Avenatti Doubles Down, Says Nike Targeted Him to Cover Up ‘Crimes’
Avenatti Doubles Down, Says Nike Targeted Him to Cover Up ‘Crimes’
(Bloomberg) -- Michael Avenatti brushed aside claims by prosecutors that he tried to extort millions of dollars from Nike Inc., thanking followers for their support after he was released on bail and lobbing fresh accusations at the world’s biggest sports apparel and footwear company.
In a series of tweets Tuesday, the lawyer said it’s Nike -- not him -- that should be prosecuted. The company targeted him “to divert attention from their own crimes,” he said. Avenatti also disputed Nike’s claim that it’s been cooperating with a probe into corruption in NCAA basketball, as Nike said after Avenatti was arrested outside the company’s law firm.
“Contrary to Nike’s claims yesterday, they have NOT been cooperating with investigators for over a year. Unless you count lying in response to subpoenas and withholding documents as ‘cooperating,’” Avenatti tweeted separately. The lawyer also questioned why, if Nike had been cooperating, there weren’t disclosures about it in their SEC filings.
A Nike spokesman declined to comment on the tweets. Its statement Monday concluded that “Nike firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors.”
Avenatti posted plans to hold a press conference to unveil a case he claimed would show how “criminal conduct reached the highest levels of Nike.” According to prosecutors, he told lawyers at Boies Schiller Flexner LLP that he’d cancel the event if Nike paid more than $20 million for him and another lawyer to conduct an internal investigation, and his client.
“I’ll go take ten billion dollars off your client’s market cap,” Avenatti told them in a March 20 phone call secretly recorded by the FBI and cited in the complaint. Nike shares did decline Monday after the press conference tweet, but rose after his arrest. The stock was up 1.3 percent at 2:16 p.m. in New York.
View the TicToc timeline on Michael Avenatti’s rapid rise
The circumstances are “highly unusual,” according to Melissa Jampol, a former state and federal prosecutor in New York and New Jersey who isn’t involved in the case. Avenatti was making tough negotiation remarks that “might not normally be construed as extortion” in a difference context, she said.
“This case boils down to the lines between firm negotiations and zealous advocacy, and stuff that crosses the line into extortion,” Jampol said. “The government ultimately will have to prove at trial that there was criminal intent here -- that he willfully and knowingly intended to extort the company.”
U.S. Attorney Geoffrey Berman seemed to address that point during the press conference after the arrest. “Avenatti was not acting as an attorney. A suit and tie doesn’t mask the fact that at its core, this was an old-fashioned shakedown.”
Based on the government’s filings, Avenatti “went pretty far over the line” between legitimate negotiation tactics and criminal wrongdoing, according to Josh Robbins, who leads the white-collar criminal defense practice at Greenberg Gross LLP in Los Angeles. Avenatti may also try to get the full recordings of his conversations with Nike’s lawyers.
“Depending on what he actually said and the full context of the recorded conversations he could try to make the argument the government was taking him out of context and that it was more of a genuine settlement offer than extortion,” said Robbins, who isn’t involved in the case. “The quotations attributed to him by the government sound pretty bad.”
Scott Wilson, one of Nike’s attorneys, is one of two lawyers at Boies Schiller who wore a wire for the FBI, and is identified in the complaint as “Attorney-1,” according to a person familiar with the matter. Wilson, a former senior adviser and special counsel to the New York Attorney General, didn’t immediately respond to a phone call.
What Bloomberg Opinion Says“He didn’t just ask for money; he demanded that Nike do an internal investigation and that he be in charge of it. (And be paid a lot.) It’s not pure, naked blackmail; it is a settlement negotiation that gets a little deeper into blackmail territory than you’d ideally like. But any settlement negotiation is, you know, “give me money or I will sue and that will be embarrassing for you,” so it is a matter of degrees.” --Matt Levine, columnist Click here to view the piece. |
Avenatti was released Monday evening on $300,000 bond. His next court appearance will be in Santa Ana, California as he was also charged in a separate case by prosecutors in Los Angeles. There he’s accused of stealing a client’s $1.6 million settlement and using it to cover expenses, as well as defrauding a bank to obtain more than $4 million in loans. He hasn’t addressed those allegations.
--With assistance from Eben Novy-Williams.
To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Blumberg, Heather Smith
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