Michael Avenatti, best known as the former lawyer of porn star Stormy Daniels, was arrested Monday after being indicted by the Southern District of New York on four counts involving an alleged extortion attempt of the shoe and apparel company Nike.
Meanwhile, federal prosecutors in Los Angeles announced they will charge Avenatti on separate wire and bank fraud in a matter unrelated to the New York indictments.
Avenatti, according to the SDNY indictment, threatened Nike that he had a client who was a former AAU basketball coach willing to disclose “evidence that one or more Nike employees had authorized and funded payments to the families of top high school players.” The alleged Nike scheme was similar to the one that caused an Adidas executive and consultant to be found guilty of fraud during a separate October trial in New York.
Avenatti, according to prosecutors, demanded more than $20 million in payments to not publicize the findings during a news conference timed for “the eve of Nike’s quarterly earnings and the start of the annual NCAA Basketball Tournament.”
The indictment says Avenatti, along with an unnamed co-conspirator who the Wall Street Journal identified as Mark Geragos — the celebrity lawyer who represents Colin Kaepernick — warned Nike that continued negative publicity and the potential for legal troubles would hurt Nike’s stock, perhaps in the billions.
On Monday, just minutes before his arrest was announced by the Southern District of New York, Avenatti tweeted that he had scheduled a news conference for Tuesday at 11 a.m. ET “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.”
Tmrw at 11 am ET, we will be holding a press conference 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.
— Michael Avenatti (@MichaelAvenatti) March 25, 2019
Whether that news conference will be held is still unknown. Calls to Avenatti have not been returned.
The AAU coach in question is, according to ESPN, Gary Franklin who ran Cal Supreme out of the Los Angeles area for years and was recently cut by Nike.
While no specific players or college programs are mentioned in the indictment, Cal Supreme’s website features a list of recent alums who are prominent current and former college players — Brandon Williams (Arizona), Deandre Ayton (Arizona), Bol Bol (Oregon), Tevian Jones (Illinois), Jordan Schakel, (SDSU), Ethan Thomas, (Oregon State), Brandon McCoy, (UNLV), Justice Sueing, (Cal), Johan Matthews, (USC), DeAnthony Melton, (USC) and Milan Acquaah (Washington State).
"A suit and tie doesn’t mask the fact that at its core this was an old-fashioned shakedown," U.S. Attorney Geoff Berman said.
According to the U.S. Attorney timeline, Avenatti made the alleged threat on March 19. “Nike will not be extorted or hide information that is relevant to a government investigation,” Nike said in a statement. “When Nike became aware of the matter, Nike immediately reported it to federal prosecutors. When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation.”
— US Attorney SDNY (@SDNYnews) March 25, 2019
Avenatti blasted into public consciousness when he served as the attorney for Stormy Daniels, a porn star who was allegedly involved with President Donald Trump. The bombastic lawyer became a regular on cable news shows and was a frequent critic of Trump.
While Avenatti is facing serious legal issues here, for college basketball, the information that he may hold remains intriguing. The federal fraud case into the sport has shown an underground economy that features payments to college players and their families, often funded by shoe companies. Most of the public testimony and evidence has dealt with Adidas, where longtime executive James Gatto and consultant Merl Code were both convicted.
However, no one in the sport believes this practice doesn’t extend to other shoe companies. Code, himself, was a longtime Nike employee before working with Adidas. Nike is the most prominent sponsor in the sport and has exclusive deals with numerous top basketball programs including Duke, North Carolina and Kentucky.
This story will be updated.
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