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US-CRIME-AVENATTI
Lawyer Avenatti arrested, accused of fraud and of extorting Nike
LOS ANGELES, March 26, 2019 (BSS/AFP) – Michael Avenatti, who shot to fame
as the lawyer of adult film star Stormy Daniels, was arrested on Monday on
charges of trying to extort more than $20 million from Nike and for
embezzling a client’s money.
The celebrity attorney, who represented Daniels in her lawsuit against
President Donald Trump, was arrested in New York based on separate complaints
filed in that city as well as California.
He was due to be released later Monday following an initial court
appearance and after signing a $300,000 personal recognizance bond. His
travel was also restricted to California and New York.
According to the complaint filed in New York and involving the sports
apparel giant, Avenatti devised a scheme to extort millions of dollars from
Nike by threatening to damage the company’s reputation right before its
quarterly earnings and the start of the NCAA men’s basketball tournament.
He accused Nike of being involved in a basketball bribery scandal and vowed
to go public with his allegations unless the company agreed to multi-million
dollar payments to him under the guise of legal work, authorities said.
“Calling this anticipated payout a retainer or a settlement doesn’t change
what it was — a shakedown,” New York federal prosecutor Geoffrey Berman told
reporters.
The complaint states that Avenatti, 48, and a California-based lawyer known
for representing celebrities approached Nike on March 19 with a list of
financial demands.
The following day, in a telephone conversation with attorneys for Nike,
Avenatti stated that if his demands were not met he would “take $10 billion
off your client’s market cap… I’m not fucking around,” according to the
complaint.
Authorities said he haggled with Nike attorneys over the amount he should
be paid, finally telling them he would “ride off into the sunset” if he
received $22.5 million.
Berman said his office launched a probe after being contacted by Nike.
– ‘Lawless conduct and greed’ –
Less than an hour before his arrest was announced, Avenatti tweeted that he
would be holding a press conference Tuesday 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,” he added.
In a statement, Nike said it had reached out to federal officials after the
initial meeting with Avenatti as it would not stand being extorted.
“Nike has been cooperating with the government’s investigation into NCAA
basketball for over a year,” the statement said. “When Nike became aware of
this matter, Nike immediately reported it to federal prosecutors.”
Speaking to reporters after his court appearance in New York, Avenatti said
he was confident he will “be fully exonerated and justice will be done.”
“As all of you know, for the entirety of my career, I have fought against
the powerful — powerful pelople and powerful corporations,” he said. “I will
never stop fighting that good fight.
Avenatti — who at one point entertained the possibility of running for
president — embezzled a client’s money in order to pay his own expenses and
debts and also defrauded a bank by using phony tax returns to obtain millions
of dollars in loans, according to the two-count criminal complaint filed in
California.
“The investigation paints an ugly picture of lawless conduct and greed,”
Nicola Hanna, the US attorney for the Central District of California, told
reporters.
At odds with Avenatti’s claim to be fighting for the most vulnerable, Hanna
said a two-year probe conducted by his office paints a picture of “a corrupt
lawyer who instead fights for his own selfish interests by misappropriating
close to a million dollars that rightfully belong to one of his clients.”
“Lawyers have a sworn duty to obey the law and protect their clients,”
Hanna said. “Mr Avenatti has breached that duty and violated the principles
of honesty and fairness that he claims to uphold.”
He said Avenatti, who is due to appear in a California federal court on
April 1, faces up to 50 years in prison if found guilty in the case.
He faces up to 47 years in prison on the four extortion-related charges
filed in New York.
Daniels — who dropped Avenatti as her lawyer earlier this month — reacted
swiftly, saying in a tweet that while she was saddened by the news reports,
she was not shocked.
“I made the decision more than a month ago to terminate Michael’s services
after discovering that he had dealt with me extremely dishonestly and there
will be more announcements to come,” she said.
BSS/AFP/GMR/0816 hrs