A panel of appellate judges on Wednesday overturned the prison sentence of Michael Avenatti, the suspended attorney who recently rose to fame representing adult film actress Stormy Daniels in her trial against former President Donald Trump.
The three-judge panel of the Ninth Circuit Court of Appeals sent the case back to U.S. District Judge James V. Selna for reconsideration of Avenatti’s sentence. It is believed his 14-year prison sentence could be halved.
“I am grateful that a unanimous three-judge panel of the 9th Circuit today rejected my draconian prison sentence,” Avenatti said in a statement. “The punishment was always deeply unjust and contrary to my most fundamental constitutional rights, but the government imposed the sentence anyway solely because of who I am. We all deserve a fair trial.”
In June 2022, Avenatti entered an open plea to tax and wire fraud, meaning there was no guarantee of the size of his sentence. Selna’s original conviction was handed down after Avenatti was sentenced to five years in prison in New York for extortion against Nike and theft from Daniels.
Selna ordered that the sentences be consecutive.
On Wednesday, appellate judges ruled that Selna erred when he failed to take into account the value of the legal services Avenatti provided to his victims, and that he improperly increased the sentence on the grounds of obstruction of justice under perjury.
They also sided with Avenatti on Selna’s error in increasing the sentence based on his calculation of the $12.3 million in losses from the fraud.
“Avenatti claims that (Selna) should have taken into account the value of his legal services and costs, as well as the value of certain payments he made to victims,” the judges ruled. “We agree.”
They say Selna calculated the loss based on the full settlements Avenatti negotiated for his clients because the attorney “forfeited” his fees due to “fraudulent conduct,” the judges wrote.
“Selna made a mistake. Forfeiture is a sanction disproportionate to the monetary damages caused by an attorney’s misconduct,” they wrote. “It has no place in calculating ‘actual loss’ for the purpose of increasing a criminal defendant’s sentence. Furthermore, Avenatti’s clients were never entitled to the full settlement value – they hired Avenatti on a contingency fee basis and contractually agreed to pay him a portion of the settlement as a fee and reimburse him for his costs.”
The judges ordered Selna to assess what fees and expenses Avenatti should receive credit for, and they also found that he abused his discretion by refusing to credit Avenatti for payments he made to his clients after receiving money from their settlements darkened.
In addition, Selna was ordered to determine the value of a business he helped acquire a client, to be attributed to his restitution to that victim.
The appeal judges also partially agreed with Avenatti on whether his sentence should run consecutively to the term imposed in the Nike case.
However, they sided with Selna regarding his use of discretion in determining that the misconduct in the Nike case was different from what was done in the Southern California case.
Federal prosecutors in Santa Ana originally sought a 17-and-a-half-year prison sentence for Avenatti, who argued for a six-year sentence to run concurrently with the New York cases.
