The county paid $4 million to resolve the case in January 2015, the USA said, but Avenatti hid the money and, over a period of several months, drained the settlement for his own benefit.
Avenatti had Johnson sign a document a day or two later saying he was satisfied with his representation, which the lawyer told him was necessary to get the settlement that had in fact been paid four years earlier, the indictment said.
Avenatti is also accused of using $2.5 million from a client's $2.75 million settlement to buy a private jet.
A jet co-owned by Avenatti was seized Wednesday as part of the ongoing investigation, officials said. He's now free on bail.
He is also accused of embezzling from another client's settlement of $1.6 million, which Avenatti denied receiving when he'd actually spent it all on personal expenses, prosecutors said. An indictment is expected soon in that case.
The client, referred to only as "Client 1" in the indictment, was identified as Geoffrey Johnson by his lawyer, Joshua Robbins.
On the day of his arrest, federal agents executed search warrants at Avenatti's Century City apartment, his Echo Park law office and the Yorba Linda home of Judy Regnier, the office manager at Eagan Avenatti, according to the US attorney's office.
Johnson no longer stood by that statement, his lawyer said.
Avenatti also allegedly submitted false information to financial institutions for several loans, including a 2011 tax return noting his adjusted gross income for that calendar year of approximately $4.6 million.
In March, Avenatti was arrested in NY on separate federal charges and then freed on $300,000 bond. But when Johnson was in escrow to purchase the property, Avenatti falsely said he had not received the settlement funds, the indictment said. Avenatti told his client that these payments were "advances" on the settlement.
The charges in California are an expansion of criminal charges filed there last month that accused Avenatti of misappropriating $1.6 million from a client and submitting fake tax returns to a MS bank to obtain $4.1 million in loans.
The indictments against Avenatti are for wire fraud, tax fraud, bank fraud and bankruptcy fraud.
Avenatti faces 19 tax-related charges.
When the IRS started garnishing the company's bank accounts, the indictment says, Avenatti ordered employees to deposit the stores' cash and credit-card receipts in new accounts under a new company name. In one example in the indictment, Avenatti answered "no" under oath during the proceeding when asked if his firm received any fees from the Super Bowl NFL litigation.
In fact, the indictment says, Avenatti "well knew" that the firm had received almost $1.4 million on May 17, 2017.