Michael Avenatti’s fall from grace continued yesterday when he agreed to relinquish financial control of his law firm after his former partner filed court papers accusing him of hiding millions of dollars from the court overseeing the firm’s bankruptcy – in an act of bankruptcy fraud.

The Los Angeles Times’ Michael Finnegan has more:
 

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 alleges Avenatti hid millions of dollars from creditors when his firm was under federal bankruptcy protection.

Avenatti denies any wrongdoing.

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