Attorney Michael Avenatti, who became well-known as the lawyer for Stormy Daniels and an outspoken critic of President Donald Trump, has been charged with extortion and wire fraud in an alleged plot to extort Nike. He also faces fraud charges in two other cases.
Prosecutors said in a court filing on Wednesday that a grand jury in New York had returned a superseding indictment which charges Avenatti with three counts: Transmission of Interstate Communications With Intent To Extort, Extortion, and Wire Fraud.
A second lawyer who was previously referred to as a co-conspirator was not indicted and two conspiracy charges against Avenatti were dropped. The grand jury, however, added one count of wire fraud for depriving his client of honest services. If convicted on all charges, Avenatti could face decades in prison.
Responding to Wednesday’s indictment, Avenatti said he was “extremely pleased” that the two conspiracy counts were dropped. “I expect to be fully exonerated when it’s all said and done,” he said in a message sent to BNO News on Twitter. In a second tweet, Avenatti claimed that the case is “considerably weaker” without the conspiracy charges.
According to the indictment, Avenatti and a second lawyer told Nike’s lawyers earlier this year that they represented a client who claimed to have evidence of a basketball bribery scandal involving one or more Nike employees. Avenatti threatened to hold a damaging press conference unless Nike agreed to pay him up to $20 million under the guise of legal work.
Avenatti told Nike’s lawyers that they would have to accept his demands immediately, or else he would hold his press conference, according to court documents. He warned that it would negatively affect the company’s market value and pointed out that Nike’s quarterly earnings call and the NCAA tournament – which is important to Nike’s brand – were starting soon.
After the meeting, Avenatti agreed to give Nike two more days to consider his demands. But at the same time, representatives of Nike reported Avenatti’s alleged conduct to the U.S. Attorney’s Office for the Southern District of New York, which led to an FBI investigation.
At the direction of law enforcement, Nike’s attorneys reached out to Avenatti in March to ask for more time to consider his demands, according to the indictment. Avenatti, however, repeated his demands and threats during a call which was recorded by investigators.
“I’m not fucking around with this, and I’m not continuing to play games. … 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,” Avenatti said, according to a transcript.
“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 take 10 billion dollars off your client’s market cap. But I’m not fucking around,” he continued.
At a second meeting, which was recorded on video, Avenatti demanded that he be hired to conduct an “internal investigation” with a minimum guarantee of $15 million in billings, and a maximum of $25 million. When one of Nike’s attorneys pointed out that they had never done an investigation for Nike that broke $10 million, Avenatti asked: “[have you] held the balls of the client in your hand where you could take 5 to 6 billion market cap off of them?”
When asked if there was any way to avoid a press conference without Avenatti and the second lawyer being hired to conduct an internal investigation, Avenatti proposed a $22.5 million settlement. “Full confidentiality, we ride off into the sunset,” he allegedly said.
He then reiterated his threat to hold a press conference.
“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,” Avenatti was quoted as saying. “It’s always bullshit 90% of the time, always, whether it’s R. Kelly or Trump, the list goes on and on – but 10% of it is actually going to be true, and then what’s going to happen is that this is going to snowball.”
Avenatti added: “Every time we get more information, 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.”
Finally, Avenatti and the second lawyer agreed to meet one of Nike’s attorneys in New York, but made clear that Nike would have to agree to his demands at that meeting or else he would hold his press conference.
“If this is not papered on Monday, we are done. I don’t want to hear about somebody on a bike trip. I don’t want to hear that somebody’s grandmother passed away or … the dog ate my homework,” he said. “None of it is going to go anywhere unless somebody was killed in a plane crash. It’s going to go zero, no place with me.”
According to the superseding indictment, Avenatti learned shortly before this meeting that law enforcement had approached his client and he sent the following tweet without the client’s permission: “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.” Avenatti was arrested a short time later.
The second lawyer was identified in media reports as Mark Geragos, who has represented celebrities such as former NFL quarterback Colin Kaepernick and “Empire” actor Jussie Smollett. The original indictment referred to him as a “co-conspirator”, but he has not been charged with a crime and is no longer referred to as a co-conspirator. Geragos was also a legal analyst for CNN, but a spokeswoman said in March that he was no longer with the network.