Federal prosecutors in Manhattan and Los Angeles charged attorney Michael Avenatti nearly simultaneously in two criminal cases Monday, unsealing complaints that alleged he attempted to extort more than $20 million from Nike and that he committed wire and bank fraud.
Avenatti was arrested Monday afternoon in Manhattan, law enforcement officials tell CNN. He is set to appear in court later Monday.
According to the criminal complaint in New York, Avenatti met this month with an attorney for Nike and threatened to release what he said were allegations of misconduct by employees on the eve of both its quarterly earnings call and the start of the National Collegiate Athletic Association conference if Nike didn’t make millions in payments to him and an unnamed co-conspirator. Avenatti also allegedly demanded that Nike pay $1.5 million to an individual he claimed to represent.
“I’ll go take ten billion dollars off your client’s market cap … I’m not f***ing around,” Avenatti told Nike’s attorneys, according to the complaint.
“And I’m not continuing to play games,” he added. “You guys know enough now to know you’ve got a serious problem. And it’s worth more in exposure to me to just blow the lid on this thing.”
Minutes after the news about the New York charges broke, federal prosecutors in California charged Avenatti in a separate case involving wire and bank fraud — charges that could bring a maximum sentence of 50 years in federal prison.
Until recently, Avenatti represented adult-film actress Stormy Daniels, a central figure in the hush-money scandal that resulted in Manhattan federal prosecutors charging President Donald Trump’s former personal attorney, Michael Cohen, with campaign-finance violations. Cohen pleaded guilty and is set to report to prison in May.
On Monday, after the two sets of charges against Avenatti became public, Daniels said she was “saddened but not shocked” at the news.
“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 in a statement.
Avenatti did not immediately respond to a request for comment.
Prosecutor: ‘Old fashioned shakedown’
Geoffrey Berman, the US attorney for the Southern District of New York, told reporters Avenatti’s actions amounted to a “shakedown.”
“By engaging in the conduct alleged in the complaint, Avenatti was not acting as an attorney,” Berman said. “A suit and tie doesn’t mask the fact that at its core, this was an old-fashioned shakedown.”
Much of the alleged actions by Avenatti regarding Nike appeared to unfold quickly through roughly the past week, culminating in the announcement of his arrest Monday shortly after a tweet declaring his intent to hold a news conference Tuesday.
“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,” Avenatti tweeted.
Nike said in a statement that it would “not be extorted or hide information that is relevant to a government investigation” and had been cooperating with an investigation into NCAA basketball for over a year.
“When Nike became aware of this matter, Nike immediately reported it to federal prosecutors,” the statement said. “When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation.”
Mark Geragos is unnamed co-conspirator
Attorney Mark Geragos is the unnamed co-conspirator referred to in the New York criminal complaint against Avenatti, a source familiar confirmed to CNN.
The complaint described the co-conspirator as “an attorney licensed in California who’s known for his representation of celebrity and public figure clients.”
Geragos has not been charged with a crime.
The Wall Street Journal was the first to report that Geragos was the unnamed co-conspirator. Geragos, who has represented a number of high profile clients including Chris Brown and Jussie Smollett, was a CNN contributor.
Geragos did not immediately respond to CNN’s request for comment.
A source told CNN that Avenatti was arrested outside of the offices of Boies Schiller Flexner LLP in Manhattan, and a person familiar with the matter told CNN that the Nike lawyer who cooperated with the probe, referred to in the charging documents as “Attorney-1,” is Boies Schiller Flexner LLP partner Scott Wilson.
Feds in California announce separate charges
While the actions in the Manhattan case allegedly unfolded earlier this month, federal prosecutors in Los Angeles announced separate charges of wire fraud and bank fraud against Avenatti on Monday that they said were the product of a lengthy investigation.
The Justice Department said, in addition to the case filed in New York, Avenatti was arrested “pursuant to a criminal complaint alleging he embezzled a client’s money in order to pay his own expenses and debts — as well as those of his coffee business and law firm — and also defrauded a bank by using phony tax returns to obtain millions of dollars in loans.”
Nick Hanna, the US attorney for the Central District of California, told reporters that the charges against Avenatti “paint an ugly picture of lawless conduct and greed.” Hanna said that contrary to Avenatti’s Twitter description of himself as a fighter for justice, he is really a “corrupt lawyer who fights for his own selfish interests.”
Hanna said Avenatti committed fraud during his involvement in an intellectual property case that resulted in a $1.6 million payment that was supposed to be made in January 2018. Instead of paying the client, Avenatti gave a bogus date of March 2018 for the payment and used the money to pay his own coffee business and personal expenses, according to Hanna.
In 2014, Avenatti defrauded a Mississippi bank and submitted fake income tax returns, false law partnership tax returns to support applications for three loans totaling over $4 million, according to Hanna.
Hanna said Avenatti’s arrest was not politically motivated, nor did its timing have to do with the recent conclusion of the special counsel investigation led by former FBI Director Robert Mueller. Hanna added that the investigation was ongoing.