Insurer Starr sues to rescind coverage of lawyer Avenatti's plane

(Reuters) — An insurance unit of Starr International Co. Inc. on Friday sued Michael Avenatti, the combative lawyer known for his battles with U.S. President Donald Trump, to rescind coverage of an airplane that Mr. Avenatti used, according to a court document.

Starr Indemnity & Liability Co. said that policies the company wrote for the plane should be rescinded if allegations in a U.S. indictment against Mr. Avenatti are substantiated, according to a complaint filed in the U.S. District Court in Los Angeles.

Mr. Avenatti, 48, was indicted on April 11 on charges of defrauding clients, including allegations that he used $2.5 million of a client's $2.75 million settlement payment to buy a portion of the $4.4 million Honda HA-420 jet, while falsely telling the client that the settlement would be paid out over an eight-year period.

Mr. Avenatti was also charged with bankruptcy fraud for making false statements in a 2017 bankruptcy proceeding involving his law firm, Eagan Avenatti.

A lawyer for Mr. Avenatti declined to comment on Friday. In April, Mr. Avenatti pleaded not guilty to federal charges that he allegedly stole millions of dollars from clients and failed to pay taxes.

"Starr Aviation would not have issued the policies if it had known the aircraft had been purchased with embezzled funds or the funds used to purchase the policies had been acquired through a bankruptcy fraud," the company said.

Mr. Avenatti drew national attention through his representation of adult film star Stormy Daniels, whose real name is Stephanie Clifford, in lawsuits against President Trump and the president’s former lawyer Michael Cohen, and briefly flirted with a 2020 White House run.

The April indictment came about three weeks after Mr. Avenatti was arrested in New York on separate criminal complaints filed by federal prosecutors in New York and California, to which he also pleaded not guilty.

Federal authorities seized the plane in April as collateral for taxes that prosecutors say Mr. Avenatti and his entities owe the U.S. government.

The lawsuit names Mr. Avenatti and a number of individuals and entities, including the United States, and the plane's co-owner, Spring Creek Research, who may claim a right to proceeds of the policies, Starr said.

The lawsuit says that Passport 420 LLC, a company over which Mr. Avenatti had "full and complete authority," held title to the plane.