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Avenatti's law firm hit with $10 million judgment

Stormy Daniels' lawyer said the case has nothing to do with his representation of the adult film star or him personally.
Image: Stormy Daniels' attorney Michael Avenatti leaves federal court in New York
Stormy Daniels' attorney Michael Avenatti leaves federal court in New York on April 26, 2018.Lucas Jackson / Reuters

A federal judge on Tuesday directed the firm associated with Michael Avenatti, the lawyer who represents porn star Stormy Daniels, to pay a $10 million judgment to a former legal colleague who claimed he was owed millions, according to news reports.

The firm was ordered to pay the sum by Judge Catherine Bauer, a federal bankruptcy judge in Santa Ana, California, after the Eagan Avenatti firm failed to pay $4.85 million to Jason Frank, who used to work for there, according to The Los Angeles Times.

Frank claims that the firm cheated him out of millions of dollars in pay, The Times reported.

The settlement was decided in January and stated the firm would have to pay the amount in two installments, according to court records. However, Avenatti's firm failed to pay the initial $2 million to Frank after promising to do so last week, according to The Times.

Under the settlement agreement, if a payment was missed, the firm would accept a court's judgment requiring it to pay Frank $10 million.

"At this point, that's what's appropriate," Bauer said at the hearing Tuesday, according to The Times

Avenatti, who is listed as the firm's managing partner in court documents, is representing Daniels in her bid to invalidate her agreement not to discuss her alleged affair in 2006 with President Donald Trump. The president and his aides have denied any affair.

In a statement to NBC News, Avenatti said the ruling is unrelated to his work with Daniels.

"This has nothing to do with the (Stormy Daniels) case or me personally. It is an entirely different law firm and is irrelevant," he said.

The Times also reported a Justice Department lawyer said in court Tuesday that Avenatti had defaulted on more than $440,000 in back taxes, penalties and interest he promised to pay the IRS under a different bankruptcy settlement for the law firm.

Meanwhile, Avenatti told a federal judge Tuesday that he is concerned that the president's personal lawyer Michael Cohen, who mediated the hush agreement, or members of Cohen’s team have started to leak select audio recordings seized by the FBI during their searches of Cohen's office and home related to Daniels herself.

"We think that these select leaks are meant to paint a false narrative relating to Mr. Cohen and his business dealings at the same time he is not disclosing numerous other recordings of him speaking with individuals such as Mr. Trump," he said.

He requested Judge Kimba Wood ask Cohen's attorneys about the leaks and whether Cohen's team is the source of the leak.

Avenatti did not detail how he is aware of these alleged leaks, how he is aware of the content of the audio recordings, or why he believes the recordings were part of the materials seized by the FBI.

Cohen's attorneys are due in court Thursday for a scheduled hearing involving the search warrant served on Cohen.