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Michael Avenatti granted mistrial in embezzlement case in California

"Today is a great day for the rule of law in the United States of America," Avenatti said.
Attorney Michael Avenatti arrives at the United States Courthouse in New York on Oct. 8, 2019.
Michael Avenatti arrives at the U.S. Courthouse in New York on Oct. 8, 2019.Brendan McDermid / Reuters file

A federal judge in California declared a mistrial Tuesday in lawyer Michael Avenatti's embezzlement case, in which he was accused of stealing nearly $10 million in settlement funds from his clients.

U.S. District Judge James Selna ruled in Orange County that federal prosecutors failed to disclose data in connection with a law firm server that included a database that tracked expenses and costs associated with cases, officials told NBC News.

After Avenatti raised the issue last week, Selna agreed that the data should have been turned over and declared the mistrial. Selna said he thinks prosecutors' failure to turn over the information was a mistake, and he found no malice or misconduct.

Attorneys for Avenatti did not immediately comment. Avenatti celebrated the news outside the conference room.

"This has been an incredibly difficult journey for my family, for my children, for my friends and lastly, for me. I am extremely thankful to Mr. Steward, Ms. Cummings Cefali and our entire team for standing by me and advocating tirelessly on my behalf," he told reporters, referring to members of his legal team.

"Today is a great day for the rule of law in the United States of America," he said.

A hearing is scheduled for next month.

Prosecutors allege that from 2015 to 2019, Avenatti stole nearly $10 million in settlement funds from at least five of his clients — Geoffrey Johnson, Alexis Gardner, Gregory Barela, Michelle Phan and Long Tran.

In addition to those allegations, Avenatti still faces charges of bankruptcy, bank and tax fraud in California. He is expected to be tried on those counts later this year after Selna split a 36-count indictment into two trials.

He is also accused in New York of defrauding Stormy Daniels, a former adult film actress who said she had an extramarital affair with Donald Trump in 2006. An indictment in that case alleges that Daniels was supposed to get two payments of $148,750 but that Avenatti instead had the money sent to funds he controlled. Prosecutors accused him of spending the money lavishly, including making monthly payments on a Ferrari.

Avenatti has pleaded not guilty.

In addition, Avenatti was sentenced in July to 2½ years in prison in an extortion plot against Nike. Federal investigators said he was representing a youth basketball coach in Los Angeles who claimed to have information that Nike employees made illicit payments to top high school athletes.

Avenatti threatened to ruin Nike's reputation and its stock price unless it agreed to pay him and his client millions of dollars, prosecutors said.