Attorney Michael Avenatti was arrested Monday and is facing federal charges on both coasts of bank fraud, misappropriating client funds, and trying to extort Nike, according to federal prosecutors.
Prosecutors in the Southern District of New York allege that Avenatti tried to extract more than $20 million from Nike, and said that if the company did not pay him, he would “use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met.”
The criminal complaint alleges that Avenatti said, “I’ll go take 10 billion dollars off your client’s market cap… I’m not f—ing around.”
Avenatti tweeted Monday morning that he would hold a press conference on Tuesday “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 is expected to make an initial appearance on the charges in New York on Monday.
Prosecutors in Los Angeles announced that Avenatti is also facing two federal charges of bank fraud and wire fraud. (Read the complaint here.) Avenatti is accused of misappropriating a $1.6 million client settlement to fund his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in Washington and California. He is also accused of using the funds to pay personal expenses. Avenatti faces bank fraud charges for allegedly obtaining $4.1 million in loans from a Mississippi bank by submitting false tax returns.
At a press conference Monday morning in Los Angeles, U.S. Attorney Nick Hanna said the charges “paint an ugly picture of lawless conduct and greed,” and described Avenatti as “a corrupt lawyer who fights for his own selfish interests.” Hanna said that Avenatti never paid federal taxes for the years 2011 to 2013.
In the New York case, Avenatti faces charges including extortion, conspiracy to commit extortion, and transmitting interstate communications with intent to extort. (Read it here.) According to the charges, Avenatti represents an Amateur Athletic Union basketball coach. The coach had a deal with Nike, which the shoe company decided not to renew. The coach claims to have evidence that Nike employees made illicit payments to the families of top high school basketball players.
Avenatti allegedly threatened to disclose this information unless Nike paid the coach $1.5 million and hired Avenatti’s firm to conduct an internal investigation. He allegedly threatened to time the disclosure to coincide with the NCAA basketball tournament and Nike’s quarterly earnings call in order to inflict maximum damage.
Avenatti rose to fame representing adult film actress Stormy Daniels in her effort to void a hush-money agreement pertaining to her liaison with President Donald Trump. Last year, Avenatti flirted with running for president before deciding against it.
At the Los Angeles press conference, Hanna was asked if the timing of the criminal complaint was connected to the completion of the report on Russian election interference from Robert Mueller. “It had nothing to do with anything political,” Hanna said. “We had no idea when the Mueller report was going to come down.”
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