Federal prosecutors in New York and California have charged celebrity attorney Michael Avenatti with extortion and bank and wire fraud, according to ESPN’s Mark Schlabach.
Avenatti, 48, was charged in New York with attempting to extort more than $20 million in payments from apparel brand Nike by threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the mega-brand if his demands were not met by Nike.
Avenatti is best recently known for representing Stormy Daniels in her lawsuit against President Donald Trump and his attorney, Michael Cohen.
“The defendant was arrested earlier today and is in custody” Nicholas Biase, spokesman for the Southern District of New York said in a statement. “He is expected to be presented in Manhattan federal court [Monday] afternoon.”
The complaint from New York alleges that Avenatti threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of 2019 March Madness, where he would announce allegations of misconduct by Nike employees unless Nike agree to an immediate payout to Avenatti of $1.5 million.
“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 alleged.
The Feds say that 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.
“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 less than an hour after he tweeted that he was holding a press conference on Tuesday morning “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.”
U.S. Attorney Geoffrey Berman said during a news conference that “By engaging in the conduct alleged in the complaint, Avenatti was not acting as an attorney.”
“A suit and tie does not mask the fact that at its core, this was an old-fashioned shake down,” Berman said. The prosecutor said the investigation is continuing.
“Nike will not be extorted or hide information that is relevant to a government investigation.”
“Nike has been cooperating with the government’s investigation into NCAA basketball for over a year,” the company said. “When Nike became aware of this matter, Nike immediately reported it to federal prosecutors. When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation.”
“Nike firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors,” Mike said in an official statement.