Michael Avenatti is indicted and out pops Peoples Bank

A reader did some high quality sleuthing and the result is this post, which seeks to add a healthy dose of color to the reporting on this mattter from WLOX and Anita Lee over at the Sun Herald, which then spread regionally. Let’s start connecting some dots.

First a caveat and disclaimer. Federal prosecutors love using initials in criminal filings to protect the innocent (and sometimes the not so innocent). There is nothing in the Avenatti indictment to suggest those that knew him here on the coast have done anything wrong.

With that set up Slabbed has had some success in these circumstances  deciphering initials via community sourcing. Let’s visit with Avenatti’s indictment section devoted to The Peoples Bank to get the latest batch of initials:

Avenatti Complaint by on Scribd

Footnote 41 on page 124 (PDF page 159) says an M. C. introduced Avenatti to C.S., who everyone understands is The People Bank CEO Chevis Sweatman. M. C. was fairly easy to unravel and involves an interesting case Avenatti had suing a Seattle regional CPA firm Moss Adams and a ponzi scheme gone bad. One look at the case raises a whole bunch of red flags because sanctions were levied against Trustee Mark Calvert. The Seattle Times has the skinny:

The region’s largest accounting firm, Moss Adams, is locked in a legal fight over its role in the region’s largest Ponzi scheme — and the battle took an odd new twist this month in court.

The lawyer suing Moss Adams told Bankruptcy Court Judge Karen Overstreet that the CPA firm’s executives had long withheld “smoking-gun emails,” showing they knew one of its employees had a romantic relationship with Meridian founder Frederick Darren Berg.

That sounds bad folks, full of proverbial sound and fury. The truth was more boring by contrast:

The boyfriend at the center of the allegations, however, says the idea that he had any impact on Moss Adams’ audits of Meridian is “comical.”

The onetime Moss Adams employee, Dan Matthias, says his involvement with Berg began only in mid-2010, after he’d already left Moss Adams.

And then we have this from the companion case in Washington State Court:

The shoe was on the other foot in King County Superior Court, where Calvert’s suit against Moss Adams initially was filed. Moss Adams won an $80,000 sanction against Calvert when Superior Court Judge Catherine Shaffer accepted the CPA firm’s argument that the trustee didn’t follow her order to detail which investors put money into each of Meridian’s funds, and how they allegedly relied on Moss Adams’s audits.

That particular Avenetti lawsuit did not turn out so well as the bankruptcy court action was dismissed. Trustee Calvert was awarded attorney fees however because Bankruptcy Court judges do not allows games to played in discovery and that evidently happened.

Calvert is no stranger to Mississippi or its Courts as he currently has litigation in Federal Court before Judge Guriola. Kingfish at Jackson Jambalaya covered the suit last year. Calvert had better luck recently here winning a Motion for Summary Judgment and a Motion for Judgment on the Pleadings against the defendants last month. Calvert in fact has a long history here on the coast. He was involved with Foxwoods Casino venture on the coast for instance. There was a Mark Calvert who was CFO of Treasure Bay at some point in the mid 90s, likely the same guy but that was a factoid we could not 100% confirm.

In 2016 Avenatti became involved with the Kemper plant litigation at some point, representing clients along with Joe Sam Owen

The lawsuit (Cause No. A2401-16-45) was filed on March 2 in Harrison County Circuit Court Mississippi, First Judicial District, by three plaintiffs —Biloxi Freezing & Processing, a seafood processing firm; Gulfside Casino Partnership, doing business as Island View Casino; and Gulfport resident John Carolton Dean — alleging the investor-owned utility, a subsidiary of Atlanta-based Southern Company, has avoided accountability for “fraud and mismanagement “while depriving the public of profits.

In the current suit, the plaintiffs are not seeking to change the utility’s rates. According to Watchdog.org – a nonprofit organization that advocates for the electorate at the state government level – the plaintiffs, represented by local attorney Joe Sam Owen and California attorney Michael Avenatti, are seeking economic losses, punitive damages, attorney fees and court costs.

That case or another one that was related to it evidently settled per the indictment but Avenatti did not use his share of the loot to pay off his last loan at The Peoples Bank until months after the fact.

Let’s circle back because there is one more set of initials we have to unravel. A timeline of the Avenatti loans helps this process:

• January 16, 2014: $850,000 loan to Avenatti, loan matures in March.
• Between January 16, 2014 and March 14, 2014:  Peoples assigns loan to a J.R.C.
• March 14, 2014 : Peoples makes a $2.75 million loan to Avenatti including disbursing $884,165.63 to J.R.C. to repay the previous note which was assigned to him.
• May 23, 2014 $2,787,430 paid to Peoples Bank to satisfy the second note.

Interest /Fees totaling $34,165.63 for a 60 day loan is not a bad deal for those that can get it. That first loan and it’s terms would be something I’d love to know. The effective rate of interest works out to something over 24% based on the raw numbers.  As for J.R.C. speculation centers on Joel “Rick” Carter of the Island View Casino due to Calvert’s previous ties to the coast gaming community and the Island View’s involvement in the Kemper Plant suit.

The takedown of Michael Avanetti has begun. Time to pop some popcorn and follow the show.