California lawyer Michael Avenatti was charged by federal prosecutors on both coasts, accused in New York of trying to extort millions of dollars from Nike Inc. and in Los Angeles of embezzling money from a client and defrauding a bank.
The charges depict a lawyer desperate for cash and willing to exploit his own clients.
In California, prosecutors say, he stole a client’s $1.6 million settlement and used it to cover expenses.
In New York, he’s accused of telling Nike he’d cancel a press conference accusing the company of making illegal payoffs to promising basketball players.
In exchange, he demanded $1.5 million for an unidentified client, and as much as $25 million for him and another attorney to conduct an internal investigation.
Instead, Nike went to prosecutors.
Within a week, Avenatti, 48, was arrested — nabbed on today as he was arriving for a meeting at the New York offices of Boies Schiller Flexner LLP.
The firm was representing Nike and its lawyers wore wires to secretly record their conversations with Avenatti.
“I’ll go take ten billion dollars off your client’s market cap. But I’m not f—ing around,” Avenatti told Nike’s attorneys in a March 20 phone call secretly recorded by the FBI, according to a complaint unsealed today.
At 12:16 pm today, just minutes before his arrest, Avenatti posted a tweet saying he would hold a press conference tomorrow to disclose a “major high school/college basketball scandal” perpetrated by Nike that he claimed to have uncovered.
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.
— Michael Avenatti (@MichaelAvenatti) March 25, 2019
“This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball,” Avenatti said in the tweet.
Avenatti’s tweet mentioning the scandal sent Nike shares down as much as 1.6 percent, nearing a two-month low.
The stock rebounded after the charges were announced and ended the day up 0.2 percent in New York.
“Avenatti was not acting as an attorney,’’ U.S. Attorney Geoffrey Berman said at a news conference in New York.
“At its core, this was an old-fashioned shakedown.’’
Avenatti’s alleged threat appears to center on an ongoing U.S. investigation into corruption involving NCAA basketball.
Nike says it’s been cooperating with the prosecutors for over a year and “immediately” told them of Avenatti’s actions.
“When Mr. Avenatti attempted to extort Nike over this matter, Nike, with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation,” the company said.
That is not the only case filed against Avenatti either, with a second case accusing the lawyer of bank and wire fraud was also filed on Monday in the Central District of California.
Avenatti gained notoriety by representing the porn actress Stormy Daniels in a lawsuit against President Trump, with whom she claimed to have had an affair.
He capitalized on his raised profile by repeatedly assailing Trump and his former attorney, Michael Cohen.
He even floated a possible presidential run for himself.
Soon after the arrest, Donald Trump Jr. celebrated the announcement in his own tweet, saying: “Good news for my friend @MichaelAvenatti, if you plead fast enough, you might just get to share a cell with Michael Cohen!”
Avenatti faces years in prison in the two cases.