Michael Avenatti charged with extortion and wire, bank fraud

Updated March 25, 2019 - 2:37 pm

NEW YORK — Michael Avenatti, the pugnacious attorney best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump, was arrested Monday on charges that included trying to shake down Nike for as much as $25 million by threatening the company with bad publicity.

Avenatti, who was also accused of embezzling a client’s money to pay his own expenses, was charged with extortion and bank and wire fraud in separate cases in New York and California. He was arrested in New York just minutes after tweeting that he planned to hold a news conference Tuesday to “disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered.”

“When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals,” said Geoffrey S. Berman, the U.S. attorney in New York, accusing Avenatti of engaging in “a shakedown.”

The allegations “paint an ugly picture of lawless conduct and greed,” said Nick Hanna, the U.S. attorney in Los Angeles. Avenatti describes himself on Twitter as an attorney and advocate, but the accusations describe “a corrupt lawyer who instead fights for his own selfish interests.”

Prosecutors in New York said their investigation began only last week and was complete in days.

In the California case, Avenatti allegedly misused a client’s money to pay his debts and those of his coffee business and law firm. Federal prosecutors said he also defrauded a bank by using phony tax returns to obtain millions of dollars in loans.

Avenatti allegedly threatened to hold a news conference last week on the eve of Nike’s quarterly earnings call and the start of the NCAA Tournament to announce allegations of misconduct by Nike employees. The attorney and a co-conspirator demanded to be paid $15 million to $25 million and an additional $1.5 million for an Avenatti client to remain silent, the complaint said.

A person familiar with details of the investigation confirmed that the unidentified co-conspirator was Mark Geragos, a Los Angeles criminal defense lawyer known for his work with celebrities. The person spoke on condition of anonymity because the information was not made public by prosecutors.

Geragos, a CNN contributor, has a client list that has included Michael Jackson, Winona Ryder, Scott Peterson and most recently Jussie Smollett, the actor accused of fabricating a racist, anti-gay attack in Chicago. Geragos did not respond to messages seeking comment.

The Avenatti client is a coach of an amateur athletic union men’s basketball program in California, according to the papers. The AAU program coached by the client was sponsored by Nike for $72,000 annually, the complaint said.

Shortly before the charges came to light, Avenatti tweeted that he planned to hold another news conference regarding Nike on Tuesday. Less than 45 minutes later, prosecutors announced the extortion case.

Nike officials told investigators that Avenatti claimed to know of rules violations by an amateur basketball team sponsored by Nike. Executives immediately reported the threats to federal authorities.

The company “firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors,” Nike said in a statement.

Avenatti was in custody and did not respond to an email requesting comment or phone calls and text messages from The Associated Press.

He rose to national prominence by representing Daniels, whose real name is Stephanie Clifford, in a lawsuit to break a confidentiality agreement to speak about her alleged affair with Trump. He also made headlines in recent weeks for representing two women who accused R&B star R. Kelly of sexual abuse, and he briefly explored the idea of a presidential bid last year.

Daniels said she was “saddened but not shocked” by the arrest. She issued a statement Monday on Twitter saying she fired Avenatti a month ago after “discovering that he had dealt with me extremely dishonestly.” She said she would not elaborate.

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