Michael Avenatti Arrested on Federal Charges in New York

Stormy Daniels’ former attorney also faces bank fraud charges in Los Angeles

Last Updated: March 25, 2019 @ 12:23 PM

Michael Avenatti, who previously represented adult star Stormy Daniels, was arrested in Manhattan Monday on charges that he tried to extort more than $20 million from Nike.

Avenatti was also charged in a separate federal case in Los Angeles in which he is accused of embezzling a client’s money “in order to pay his own expense and debts,” and of “defrauding a bank in Mississippi,” according to prosecutors.

James Margolin, a spokesman for the Southern District of New York, said that Avenatti is scheduled to appear in court Monday afternoon.

Before he was taken into custody, 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. This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.”

The complaint also mentions an unidentified co-conspirator in the case, referred to as “CC-1.” On Monday, the Wall Street Journal identified him as Jussie Smollett attorney Mark Geragos. Geragos’ office told TheWrap that Geragos said it was aware of the report but would not be commenting.

“The allegations related to Nike arose out of Mr. Avenatti’s representation of a client identified in the complaint as the coach of an amateur men’s basketball program in California, which prosecutors said had a sponsorship agreement with Nike,” the complaint read.

Avenatti was hit with four counts of bank and wire fraud after prosecutors said he tried to extort $20 million from Nike.

Per the complaint obtained by TheWrap, Avenatti met with Nike attorneys and “threatened to release damaging information about Nike if Nike did not agree to make multi-million dollar payments.”

According to the complaint, on March 20, Avenatti then spoke with Nike’s attorneys on the phone, telling them that if those demands were not met, Avenatti said he would “take $10 billion off your market cap… I’m not f—ing around.”

An FBI special agent said that Avenatti threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of the NCAA tournament to announce the “allegations of misconduct by employees of Nike.”

Avenatti told Nike he would refrain from holding the damaging press conference if Nike made a payment of $1.5 million to his client, and hired Avenatti and his client to conduct a $15 to $20 million for an investigation the company did not request.

In California, federal prosecutors say Avenatti embezzled $1.6 million in funds allocated for his client’s settlement to cover “expenses for his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in California and Washington state, as well as for his own expenses,” according to the statement.

He is also accused of fraudulently obtaining more than $4 million in loans from a bank in Mississippi in 2014 by submitting false tax returns.

Avenatti said he had paid nearly $3 million in federal taxes in 2012 and 2013. Prosecutors say, when, in reality, he had not paid any personal tax returns during those years.

Avenatti could not be reached for comment Monday.

In 2018, Avenatti rose to prominence representing Daniels, the adult film star who said she had an affair with Donald Trump before he became president.

On Monday, Daniels said that she cut ties with Avenatti more than a month ago “after discovering that he had dealt with me extremely dishonestly.”

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