Avenatti didn’t pay settlement money, client tells bar judge

Though it was Michael J. Avenatti's State Bar hearing, it was his former client's credibility that was front and center during deliberations Tuesday.

Picking up where he left off following a continued Dec. 18 hearing, Gregory A. Barela once again took the stand to testify about allegations of fraud he's made against Avenatti, who was his counsel in a case ending in a confidential settlement in January 2018.

The money won from the settlement was paid to a trust account directed to Avenatti, who was to forward it to Barela. Afterward, he testified Tuesday, he suddenly found Avenatti and his fellow attorneys at the now-defunct Eagen & Avenatti LLP hard to reach. As they shared office space, Barela said, the attorneys would go out of their way to avoid him, and in at least one instance, an attorney fled from a shared kitchen area when it became apparent Barela was coming over to talk to him.

Avenatti was particularly evasive on the subject of payment, Barela said, offering little more than various assurances.

"He said 'The money is coming. Take your family on a vacation,'" Barela testified.

In a criminal complaint filed in January 2019, Barela claimed Avenatti told him the party responsible for paying off the settlement hadn't made the payments as required. Pushed to the point of financial exhaustion after repeatedly rebuffed payment requests, Barela said he was offered a loan by Avenatti at 10%t interest.

The State Bar trial counsel argued the delayed payments and misdirection were part of an effective pyramid scheme conducted by Avenatti wherein he'd use money from more recent awards and settlements to pay off previously owed clients.

The cross-examination, which had been continued from the prior hearing, took up the lion's share of the day.

Thomas D. Warren of Pierce Bainbridge Beck Price & Hecht LLP questioned Barela about his own criminal history, prompting Barela to acknowledge he'd been recently found criminally liable on two counts of construction fraud and ordered to pay restitution.

Warren also prodded Barela about the nature of his interactions with Eagen & Avenatti attorneys following the settlement, drawing an objection from the bar's chief trial counsel, Eli D. Morgenstern.

While initially offering some leeway, State Bar Court Judge Yvette D. Roland eventually sided with Morgenstern, reminding Warren the matter was about Avenatti's conduct, not Barela's.

At that point, Avenatti beckoned his attorneys for a huddle. When he returned to the podium, Warren claimed the line of questioning was necessary to show how Barela's account would conflict with later testimony provided by Eagen & Avenatti attorneys Ahmed Ibrahim and John Arden, thus proving the testimony as unreliable.

The comment drew a scoff from Morgenstern.

"Have these parties even been contacted for testimony? I suspect they haven't," Morgenstern said.

Avenatti was slated as the next witness, Warren said, though the prospect was diminished by a significant break called to allow Avenatti to take a status conference call related to his criminal case in New York federal court. The hearing was again continued, with a follow-up anticipated later this month.