Consultant Testifies Against Avenatti in Nike Extortion Trial

MANHATTAN (CN) — A California consultant took the witness stand in Michael Avenatti’s New York trial Monday, testifying that the celebrity attorney never revealed his alleged extortion scheme to clients who were angered by what they perceived as misconduct at Nike.

At a March 5, 2019 meeting between the embattled Avenatti, Monday’s witness Jeffrey Auerbach and Auerbach’s colleague, amateur basketball coach Gary Franklin, the latter two men outlined a case they thought they had against Nike, Auerbach said.

Attorney Michael Avenatti arrives at federal court to enter a not-guilty plea on Dec. 17, 2019. (AP Photo/Mark Lennihan, File)

Franklin, the coach of boys’ basketball powerhouse California Supreme — which was sponsored by Nike — said Nike executives Carlton DeBose and Jamal James had directed him to falsify invoices, make questionable wire payments, and pay $10,000 in cash to the mother of Deandre Ayton, a former Supreme player who became the top pick in the 2018 NBA draft.

“I just remember [Avenatti] going ‘Wow,’” Auerbach said of their first meeting. “He gave a whole speech about justice, and [said] ‘I want to get you justice.’”

Prosecutors in the Southern District of New York accuse Avenatti of trying to extort Nike for tens of millions of dollars by threatening to go public, just before a quarterly earnings call, with misconduct allegations against Nike employees.

The indictment says Avenatti, 48, contacted Nike on Franklin’s behalf, threatening to expose its alleged wrongdoing unless the company forked over $1.5 million. Avenatti also allegedly told Nike it must hire him and fellow celebrity attorney Mark Geragos to conduct an internal investigation for a retainer fee between $15 million and $25 million.

In his meetings and other conversations with Auerbach and Franklin, though, Avenatti never once mentioned a press conference or internal investigation, or even a particular urgency in the case, Auerbach testified. At the time, he said, he assumed the attorney would consult with them before taking any action.

Auerbach said both he and Franklin were “shocked” when Avenatti rushed through a meeting with them in California on March 18, 2019 — just weeks after their first meeting — and said he was taking a red-eye to New York to meet with Nike lawyers.

“It was absolute shock,” Auerbach said of his reaction to Avenatti’s haste. “I thought we were getting together to strategize at that meeting … He was extremely rushed and harried, said he had to go pack a couple of times, really didn’t want to get into anything.”

The men didn’t even have time to go over the discussion questions Auerbach had prepared, he testified.

A press conference, Auerbach said on direct examination Monday, would be “detrimental, damaging … to Franklin’s objectives” and could damage the coach’s relationship with Nike.

An internal investigation was something he and Franklin “hadn’t even entertained,” he added.

Avenatti called from New York and said the first meeting with Nike counsel had gone “great” but offered few details, Auerbach said. Avenatti’s report about the second meeting was that it had also gone well, and that there would be one more, according to Monday’s testimony.

But then Avenatti posted a series of tweets that made Auerbach nervous Avenatti would reveal their case, he testified. The second tweet, on March 25, 2019, said Avenatti would hold a press conference the following day “to disclose a major high school/college basketball scandal perpetuated by Nike that we have uncovered.”
The presser was never held. Avenatti was arrested that same day. Auerbach found out from Franklin, who had seen it on CNN, he said.

Auerbach had meticulously compiled documents and memos describing and backing up the situation, and sent them to Avenatti in the days around their initial meeting, he said, labeling them “privileged and confidential.”

In a summary of a conversation with another Nike executive, John Slusher, Auerbach recalled that Slusher had asked him what justice would look like and whether it involved firing DeBose and James.

“Yes, for starters,” Auerbach replied.

Avenatti’s defense team has seized on this response as an argument that Auerbach and Franklin wanted their attorney to make waves against Nike, and made the press conference threat and investigation demand at their direction.

Cross-examination of Auerbach is set to continue Tuesday morning.

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