High-profile US lawyer Michael Avenatti has been arrested on charges that he tried to extort as much as 25 million dollars (£19 million) from Nike by threatening the company with bad publicity.
The pugnacious 48-year-old is best known for representing porn actress Stormy Daniels in lawsuits against President Donald Trump.
Avenatti, who was also accused of embezzling a client’s money to pay his own expenses, was charged with extortion and bank and wire fraud in separate cases in New York and California.
He was arrested at a New York law firm where he had gone to meet Nike executives, minutes after he tweeted that he planned to hold a news conference to “disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered”.
“When lawyers use their law licences as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals,” said Geoffrey S Berman, the US attorney in New York.
California investigators had been building a case against Avenatti for more than a year, but prosecutors in New York said their investigation began only last week and was completed in days.
In the California case, Avenatti allegedly misused a client’s money to pay his debts and those of his coffee business and law firm.
Federal prosecutors said he also defrauded a Mississippi bank by using fake tax returns to obtain millions of dollars in loans.
The allegations “paint an ugly picture of lawless conduct and greed”, said Nick Hanna, the US attorney in Los Angeles.
Lawyer Michael Avenatti Arrested on Federal Bank Fraud and Wire Fraud Charges https://t.co/Iv1pwFWJ6I— US Attorney L.A. (@USAO_LosAngeles) March 25, 2019
Avenatti describes himself on Twitter as an attorney and advocate, but the accusations describe “a corrupt lawyer who instead fights for his own selfish interests”.
The arrest was a sharp reversal of fortune for Avenatti, who, less than a year ago, emerged as a leading figure in the anti-Trump movement, with relentless cable news appearances, a hard-punching style and a knack for obtaining information about others’ wrongdoing.
He appeared briefly in court on Monday evening and was ordered released on 300,000 dollars (£227,000) bond. He did not enter a plea.
Donald Trump Jr gloated over the arrest on Twitter.
“Good news for my friend @MichaelAvenatti, if you plead fast enough, you might just get to share a cell with Michael Cohen!” he wrote, referring to the former Trump lawyer set to go to prison next month for crimes that include orchestrating hush-money payments to Daniels.
Avenatti allegedly threatened to hold a news conference last week on the eve of Nike’s quarterly earnings call and the start of the NCAA basketball tournament to announce allegations of misconduct by Nike employees.
The attorney and a co-conspirator demanded to be paid up to 25 million dollats and an additional 1.5 million dollars (£1.1 million) for an Avenatti client to remain silent, the complaint said.
Two sources confirmed that the unidentified co-conspirator was Mark Geragos, a Los Angeles criminal defence lawyer known for his work with celebrities.
Mr Geragos, a one-time CNN contributor, has a client list that has included Michael Jackson, Winona Ryder, Scott Peterson and most recently Jussie Smollett, the actor accused of fabricating a racist, anti-gay attack in Chicago.
The Avenatti client is a coach of an amateur athletic union men’s basketball programme in California, according to the papers.
Shortly before the charges came to light, Avenatti tweeted that he planned to hold another news conference regarding Nike on Tuesday. Less than 45 minutes later, prosecutors announced the extortion case and his arrest.
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.— Michael Avenatti (@MichaelAvenatti) March 25, 2019
Nike officials told investigators that Avenatti claimed to know of rules violations by an amateur basketball team sponsored by Nike. Executives immediately reported the threats to federal authorities.
The company “firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors”, Nike said in a statement.
Avenatti rose to national prominence by representing Daniels, whose real name is Stephanie Clifford, in a lawsuit to break a confidentiality agreement to speak about her alleged affair with Mr Trump.
My statement regarding my former attorney Mr. Avenatti.. pic.twitter.com/9aKYCPNN6y— Stormy Daniels (@StormyDaniels) March 25, 2019
He also made headlines in recent weeks for representing two women who accused R&B star R Kelly of sexual abuse, and he briefly explored the idea of a presidential bid last year.
Daniels said she was “saddened but not shocked” by the arrest. She said she fired Avenatti a month ago after “discovering that he had dealt with me extremely dishonestly”.