Celebrity attorney Michael Avenatti—who gained public recognition after representing adult film star Stormy Daniels in a defamation lawsuit against her alleged ex-lover President Donald Trump—was arrested by the FBI in New York Monday for allegedly trying to extort up to $25 million from Nike.
And less than an hour after he was charged with four counts of extortion and related crimes by the U.S. attorney for the Southern District of New York, federal prosecutors in Los Angeles announced that they were also charging the California celebrity lawyer with bank and wire fraud in a separate case.
“A suit and tie doesn’t mask the fact that at it’s core, this was an old fashioned shakedown,” U.S. Attorney for the Southern District of New York Geoffrey Berman said during a press conference later in the afternoon.
Nike told Bloomberg it’s cooperating with a government investigation into NCAA basketball and alerted federal prosecutors.
“Nike will not be extorted or hide information that is relevant to a government investigation,” Nike told Bloomberg in an email. “When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation.”
The New York Nike Case
According to the New York complaint, Avenatti, 48, threatened that he’d release damaging information about Nike right before its earnings call, unless the athletics giant paid him and a co-conspirator $15 to $20 million. Although the co-conspirator wasn’t formally named, the Wall Street Journal reports that it was Mark Geragos, who represented Nike endorser Colin Kaepernick in a grievance suit against the NFL.
According to the complaint, Avenatti told Nike’s lawyers on a phone call last Wednesday that if they didn’t pay meet his monetary demands, which also included a $1.5 million payout to a client who’s been kept anonymous , he’d “go take $10 billion off your client’s market cap… I’m not f—ing around.”
Days later, sans payout, Avenatti tweeted that he planned to host a press conference to discuss an alleged against the athletic company Monday at 12:16 p.m. ET. Nike’s stock fell 0.3% shortly after.
“This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball,” he tweeted.
According to CNBC, the complaint charges that Avenatti threatened Nike’s lawyers on a phone call last Wednesday, during which he said that if the company didn’t pay him tens of millions of dollars, he would “go take ten billion dollars off your client’s market cap … I’m not f—ing around.”
Less than an hour after, the Department of Justice announced that Avenatti had also been charged in the Centra District of California for allegedly embezzling a client’s money and defrauding a bank through falsified tax returns.
According to the complaint, Avenatti lied to his clients about the amount of money they had won in a $1.6 million settlement, giving them their payout months later than legally mandated to cover his own personal and business expenses. He also allegedly used fake tax returns to get a $4.1 million loan from a Mississippi bank to fund his law firm and coffee business.
“Knowing what I know now about Michael, I’m saddened but not shocked regarding his arrest,” Daniels’ lawyer told CNBC in a statement. “I made the decision weeks ago to terminate Michael’s services after discovering that he had dealt with me extremely dishonestly, and I will have my own announcement coming soon.”