Judge orders US to let Avenatti search his firm’s data servers

SANTA ANA -- A federal judge told prosecutors Friday to try to locate accounting data that disgraced lawyer Michael J. Avenatti says are missing and would more accurately reflect costs for his clients' cases.

Avenatti is accused of stealing $10 million from five clients' settlement funds. Core to his defense has been the assertion that the clients were unaware of the costs related to their case and didn't know how much he actually owed them.

Avenatti's wire fraud trial has reached its third week, and was originally estimated to conclude by Aug. 20. No trial testimony was heard Friday. The jury will return to U.S. District Judge James V. Selna's courtroom Tuesday.

Plans to finalize jury instructions Friday were scrapped after the judge said he wanted to get to the bottom of Avenatti's allegations about missing accounting data from a system called Tabs. The law firm, Eagan Avenatti LLP, used that system to track the firm's costs, attorney time and billing, Avenatti said while defending himself.

"We're on Day 22 with this jury. We've already delayed it until Tuesday. I want to get this issue resolved by Tuesday so we know where we are," Selna told all counsel. "I want this question answered. Preserving this jury is a major concern to me."

The Tabs data is an integral part of Avenatti's defense that centers on calculations made by the government's financial expert. Avenatti has repeatedly pressed throughout the trial for the government to provide a more precise accounting of his expenses.

"Close is not good enough," he said in his opening statement.

Assistant U.S. Attorneys Brett A. Sagel and Alexander C.K. Wyman said they have already produced everything in their possession and the Tabs data has no impact on his criminal charges. Some legal experts not involved in the trial have said a more precise accounting of costs would not materially change the outcome.

On Friday, Selna asked Assistant U.S. Attorney Patrick Fitzgerald, who led the team that seized Eagan Avenatti's servers, for an explanation of why Tabs data appeared in documents kept by the team but was not provided to the defendant in discovery. Fitzgerald said he searched the files Thursday and found records similar to two exhibits that were identified as interim reports based on the Tabs data. But the team couldn't find anything else when he ran "Tabs" as a stand alone search term in the database, Fitzgerald said.

The judge directed the government to give Avenatti a chance to search through the servers, with agents present, along with any of Avenatti's own experts.

"I'd like a search done to see if this database is there," Selna concluded. "And I accept for present purposes that the government doesn't have the Tabs program or Tabs database," but "that doesn't answer my bottom line question: Was it part of the documents seized?"

Fitzgerald responded that there was no guarantee anything was in the data, to which Selna interjected: "Nor can you guarantee that there's not something in there."

"I think further inquiry is warranted," Selna said, at which point Avenatti stated, "Your Honor, I agree," adding that he was "highly confident" there was something there.

Avenatti faces 10 counts of federal wire fraud. USA v. Avenatti, 19-CR-61 (C.D. Cal., filed April 10, 2019).