By Joseph Ax and Brendan Pierson
NEW YORK (Reuters) - Attorney Michael Avenatti, who
represented adult film star Stormy Daniels in her legal battles with U.S.
President Donald Trump, was charged with
what prosecutors said was an attempt to “shake down” Nike Inc for over $20
million.
Avenatti, who was also hit with separate embezzlement and
fraud charges in U.S. District Court in Los Angeles, was arrested in New York.
A federal magistrate judge ordered Avenatti, 48, released
on $300,000 bond during a hearing in U.S. District Court in New York. A subdued
Avenatti appeared in the courtroom wearing a dark gray suit and sitting with
federal public defenders.
“When due process occurs I will be fully exonerated and
justice will prevail,” Avenatti said outside the court following the hearing.
Prosecutors said Avenatti and another lawyer, who was not
named in court papers, met with Nike’s attorneys on March 19 and told them they
had a client, a former amateur coach, who had evidence Nike employees had
bribed top high school players to play for Nike-sponsored college teams.
The other lawyer, an unnamed co-conspirator, was
identified by The New York Times and The Wall Street Journal, citing sources,
as high-profile Los Angeles attorney and CNN contributor Mark Geragos.
Geragos did not respond to a request by Reuters for
comment. A spokeswoman for CNN said Geragos was no longer with the network.
According to the criminal complaint, Avenatti told Nike
he would go public unless it paid his client $1.5 million and hired him and the
other lawyer to conduct an internal investigation for between $15 million and
$25 million.
Avenatti also offered to accept a $22.5 million payment
for his silence, prosecutors said.
A former executive at Nike rival athletic shoe maker
Adidas was recently convicted in federal court in Manhattan of participating in
a similar scheme, part of a sweeping probe by prosecutors of corruption
surrounding the National Collegiate Athletic Association. The case has ensnared
several prominent basketball coaches.
In one call, Avenatti threatened, “I’ll go take ten
billion dollars off your client’s market cap ... I’m not fucking around,”
according to the complaint.
Geragos, who has represented celebrities such as Michael
Jackson and Winona Ryder, is defending the actor Jussie Smollett, who is
charged with falsely reporting he was the victim of a racially motivated attack
in Chicago.
It was not clear why Geragos has not been charged in the
Nike case.
“OLD-FASHIONED
SHAKE-DOWN”
The charges came shortly after Avenatti said on Twitter
he would hold a news conference to
reveal “a major high school/college basketball scandal” reaching “the highest
levels of Nike.”
“A suit and tie does not mask the fact that, at its core,
this was an old-fashioned shakedown,” Geoffrey Berman, the U.S. attorney in
Manhattan, told a news conference.
Nike said in a statement it “will not be extorted” and
alerted investigators to Avenatti’s demands immediately.
Federal prosecutors in California unveiled separate
charges against Avenatti on Monday, accusing him of misusing a client’s $1.6
million settlement to pay for his own expenses as well as those for his coffee
business.
He was also charged with defrauding a Mississippi bank of
$4.1 million in loans by submitting false tax returns for 2011-2013 that
inflated his income.
Avenatti faces up to 30 years in prison on the most
serious charge in California and up to 20 years for the top charge in New York.
He gained international notoriety for representing
Daniels, the porn star whom Trump is accused of paying off during the 2016
presidential campaign to keep quiet about an alleged affair. Trump has denied
having an affair with Daniels, whose real name is Stephanie Clifford.
Daniels, 40, who is no longer represented by Avenatti,
said she was “saddened but not shocked” by his arrest, adding she fired him
after learning he had acted “dishonestly” with her.
Reporting
by Joseph Ax and Brendan Pierson in New York; additional reporting by Daniel
Trotta and Jonathan Stempel in New York, Brendan O'Brien in Milwaukee, Nivedita
Balu in Bengaluru and Dan Whitcomb in Los Angeles; editing by Bill Tarrant,
Cynthia Ostermanand Leslie Adler
