United States v. Avenatti
| Decision Date | 15 February 2022 |
| Docket Number | 19-CR-374 (JMF) |
| Parties | UNITED STATES OF AMERICA v. MICHAEL AVENATTI, Defendant. |
| Court | U.S. District Court — Southern District of New York |
On February 4, 2022, after an eight-day trial, a jury found Defendant Michael Avenatti guilty of wire fraud and aggravated identify theft in connection with a scheme to defraud his former client, Stephanie Clifford (also known as Stormy Daniels), of money that she was supposed to receive in connection with a book contract. In advance of and during the trial, Avenatti made at least three motions to compel the Government to acquire or disclose information on servers containing data and files from his former law firm (the “Servers”), servers that had been seized by prosecutors in the United States Attorney's Office for the Central District of California in connection with a different case. During trial, the Court denied Avenatti's motions to compel, providing a brief summary of its reasoning and promising that a more detailed opinion would follow. See Tr. 71, 1035-36.[1] This is that opinion.
As the Court will explain, Avenatti's motions were and are without merit for several reasons. First, at least one, if not all, of the motions were patently untimely, as Avenatti knew or should have known the facts underlying his motions for months, if not years, and yet he waited until the eve of trial (or during trial) to raise them. Second, there was and is no basis to compel the Government to disclose the Servers because Avenatti himself has had them since September 2021 - more than four months before trial - when he obtained a complete forensic copy of the Servers from the prosecutors in California. Third, the Government's disclosure obligations extend only to evidence or information in the possession of the “prosecution team” - those involved in the prosecution at issue - and the Servers are not, and have never been, in the possession of the prosecution team for purposes of this case. And finally, Avenatti has not shown, and almost certainly cannot show, that anything on the Servers was favorable to his defense and would have altered the outcome of the trial. That is because the evidence that he engaged in a scheme to defraud was overwhelming and largely undisputed; his sole “defense” was no valid defense at all. In short Avenatti's motions to compel were and are without merit.
These motions arise from the fact that Avenatti has, for almost three years, been facing three (or arguably four) sets of charges in two different districts: an indictment for extortion and other crimes in 19-CR-373 (PGG) (S.D.N.Y.) (the “Nike Extortion Case”); an indictment for tax offenses and other crimes (since severed into two sets of charges to be tried separately) in 8:19-CR-061 (JVS) (C.D Cal.) (the “California Case”); and the indictment in this case for wire fraud and aggravated identity theft. More specifically, the motions arise primarily from the seizure by prosecutors and agents in the California Case of servers containing data from Eagan Avenatti, LLP Avenatti's former law firm.
Avenatti's motions are premised in part on the relationship between the two U.S.
Attorney's Offices involved in his three cases, so a detailed summary of that relationship is warranted. On March 25, 2019, Avenatti was arrested pursuant to a criminal complaint filed in the Central District of California and a criminal complaint filed in this District in connection with the Nike Extortion Case. See ECF No. 190 (“Def.'s Mot. for Adjournment”), at 2. The United States Attorney's Office in this District (“USAO-SDNY”) learned of the nature and scope of the investigation being conducted by the United States Attorney's Office for the Central District of California (“USAO-CDC”) “only a few days before” Avenatti was arrested “in the context of deconfliction discussions concerning the place and timing of [his] arrest.” ECF No. 287 (“Gov't Opp'n”), at 1. Beyond deconfliction efforts, the interactions between the two offices were limited to “discrete requests for certain materials” and a small number of joint witness interviews discussed in more detail below. Id. at 1-2, 7.
Aside from these interactions, the USAO-SDNY and USAO-CDC investigated and prosecuted their respective cases largely independently. The two offices conducted their investigations with different agency partners - the USAO-SDNY partnering with the Federal Bureau of Investigation's New York Field Office (“FBI-NY”) in this case and the Nike Extortion Case, and the USAO-CDC partnering with the Internal Revenue Service-Criminal Investigations (“IRS-CI”) in the California Case. Id. at 1, 6; No. 19-CR-373, ECF No. 360, at 3. Additionally, the USAO-CDC was not involved in the USAO-SDNY's grand jury presentation for this case (or the Nike Extortion Case). Gov't Opp'n 7. Nor did it accompany the USAO-SDNY to any court proceedings in this case (or the Nike Extortion Case). Id.[2] Likewise, the USAO-CDC played no role in the development of the USAO-SDNY's prosecutorial strategy or trial plans. Id. For instance, when the USAO-CDC moved to remand Avenatti just days before the trial in the Nike Extortion Case, it gave no prior notice to the USAO-SDNY team. Id.
