Avenatti to give up financial control of law firm after he's accused of hiding millions

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Michael Avenatti agreed Wednesday to relinquish financial control of his longtime law firm hours after a former partner filed papers accusing him of hiding millions of dollars from the court that oversaw its bankruptcy.

The celebrity lawyer and his firm, Eagan Avenatti, consented to the appointment of a receiver to take possession of its bank accounts, case files, computers and other assets.

Avenatti also promised to cooperate with efforts by Jason Frank, a former lawyer at Eagan Avenatti, to collect on his $10-million judgment against the firm. Avenatti will continue to work as the lead lawyer in his law practice, which he now calls Avenatti & Associates.

The agreement came after Frank asked a federal court Tuesday night to appoint a receiver to seize Eagan Avenatti and stop the firm from draining its assets. U.S. Magistrate Judge Karen E. Scott in Orange County signed an order late Wednesday naming Newport Beach accountant Brian Weiss as the receiver.

Frank’s court papers alleged that Avenatti used nefarious bank maneuvers when his firm was under federal bankruptcy protection to hide millions of dollars from its creditors.