Former presidential candidate and attorney Michael Avenatti is headed for federal custody and has been denied bail.
What are the details?
Prosecutors revealed Wednesday that Avenatti's Tuesday arrest stemmed from allegations that he had been engaging in money laundering while out on bail.
Manhattan federal prosecutor Matthew Podolsky told Judge Paul Gardephe that the allegations are lurid, especially considering the fact that Avenatti has been on pre-trial release since May.
"We understand in substance that the allegations have to do with fraud, money structuring, money laundering, and other crimes by [Avenatti] while he's been on pre-trial release," he said during an emergency conference following Avenatti's Tuesday arrest.
Avenatti is also facing charges in California for embezzlement.
According to the New York Post, unsealed documents claim that Avenatti "illegally moved a nearly $1 million payment to his law firm to another account ... in an attempt to hide the funds from creditors he owes upwards of $10 million."
Avenatti also reportedly attempted to coerce his ex-wife into using $50,000 of his money in order to purchase a Mercedes-Benz vehicle in her own name. The vehicle, according to records, is a vehicle mainly used by him and his driver.
The Post reported that Avenatti was making significant bank withdrawals and redepositing it in order to remain under the $10,000 threshold that would require financial institutions to flag such transactions to the federal government under banking regulations.
Defense Attorney Scott Srebnick told the court that the new accusations are a bombshell in the Avenatti-Nike extortion trial, which was set for Tuesday. You can read more about Avenatti's entanglements with Nike — which include allegations that Avenatti attempted to extort more than $20 million from the sportswear giant — here.
Srebnick pointed out that the new allegations threw a wrench into defense plans since it would call into question Avenatti's financial situation.
"The arrest of Mr. Avenatti has essentially thrown this trial into chaos," Judge Gardephe said. "Mr. Avenatti has been out on bail in the California case for a long time. There are certainly questions in my mind about why it was necessary to raise questions about bail violations so close to trial."
The embattled attorney also faces a May trial in California for allegations that he defrauded clients of millions of dollars, committed bank fraud, and circumvented the IRS' authority.
Avenatti has pleaded not guilty to those charges.