With respect to witness interviews, the USAO-SDNY conducted more than 120 interviews with approximately 45 witnesses over the course of its investigation both for this case and the Nike Extortion Case without “any involvement whatsoever” on the part of the USAO-CDC. Id. The USAO-SDNY and USAO-CDC met jointly, “for mutual convenience, ” with only two witnesses of mutual interest on five total occasions - four times with Avenatti's former assistant, Judy Regnier, [3] and one time with Sean Macias.[4] Id. at 2, 6-7. But the two USAOs met with Regnier and Macias more times alone than they did together. The USAO-SDNY met with Regnier approximately nine times without a representative of the USAO-CDC present, [5] and the USAO-CDC met with Regnier approximately twelve times without a representative of the USAO-SDNY present.[6] Id. Likewise, the USAO-SDNY met with Macias approximately three times without a representative of the USAO-CDC present, [7] and the USAO-CDC met with Macias approximately once without a representative of the USAO-SDNY present.[8] Id. The USAO-SDNY produced to Avenatti documentation of the USAO-CDC's meetings with Regnier and Macias that were not attended by the USAO-SDNY, in addition to documentation of the USAO-SDNY's meetings with both witnesses. Id.[9]
As noted, Avenatti was arrested on March 25, 2019, pursuant to warrants issued in connection with both the Nike Extortion Case and the California Case. See Def.'s Mot. for Adjournment 2. A few weeks later, pursuant to a search warrant obtained in the Central District of California, agents involved in the California Case obtained the Servers - containing approximately twenty terabytes of client and other firm data - from a receiver (the “Receiver”) who had been appointed to manage Eagan Avenatti and made a complete forensic copy of the Servers. See id.; ECF No. 196 (“Gov't Adjournment Ltr.”), at 1-2. In May 2019, the agents in the California Case obtained another search warrant authorizing a search of the Servers. See Def.'s Mot. for Adjournment 4.
Beginning as early as April 2019, Avenatti repeatedly sought access to data on the Servers in the California Case. See id. at 2-4. By contrast, until shortly before trial in this case, Avenatti appears to have raised the issue only once in this District - and not at all in this case. See Gov't Adjournment Ltr. 2. Specifically, in a June 18, 2019 status conference before Judge Gardephe - the District Judge in the Nike Extortion Case - Avenatti's counsel noted that he had “made a request of the government in” the Nike Extortion Case “for a copy and image of the server” and that 19-CR-373, ECF No. 25, at 7. The Assistant United States Attorney (who represents the Government in this case as well) responded: Id. at 9. At that time, Avenatti did not seek relief from Judge Gardephe, and he did not raise the issue at all in this case.
Fast forward to 2020 and 2021. In February 2020, a jury convicted Avenatti of all charges in the Nike Extortion Case; later, Judge Gardephe sentenced him principally to thirty months' imprisonment. See United States v. Avenatti, No. 19-CR-374-1 (JMF), 2021 WL 4120539, at *2 (S.D.N.Y. Sept. 9, 2021). The California case, meanwhile, was severed into two sets of charges, and trial on the first set began in July 2021. See id. A few weeks into trial, Judge Selna - the District Judge in the California Case - granted a mistrial after finding that the Government had failed to produce certain Brady information contained on the Servers. See Def.'s Mot. for Adjournment 5-6. Even then, Avenatti made no mention of the Servers in this case.
On September 16, 2021, more than four months before trial in this case was scheduled to begin, Avenatti was provided (apparently by the USAO-CDC) a complete forensic copy of the Servers. See id. at 7. By contrast, when trial started in this case, the USAO-SDNY did not have a copy of the Servers, although it had issued three subpoenas to the person appointed by the Bankruptcy Court for the Central District of California to serve as the trustee for Eagan Avenatti (the “Bankruptcy Trustee”) seeking to obtain any data on the...
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