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Michael Avenatti urges 2nd Circuit to overturn Nike bribery conviction

The once-bombastic lawyer, incarcerated on three separate felony verdicts, is seeking a reversal of the first conviction for trying to squeeze millions of dollars from Nike.

MANHATTAN (CN) — Thrice-convicted California lawyer Michael Avenatti asked a Second Circuit panel on Thursday to overturn his 2020 guilty verdicts for extorting the shoe giant Nike.

Shortly before the Covid-19 pandemic shut down courtrooms across the country, a New York jury found the once-swaggering attorney guilty on all counts in February 2020. The disgraced celebrity lawyer was given a two-and-a-half year prison sentence, followed soon after by two more federal felony convictions.

Avenatti demanded millions of dollars from Nike to stop him from holding a press conference in which he would purportedly expose the company’s corruption and misconduct related to amateur basketball sponsorship. On appeal to the Second Circuit in Manhattan, the now-incarcerated lawyer argued that prosecutors failed to sufficiently prove that said shakedown was “criminally extortionate.”

“Avenatti can reasonably have believed that he had been authorized by his client to seek an internal investigation of misconduct in Nikes elite youth basketball program,” federal public defender Daniel Habib said during a 52-minute oral arguments hearing held on Thursday morning.

In an appeals brief, Avenatti claimed that federal prosecutors’ evidence at trial was insufficient to support the jury’s verdict on his criminal liability for threatening to expose Nike’s improper payments to amateur basketball players.

“As to the extortion counts, the evidence failed to establish wrongfulness. An investigation would have served Franklin’s objectives and, in seeking to conduct one, Avenatti did not disobey any of his client’s instructions or impair his client’s rights, in particular because any settlement would have required Franklin’s consent,” the brief states. “More fundamentally, an attorney does not commit criminal extortion by pairing a threat of economic harm with a request for compensation.”

Avenatti also argues that California law affords an attorney “unquestioned” “authority to proceed in any appropriate manner” in “achieving the client’s fundamental goals,” and that the district court erred by refusing to instruct jurors to his “broad authority” to advance a client’s interests.

Assistant U.S. Attorney Matthew Podolsky, who represented the government at trial, rebutted the sufficiency claims of Avenatti’s appeal.

“The evidence as to each of these elements was extensive, and far more than sufficient,” prosecutors wrote in a brief. “The record is replete with evidence, including Avenatti’s own recorded statements, that Avenatti well understood that he had no entitlement to be hired or paid by Nike, much less that he be paid more than $20 million. Avenatti’s arguments to the contrary amount to nothing more than a disagreement with the jury’s interpretation of the evidence, which was perfectly rational and therefore entitled to deference.”

At trial, prosecutors showed video footage of Avenatti in a meeting with attorneys for the Oregon-based sporting behemoth where he threatened to hold a press conference and contact The New York Times unless Nike paid up. “I’ll go take $10 billion off your client’s market cap,” Avenatti warned.

To call off the press conference, Avenatti wanted a $1.5 million settlement payment to his client, youth basketball coach Gary Franklin, on top of Nike's promise to hire Avenatti and co-counsel Mark Geragos on a retainer between $15 million and $25 million to conduct an internal investigation.

“It’s worth more in exposure for me to just blow the lid on this thing,” Avenatti gloated to Nike reps in the videotape.

“A few million dollars doesn’t move the needle with me,” AUSA Podolsky quoted Avenatti to the appeals panel on Thursday. “Well, that's clearly conveying that if his demands aren't met to pay him, this matter is not going to be settled.”

“That is a request for a bribe, and that is a crime,” the prosecutor concluded.

The three-judge panel, made up of Senior U.S. Circuit Judge John M. Walker Jr., Senior U.S. Circuit Judge Reena Raggi and U.S. Circuit Judge Michael Park, took the case under advisement and did not issue a ruling on Thursday.

U.S. District Judge Paul Gardephe sentenced Avenatti to 24 months imprisonment on count one, and 30 months imprisonment on each of counts two and three, with all terms to be served concurrently.

“Mr. Avenatti’s conduct was outrageous,” the George W. Bush-appointee said at sentencing in July 2021. “He hijacked his client’s claims and he used those claims to further his own agenda, which was to extort millions of dollars from Nike for himself."

The 30-month sentence in the Nike case runs concurrently with the four-year sentence ordered by another judge in the same district on Avenatti’s conviction for stealing book proceeds from Stormy Daniels, the porn actress who catapulted Avenatti to fame as he represented her in courtrooms and cable news programs during her legal battles with then-President Donald Trump.

Having separately pleaded guilty to federal embezzlement charges in the Central District of California, the disbarred Avenatti will serve an additional 14-year sentence on top of the two prison terms he received in New York.

Avenatti admitted in June 2022 to stealing a total of $7.9 million from four of his clients, including from one man who had ended up a paraplegic as a result of his incarceration in Los Angeles County jail and who had received a $4 million settlement. The attorney also pleaded guilty to obstructing the IRS effort to collect $3.2 million in payroll taxes from his coffee business, which the government said was partially funded by the money he had stolen from clients.

U.S. District Judge James Selna imposed a 14-year sentence in the California case and ordered that this term of imprisonment run consecutive to sentences totaling four years from the two federal cases in the Southern District of New York.

Judge Selna also ordered Avenatti to pay $10,810,709 in restitution to four clients and to the IRS.

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