Judge reduces Avenatti's sentence but condemns 'abandonment of fairness'

Disbarred attorney Michael J. Avenatti received a reduced prison sentence on Thursday of just under eight years for defrauding California clients and tax evasion. Avenatti was initially sentenced to 14 years in 2022, but that punishment was vacated by the 9th U.S. Circuit Court of Appeals.

U.S. District Judge James V. Selna initially imposed a 135-month sentence, or just over 11 years, during Thursday's resentencing in Santa Ana. Selna gave Avenatti credit for 40 months of time served in a separate New York conviction related to stolen profits from his former client Stormy Daniels.

Avenatti still has eight months to serve in that case, which Selna ruled will run concurrently with his 95-month California sentence, calculated after deducting time served.

"We believe he should've received a higher amount, but getting the equivalent of 11 years on a fraud matter is a significant sentence," Assistant U.S. Attorney Brett A. Sagel told reporters outside of the courtroom after the hearing.

"Obviously, we think it should have been higher, but I'm pretty sure he doesn't see this as a victory."

Avenatti's counsel, led by Federal Public Defender Margaret A. Farrand, declined to comment.

The government, led by Sagel in this case, urged Selna to resentence Avenatti to just over 13 years in prison, after arguing his purported rehabilitation behind bars was just a front.

"He is the same unrepentant person who will say or do anything - whether truthful or not - if he thinks it will benefit him ... and he will testify and not take responsibility for his own actions and conduct," Sagel told Selna during the hearing. "This case is so much more than him embezzling from four clients."

To support his argument, Sagel referenced a pre-sentencing letter Avenatti wrote that the prosecutor argued conflicted with prior post-conviction statements about righting the victims he stole from. For example, Sagel claimed Avenatti did not explicitly acknowledge the client victims or the fraud he committed against them, but instead talked about how successful his law firm was.

"If that's true, that makes what he did even more egregious," Sagel added. "His firm was firing on all cylinders and he's stealing from clients to live his lifestyle?"

However, Avenatti's counsel argued that while their client should still face punishment for his crimes, Selna had the rare opportunity to send a message to other inmates that a true change of character during their time spent behind bars would not go unnoticed and could be a significant factor in their cases in the future.

The defense attorneys pushed Selna to significantly lower his prison sentence to no more than an additional 39 months because of his record as a "model inmate" and clean prison record, as stated in his sentencing memorandum filed earlier this year. This record was also supported by a Bureau of Prisons (BOP) report, his counsel added, that acknowledged his leadership roles in the prison as a suicide watch companion and GED tutor.

"It's not true that nothing has changed since 2022," Farrand told Selna. "What he has done in the BOP shows that this is the part of himself he wants to carry on. He's not going to be a lawyer in the future, but what he has the ability to do is use his skills to help others the best way he can. ... He had no idea that he would ever get to address your honor."

After pleading guilty to multiple counts related to wire fraud and a tax violation in 2022, Selna originally sentenced the former Newport Beach attorney to 168 months, or 14 years, in prison. He admitted to stealing nearly $8 million in settlement funds intended for four of his former clients and failing to pay more than $3 million in payroll taxes related to a coffee chain he owned. U.S. v. Avenatti, 8:19-cr-00061 (C.D. Cal., filed April. 10, 2019).

The 9th Circuit panel remanded the case back to Selna last year after finding the judge improperly separated the Daniels case in his original sentencing analysis.

The panel also found Selna improperly enhanced the punishment due to a calculated loss amount of over $12 million due to the fraud. The appellate panel determined that number was too high because, for example, it did not take into account Avenatti's legal services.

During Thursday's resentencing, Selna ordered Avenatti to pay $5.9 million in restitution to the victims and an additional $3 million to the IRS.

According to a tentative ruling, Selna was originally inclined to sentence Avenatti to 121 months. However, after hearing the attorneys' arguments - including a last-minute impact statement from one of the client victims who referred to Avenatti as a "legal predator" who abused her - he added an additional 14 months to his ruling.

"Frankly, the evil he inflicted on those people is not lost on me," Selna told the parties. "His actions in this case show an abandonment of the most basic principles of fairness."

Avenatti, who is incarcerated at Terminal Island, a federal prison near the Port of Long Beach, is also serving a separate 30-month sentence for attempting to extort over $25 million from Nike. However, that case, as the appellate panel affirmed, was not relevant to the California misconduct and did not factor into Selna's resentencing analysis.