Michael Avenatti Convicted of Federal Fraud, Extortion Charges in Nike Shakedown
"This is what extortion looks like," assistant U.S. attorney Matthew Podolsky said during the government's closing arguments Tuesday.
February 14, 2020 at 02:23 PM
4 minute read
A Manhattan federal jury on Friday convicted Michael Avenatti, the brash California lawyer and outspoken critic of President Donald Trump, on charges of extortion and fraud stemming from a shakedown of Nike Inc. in March 2019.
The guilty verdict followed more than two weeks of trial in the U.S District Court for the Southern District of New York, where prosecutors alleged that Avenatti used a client's claims of corruption at Nike to demand that the company pay him between $15 and $25 million to lead an internal investigation into allegations that Nike employees had made illegal payments to the families of high school basketball players.
Avenatti, known for his representation of adult film star Stormy Daniels in her lawsuit against Trump, pleaded not guilty to two counts of extortion and one count of honest-services fraud.
He claimed that his meetings with Nike lawyers were simply settlement talks on behalf of Gary Franklin, a youth basketball coach who had raised concerns after the company pulled its $72,000-per-year sponsorship of his elite California squad, and said the prosecution was at least partially motivated by his public criticisms of the president.
Throughout the trial, jurors heard evidence that Avenatti was facing at least $11 million in personal debts and that his law firm had spiraled into bankruptcy before the alleged extortion plot took place. A former office manager who regularly discussed finances with Avenatti testified that Avenatti had told her he had a plan that would reverse his fortunes and finally allow him to "live the way he wanted to."
They also heard recordings of the meetings, where Avenatti threatened to lay out allegations of Nike's wrongdoing in a press conference that, he said, would take $10 billion off the company's market cap.
"This is what extortion looks like," assistant U.S. attorney Matthew Podolsky said during the government's closing arguments Tuesday.
According to prosecutors, Avenatti's demands included a $1.5 million payment for Franklin, but Avenatti never told his client about his larger ask to head a Nike investigation.
Avenatti's defense attorneys, Scott and Howard Srebnick, painted their client as a zealous advocate, who was prepared to bring his considerable media profile to bear in order to settle Franklin's claims.
Howard Srebnick acknowledged in the defense's closing that Avenatti's behavior could be "harsh," "abrasive" and sometimes "chest-pounding," but, he said, that was exactly the type of powerful persona that led Franklin to hire Avenatti in the first place.
"In the words of Nike itself, he went in there to 'just do it' for his client," Srebnick said, quoting the company's iconic marketing slogan.
The jury of six men and six women deliberated for nearly three days before returning its guilty verdict. A tentative sentencing date was set for June 17.
For Avenatti, Friday's verdict was only the beginning of his criminal exposure on both coasts. He is set to stand trial in Manhattan later this year of charges that he skimmed money from an advance paid to his former client, Daniels, on a book deal, and prosecutors in California have accused him in a sprawling indictment of concealing assets and stealing millions from one-time clients.
Avenatti had remained in federal custody throughout his New York extortion trial, after he was arrested last month for violating the terms of his pretrial release in California.
Avenatti's lawyers, after the verdict was read, promised an appeal.
Geoffrey S. Berman, the U.S. Attorney for the Southern District, in a statement said that "while the defendant may have tried to hide behind legal terms and a suit and tie, the jury clearly saw the defendant's scheme for what it was—an old fashioned shakedown."
A pretrial conference was set for Feb. 25 in the case where Avenatti is charged with stealing money from Daniels when she was his client.
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