Michael Avenatti is known as Stormy Daniels’ attorney and an adversary of Donald Trump, but his coffee-chain business has raised concerns.
The agency that regulates lawyer conduct in California is investigating high-profile attorney Michael Avenatti based on allegations of dubious business dealings while he ran the Seattle-based Tully’s coffee chain, according to a letter sent to the Bellevue lawyer who formally complained about Avenatti.
The April 18 letter from the State Bar of California to attorney David Nold says his complaint against Avenatti “has been reviewed and forwarded to the Enforcement Unit for further investigation and prosecution, if warranted.”
Avenatti’s fame has burgeoned in recent months. As the lawyer representing Stormy Daniels, he has become a fixture on cable TV shows and a chief adversary of President Donald Trump.
An investigator and a senior trial counsel have been assigned to the Avenatti complaint in California, the letter said.
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The assigned bar officials identified in the document did not return phone messages this week. A spokesman for the California bar, which is responsible for licensing and disciplining attorneys in the state, said Friday the agency won’t comment about ongoing investigations or even confirm whether a complaint is being investigated.
Avenatti, whose law practice is based in Newport Beach, California, has denied the allegations raised by Nold, saying in emails to The Seattle Times on Friday that the bar hadn’t notified him of any complaint or investigation into his conduct.
“The letter does not mean that the State Bar finds any merit to David Nold’s baseless claims,” Avenatti added in an email. “I have received nothing from the State Bar and I am confident that I will be fully exonerated.”
Avenatti also called Nold an “unethical lawyer,” citing a judge’s contempt order issued against Nold this month for providing reporters with a transcript of a deposition Avenatti gave last year that the court had restricted from disclosure.
Nold, who represents Bellevue Square, Ellenos yogurt and other clients who have recently sued Global Baristas — Avenatti’s firm that owned and operated the Tully’s chain — declined to comment about the bar investigation Friday.
“Avenatti can say whatever he wants,” Nold added. “We are the attorneys who’ve collected $1.18 million in judgments against him.”
Nold’s law firm started butting heads with Avenatti in 2015 as part of Bellevue Square’s breach-of-lease suit against Global Baristas — an acrimonious landlord-tenant dispute that led to court sanctions, fines and judgments against Avenatti’s coffee firm, in part for failing to comply with court orders to produce evidence. That case is now under appeal.
Nold submitted his bar complaint against Avenatti on March 26, contending that while Avenatti ran Global Baristas, he fleeced millions in state and federal tax withholdings from the paychecks of Tully’s employees.
Nold’s complaint also alleges Avenatti fraudulently transferred $100,000 from the Tully’s operation last year to retain lawyers for his law firm’s unrelated bankruptcy case.
“Michael Avenatti’s actions in connection with Global Baristas US, LLC have caused significant damage to the State of Washington, the federal government and numerous private entities,” Nold’s complaint states. “And they implicate his fitness to practice law.”
In recent months, Global Baristas has shuttered or vacated all of its Tully’s stores and has been the target of more than 50 state and federal legal complaints. Various landlords, vendors and other creditors have won default judgments for unpaid rents, goods or services against the coffee company for hundreds of thousands of dollars, records show.
Avenatti reiterated in emails Friday that he no longer owns Global Baristas and doesn’t know whether the new owners have paid the overdue taxes. He previously has declined to identify to The Seattle Times the company’s new owners.
But in a deposition last July, Avenatti testified that his law firm wholly owned Doppio Inc., a Delaware corporation that he said controlled 80 percent of Tully’s ownership firm, Global Baristas US.
State agencies and court filings indicate Global Baristas collectively still owes more than $6 million in state and federal taxes dating back several years, when Avenatti has said he was the principal in charge of the company.
When pressed about the unpaid taxes, Avenatti responded Friday: “They are not my personal responsibility and never have been. Period.”
The bar investigation and various court matters tied to Tully’s operations aren’t the only legal troubles facing Avenatti. His former law partner, Jason Frank, sued Avenatti in California state court this week for failing to make a $2 million payment by May 15 — the first installment due under a $4.85 million settlement the parties agreed to last year. Frank previously claimed Avenatti had stiffed him out of millions of dollars in profits and clients’ fees at Avenatti’s law firm.
Last month, before The Seattle Times published a story detailing Nold’s bar complaint and the assorted lawsuits against Tully’s, Avenatti threatened to sue the newspaper if it published the story.
“Please be advised that in the event you or the Seattle Times makes any reference to any alleged criminal conduct, charges of criminal conduct or any other such investigation (including a bar investigation), I will bring suit against you and the Seattle Times for defamation (among other things),” he said in an email. “I have never been arrested or investigated criminally in my lifetime. And I have spotless record with the State Bar. Nor is there ANY evidence of ANY investigation.”
Avenatti prefaced his email with “Off the record,” but he did not ask for, nor had he received, agreement from The Times to keep his comments confidential before sending them.
The California state bar’s letter to Nold last month indicates that, in fact, a bar investigation is underway, meaning Nold’s allegations against Avenatti have at least passed a threshold review to determine whether they could result in administrative charges and merit further investigation.
In general, such bar investigations typically take about six months to complete, according to the agency.
Last year, California’s state bar received 15,175 new complaints against lawyers. Disciplinary charges or stipulations were filed in 491 cases, resulting in 129 lawyers being disbarred and another 134 being suspended.
Bar complaints typically only become public in California when formal administrative charges are filed against an attorney, but parties to a complaint or an investigation are not prohibited from publicly sharing records about an investigation.