Nice shoe company you got there. It’d be a real shame if something happened to it. Attorney Michael Avenatti has been arrested and is being charged with extortion by the US Attorney for the Southern District of New York. He is also being charged with wire and bank fraud by the US Attorney for Central California. According to the complaint in the New York case, Avenatti attempted to pressure Nike into paying him and others involved in the scheme $22.5 million dollars. From CNBC:
A criminal complaint against Avenatti says he “devised a scheme to extort a company by means of an interstate communication by threatening to damage the company’s reputation if the company did not agree to make multi-million dollar payments to Avenatti and [co-conspirator], and further agree to pay an additional $1.5 million to a client of Avenatti’s.”
The complaint says that last Wednesday, Avenatti and a cooperating witness spoke by phone with lawyers for Nike “during which Avenatti stated, with respect to his demands for payment of milions of dollars, that if those demands were not met ‘I’ll go take ten billion dollars off your client’s market cap … I’m not f—ing around.’ “
Yashar Ali tweeted some excerpts of the court documents which outline some of the evidence prosecutors have in this case:
— Yashar Ali 🐘 (@yashar) March 25, 2019
The charges against Avenatti were announced about 15 minutes after he tweeted this:
Tmrw at 11 am ET, we will be holding a press conference 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.
— Michael Avenatti (@MichaelAvenatti) March 25, 2019
Sounds like he was following through on his threat to hurt the company financially. Indeed, CNBC published a separate story saying Nike’s stock did drop a bit after the tweet:
Shares of Nike fell more than 1 percent on Monday following a tweet from California-based lawyer Michael Avenatti alleging Nike’s involvement in a “major high school/college basketball scandal.”
Meanwhile, on the west coast the US Attorney for the Central District of California announced that Avenatti has been charged with bank fraud and embezzlement:
Avenatti, 48, of Century City, was arrested today pursuant to a two-count felony complaint charging him with wire fraud and bank fraud. He also was arrested pursuant to a separate federal case filed in New York.
According to an affidavit filed with the criminal complaint in this case, Avenatti negotiated a settlement which called for $1.6 million in settlement money to be paid on January 10, 2018, but then gave the client a bogus settlement agreement with a false payment date of March 10, 2018. The affidavit states that Avenatti misappropriated his client’s settlement money and used it to pay expenses for his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in California and Washington state, as well as for his own expenses. When the fake March 2018 deadline passed and the client asked where the money was, Avenatti continued to conceal that the payment had already been received, court documents said.
Avenatti also allegedly defrauded a bank in Mississippi by submitting to the lender false tax returns in order to obtain three loans totaling $4.1 million for his law firm and coffee business in 2014. According to the affidavit, Avenatti obtained the loans by submitting fabricated individual income tax returns (Forms 1040) for 2011, 2012, and 2013, reporting substantial income even though he had never filed any such returns with the Internal Revenue Service. The phony returns stated that he earned $4,562,881 in adjusted gross income in 2011, $5,423,099 in 2012, and $4,082,803 in 2013, according to the affidavit. Avenatti allegedly also claimed he paid $1.6 million in estimated tax payments to the IRS in 2012 and paid $1.25 million in 2013. In reality, Avenatti never filed personal income tax returns for 2011, 2012 and 2013 and did not make any estimated tax payments in 2012 and 2013. Instead of the millions of dollars he claimed to have paid in taxes, Avenatti still owed the IRS $850,438 in unpaid personal income tax plus interest and penalties for the tax years 2009 and 2010, court papers state. The affidavit also alleges that, as part of his loan applications, Avenatti also submitted a fictitious partnership tax return for his law firm.
“A lawyer has a basic duty not to steal from his client,” said United States Attorney Nick Hanna.
According to the press release, Avenatti is facing “a statutory maximum sentence of 50 years in federal prison” but Ken White (aka Popehat) pointed out to me that these figures are often very misleading despite the fact that they regularly appear in press releases like the one above. Avenatti won’t serve anything close to that maximum even assuming he’s convicted.
The more significant question is whether or not he will be able to retain his law license if he’s convicted. And if it turns out he can’t practice law, what is he going to do for a living? CNN and MSNBC made this guy a household name. Maybe they will throw him a bone?
Finally, Avenatti’s former client Stormy Daniels says she’s “not shocked” by the news:
My statement regarding my former attorney Mr. Avenatti.. pic.twitter.com/9aKYCPNN6y
— Stormy Daniels (@StormyDaniels) March 25, 2019
Update: WSJ is reporting Avenatti’s co-conspirator is attorney Mark Geragos.
Geragos is an attorney to the stars who has recently been working for Colin Kaepernick and Jussie Smollett.
Update: Just a reminder that CNN and MSNBC made Avenatti a household name by having him on the air constantly last year. That’s how he has the juice to threaten anyone with reputational and financial harm. From the Free Beacon:
The Washington Free Beacon analyzed 108 appearances by Avenatti on MSNBC and CNN over a 64-day period from March 7 to May 10. To calculate his earned media time, the Free Beacon multiplied the length of his appearances on a program by its “National Publicity Value” determination from media monitoring site TVEyes.com.
The total came out to $174,631,598.07 from at least 65 CNN appearances and 43 MSNBC appearances. Avenatti’s favorite shows include CNN’s “Anderson Cooper 360” (at least 20 interviews), MSNBC’s “The Last Word with Lawrence O’Donnell” (14), CNN’s “New Day” (12), CNN’s “Tonight with Don Lemon” (eight), and MSNBC’s “Deadline White House” (seven).
Here’s MSNBC’s Ali Velshi today saying his head is going to explode over the charges.
MSNBC’s Ali Velshi on Michael Avenatti's arrest: "My head is officially going to explode" pic.twitter.com/UoPrTnIVF1
— Ryan Saavedra (@RealSaavedra) March 25, 2019
Update: Here’s the SDNY press conference on the charges.
NY federal prosecutors announce charges against attorney Michael Avenatti for threatening to extort Nike. https://t.co/yuMsj4nxSx
— USA TODAY (@USATODAY) March 25, 2019
Update: CNN and Mark Geragos have parted ways.
Just received this from a CNN spokeswoman on Mark Geragos, who is Michael Avenatti's alleged co-conspirator:
"Mark Geragos is no longer CNN contributor."
— Justin Baragona (@justinbaragona) March 25, 2019