Michael Cohen's lawyers are trying to use the $10 million settlement on Michael Avenatti's law firm against him

  • Michael Cohen’s lawyers are trying to use a recent $US10-million judgment against Michael Avenatti’s law firm to prevent him from being admitted into Cohen’s case.
  • Avenatti told Business Insider that the attempt by Cohen’s attorney’s was “desperate.”

In an extensive Tuesday court filing, Michael Cohen’s lawyers are trying to use a recent $US10 million judgment against Michael Avenatti’s law firm to prevent him from being admitted into Cohen’s case, which is taking place in the Southern District of New York.

“We believe the attached court documents amplify our opposition to Mr. Avenatti’s motion to be” admitted into the case, Cohen’s lawyers wrote in the Tuesday filing.

The lawyers included the court documents from the case involving Avenatti’s firm, Eagan Avenatti, in US Bankruptcy Court.

Avenatti, the attorney for porn star Stormy Daniels, responded to the filing on Twitter, saying that Cohen, President Donald Trump’s longtime lawyer, “will do anything and everything to distract away from the serious charges he will likely face and the complicity of Mr. Trump.”

“Distract, distract, distract,” he wrote, adding that Cohen should instead be producing bank statements for his company, Essential Consultants LLC, which he used both to facilitate a $US130,000 hush money payment to Daniels just prior to the 2016 presidential election and to accept controversial payments from companies such as AT&T and Novartis.

Responding to a request from Business Insider, Avenatti called the effort by Cohen’s attorneys “desperate.”

“Not even the same firm in the case,” he said. “They can’t even get the law firm right.”

Last week, US Bankruptcy Court Judge Catherine Bauer ordered Eagan Avenatti to pay $US10 million to Jason Frank, a lawyer who used to work at the California firm, after Avenatti failed to pay Frank $US2 million this month.

“At this point, that’s what’s appropriate,” Bauer said in the hearing, per the Los Angeles Times.

Avenatti had personally guaranteed that $US2 million would be paid to Frank to settle the law firm’s bankruptcy, but he and the firm did not pay out that sum. Avenatti is not representing Daniels, whose real name is Stephanie Clifford, through Eagan Avenatti.

Michael AvenattiDrew Angerer/Getty ImagesMichael Avenatti.

During the hearing, the Department of Justice revealed that the firm had defaulted on back taxes it owed to the IRS, The Times reported. An assistant US attorney told Bauer that the government is planning to file a subsequent motion demanding payment of those back taxes.

Avenatti had agreed to pay the IRS $US2.4 million in a January bankruptcy settlement. The US attorney’s office in Los Angeles said Avenatti has paid at least $US1.5 million of that total, but he and the firm missed a payment due last week.

Avenatti has blamed the unpaid taxes on a payroll company he did not identify, The Times wrote.

In an email to The Times, Avenatti claimed the publication “purposely” confused him “with a separate legal entity that has no role in the Daniels case.”

“No judgment against me was issued nor do I owe any taxes,” he wrote.

Cohen’s attorneys have earlier expressed their desire for Avenatti to not be admitted into the case, which he is seeking to do on Daniels’ behalf. Earlier this month, Cohen’s lawyers wrote that Avenatti had created a “carnival atmosphere” and should not be allowed into the New York court. Avenatti, they said, focused on “smearing” Cohen.

They argued that Avenatti may have violated the New York Rules of Professional Conduct with his public actions related to Cohen, such as publishing leaked documents on Cohen’s financial dealings that were later confirmed by media outlets and the institutions that did businesses with the Trump attorney following the 2016 presidential election.

“Mr. Avenatti appears to be primarily focused on smearing Mr. Cohen publicly in his efforts to further his own interest in garnering as much media attention as possible,”Cohen’s attorneys wrote.

Avenatti called those arguments “without merit and frivolous” and said it “speaks volumes that they so desperately” want him excluded from the case.

In a separate filing, the US Attorney’s Office for the Southern District of New York did not oppose Avenatti’s admission into the case, which follows the FBI raids on Cohen’s home, office, and hotel room last month.

Avenatti’s client, Daniels, received that hush-money payment from Cohen in exchange for her silence regarding a 2006 affair she alleged having with Trump. The revelation of that payment ignited a firestorm around Cohen and the president, and Daniels is separately suing Cohen and Trump in California to void the nondisclosure agreement she signed with Cohen.

Cohen, who has not been charged with a crime, is under investigation on suspicion of campaign-finance violations and bank fraud.

At the moment, a special master is overseeing a document review of the items obtained by the government in the raids to determine what falls under attorney-client privilege. The special master, Barbara Jones, provided the court on Tuesday with her first update on that review process.

The next hearing in the case is set for Wednesday morning.

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