Avenatti Charged Coast-to-Coast With Extortion, Fraud

Michael Avenatti arrives to court in New York on May 30, 2018. (AP Photo/Seth Wenig)

MANHATTAN (CN) — Less than a year after his representation of Stormy Daniels signaled the downfall of the president’s personal fixer, attorney Michael Avenatti received a one-two punch from federal prosecutors on both coasts Monday.

The complaint in New York charges Avenatti with trying to extort more than $20 million from Nike, and another brought in Los Angeles says he embezzled a client’s money to pay personal expenses.

Prosecutors say the extortion scheme began with a meeting with an unnamed co-conspirator on March 19.

Avenatti, 48, allegedly threatened Nike’s attorneys over the phone the next day: “I’ll go take 10 billion dollars off your client’s market cap … I’m not fucking around.”

At a rare press conference this afternoon, Manhattan U.S. Attorney Geoffrey Berman displayed a timeline where he showed that the celebrity lawyer had tweeted a teaser about a potential college basketball scandal.

“Something tells me that we have not reached the end of this scandal,” Avenatti tweeted on March 21. “It is likely far far broader than imagined…”

Manhattan U.S. Attorney recounts Twitter activity from lawyer Michael Avenatti at a press conference describing a criminal complaint against Avenatti. (ADAM KLASFELD/Courthouse News Service)

Referring to that post, Berman said: “This was Michael Avenatti’s shot across Nike’s bow.”

Shortly before firing off that tweet, Avenatti appeared in New York for a meeting with lawyers.

Prosecutors say Avenatti demanded a $12 million retainer at that meeting, which was recorded consensually, and that the other participants responded that Nike had never done an investigation that “breaks $10 million.”

In response, according to the complaint, Avenatti asked whether that attorney ever “held the balls of the client in your hand where you could take 5 to 6 billion dollars market cap off of them?”

Laying out the terms of a $22.5 million confidential deal, Avenatti said: “Full confidentiality, we ride off into the sunset,” according to the complaint.

Berman asserted that these hardball tactics were something stronger than zealous advocacy for a client.

“A suit and tie doesn’t mask the fact that at its core, this was an old fashioned shakedown,” Berman added.

A spokesman for Nike echoed that sentiment in a statement.

“Nike will not be extorted or hide information that is relevant to a government investigation,” the spokesman said, adding that the company cooperated in the NCAA corruption investigation for more than a year.  

“When Nike became aware of this matter, Nike immediately reported it to federal prosecutors,” he added. “When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation.” 

On the eve of Nike’s quarterly earnings call and the NCAA tournament, prosecutors say, Avenatti threatened to hold a press conference announcing allegations of employee misconduct unless the company made a deal.

“Avenatti stated that he would refrain from holding the press conference and harming Nike only if Nike made a payment of $1.5 million to a client of Avenatti’s in possession of information damaging to Nike, i.e., Client-1, and agreed to ‘retain’ Avenatti and CC-1 to conduct an ‘internal investigation’ – an investigation that Nike did not request — for which Avenatti and CC-1 demanded to be paid, at a minimum, between $15 and $25 million,” the 11-page complaint states.

The Wall Street Journal names that unidentified co-conspirator as Mark Geragos, a fellow celebrity attorney known for his activism in the Armenian-American community and for representing such Hollywood icons as Michael Jackson, Winona Ryder and Gary Conduit. Geragos declined to comment.

“Alternatively, and in lieu of such a retainer agreement, Avenatti and CC-1 demanded a total payment of $22.5 million from Nike to resolve any claims Client-1 might have and additionally to buy Avenatti’s silence,” it continues.

Over in Los Angeles, prosecutors leveled two charges of wire and bank fraud. They say Avenatti negotiated a $1.6 million settlement to be paid on Jan. 10 this year, but then gave the client a bogus deal with a false payment date of March 10.

Prosecutors say Avenatti used the client’s settlement money for his own personal use, including paying expenses of a now-defunct coffee chain he owned. Additionally, prosecutors say Avenatti even loaned the client money using the client’s settlement funds.

One set of charges relate to three separate loans that prosecutors claim Avenatti sought from The Peoples Bank in 2014: one for $850,500 in January, another for $2.75 million in March and a third for $500,000 that December.

“In these purported tax returns, Avenatti claimed that he earned $4,562,881 in adjusted gross income in 2011, $5,423,099 in adjusted gross income in 2012, and $4,082,803 in adjusted gross income in 2013,” says the complaint, which is signed by IRS Agent Remoun Karlous. “He also claimed that he had paid to the IRS $1,600,000 in estimated tax payments in 2012, and $1,250,000 in estimated tax payments in 2013. However, Avenatti never filed personal income tax returns for the 2011, 2012, and 2013 tax years, and did not make any.”

The other count involves a $1.6 million settlement that prosecutors say Avenatti arranged to be transferred to a newly opened attorney trust account.

“Rather than transfer his client’s portion of the settlement proceeds to his client, Avenatti used the entire $1.6 million for his own purposes, including to pay for expenses relating to [Global Baristas US LLC],” the complaint states, referring to the corporate parent of Avenatti’s now-defunct coffee company. “Avenatti lied to his client and claimed that the settlement payment was not due until March 2018.”

At a press conference announcing the charges in Los Angeles, U.S. Attorney Nick Hanna called Avenatti a corrupt lawyer who fought for his own selfish interests. He said the affidavit unsealed Monday contain allegations that “paint an ugly picture of lawless conduct and greed.”

Hanna also beat back claims that the arrest of Avenatti – an outspoken and frequent critic of President Donald Trump – was politically motivated.

“It’s completely untrue. This investigation was started in the ordinary course,” said Hanna. “It had nothing to do with politics. The facts speak for themselves.”

Avenatti faces roughly up to nearly 50 years in prison if convicted on all courts in the two courts where he is charged.

At a brief court hearing this afternoon, U.S. Magistrate Judge Katharine H. Parker released Avenatti on $300,000 bail. The 48-year-old attorney appeared calm as the judge read him his rights, surrendered his U.S. and Italian passports, and maintained his characteristic defiance with brief remarks that he delivered late outside a Manhattan federal courthouse.

“As all of you know, for the entirety of my career, I have fought against the powerful, powerful people and powerful corporations,” Avenatti told an enormous scrum of reporters. “I will never stop fighting that good fight. I am highly confident that when all of the evidence is laid bare in connection with these cases, when it is all known and when due process occurs, that I will be fully exonerated, and justice will be done.”

Avenatti became a fixture of cable news commentary on the Russia investigation in connection to his representation of Daniels, an adult film actress who was paid by Michael Cohen to keep quiet about an alleged affair with Trump. Cohen later implicated Trump in his pleas to campaign-finance violations and obstruction of justice.

Since that time, Avenatti’s star has fallen to the point that his former client slammed him upon news of his arrest.

“Knowing what I know now about Avenatti, I am saddened but not shocked by news reports that he has been criminally charged today,” she tweeted in a statement that promised future revelations about how “he had dealt with me extremely dishonestly.”

After appearing in California again on April 1, Avenatti will return to New York for a court appearance on April 25.

Nathan Solis contributed to this report from Los Angeles.

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