat. You may not agree. Fine. But I like to think that the profession would never accept such a lawyer's entitlement to any fees.

Posted by: federalist | Oct 24, 2024 5:00:59 PM

Glad you got around to actually reading the opinion, federalist. Legal discussions are typically better when folks have done the reading.

Posted by: Doug B | Oct 24, 2024 5:12:21 PM

Doug, doesn't Frank Fosdick's comment violate your policy. And the opinion doesn't really give any more insight than the write-up.

Posted by: federalist | Oct 25, 2024 9:07:02 AM

Frank seemed to be giving you a relative compliment, federalist. And originalism has been a topic of a number of recent posts.

Also, my blog, my judgments (which are likely often influenced by my mood).

Posted by: Doug B | Oct 25, 2024 1:13:51 PM

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