How lawyer Michael Avenatti went from taking on Trump to facing extortion charges by Nikehttps://indianexpress.com/article/world/michael-avenatti-trump-extortion-charges-nike-5652511/

How lawyer Michael Avenatti went from taking on Trump to facing extortion charges by Nike

The man who many on the left predicted would take down Trump, who had become a fixture on cable news networks, orbited in celebrity circles and even flirted with a presidential run himself, could now face years in federal prison.

Attorney Michael Avenatti.
Attorney Michael Avenatti. (Source: AP)

By Rebecca R. Ruiz, Nellie Bowles and Kevin Draper

Just after making bail last Monday, celebrity lawyer Michael Avenatti did what he had always done in the swirl of a hot story. He called a reporter.

It did not seem to matter that he was now facing criminal charges in what federal prosecutors in Manhattan described as a scheme to extort millions of dollars from Nike, or that federal prosecutors in California had just filed unrelated charges that he had defrauded a former client and a bank.

Avenatti, the lawyer who represented the pornographic film actress Stormy Daniels in her lawsuits against President Donald Trump, walked into a cellphone store last Monday night and used the landline to call a reporter for The New York Times, beginning a campaign to deny all allegations against him and defend himself in the court of public opinion.

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“I’m the most well-known attorney in the United States right now, for better or worse,” he said on Thursday in an interview. “And that’s been true for a long time now. For a year.”

It has been a long year. The man who many on the left predicted would take down Trump, who had become a fixture on cable news networks, orbited in celebrity circles and even flirted with a presidential run himself, could now face years in federal prison, a turnabout the Trump camp noted with glee.

“It went from Avenatti 2020 to Avenatti 20-to-25,” Donald Trump Jr. said last week at a political rally for his father in Michigan.

On inspection, some of the same qualities that brought Avenatti fame now appear to be contributing to his potential fall.

Grasping for big wins, the brash lawyer often promised more than he delivered. And his cocksure public image masked disarray, now evident in a trail of civil disputes, bankruptcy filings and alleged financial crimes going back several years, according to court papers and interviews. Late last year, he was accused of domestic violence by a former girlfriend, though Los Angeles prosecutors have declined to file charges while leaving the case open.

Such troubles would drive many people underground. Yet Avenatti has never relented. He has kept pushing stories. Two weeks ago, he contacted reporters, including two from The Times, suggesting he had a story related to a sportswear company and promising it would be big.

It was. But it turned out to be about him.

A Year in the Spotlight

It was only a year ago that Avenatti, 48, burst onto the scene, trumpeting a salacious case he had taken on that could bring down the president.

A coalition of online anti-Trump figures from the left and right was rising, calling itself #TheResistance, and Avenatti was seen as one of its most vocal leaders. He used tough, crude language and gambling metaphors. He told Time magazine that the person who could best beat Trump was “a white male,” though he later said he was misquoted. He called himself a fighter, and looked the part. His hashtag was #basta, meaning “enough.”

As he battled on behalf of Daniels — who received hush money before the 2016 election to keep quiet about a sexual encounter she said she had with Trump — he raised his own profile in more than 300 television appearances and countless interviews, some with The Times. Everything about him became news, from his Tom Ford suits to his low body-fat percentage.

Stephanie Clifford, the porn star better known as Stormy Daniels, with Michael Avenatti
Stephanie Clifford, the porn star better known as Stormy Daniels, with Michael Avenatti, in New York, April 16, 2018. (Jeenah Moon/The New York Times)

He regarded the media as a cudgel for his cases, maximizing exposure, inviting new evidence from would-be whistleblowers and sometimes inciting responses from the White House. As often as he provoked eye-rolling, his claims frequently flitted over airwaves and onto news sites with little scrutiny.

He appeared to relish rationing out bits of real news to reporters, whom he was quick to cut out if he found their coverage unfavourable. Along the way, the right-wing press claimed that much of the response to him was credulous, and that he was inserting himself in legal battles beyond his expertise.

“I was and am a real lawyer,” he said Thursday. “I’m not just some TV lawyer.”

