Michael Avenatti, the lawyer best known for representing adult film star Stormy Daniels in a lawsuit against President Donald Trump, has been arrested for attempting to extort $22.5 million from Nike, according to a complaint filed in New York today by the Federal Bureau of Investigation.
Earlier this month, Avenatti threatened the athletic apparel giant with negative publicity as well as economic and reputational damage ahead of the company’s March 21 quarterly earnings call and the start of the National Collegiate Athletic Association tournament, according to the FBI’s charges.
UPDATE: Nike sent Adweek the following statement: “Nike will not be extorted or hide information that is relevant to a government investigation. Nike has been cooperating with the government’s investigation into NCAA basketball for over a year. When Nike became aware of this matter, Nike immediately reported it to federal prosecutors.”
The Nike statement continued: “When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation. Nike firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors.”
Per the legal documents, Avenatti met with Nike lawyers and “threatened to release damaging information regarding Nike if Nike did not agree to make multi-million-dollar payments to Avenatti” as well as “an additional $1.5 million payment” to a client of Avenatti.
This morning, Avenatti tweeted that he would be holding a press conference tomorrow detailing “a major high school/college basketball scandal perpetrated by [Nike].” He continued, “This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.”
Avenatti claimed to have evidence that Nike employees had either sent funds or authorized payments to top high school basketball players and/or their families. He claimed to know of three high school players who were allegedly involved and that the Nike employees had worked to keep the alleged payments secret.
Per The Wall Street Journal, Avenatti’s alleged co-conspirator in the scheme was attorney Mark Geragos.
Adidas previously dealt with a similar scandal. Last October, after an investigation was conducted by the U.S. Department of Justice, Adidas’ head of global sports marketing, James Gatto, was found guilty of fraud. The investigation looked into Adidas’ alleged practice of paying high school basketball players and their families to get them to attend colleges where Adidas was a sponsor.
“[Avenatti] intended to hold a press conference the following day to publicize the asserted misconduct at Nike, which would negatively affect Nike’s market value,” wrote FBI special agent Christopher Harper in the document.
Avenatti approached Nike ahead of the annual NCAA tournament because he knew it was a significant event for the Nike brand. He also timed his approach to Nike’s quarterly earnings call, which was scheduled for March 21, as it would maximize “the potential financial and reputational damage his press conference could cause to Nike,” wrote Harper.
Read the full complaint here.
A representative for Nike did not immediately respond to requests for comment.
Avenatti, in a separate case also filed today, has been arrested and charged with wire fraud and bank fraud for embezzling a client’s money and for defrauding a bank, which comes in addition to the charges for extortion.