Avenatti pleads 5th to questions over alleged artwork scheme

LOS ANGELES -- Faced with new allegations of a scheme involving auctioned art, Michael J. Avenatti repeatedly invoked the Fifth Amendment during a judgment debtor exam Friday that included a spontaneous $11 payment on a $5 million debt.

Avenatti refused to answer most questions from his ex-partner turned creditor, Andrew D. Stolper, about what he owes his first ex-wife, but he insisted it's "in excess of $2 million" and predates his debt to Stolper's client Jason M. Frank.

"It's not a belief, it's a fact," Avenatti said. "You may not like the answer, but that's the answer."

Stolper questioned Avenatti for 90 minutes Friday in a cafeteria conference room at the Stanley Mosk Courthouse as part of a renewed judgment debtor exam related to $5 million Avenatti owes Frank. It was a showdown over $18,000 Avenatti spent at a sheriff's auction to buy back art from his bankrupted law firm, and it continued an exam that began shortly before Avenatti's criminal indictments in March. It also continued the acrimonious relationship between Stolper, Frank and Avenatti, who have been fighting over money from their former partnership at Eagan Avenatti LLP.

"Is something wrong with your memory? ... I'm just curious. You have a very spotty recollection of these facts," Stolper asked.

"Mr. Stolper, you can make whatever comments you want to make about me, and I'm happy to make some about you as well," Avenatti said. "But in the grand scheme of things, my friend, this ain't that important to me. So go ahead."

Now partners at Frank Sims Stolper LLP, Frank and Stolper are trying to collect a $4.85 million judgment lodged against Avenatti in October 2018 for breach of contract related to $10 million he'd agreed to pay Frank as part of Eagan Avenatti's bankruptcy. In addition to the personal debt, which now includes $200,000 in interest, Frank also is owed $10 million by Eagan Avenatti. Jason Frank Law v. Avenatti, BC706555 (L.A. Super. Ct., filed May 16, 2018).

Avenatti has long disputed the debts and vowed not to pay. But he relented on Friday, and it began when Stolper opened the exam by questioning him about snacks he purchased in the courthouse cafeteria that morning. After Avenatti said he'd given his remaining $11 to his attorney Daniel Dubin of Pierce Bainbridge Beck Price & Hecht LLP, Stolper asked how much cash he had on him presently.

"None. Do you want to search me? Would you like to search me, Mr. Stolper, or do you have your henchmen do that?" Avenatti asked.

Frank later told Dubin and his colleague Thomas D. Warren he'd be filing a motion to require them to turnover the $11. Avenatti then gave the cash to Frank and said he'll request a satisfaction of judgment regarding it.

Frank said he'll take whatever he can get.

"If it's $11 I'll take it; $11," Frank said.

Los Angeles County Superior Court Judge Edward B. Moreton authorized the exam after learning Avenatti had been the highest bidder at the August auction for the art, which include a sculpture by Seo Young-Deok and several pieces by Italian artist Antonio Sannino.

Stolper and Frank are legally recognized creditors with liens on Avenatti's assets, and judgment debtor exams are a way for them to determine possible ways to recoup what they're owed.

Stolper's questions indicate he suspects Avenatti could be colluding with his ex-wives to keep cash flowing by laundering assets, including the art he bought back at the August sheriff's auction. His second ex-wife obtained the art through a judge's order in their ongoing divorce, and she was to auction it to recoup some of what he owes her. Stolper and Frank had someone at the auction who confirmed Avenatti was the high bidder and photographed him in a 2014 Mercedes, which was purchased in May. Avenatti has said his first ex-wife owns the vehicle, but Stolper's questions on Friday indicated he believes Avenatti put the car in her name to keep it from creditors.

Stolper and Frank wanted Avenatti to give them the art so they could sell it to recoup debt, but Avenatti said in a declaration he already gave the art to his first ex-wife in exchange for a $20,000 debt reduction. Avenatti's lawyers tried to thwart reopening the debtor exam by invoking the Fifth Amendment, but Moreton said Avenatti's declaration already opened the issue and authorized the exam. The judge said he'd decide objections to the Fifth Amendment on a questionbyquestion basis, but the attorneys never sought his help.

Warren told Stolper the fifth pleas were to be expected for questions that could "in any conceivable way, shape or form have an impact on the criminal indictments."

"Not only I but every single lawyer in this town would instruct their client to plead the Fifth," Warren said.

Stolper, a former assistant U.S. attorney, was undeterred. He asked dozens more questions that Avenatti refused to answer, including about Avenatti's payments to lawyers in his criminal cases, his employment status, whether he had a cellphone on him, the last time he withdrew money from a bank and how he pays his rent, phone bill and Uber drivers.