Federal prosecutors in New York announced that they filed charges against Michael Avenatti, the lawyer who said he had a major announcement against Nike and it’s alleged involvement in a ‘major school/college basketball scandal.’
The charges filed by Assitant United States Attorneys Matthew Podolsky, Robert L. Boone, and Robert B. Sobelman alleges that Avenatti of attempting to extort Nike for up to $25 million by threatening to release damaging information about the company.
He now faces five counts of conspiracy to commit extortion.
Earlier today, Avenatti posted on Twitter that he will be holding a press conference to disclose a major high school/college basketball scandal by Nike that he and his team have discovered. “This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.”
Nike’s shares reportedly fell as much as 1.3% after the tweet of Avenatti’s supposed expose.
According to the lawsuit, Michael Avenatti attempted to conspire with another party to “extract more than $20 million in payments from a publicly traded company by using his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met.”
In an 11-page complaint, prosecutors said that Avenatti met with Nike’s attorneys to demand a payment ‘to make a multi-million dollar payment” and make an additional $1.5 million dollar payment to an individual that the lawyer refers to like his client.
The client was said to be an AAU coach, whose team have previously made deals with Nike. According to the affidavit, Nike refused to further renew the contract with Avenatti’s client. Avenatti claimed that his client has evidence that would prove that Nike employees have paid the families of high school players “similar to conduct a rival company” that had recently been subjecting of criminal proceedings in the District. He named three high school players in particular and indicated that his client is well aware of the said payments as well.
The legal document obtained by Z6Mag also revealed that on March 20, Avenatti called the representative of Nike concerning the demanded payment and if those demands were not met, the lawyer will “go and take ten billion dollars off your client market cap […] I’m not f*cking around.”
An affidavit from an investigator from Federal Bureau of Investigation said that Avenatti and another party referred to as “CC-1” used “threats of economic and reputational harm to extort Nike[…] Specifically, Avenatti threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of the annual National Collegiate Athletic Association (NCAA) tournament at which he would announce allegations of misconduct by employees of Nike”
The complaint characterized the unnamed CC-1 as an attorney licensed to practice in the state of California and is similarly known to have represented celebrities and public figure clients like Avenatti.
AVENATTI WANTS TO BE PAID FOR “INTERNAL INVESTIGATION” THAT NIKE DID NOT REQUEST
Special Agent Christopher Harper further revealed that the lawyer and the certain CC-1 demanded to be “retained” by Nike to conduct an “internal investigation – an investigation that the global athletic brand did not request. Avenatti and his cohort also allegedly demanded payment for their work in the said “internal investigation” with a retainers fee amounting to $22.5 million.
The attorneys of Nike said that they asked for time from Avenatti and the defendant gave them until Tuesday, two days after the alleged meeting.
“If [Nike] want to have one confidential settlement and we’re done, they can buy that for twenty-two and half million dollars, and we’re done[…] Full confidentiality, we ride off into the sunset,” Avenatti allegedly told Nike’s lawyers as indicated in the filed court document.
A screenshot of one of Avenatti’s posts on Twitter was also cited in the affidavit. The tweet seems to taunt the “end of the scandal” about the demands (and the inability of Nike to meet them) he made from the company.
“Something tells me that we have not reached the end of this scandal. It is likely far far broader than imagined,” Avenatti wrote on Twitter.
Furthermore, the lawyer is also facing federal charges of wire fraud and bank fraud in the Central District of California. The Department of Justice said that “Federal law enforcement officials will provide details concerning today’s arrest of lawyer Michael Avenatti, who faces federal charges of wire fraud and bank fraud in the Central District of California.” /apr