NEW YORK -- Michael Avenatti, the high-profile attorney and critic of President Donald Trump, was arrested in New York on Monday on charges of trying to extort as much as $25 million from Nike.
Simultaneously, federal prosecutors in Los Angeles filed separate charges accusing Avenatti of wire fraud and bank fraud, saying he embezzled a client's settlement money.
California investigators had been building a case against Avenatti for more than a year. Officials said he did not pay taxes for several years and owed the Internal Revenue Service $850,438, plus interest and penalties, and those collection efforts prompted the investigation.
In contrast, prosecutors in New York said their investigation began only last week and was completed in days.
FBI officials said Avenatti, 48, was arrested in Manhattan on Monday as he arrived for a meeting at the offices of Boies Schiller, the law firm representing Nike.
"A suit and tie doesn't mask the fact that, at its core, this was an old-fashioned shakedown," said Geoffrey Berman, the U.S. attorney in Manhattan.
Avenatti appeared in court Monday evening in New York and was ordered released on $300,000 bond. He did not enter a plea. Emerging from the courthouse, he thanked the federal agents who arrested him for being courteous and professional.
"As all of you know, for the entirety of my career I have fought against the powerful. Powerful people and powerful corporations. I will never stop fighting that good fight," he said. "I am highly confident that when all the evidence is laid bare in connection with these cases, when it is all known, when due process occurs, that I will be fully exonerated and justice will be done."
The California lawyer first achieved cable television news fame when he represented adult-film actress Stormy Daniels in a lawsuit that effectively tore up a confidentiality agreement, allowing her to speak about her time with Trump.
Over the course of nine months, Avenatti framed himself as Trump's chief legal adversary. He also made headlines in recent weeks for representing two women who accused R&B star R. Kelly of sexual abuse.
Prosecutors now say Avenatti threatened to use his fame to commit a crime.
Authorities said Avenatti and another attorney, whom they called a co-conspirator, approached Nike claiming to have evidence of misconduct by Nike employees. Avenatti told Nike that it could pay the attorneys somewhere between $15 million to $25 million to investigate the allegations, or pay more than $22 million "to resolve any claims ... and additionally to buy Avenatti's silence," the criminal complaint said.
Prosecutors said Avenatti threatened to hold a news conference last week on the eve of the company's quarterly earnings call and the start of the NCAA Tournament if Nike did not agree to his terms.
Last week, Avenatti told Nike that if his demands were not met, "I'll go take ten billion dollars off your client's market cap... . I'm not [expletive] around," according to the complaint.
While lawyers can make demands to seek out-of-court settlements, they cannot threaten to go public with damaging information to gain leverage in a civil dispute, former federal prosecutor Neama Rahmani said.
Two people familiar with the Nike investigation confirmed that Avenatti's unidentified co-conspirator was Mark Geragos, a Los Angeles criminal defense lawyer. The two people spoke on condition of anonymity because the information was not made public by prosecutors.
Geragos, who has not been charged, made his name in the 1990s when he got an acquittal in an embezzlement case against Susan McDougal, who was previously convicted in the Whitewater scandal involving President Bill Clinton. A few years later, he represented Clinton's brother, Roger Clinton, in a drunken-driving case.
Most recently his clients included Jussie Smollett, the actor accused of fabricating a racist, anti-gay attack in Chicago.
Geragos, a longtime CNN contributor, did not respond to messages seeking comment. CNN cut ties with him late Monday.
On Monday, Avenatti tweeted that he planned to hold a news conference today "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."
He was arrested within minutes.
In the California case, Avenatti is accused of misusing client funds and lying to a bank about his income to obtain loans totaling $4.1 million for his law firm and coffee business.
According to court papers, Avenatti negotiated in January a $1.6 million settlement on behalf of an unidentified client but allegedly gave that client a bogus settlement agreement with a false payment date, concealing what he'd done.
Daniels, whose real name is Stephanie Clifford, dropped Avenatti as her lawyer earlier this year. In a statement issued after his arrest, she said she was "saddened but not shocked" by reports that he had been charged. Avenatti, she said, "dealt with me extremely dishonestly." She did not elaborate.
Information for this article was contributed by Devlin Barrett, Elise Viebeck and Will Hobson of The Washington Post; and by Brian Melley, Larry Neumeister, Jim Mustian, Michael Balsamo and John Antczak of The Associated Press.
A Section on 03/26/2019
Print Headline: Trump critic faces extortion case