Michael Avenatti is the second nationally prominent attorney whose short-term loans at The Peoples Bank in Biloxi have been scrutinized by federal investigators in recent decades.
Avenatti paid back his $4.1 million in short-term loans from the bank, with only one loan under threat of being sent to collections because the payment was late.
Investigators say he got the three loans in 2014 by submitting false IRS records, and he also faces a wire fraud charge on the West Coast. On the East Coast, he is accused of trying to extort money from Nike.
The federal complaint filed against Avenatti on the West Coast says a client who had earlier been involved in Biloxi development proposals introduced the attorney to The Peoples Bank CEO and president Chevis Swetman.
For some, Avenatti’s case brought to mind an earlier federal investigation in South Mississippi that involved a trial attorney and The Peoples Bank.
The case, which unfolded over five years of investigation and trials, rocked South Mississippi political, business and social circles.
In 1998, then-attorney Paul Minor was a multimillionaire living in Ocean Springs and was one of the bank’s top 10 customers, a bank representative later testified. Minor had more than $12 million on deposit at The People’s Bank.
He made his fortune representing clients in asbestos, tobacco and other personal injury cases.
Also in 1998, Minor guaranteed loans totaling $165,000 for two state-court judges.
The judges were supposed to pay off their loans within six months, but the bank had to keep renewing them. Former Chancery Court Judge Wes Teel finally paid off his loan in 2000, with money that Minor supplied through a third party.
Two loans to then-Circuit Court Judge John Whitfield had been consolidated and reduced from a total of $140,000 to $120,000 when bank examiners performing a routine audit started asking questions in 2002.
Hoping to avoid publicity and a federal inquiry, Minor then frantically arranged to pay off the loan through an attorney friend in New Orleans, that attorney later testified at trial.
Minor, Whitfield and Teel all were disbarred, served prison sentences for judicial bribery and have been released. Minor is living in New Orleans, while Teel has relocated from Gulfport to Oxford, and Whitfield is now an ordained minister with a Gulfport congregation.
Why The Peoples Bank?
In guaranteeing the loans, Minor was doing business with a local bank.
After Avenatti was arrested Monday, many questioned how a South California attorney came to do business with a Biloxi-based bank with 17 branches, all located in South Mississippi.
The federal complaint filed against Avenatti says “M.C.,” put the attorney in touch with “C.S.,” the CEO and president of The People’s Bank. That would be Chevis Swetman, whose great uncle was a founder of the bank in 1896 and who succeeded his father as the bank’s president and CEO in 1983.
The complaint describes “M.C.” as “Meridian Liquidating Trustee,” apparently referring to Mark Calvert, managing director of the Cascade Financial Group in Seattle, Washington, and trustee on the much-publicized Meridian Mortgage bankruptcy case. (Meridian’s owner went to prison for operating a $140 million Ponzi scheme from his company, media reports have detailed.)
Calvert also has a Coast connection. Calvert has been working on Coast projects since 1994, when he and his family moved to Biloxi for restructuring of Treasure Bay Casino after a bankruptcy.
Calvert is described on Cascade’s website as having “successfully raised over $500 million in capital for his clients,” and as being experienced in accounting, finance and other areas.
Swetman communicated with Avenatti by telephone and email, the complaint said, requiring extensive financial records to extend short-term loans to the attorney who represented Stormy Daniels and vilifies Trump at every opportunity.
Avenatti had paid off two previous short-term loans totaling $3.6 million at The Peoples Bank when he emailed Swetman in November 2014 about securing a $2.5 million line of credit. The bank requested extensive financial records, resulting in Avenatti’s submission of false IRS records, the complaint says.
In the end, the bank gave Avenatti a $500,000 loan that had to be repaid a year later, in December 2015.
The complaint says Avenatti failed to pay off the loan by the due date and describes the bank contacting the attorney on numerous occasions. Avenatti finally paid off the loan in April 2016 — only after Swetman let the attorney know the debt would be turned over to the bank’s collections department.
For his part, the gregarious Swetman told the Sun Herald on Tuesday that he couldn’t say much about Avenatti’s business with the bank because of banking privacy laws.
Asked about how he met Avenatti, he said, “I’m going to have to crawfish on that one.”
Staff Writer Mary Perez contributed to this report.