California lawyer Michael Avenatti was indicted on federal charges that he tried to extort millions of dollars from shoe maker Nike Inc., as well as additional charges that he tried to divert client money for his own use, including a monthly car payment on a Ferrari.
The indictment by a federal grand jury in New York advances one of two criminal cases against Avenatti, who gained fame as the attorney for porn star Stormy Daniels in her legal battles against President Donald Trump. He must now appear in federal court in Manhattan to enter a plea to the charges, and a judge may set a trial date.
Avenatti was arrested in March as he arrived for a meeting about Nike at the New York offices of law firm Boies Schiller Flexner LLP. Separately, he’s charged by prosecutors in California with embezzling money from a client and defrauding a bank. He has denied wrongdoing in that case -- and now faces a trial on both coasts.
“I look forward to a jury hearing all of the evidence and passing judgment on my conduct,” Avenatti said. “At no time was any money misappropriated or mishandled. I will be fully exonerated once the relevant emails, contracts, text messages and documents are presented.”
Avenatti allegedly used misrepresentations and a fraudulent document to convince a client’s literary agent to divert money owed to the client to an account controlled by the lawyer, prosecutors in New York said. He then spent the money for his own personal and business purposes.
While the client that Avenatti defrauded was not identified in court papers, the indictment alleges that he stole “a significant portion” of advances from a book contract he helped secure. Daniels’ book, "Full Disclosure," which contains a forward from Avenatti, was published in October of last year.
“Michael Avenatti abused and violated the core duty of an attorney -- the duty to his client,” Manhattan U.S. Attorney Geoffrey Berman said. “As alleged, he used his position of trust to steal an advance on the client’s book deal. As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle.”
Avenatti also is accused of telling Nike he would hold a press conference and reveal that company employees were making improper payments to college basketball recruits unless the shoemaker paid him US$1.5 million and hired him and another attorney to conduct a US$25 million internal investigation.
Just minutes before his March arrest, Avenatti posted a tweet saying he would hold a press conference to disclose a “major high school/college basketball scandal” perpetrated by Nike that he claimed to have uncovered and reached "the highest levels of Nike and involves some of the biggest names in college basketball."
Avenatti’s alleged threat appeared to center on a U.S. probe into corruption involving college basketball. A former Adidas AG executive, assistant college basketball coaches and others have been convicted in the bribery and kickback investigations. Nike has said it’s been cooperating with prosecutors for more than a year and “immediately” told them of Avenatti’s actions.
Avenatti gained fame representing Daniels in her suit over a US$130,000 agreement, signed in the run-up to the 2016 election, requiring her to keep quiet about having had sex with Trump in 2006. The president denied the affair, but Michael Cohen, his former personal attorney, admitted to federal campaign law violations for arranging the payment to Daniels, who’s real name is Stephanie Clifford, to help Trump win election.
Daniels’s new lawyer, Clark Brewster, didn’t immediately respond to a message seeking comment.
The case is U.S. v Avenatti, 19-mj-2927, U.S. District Court, Southern District of New York.