Attorney Michael Avenatti, who came to national prominence as the lawyer for adult film star Stormy Daniels, was arrested on federal charges in two separate cases in California and New York, federal prosecutors said Monday.
The U.S. attorney for the Southern District of New York charged Avenatti for allegedly trying to extort Nike for about $20 million. Prosecutors said he and another attorney threatened to release damaging information about the company if it did not meet his demands.
The U.S. attorney in Los Angeles separately announced Avenatti faces bank and wire fraud charges for allegedly embezzling money from a client and defrauding a bank through fake tax returns.
Avenatti was arrested in New York and is expected in federal court on Monday afternoon. An attorney for Avenatti did not immediately respond to a request for comment.
The criminal complaint in the New York case says Avenatti and an alleged co-conspirator, an attorney identified as “CC-1,” requested a meeting with lawyers representing Nike in New York last Tuesday, March 19.
At the meeting, Avenatti said he represented the coach of an amateur athletic union (AAU) basketball team in California whose contract with Nike had not been renewed. He said the coach had evidence of Nike employees funneling illegal payments to top high school basketball prospects and their families.
Avenatti allegedly threatened to hold a press conference detailing the allegations to coincide with the beginning of the NCAA basketball tournament and Nike’s quarterly earnings call. The complaint says Avenatti offered to scrap the press conference if Nike paid his client for $1.5 million and hired Avenatti to conduct an internal investigation of the company.
After the meeting later that afternoon, Nike’s attorneys contacted the U.S. Attorney’s Office to report the alleged extortion attempt.
On March 20, the next day, two of the Nike attorneys held a phone call with Avenatti that was recorded by law enforcement. Avenatti allegedly reiterated his demands for payment for him and his client.
“I’m not f—ing around with this, and I’m not continuing to play games,” Avenatti was recorded as saying. “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. A few million dollars doesn’t move the needle for me. I’m just being really frank with you.”
“I’ll go and I’ll go take $10 billion off your client’s market cap. But I’m not f—ing around,” he said.
On March 21 — the day of the Nike earnings call and the first day of the NCAA tournament — the group met again in New York, with the Nike attorneys recording the meeting. The Nike attorneys asked whether they could arrange to make a payment without an internal investigation.
“If [Nike] wants to have one confidential settlement and we’re done, they can buy that for $22.5 million and we’re done,” Avenatti is quoted as saying. “Full confidentiality, we ride off into the sunset.”
Avenatti set a deadline of Monday, March 25, to reach an agreement and arranged another meeting. Early Monday afternoon, Avenatti tweeted: “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.”
He was arrested when he showed up for the meeting in New York, U.S. Attorney Geoffrey Berman said at a press conference.
In the California case, prosecutors charged Avenatti with wire fraud, saying he negotiated a $1.6 million settlement for a client but used the money for personal use and to pay expenses for his coffee business.
Avenatti is also charged with bank fraud in California. According to the criminal complaint, Avenatti lied about his income to obtain more than $4 million in loans from a Mississippi bank in 2014. The complaint alleges Avenatti gave The Peoples Bank bogus tax returns showing more than $14 million in earnings for the three preceding years. In fact, the complaint alleges, Avenatti never filed returns for those years, and owed the IRS $850,000 from prior years.
Avenatti came to prominence for his representation of Daniels, the adult film star who alleged she had an affair with President Trump and was paid for her silence in the weeks before the 2016 election. On Monday, Daniels said she cut ties with Avenatti more than a month ago “after discovering that he had dealt with me extremely dishonestly.”
Lex Haris contributed to this report.
