This morning, lawyer Michael Avenatti had an announcement.
This was nothing new for Avenatti, a lawyer who rose to recent fame representing Stormy Daniels in her lawsuit against the president, and a man who says he found a tape of R. Kelly raping a child. He’s been in the news a lot recently. Nike’s stock even dropped after Avenatti’s tweet.
Minutes later, federal prosecutors in New York and in Los Angeles announced the arrest of Avenatti in two entirely separate cases.
According to the indictment, the Southern District of New York alleges that Avenatti went to Nike last week with a proposal. Avenatti allegedly said he represented a former AAU coach, one whose program previously a sponsorship agreement with Nike. Avenatti told Nike his client had evidence of Nike employees paying at least three players.
Avenatti, according to prosecutors, then told Nike he wanted $1.5 million for his client; he also demanded Nike hire his own firm to conduct an internal investigation of the company, which would pay him more than $9 million. (His demand even included the following caveat: If Nike hired a different law firm to investigate the company, Avenatti would still be paid “at least twice the fees of any other firm hired,” the indictment says.)
To turn up the heat on Nike, he tweeted this:
The complaint says Avenatti planned to hold the press conference just before Nike’s earnings call last Thursday. Instead he agreed to meet with Nike that day and delay his presser until Monday.
“I’m not fucking around with this, and I’m not continuing to play games… you guys know enough to know you’ve got a serious problem,” Avenatti said at that meeting, according to a video recording made of that meeting. “And it’s worth more in exposure to me to just blow the lid on this thing. I’m just being really frank with you.… I’m not fucking 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 going to 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 10 billion dollars off your client’s market cap. But I’m not fucking around.”
At just about the same time as the New York announcement, Avenatti was charged by the Central District of California with bank and wire fraud for allegedly defrauding one of his clients. From the government’s release:
According to an affidavit filed with the criminal complaint in this case, Avenatti negotiated a settlement which called for $1.6 million in settlement money to be paid on January 10, 2018, but then gave the client a bogus settlement agreement with a false payment date of March 10, 2018. The affidavit states that Avenatti misappropriated his client’s settlement money and used it to pay expenses for his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in California and Washington state, as well as for his own expenses. When the fake March 2018 deadline passed and the client asked where the money was, Avenatti continued to conceal that the payment had already been received, court documents said.
The California case also accuses Avenatti of defrauding a Mississippi bank by submitting fake income tax returns.
Copies of both complaints are below.
Update (3:31 p.m.): The Wall Street Journal says sources have identified one other lawyer from the Nike complaint as well as the law firm that did the recording.
Update (3:36 p.m.): Federal prosecutors in New York have shared their flow chart of what they believe happened, in case you needed a visual.
Update (5:09 p.m.): The press conference held by federal authorities in New York didn’t provide a ton of new information, but the U.S. attorney for the southern district of New York, Geoffrey Berman, did take questions from reporters. At the press conference, Berman described what happened with Aveanatti as “an old-fashioned shake down.”
When asked what made this a case of extortion, as opposed to a settlement negotiation, Berman said: “Extortion is when you threaten to do something for a thing of value and you don’t have a right, a plausible right, to that thing of value. So here, Avenatti was not extorting in terms of seeking money for a client. He was seeking money for himself.”
As for if more charges could be filed, Berman said the investigation is ongoing.
Deadspin senior editor Diana Moskovitz contributed to this report.