Daniels, whose real name is Stephanie Clifford, was accused of touching three customers who were undercover vice detectives in the early-morning incident, police in the OH capital Columbus said in a statement.
Avenatti says Daniels has received a misdemeanor and they will be contesting the charges.
Daniels was transported to jail and later released on bail. Daniels started performing at about 11:30 p.m. Wednesday, according to an affidavit filed in Franklin County Municipal Court. A court document said because Daniels does not regularly appear at the club, as required under the law for such an offense, the charges were dismissed.
Avenatti took to Twitter to respond to his client's arrest and said the incident was "a setup and politically motivated". "We will fight all bogus charges", he tweeted, including a hashtag for the word "basta" which is Italian for "enough". She is facing three counts of "Illegally Operating Sexually Oriented Business - Employee Knowingly Touch Any Patron", according to online court records. A violation is a misdemeanor.
- Michael Avenatti (@MichaelAvenatti)She was arrested for allegedly allowing a customer to touch her while on stage in a non sexual manner!
"This is ridiculous that law enforcement resources were used to conduct this sting operation", he said. "There has to be higher priorities!" he continued.
Earlier Thursday, he told MSNBC that female officers approached Daniels while she was performing at the club and asked "if they could put their faces between her breasts".
Columbus police said Thursday that Daniels' arrest was part of a long-term human trafficking investigation of illegal activity at city adult clubs. The Sirens Gentlemen's Club had posted on its website that Daniels was scheduled to perform there Wednesday and Thursday. A person who answered the phone at the strip club declined to comment.
Daniels made the national spotlight this year due to a legal controversy with President Donald Trump, in which she claims she was coerced to sign a confidentiality contract to prevent her from talking about a former affair during the 2016 presidential campaign.
Avenatti confirmed to Fox News that his client was arrested just after midnight Thursday.
Daniels has said she had sex with President Donald Trump in 2006, when he was married, which Trump has denied. "#SetUp #Basta", Avenatti said in a second tweet. In May, Trump said Daniels was paid to stop "false and extortionist accusations".