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Stormy Daniels' lawyer Michael Avenatti faces increasing questions about financial woes, tax liens

Attorney Michael Avenatti, who is considering a bid for president in 2020, allegedly owes millions in unpaid to the IRS. (Image source: video screenshot)

Attorney Michael Avenatti, who's best known for representing Stormy Daniels in a case against President Donald Trump, has personally owed at least $1.2 million in federal taxes, along with millions in unpaid judgments and corporate debts, according to a Daily Beast report. Avenatti's former law firm Eagan Avenatti also once owed $2.4 million to the IRS.

In August, the California lawyer started a political action committee, Fight PAC, and he's also preparing to make a possible run for the Democratic nominee in the 2020 presidential election.

But Avenatti's finances could be a thorny issue in his chances to gain the Democratic nomination.

After the Daily Beast's story was published, Avenatti took to Twitter to affirm he would release his taxes if he ran for president.

"A lot of misinformation being thrown about re my tax returns. Be clear - on Aug. 12 (This Week interview on ABC), I stated I would release my tax returns if I ran. On Sept. 28 (Texas Tribune interview), I stated the same thing. Both on video. My position remains the same," he tweeted on Sunday.

A lavish lifestyle, costly divorce payments and tax liens

According to divorce documents, Avenatti and his second wife Lisa Storie-Avenatti lived a lavish lifestyle including multimillion dollar homes, expensive trips to Cabo San Lucas, Mexico, and the French Riviera, two private jets, a full-time pilot and nannies for their 3-year-old son.

The couple formally separated in October 2017 after six years of marriage.

Storie-Avenatti asked the court for more than $215,000 in monthly support and alleged that she'd been cut off from her husband's income since they separated.

A list of her monthly expenses included $12,000 for nannies, $19,779 for groceries and household supplies, $19,849 for clothing, and $27,257 for entertainment, gifts, and vacations, the Daily Beast reported.

In July, Avenatti was ordered by a judge to pay $31,981 a month in child support and $124,398 a month in spousal support to Storie-Avenatti. In addition, he was ordered to pay $185,000 in attorney's fees and $30,000 in expert fees.

And in Orange County, California, tax lien filings showed that Avenatti personally owed at least $1.2 million in federal taxes. A lien filed in August 2015 showed a balance of $903,987 and another filed earlier this year showed a balance of $308,396.

In July, Avenatti told CNN that both debts had been "fully paid," but the Daily Beast was unable to find lien release records related to the alleged payments.

What are the debts connected to his former law firm?

All the while, the lawyer has remained in a long-running battle with his former colleague, Jason Frank, who claims that Eagan Avenatti owes him millions in unpaid compensation that stemmed from the firm's 2017 bankruptcy action.

In January, Frank settled with Eagan Avenatti for $4.85 million, which Avenatti personally guaranteed to pay, but failed to do so.

After Avenatti failed to make the first payment to Frank, a U.S. bankruptcy court judge entered a $10 million judgment against Eagan Avenatti.

Avenatti is expected in court Monday for a hearing on the case.

“Jason’s claims are completely bogus,” Avenatti told the Daily Beast regarding the hearing.

He added that “regardless of what happens on Monday, Jason owes me and my law firm over $10 million” for allegedly stealing clients.

Also in January, the IRS filed documents in the bankruptcy action that alleged the law firm owed nearly $2.4 million to the federal government.

Two months later, a $1.5 million payment was made to the IRS, but by July, the remainder of $880,582 was still owed.

Federal prosecutors asked the court to find Eagan Avenatti in contempt of court or to reinstate the Chapter 11 bankruptcy case.

“In this case, the Debtor and its responsible officer Michael Avenatti made misrepresentations to the detriment of the United States,” federal prosecutors wrote, according to the Daily Beast.

In August, a U.S. bankruptcy judge approved to allow Eagan Avenatti to make monthly payments of $75,000 until the taxes are paid in full.

“To the best of my knowledge, the firm has paid everything,” Avenatti told the Daily Beast.

The IRS is not allowed to comment on taxpayer information.

State tax liens filed in Orange County, California, against Eagan Avenatti also amount to more than $493,000.

Again, Avenatti told the news outlet that the debt was fully paid to the best of his knowledge, but county records don't reflect that the liens have been released.

"[V]ery often, the satisfaction of the releases don’t get filed” in a timely matter, Avenatti said.

What about his debts connected to Tully's coffee chain?

The jet-setting lawyer is also being pursued by creditors over debts connected the now-defunct Seattle-based Tully's coffee chain.

In early 2013, Avenatti partnered with actor Patrick Dempsey to purchase Tully's out of bankruptcy for $9.15 million using an LLC called Global Baristas.

Later that year, Dempsey sued Avenatti over a $2 million loan that Avenatti had taken for the company 10 days after the purchase was closed.

Dempsey had been aware of the loan for which Avenatti had pledged the company's assets as collateral. That case was settled shortly after but Global Baristas troubles continued.

Nearly $2 million in unsettled Washington state tax warrants were found against Global Baristas in King County Superior Court.

And in November 2017, nearly $5 million in federal tax liens was filed against Global Baristas but the Daily Beast found no indication in the recorder's office that the money had been paid.

In a separate case, Marie Fiore, a spokeswoman for the Washington State Department of Labor and Industries, told the news outlet that Global Baristas owes judgments and penalties and interest totaling more than $470,000 dating from April 2015 to June 2018.

One last thing…
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