Federal prosecutors in Manhattan today brought charges against famed attorney Michael Avenatti for allegedly attempting to extort upwards of $20 million from Nike Inc.
In the complaint, filed in the U.S. District Court for the Southern District of New York, prosecutors said Avenatti threatened to release damning allegations against the firm if it did not agree to pay him and a co-conspirator more than $22 million. The complaint contends that Avenatti also demanded that Nike pay a client he purported to represent — described as an Amateur Athletic Union men’s basketball coach claiming to have damaging information against the brand — $1.5 million to secure his/her silence.
“As alleged, Michael Avenatti approached Nike last week with a list of financial demands in exchange for covering up allegations of misconduct on behalf of the company,” FBI Assistant Director in Charge William F. Sweeney Jr. said today. “In the event anyone needs to be reminded, this type of behavior is illegal, and it will not be tolerated — especially when committed by a lawyer who is supposed to use his license to practice law, not to willfully violate it.”
Here, five explosive allegations in the complaint.
Avenatti Threatened to Release Information in Tandem With Key Events
According to the complaint, Avenatti and a co-conspirator, who is also an attorney but was not named as a defendant, threatened to hold a press conference on the eve of Nike’s March 21 third-quarter conference call and the start of the annual National Collegiate Athletic Association tournament. During a March 19 meeting he scheduled with attorneys for Nike, Avenatti allegedly said he would use the press conference to announce allegations of misconduct by employees of Nike — and anticipated that releasing negative information about Nike at such a pivotal time would hurt its market value. “Avenatti stated … he approached Nike now … maximizing the potential financial and reputational damage his press conference could cause to Nike,” the complaint read. During a March 20 recorded phone call, Avenatti allegedly escalated those threats by telling attorneys for Nike that “I’ll go take 10 billion dollars off your client market cap … I’m not f**king around,” according to court documents. (After the March 19 meeting, Nike’s attorneys contacted the U.S. Attorney’s Office for the Southern District of New York, which launched an investigation in conjunction with the FBI, resulting in subsequent calls and meetings between the attorneys being recorded.)
An AAU Coach Was Disgruntled Over Nike’s Decision to End a Contract
During his first meeting with two attorneys for Nike, on March 19, Avenatti allegedly stated that Nike previously had a contractual relationship with the AAU team coached by his client. Nike had recently decided not to renew the contract, valued at $72,000 annually. Avenatti’s client purported to have evidence that one or more Nike employees had authorized payments to the families of top high school basketball players and/or their families. (Former Adidas executive James “Jim” Gatto was sentenced to prison time this month for his role in the NCAA pay-for-play scandal that turned college basketball on its head in 2017.) Avenatti allegedly named three high school players in particular but indicated the AAU coach had more names of those who had allegedly received payments from Nike.
Avenatti Wanted Nike to Retain Him for an “Internal Investigation”
Among his major demands to keep the potentially harmful information against Nike under wraps, prosecutors allege Avenatti requested that Nike hire him and his purported co-conspirator “to conduct an internal investigation of Nike, with a provision that if Nike hired another firm to conduct such an internal investigation, Nike would still be required to pay Avenatti and [his purported co-conspirator] at least twice the fees of any other firm hired,” the documents stated. Avenatti also, per court papers, told Nike’s attorneys on March 20 that his demand was not simply to be retained by Nike but to “be paid at least $10 million or more by Nike in return for not holding a press conference.”
“I’m not f**king around with this, and I’m not continuing to play games … You guys know you have a serious problem. And it’s worth more in exposure to me to just blow the lid on this thing,” he allegedly told Nike attorneys.
Among the purported perks of having Avenatti and his team conduct the internal investigation for Nike were that such a process, according to Avenatti, could “benefit Nike by, among other things, allowing Nike to ‘self-report’ any misconduct, and that it would be Nike’s choice whether to do so,” the court documents stated.
More Than $20 Million Was Requested in Desired Payouts
Court documents stated Avenatti demanded during a March 21 meeting with Nike attorneys a $1.5 million payment for his client, the AAU coach. Avenatti allegedly requested an additional $12 million retainer to be paid immediately to himself and his co-conspirator and “deemed earned when paid,” with a minimum guarantee of $15 million in billings and a maximum fee of $25 million.
When a Nike attorney purportedly asked whether Nike could resolve the demands just by paying the AAU coach rather than retaining Avenatti and his co-conspirator, Avenatti allegedly stated: “If [Nike] wants to have one confidential settlement and we’re done, they can buy that for 22 and half million dollars and we’re done … Full confidentiality, we ride off into the sunset.”
Authorities Flagged an Incriminating Tweet
Shortly after that March 21 meeting, Avenatti allegedly made good on some of his purported threats by posting a message to Twitter, writing in reference to an article about a prior prosecution involving employees of Adidas: “Something tells me that we have not reached the end of this scandal. It is likely far far broader than imagined.”