The money was from a publisher working with Daniels on a book deal.
Federal prosecutors filed additional charges against high-profile attorney Michael Avenatti on Wednesday, claiming the frequent White House critic pocketed nearly $300,000 from former client Stormy Daniels.
He was indicted on fraud and aggravated identity theft charges for allegedly using a "fraudulent document purporting to bear his client's name and signature to convince his client's literary agent to divert money owed to Avenatti's client to an account controlled by Avenatti," according to statement by federal prosecutors.
A senior federal law enforcement official told NBC News that "Victim-1" who is was allegedly bilked by Avenatti is Stephanie Clifford, otherwise known by her stage name, Stormy Daniels.
The publisher gave two payments of over $148,000, intended for Daniels, to Avenatti and she's so far only received half of that, according to the indictment.
Prosecutors accused Avenatti of spending the money lavishly, including monthly payments on a Ferrari.
"Michael Avenatti abused and violated the core duty of an attorney — the duty to his client," according to a statement by U.S. Attorney Geoffrey Berman.
"As alleged, he used his position of trust to steal an advance on the client's book deal. As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari. Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client."
The attorney had predicted on Tuesday night that the U.S. Attorney's Office our of the Manhattan-based Southern District of New York.
"I expect an indictment to issue from SDNY in the next 48 hrs charging me in connection with my arrest in March. I intend on fighting these bogus/legally baseless allegations, and will plead not guilty to ALL CHARGES. I look forward to the trial where I can begin to clear my name,"he tweeted.
Avenatti is known for representing adult film actress Daniels, who claims she had an affair with President Donald Trump in 2006, long before the real estate executive and reality show host ran for office.
Without mentioning Trump's name, Avenatti took another shot at the commander-in-chief even as he prepared to answer more criminal charges.
"While the power of the fed government is brought to bear, with all of its force and might, against me, the biggest criminal in the U.S. and the largest threat to American democracy in 200 years, together with his family, walks. And we call this `justice.' This is not our America," Avenatti wrote on Tuesday night.
Avenatti was charged in March — and formally indicted on Wednesday — for allegedly trying to extort $20 million from Nike and embezzling a client's settlement money to pay expenses for his faltering coffee business.
He cannot travel anywhere else in the country without approval and may not transfer $5,000 or more from any account he controls without pretrial services.
Avenatti allegedly met with Nike reps weeks earlier, representing a youth basketball coach who had damaging information that Nike employees made illegal payments to the families of elite high school athletes.
In an interview with Vanity Fair, posted this week, Avenatti seemed to acknowledge — via Greek mythology — that his ego might have gotten too big.
"Some would argue at this point that I flew too close to the sun," he said. "As I sit here today, yes, absolutely, I know I did. No question. Icarus."