Embattled lawyer Michael Avenatti, who’s on trial for allegedly extorting Nike, “saw dollar signs” and wanted to pay off his own debts when he attempted to shake down the company for tens of millions of dollars, federal prosecutors said Wednesday.
During opening arguments, assistant U.S. Attorney Robert Sobelman told the jury that Avenatti “betrayed” his client, youth basketball coach Gary Franklin, by threatening to publicize intel Franklin provided on the corporation’s alleged illegal payouts to his players. Sobelman said Avenatti was prepared to use a “modern weapon” to harm Nike: his social media following and then-ubiquitous TV appearances.
Avenatti was ready to trade “money for silence, and he did it without considering what Franklin wanted,” Sobelman said. Avenatti “would not just let Nike settle with Franklin,” the prosecutor added, but wanted the company to hire him to conduct an internal investigation for up to $25 million and demanded “$12 million right away.”
Sobelman quoted Avenatti’s phone calls with Nike counsel: “You guys know enough to know you’ve got a serious problem … A few million dollars doesn’t move the needle for me” and “I’m not fucking around with this.”
“Make no mistake: It was extortion,” Sobelman said.
But defense lawyer Howard Srebnick said Franklin and a friend contacted Avenatti because “they liked [his] bravado. They termed him the heavy artillery.” Srebnick said Avenatti is brash, tenacious, sometimes outrageous and offense.
“It’s not a crime to be offensive,” Srebnick told the jury. “It’s not a crime to use the F word.”
Srebnick said Franklin was impressed by Avenatti’s high-profile legal tactics and TV appearances on behalf of former client, adult film actress Stormy Daniels, who sued President Trump in 2018.
“They wanted Avenatti to be Avenatti,” Srebnick added. “They were hiring Michael Avenatti to be Michael Avenatti.” The defense attorney said Avenatti was fighting for what his client wanted— and as a result, Nike and its outside counsel were “on red alert.”
Avenatti is charged with extortion and wire fraud, as well as one count of transmission of interstate communications with intent to extort. If convicted, the 48-year-old litigator faces more than 25 years behind bars.
The lawyer’s profile skyrocketed after he represented Daniels in her legal battle with Trump. Yet, reports on Avenatti’s legal woes, including millions in unpaid child support and tax warrants, began to crack through his celebrity veneer.
Daniels ultimately split from Avenatti, who is facing a separate trial in Manhattan federal court for allegedly stealing $300,000 from her. In California, Avenatti faces 36 criminal counts including tax dodging, wire fraud and aggravated identity theft; he’s accused of embezzling millions from five clients, including a paraplegic man.
All told, Avenatti could spend the rest of his life in prison if convicted in the trio of criminal cases.
In today’s trial, Avenatti is accused of extorting Nike in March 2019, threatening to release damning information on the company unless they hired him to conduct an internal investigation, or paid him and his client to keep quiet.
The case stems from Avenatti’s representation of Franklin, who approached the legal eagle after Nike ended a $72,000 annual sponsorship with Franklin’s team, California Supreme. The coach wanted Nike to renew the contract, and Avenatti told him he might be able to score a $1-million settlement for him.
During opening arguments, Avenatti’s lawyer Srebnick said it was telling that, during meetings with Avenatti, Nike never denied his accusations of illegal payments to players.
Indeed, sometime before Nike ended its contract with Franklin’s team, two Nike executives allegedly directed Franklin to pay players’ families in cash. On one occasion, Srebnick said, Franklin flew to Arizona to hand cash to a player.
Srebnick said Franklin began tape-recording Nike executives because he feared they were doing something illegal. “Nike had sidelined him, taken away his team and left him disreputed” in the basketball community, Srebnick told jurors. Franklin turned to Avenatti to to expose Nike’s corruption and get those two Nike executives fired.
“They wanted justice above all else … to them justice meant exposing corruption,” Srebnick said. Franklin wanted Nike to compensate him, launch an internal investigation into Nike’s alleged corruption and pay all of Franklin’s legal fees.
Srebnick suggested that Nike and its outside counsel at the firm Boies Schiller Flexner set Avenatti up by phoning the U.S. Attorney’s Office after their first meeting.
“Their mission was to contain Michael Avenatti,” Srebnick said, adding that they wanted to “get out in front of” Franklin, Avenatti, and celebrity lawyer Mark Geragos, who’d set up the Nike meeting on Avenatti’s behalf.
Avenatti made clear that he was fighting for Franklin, who wanted remedies, Srebnick added. If they couldn’t reach an agreement, Avenatti would file a lawsuit and the truth would become public.
“That’s not extortion. That’s not fraud. That’s litigation,” Srebnick claimed.
According to the indictment, Franklin told Avenatti that he had intel on Nike employees who were allegedly funneling illegal payouts to the families of high-school basketball stars. Avenatti used that information in an attempt to extort the shoe company for up to $25 million, without telling Franklin of his plans, prosecutors say.
On March 19, Avenatti allegedly met with Nike’s lawyers and threatened to hold a press conference on the illegal payments unless they caved to his demands: a $1.5-million settlement to Franklin, and millions for Avenatti and celebrity attorney Mark Geragos to conduct an internal probe into the company’s payouts. (Geragos is not charged in this case.)
Nike contacted the U.S. Attorney’s Office in Manhattan soon after the sit-down. The next day, the corporation’s outside counsel held a conference call with Avenatti and Geragos—a conversation that was secretly recorded by law enforcement.
On March 21, Avenatti met with Nike’s counsel and allegedly demanded a $12-million retainer for the “internal investigation,” with $15 million to $25 million in billings. Avenatti also offered Nike the chance to pay him and his client a $22.5-million confidential settlement to “ride off into the sunset,” the indictment states.
After the meeting, Avenatti issued a cryptic warning shot over Twitter—linking to a story about Adidas executives who were recently convicted of conspiracy to commit wire fraud for funneling money to high-school basketball stars.
“Something tells me that we have not reached the end of this scandal. It is likely far far broader than imagined…” Avenatti tweeted.
Avenatti, however, never informed his client that Nike had offered to resolve the claims without paying Avenatti, the indictment states.
The brash lawyer agreed to meet Nike’s outside counsel at their office on March 25 to get the sports corporation’s final answer.
But just before the meeting, he’d learned his client was contacted by investigators and tweeted that he would hold a “press conference to disclose a major high school/college basketball scandal perpetrated by @Nike.”
Authorities arrested Avenatti near the building of Nike’s co-counsel before he could have his meeting with the company’s representatives.
With additional reporting by Emily Shugerman