A law firm of Stormy Daniels’ attorney Michael Avenatti was hit with a $10-million judgment Tuesday in U.S. Bankruptcy Court after he broke his promise to pay $2 million to a former colleague.
Judge Catherine Bauer of U.S. Bankruptcy Court in Santa Ana ordered the Eagan Avenatti law firm to pay the $10 million to Jason Frank, a lawyer who used to work at the Newport Beach firm.
“At this point, that’s what’s appropriate,” Bauer said at a brief hearing.
To settle his law firm’s bankruptcy, Avenatti had personally guaranteed that the $2 million would be paid to Frank last week, but both he and his firm failed to turn over the money
At the hearing, the U.S. Justice Department revealed that Avenatti has also defaulted on just over $440,000 in back taxes, penalties and interest that he had personally promised to pay the Internal Revenue Service under another bankruptcy settlement for his law firm.
Assistant U.S. Atty. Najah Shariff told the judge that the federal government would soon file a motion demanding payment.
Under the Jan. 30 bankruptcy settlement, Avenatti agreed to pay the IRS $2.4 million in back taxes, penalties and interest owed by the firm, court records show.
Nearly $1.3 million of that was for payroll taxes that the firm withheld from employees but did not turn over to the government.
Avenatti has paid $1.5 million of what was due, but he missed the deadline last week for paying the next installment of $440,291, according to the U.S. attorney’s office in Los Angeles.