Extortion or Negotiation? Avenatti’s Nike Jury Will Decide
Extortion or Negotiation? Avenatti’s Nike Jury Will Decide
(Bloomberg) -- Michael Avenatti, the lawyer who parlayed his work for adult-film actress Stormy Daniels into a platform as one of President Donald Trump’s most vocal critics, had a swift fall from grace in March after he was charged in New York with trying to extort millions of dollars from Nike Inc. and in California for stealing from clients.
He fell still further two weeks ago, when he was jailed for violating the terms of his bail and found himself in solitary confinement awaiting his trial in Manhattan.
Jurors will begin hearing Avenatti’s case this week, and their verdict will either be the first step on his path to vindication or land him behind bars for a much longer stretch.
“Once the actual evidence is heard, the jury and the public will learn that these charges are baseless and Nike and the government have tried to convict a man they know is innocent,” Avenatti, 48, said in a Jan. 12 interview, two days before his jailing. “Hopefully, people will then ask the real question -- why?”
According to prosecutors, the lawyer committed extortion when he demanded that Nike pay him and a colleague as much as $25 million or he would hold a press conference to announce claims the footwear maker illegally paid top high school basketball players. To Avenatti, who was representing a coach making the allegations, that’s an outrageous distortion of tough but legitimate negotiating positions taken in settlement talks.
Whether jurors decide he crossed the line will depend on whether they buy the government’s narrative or Avenatti’s claim that the case is a distraction from Nike’s conduct and political payback for his aggressive trolling of the president. Jury selection begins Monday.
Sharon McCarthy, a former Manhattan federal prosecutor now in private practice, said hostility to the president might not be enough to persuade jurors. “If the government is able to paint him in a negative light in terms of his self-interest versus his interest in helping a client, then I think that would in some ways negate that defense,” said McCarthy, who’s not involved in the case.
Prosecutors have said Avenatti was deeply self-interested, motivated to extort Nike because of $15 million in debt springing from court judgments against him as well as lavish spending on luxury cars, multiple homes and a failed coffee-bar chain. But Avenatti won a victory last week when U.S. District Judge Paul Gardephe ruled prosecutors could not tell the jury about the debt in detail. The judge said specifics about money owed to former partners and clients, as well as unpaid spousal and child support, risked biasing jurors against Avenatti.
Those debts are also a major reason Avenatti was jailed this month. Prosecutors in the California case claim he violated his bail conditions by engaging in fraudulent transactions aimed at dodging creditors. Avenatti denies wrongdoing.
In court, evidence of his financial situation could undercut Avenatti’s attempts to depict himself as a fearless Trump foe who relentlessly called out the president over alleged shady business dealings and perceived moral shortcomings. Since he began representing Daniels, whose real name is Stephanie Clifford, Avenatti attacked the president almost constantly, raising his own profile to the point that he flirted with a 2020 White House run.
The president has responded to Avenatti’s attacks by calling him a “total low life” and tossing other insults. Noting Avenatti had called for Trump to face criminal charges, conservative commentators including Donald Trump Jr. reacted with glee when the lawyer himself was arrested in March 2019.
Saying they opposed attempts to “inject politics” into the case, prosecutors tried to bar Avenatti’s lawyer from bringing up the president and Clifford in his opening statement at trial. But Gardephe said jurors could hear about her high-profile case against Trump because the fame it brought Avenatti gave him the clout to allegedly make demands on Nike.
Avenatti says in court filings prosecutors’ pursuit of him and Nike’s cooperation were both politically motivated. Much of the case is based on a March 19 meeting he held in New York with Nike’s lawyers at Boies Schiller Flexner LLP, who secretly recorded the discussion. According to the indictment, Avenatti asked that his client, youth basketball coach Gary Franklin, be paid $1.5 million and that he and another celebrity lawyer, Mark Geragos, be hired by Nike to conduct an internal investigation for a fee of as much as $25 million.
Avenatti says there was nothing wrong with that, given the stakes for Nike. Payments similar to those alleged by Franklin had already resulted in the conviction of an executive at one of its major competitors, Adidas. In that context, his recorded comment that his press conference would knock billions off Nike’s market value was less a threat than an observation. The $25 million figure brandished by the government also isn’t out of line for a corporate investigation of that scale, he says.
Nike has said it cooperated with a federal investigation into corruption in college basketball and reported Avenatti’s actions as part of that.
“Avenatti threatened to vilify the company and take billions off of its market capitalization unless Nike paid him—not his client—millions,” Nike said in a filing. “Mr. Avenatti’s primary ‘defense’ is to try, to the extent possible, to confuse the jury and distract from his own guilt by introducing evidence about Nike’s conduct in amateur basketball.”
According to Avenatti, the political climate gave Nike a chance to “curry favor” with the government and divert attention from its own activities by delivering him up on a silver platter. That’s why the company’s lawyers wore wires to the meeting and twisted his hardball negotiating into something more sinister, he says.
As evidence the case against him is politically motivated, Avenatti also points to the government’s decision not to charge Geragos, whom he characterizes as an equal partner in negotiations with Nike. If his conduct was criminal, Avenatti says, so was that of Geragos, whose trial testimony he is asking the judge to order.
Geragos, however, denies working “side by side” with Avenatti and is pleading his Fifth Amendment right against self-incrimination to avoid testifying in the case. Gardephe has yet to rule.
Former federal prosecutor Harry Sandick said Avenatti’s overall strategy might work. “The hope would be that this defense would make his own conduct look more defensible -- a pox on all of their houses, a juror might think,” said Sandick, who is not involved in the case.
Even if he prevails in the Nike case, Avenatti won’t be out of the woods. There’s still the California case, where his alleged victims include a destitute paraplegic client, and he’s also facing separate charges in New York that he stole $300,000 from Clifford’s book advance. Avenatti denies wrongdoing in those matters as well.
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, Anthony Lin
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