From the Associated Press and ESPN
Feds: Avenatti tried to extort $20M from Nike
Federal prosecutors in New York and California have charged celebrity attorney Michael Avenatti with extortion and bank and wire fraud.
In the New York case, Avenatti was charged with attempting to extort more than $20 million in payments from Nike by threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met.ADVERTISEMENT
Avenatti, 48, had previously represented adult film star Stormy Daniels, whose real name is Stephanie Clifford, in her lawsuit against President Donald Trump and his former lawyer Michael Cohen.
Nicholas Biase, spokesman for the Southern District of New York, told ESPN in a statement Monday that “the defendant was arrested earlier today and is in custody. He is expected to be presented in Manhattan federal court [Monday] afternoon.” The Southern District tweeted that it would hold a news conference at 2:30 p.m. ET to discuss the matter.
According to the New York complaint, Avenatti last week threatened to hold a news conference on the eve of Nike’s quarterly earnings call and the start of the NCAA men’s basketball tournament at which he would announce allegations of misconduct by Nike employees.
“Avenatti stated that he would refrain from holding the press conference and harming Nike only if Nike made a payment of $1.5 million to a client of Avenatti’s in possession of information damaging to Nike … and agreed to ‘retain’ Avenatti and [an unidentified co-conspirator] to conduct an ‘internal investigation’ — an investigation that Nike did not request, for which Avenatti and [the co-conspirator] demanded to be paid, at a minimum, between $15 [million] and $25 million,” the complaint said.
Federal prosecutors identified the co-conspirator as “an attorney licensed to practice in the state of California, and similarly known for representation of celebrity and public figure clients.”
The complaint says Avenatti’s client is a “coach of an amateur athletic union (‘AAU’) men’s basketball program based in California.”
“For a number of years, the AAU program coached by Client-1 had a sponsorship agreement with Nike pursuant to which Nike paid the AAU program approximately $72,000 annually,” the complaint says.
In the California case, Avenatti was accused of embezzling a client’s money to pay his own expenses and debts — as well as those of his coffee business and law firm. The U.S. attorney’s office also said he defrauded a bank by using phony tax returns to obtain millions of dollars in loans.
Federal prosecutors announced the charges against Avenatti on Monday less than an hour after he tweeted that he was holding a news conference on Tuesday morning.
Tmrw at 11 am ET, we will be holding a press conference to disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered. This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.7,95012:16 PM – Mar 25, 2019Twitter Ads info and privacy13.7K people are talking about this
According to the complaint, the co-conspirator contacted Nike and stated that he wished to speak to representatives of the company and that the discussion should occur in person, not over the phone, as it pertained to a sensitive matter. During a meeting with Nike’s lawyers in New York on March 19, Avenatti stated that the AAU coach, whose contract Nike had recently decided not to renew, had evidence that “one or more Nike employees had authorized and funded payments to the families of top high school basketball players and/or their families and attempted to conceal those payments, similar to conduct involving a rival company [Adidas] that had recently been the subject of a criminal prosecution in this District. Avenatti identified three former high school players in particular, and indicated that his client was aware of payments to others as well.”
According to prosecutors, Avenatti demanded that Nike pay his client $1.5 million for any claims the coach might have regarding Nike’s decision not to renew his team’s contract, and that Nike must hire Avenatti and the co-conspirator to conduct an internal investigation, with the stipulation that if the company hired another firm to conduct the inquiry, it would still have to pay Avenatti and the co-conspirator “at least twice the fees of any other firm hired.”
“At the end of the meeting, Avenatti and [the co-conspirator] indicated that Nike would have to agree to accept those demands immediately or Avenatti would hold his press conference,” the complaint says.
Later that day, Nike’s attorneys contacted the co-conspirator to tell him that the company needed more time. Avenatti and the co-conspirator agreed to give Nike two days to consider the offer. Nike’s attorneys contacted the Southern District of New York and made prosecutors aware of Avenatti’s threats and extortion demands.
On March 20, one of Nike’s attorneys sent the co-conspirator a text message to schedule a telephone call later that day. The call was recorded and monitored by law enforcement. During a three-way call later that day, Avenatti reiterated that he expected to “get a million five for our guy” and be “hired to handle the internal investigation.”
“If you don’t wanna do that, we’re done here,” Avenatti told Nike’s attorneys.
“I’m not f—— around with this, and I’m not continuing to play games,” Avenatti said during the call, according to the complaint. “You guys know enough now to know you’ve got a serious problem. And it’s worth more in exposure to me to just blow the lid on this thing. A few million dollars doesn’t move the needle for me. I’m just being really frank with you. So if that’s what, if that’s what’s being contemplated, then let’s just say it was good to meet you, and we’re done. And I’ll proceed with my press conference tomorrow.
“I’m not f—— around with this thing anymore. So if you guys think that you know, we’re gonna negotiate a million five, and you’re gonna hire us to do an internal investigation, but it’s gonna be capped at 3 or 5 or 7 million dollars, like let’s just be done. … And I’ll go and I’ll go take ten billion dollars off your client’s market cap. But I’m not f—— around.”
During a meeting with Nike’s attorneys the next day, Avenatti said that he and his co-conspirator would require a $12 million retainer to be paid immediately and to be “deemed earned when paid,” with a minimum guarantee of $15 million in billing hours and a maximum of $25 million.
When one of Nike’s attorneys asked Avenatti if the sneaker company could pay one lump sum and not hire them to conduct the internal investigation, Avenatti said, “If [Nike] wants to have one confidential settlement and we’re done, they can buy that for twenty-two and a half million dollars and we’re done. … Full confidentiality, we ride off into the sunset.”
Avenatti told Nike’s attorneys: “I just wanna share with you what’s going to happen if we don’t reach a resolution. … As soon as this becomes public, I am going to receive calls from all over the country from parents and coaches and friends and all kinds of people. This is always what happens. And they are all going to say, ‘I’ve got an email or a text message.’ Now, 90 percent of that is going to be bullshit because it’s always bullshit 90 percent of the time, always, whether it’s R. Kelly or Trump. The list goes on and on. But 10 percent of it is actually going to be true, and then what’s going to happen is that this is going to snowball. That’s going to be the Washington Post, the New York Times, ESPN, a press conference, and the company will die — not die, but they are going to incur cut after cut after cut after cut, and that’s what’s going to happen as soon as this thing becomes public.
On March 21, Avenatti tweeted a link to a story about an Adidas employee being sentenced to nine months in prison for his role in a pay-for-play scheme to send high-profile recruits to Adidas-sponsored programs. Avenatti included the remark: “Something tells me that we have not reached the end of this scandal. It is likely far far broader than imagined …”
The Associated Press contributed to this report.