In 2017, a Florida man named Gerald Tobin alleged Avenatti failed to pay him $28,700 for private investigatory work. As a result, Avenatti's firm was abruptly forced into bankruptcy. In various news reports, including work done by CNN, Tobin was found to be an ex-con with four decades of convictions and jail time and not a licensed investigator. Tobin's claim forced Avenatti into bankruptcy which caused Avenatti to cancel a deposition in an unrelated lawsuit days later, raising the question of collusion between Avenatti and Tobin. The issue was resolved when the pair entered into a Non-Disclosure Agreement, and Avenatti paid Tobin the $28,700.
In 2018, Avenatti's law firm was subjected to a $10 million judgment in U.S. bankruptcy court. Avenatti has also defaulted on a $440,000 judgment in back taxes, penalties, and interest that he was personally obligated to pay under another bankruptcy settlement. The U.S. Attorney's office asserted in court that a motion seeking payment would soon be filed against Avenatti. Eagan Avenatti had been in Chapter 11 bankruptcy proceedings and, in December 2017, had agreed to pay $4.8 million in unpaid fees to a former partner, $2 million in back taxes, and $1 million to other creditors. In June 2018, the former partner filed a motion in U.S. bankruptcy court asking for a lien on any and all legal fees Avenatti's firm might collect, up to $10 million, from clients in 54 cases including his representation of Stormy Daniels.
Avenatti’s past is littered with lawsuits, jilted business partners and bankruptcy filings. People who have worked with the lawyer described him to TheDCNF as ruthless, greedy and unbothered by ethical questions.
Dillanos Coffee CEO David Morris claimed last Tuesday that Avenatti never paid him for over $160,000 worth of coffee that Dillanos supplied to Avenatti’s company. “So @StormyDaniels hot shot lawyer Michael owes my small company @Dillanos $160,179 for coffee,” Morris wrote on Twitter. “He talks a big talk about integrity. We trusted him.”
“Michael Avenatti owned Tully’s coffee. They were a large chain of coffee shops. We are a wholesale roaster. We supplied his coffee. The $160,000 represented only a few weeks worth of beans. We cut him off when he wouldn’t pay, he had to close,” Morris explained in a subsequent tweet.
The Daily Caller News Foundation on Thursday interviewed Avenatti over the phone on several topics including Morris’s accusations, which Avenatti denied. “I don’t owe Dillanos coffee anything. I personally don’t owe them anything,” he said. “So that’s nonsense.”
But just three hours later, Morris announced that he had deleted his original tweet after working out “an arrangement” with Avenatti.