His client list followed the story of the moment: Here he was suddenly fighting for separated immigrant families along the southern border, then representing an accuser of Judge Brett M. Kavanaugh before he was confirmed to the Supreme Court. Avenatti later popped up in the R. Kelly sexual abuse investigation, representing multiple accusers and saying he submitted video evidence to state prosecutors in Chicago.

He bristled at the idea that he had emerged out of nowhere.

“I don’t feel like I get enough credit for my track record of success relating to cases,” Avenatti said, raising his voice with exasperation. “People act like I was a nobody before Stormy Daniels, and it’s ridiculous.”

As a plaintiff’s lawyer, Avenatti had won some big settlements. He sued KPMG for audit malpractice, and the company settled for $22 million. He won $80 million from a cemetery accused of overstuffing its plots, and half a billion from the makers of defective surgical gowns. Two of his cases before Daniels had landed him on “60 Minutes,” he pointed out.

But his former law firm, Eagan Avenatti, which in recent years had eight to 10 lawyers, had also filed for bankruptcy. It did so again this past month, estimating liabilities of up to $50 million. (Avenatti still operates under a different firm, Avenatti & Associates.)

A former Eagan Avenatti partner, Jason Frank, claimed in federal court this year that Avenatti had committed bankruptcy fraud in a previous filing, hiding millions of dollars from the government. Last fall, a California court ordered Avenatti to pay millions to Frank for legal work. After Avenatti failed to produce the financial records required of him in that case this year, he gave up control of the firm, which is now in the hands of a court-appointed receiver.

The federal charging documents in California, unsealed last week as part of the criminal case against him, provided new details about past financial trouble. In 2014, Avenatti submitted fake tax returns in loan applications to a Mississippi bank, prosecutors said, claiming to have paid the Internal Revenue Service millions of dollars in years when he had filed no returns at all. He owed the IRS more than $850,000 in unpaid personal income taxes at the time. Avenatti said on Thursday that the bank loans had been repaid.

Meanwhile, prosecutors said, he used his firm for personal spending and to conceal his income. From 2011 to 2017, his law firm paid more than $216,000 to Neiman Marcus, according to the federal charges filed in California. The firm is also accused of spending $68,500 at a luxury watch store; putting almost half a million dollars toward Avenatti’s mortgage; and paying hundreds of thousands of dollars to Porsche and a car dealership.

At one point, prosecutors said, Avenatti directed employees at a coffee company he owned — Global Baristas, which ran Tully’s coffee stores — to deposit cash receipts into a bank account associated with his car-racing business. Other money from Tully’s went toward his rent and shopping expenses, according to the filings.

Michael Avenatti talks to the press
Michael Avenatti, the former hard-charging lawyer for Stormy Daniels. (George Etheredge/The New York Times)

But even as criminal charges loom, Avenatti wants a little more credit for what he has done. He claimed that his aggressive tactics had won the government its guilty plea from Michael D. Cohen, Trump’s former lawyer, who last year was convicted of campaign finance crimes connected to the hush money payment to Daniels.

“That would have been a two-day story were it not for me,” Avenatti said. “Look at the other scandals Trump has been involved in. Compare the amount of coverage.”

Avenatti and Daniels officially parted ways this year, Daniels announced on Twitter weeks ago. He fired back with his own statement in minutes, framing it as his decision: “On February 19, we informed Stormy Daniels in writing that we were terminating our legal representation of her for various reasons that we cannot disclose publicly due to the attorney-client privilege.”

Both cases Avenatti brought on Daniels’ behalf were dismissed in federal court. In a defamation claim against the president, she was ordered to pay Trump nearly $300,000 in legal fees. And in a lawsuit seeking to invalidate the silencing agreement, the judge found there was nothing to litigate because Daniels was already speaking openly without consequence. Avenatti declared victory.

A Reversal of Fortune

Avenatti was arrested last Monday afternoon in New York’s new Hudson Yards development, outside the offices of Nike’s law firm, Boies Schiller Flexner, with which he had talked repeatedly in preceding days. He was accused of trying to extort more than $15 million from the apparel giant, which had in turn contacted the authorities.

In earlier meetings, he had told Nike’s lawyers that he represented a youth basketball coach who once had a contract with the company, federal prosecutors in Manhattan said. Through the coach, Gary Franklin Sr., Avenatti said he had gathered information showing Nike had made payments to high school basketball players — an NCAA violation and, in certain circumstances, a possible fraud.

