During a press conference Thursday, officials announced a 36-count indictment reportedly filed by the Department of Justice and the Internal Revenue Service.
The attorney known for representing porn actress Stormy Daniels in legal battles against President Donald Trump is accused of fraudulently obtaining bank loans and pocketing funds belonging to a client.
Avenatti also allegedly defrauded a bank in MS, submitting false tax returns to get three loans for over $4 million in 2014 for his law firm and a company he owns, Global Baristas US LLC.
Avenatti became one of Trump's leading adversaries, attacking him on cable news programs and Twitter. Avenatti even dangled the prospect of entering politics himself, even as a 2020 presidential contender, before abandoning the idea.
On the day of his arrest, federal agents executed search warrants at Avenatti's Century City apartment, his Echo Park law office and the Yorba Linda home of Judy Regnier, the office manager at Eagan Avenatti, according to the US attorney's office.
The most glaring example of deception and fraud was described in the indictment as scheming Avenatti allegedly did to deprive clients of money they were due from court settlements, legal negotiations or sales of stock and actions he took to cover his tracks.
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The indictment accuses Avenatti of lying during his June 2017 testimony in the bankruptcy case.
Johnson no longer stood by that statement, his lawyer said. In a press conference, Hanna confirmed that the jet was seized by federal authorities on Wednesday.
Until last month, Avenatti had only provided $124,000 over 69 payments to Johnson, the indictment said.
After Avenatti negotiated settlements for the clients that required payment to go to them, he would lie to the clients about the terms of the settlements, instead depositing the funds to attorney trust accounts he controlled, the indictment says.
Avenatti also allegedly raided another client's settlement in 2017 to pay $2.5 million for his portion of a jet, prosecutors said.
In November, when the Social Security Administration requested information to determine if Johnson should continue to receive disability benefits, Avenatti said he would respond, but didn't because he knew it could lead to the discovery of his embezzlement, the indictment said.
On Thursday, asked about Avenatti's claim that the indictment was the result of a conspiracy by prominent figures Avenatti has antagonized, Hanna dismissed that allegation: "Nothing can be farther from the truth".
"Mr. Johnson is the victim of an appalling fraud perpetrated by the one person who owed him loyalty and honesty most of all: his own lawyer", said attorney Josh Robbins.