He then requested $1.5 million for Franklin, according to the complaint unsealed in New York last week. He also demanded that Nike hire him to conduct an internal investigation into its criminal exposure, for which he and another lawyer would receive a minimum of $15 million to $25 million. Alternatively, according to the complaint, Avenatti demanded $22.5 million to buy his silence and resolve Franklin’s potential claims.

Franklin could not be reached for comment.

According to the Justice Department, Avenatti had issued a threat: “Every time we got more information, that’s going to be The Washington Post, The New York Times, ESPN, a press conference, and the company will die — not die, but they are going to incur cut after cut after cut after cut, and that’s what’s going to happen as soon as this thing becomes public.”

Avenatti has maintained he was simply doing what he is known for: lawyering aggressively.

He had sought to establish a media strategy from the start. On March 16, he began contacting two Times reporters about potential news related to the Justice Department’s investigation of recruiting in college basketball, which had already implicated Adidas. On March 19, prosecutors said, he met with Nike’s lawyers.

Last Monday, Avenatti asked that Times reporters meet him that afternoon at the Fifth Avenue offices of Mark Geragos, a celebrity lawyer with whom he said he was working. Within minutes of the call, Avenatti telegraphed on Twitter that he planned to hold a news conference the next day to release explosive details on crimes “reaching the highest level of Nike.”

He was arrested within the hour.

In the days since, Avenatti has again gone on the offensive on Twitter and in interviews, claiming that he is a victim of Nike’s “dishonest” lawyers. Before limiting public access to his tweets this week, he posted a screenshot of alleged text messages between Franklin, the coach, and a Nike employee, making broad reference to money changing hands.

The way Avenatti approached Nike reflected seemingly little research, according to people who closely follow the company. Nike has ridden out scandal before, including in the Justice Department’s prosecution of international soccer officials for bribery and corruption in a FIFA case, in which Nike was implicated but not charged.

It is unclear if Avenatti possessed evidence directly tying Nike to any payments, and prosecutors and Nike both declined to comment.

Trump's foe Michael Avenatti charged with trying to extort $20 million from Nike
Lawyer Michael Avenatti walks out of federal court in New York, New York, U.S., March 25, 2019. REUTERS/Carlo Allegri

“Avenatti was an idiot to think that he was going to make a company like Nike buckle,” said John Horan, the longtime publisher of Sporting Goods Intelligence, an industry newsletter.

Avenatti insisted that he simply wanted to clean up what he called corruption within Nike and conduct an internal inquiry to ensure things improved. “This was a complete hit job by Nike. It was designed to do damage to me and inoculate themselves,” he said by phone from California.

He had flown back to his home state, preparing to answer to the charges filed there. The charges include not just that he defrauded a bank through false tax returns, but also that he diverted $1.6 million in settlement proceeds in January 2018 to pay his own debts, instead of passing on the share owed to a client. The complaint said Avenatti lied to the client, Gregory Barela, telling him the settlement from a dispute with an out-of-state corporation had never been paid.

Avenatti on Thursday questioned the credibility of Barela, who had provided prosecutors with documents to inform their complaint, which also cited bank records. Barela could not be reached for comment.

For all the attention the Nike case is getting, the charges filed in California may be Avenatti’s bigger problem, said Peter Johnson, who teaches at the law school at the University of California, Los Angeles. The Nike allegations hinge on Avenatti’s intent — whether it was extortion or zealous advocacy — which is harder to determine. But the charges in California draw on a paper trail that could make it clearer to establish fraud.

“It’s about whether in fact he committed fraud on paper, and for the prosecution that’s an easier case to prove,” Johnson said.

As his star falls, some now question how he managed to stir so much enthusiasm in the first place.

David Karpf, a professor of media and public affairs at the George Washington University, viewed Avenatti as part of a larger phenomenon of “resistance grifters,” or people harnessing anti-Trump outrage for financial gain.

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“People face this overwhelming flow of information, and they lack context and understanding,” Karpf said. “So anybody who can speak with a confident tone offering some explanation can find an audience.”