Embattled lawyer Michael Avenatti was convicted of extorting Nike, and of defrauding his client in a bid to reap millions from the shoemaker, in Manhattan federal court on Tuesday.
It took jurors less than two days to deliver their guilty verdict against the California litigator, who shot to fame for representing porn star Stormy Daniels in a civil case against President Trump. Avenatti’s conviction marks a rapid fall from grace, and he still faces two other pending criminal cases in New York and California, in which he’s charged with stealing money from several of his clients—including Daniels, who claims he swiped $300,000 from her book advance.
The jury found Avenatti guilty on all three counts: extortion, wire fraud, and transmission of interstate communications with intent to extort. He faces more than 25 years in prison when he’s sentenced.
During closing arguments on Tuesday, prosecutors played audio recordings of Avenatti’s conversations with a Nike lawyer, where he said it didn’t “make sense” for Nike to pay his client “an exorbitant sum of money … in light of his role in this.”
Assistant U.S. Attorney Matthew Podolsky said Avenatti wanted a way out of his $11 million in debts, and that “he saw a meal ticket named Gary Franklin.”
“This is about a good old-fashioned shakedown. The defendant may have come in in a suit, may have used legal terms … but what he did was extortion,” Podolsky told the jury. The prosecutor said Avenatti was sending a message to Nike: “Hire me, or else.”
“This is about a good old-fashioned shakedown.”
— Assistant U.S. Attorney Matthew Podolsky
Federal prosecutors argued Avenatti had “betrayed” his client, amateur basketball coach Gary Franklin, when he attempted to shake down Nike for $15 million to $25 million during a series of meetings and phone calls in March 2019.
Avenatti tried to extort the sports corporation with intel from Franklin, who told him Nike executives made illegal payments to the families of high-school basketball stars on Franklin’s team, California Supreme in Los Angeles.
Using his sizable following on TV and Twitter as ammunition, Avenatti threatened to go public about these alleged payments and wreck Nike’s reputation and profits ahead of a company earnings call and the NCAA men’s basketball tournament. But he offered to keep quiet about the alleged scandal in return for $1.5 million for Franklin, and a $25-million payday for himself to conduct an internal investigation for the corporation.
“I’m not fucking around with this, and I’m not continuing to play games,” Avenatti said in call witth a Nike lawyer which was recorded by law enforcement, adding, “A few million dollars doesn’t move the needle for me.” These words made up an audio clip played by the prosecution more than once during summations on Tuesday.
Prosecutors argued Avenatti broke the legal code of ethics by failing to inform Franklin of what he was doing. Podolsky referenced a text message that Franklin’s friend, a consultant named Jeffrey Auerbach, sent to Avenatti after the lawyer tweeted about holding a press conference on Nike’s alleged corruption.
“I’m not fucking around with this, and I’m not continuing to play games.”
— Michael Avenatti
“Michael, very upsetting to say the least. Please call me before going public in any way,” Auerbach wrote. “Gary and I would like to discuss strategy with you.”
But Avenatti’s lawyers said he was only fighting vigorously on behalf of his client; Franklin enlisted Avenatti to expose Nike’s corruption after Nike declined to renew its $72,000 annual sponsorship of Franklin’s basketball program. Avenatti’s hard-charging tactics, the defense argued, didn’t amount to a crime.
The first witness in the roughly two-week trial was Scott Wilson, a former member of Nike’s outside counsel. Wilson said Avenatti threatened to hold a press conference and unleash a torrent of bad publicity on Nike if the company didn’t pony up $25 million to conduct an internal probe into its alleged payments to youth players. “I wanted him to feel like there was a possibility so he wouldn’t pull the trigger,” Wilson testified of how he pretended to cave to Avenatti’s demands.
“I wanted to not spook Mr. Avenatti. At no point did I intend to make a payment,” Wilson added. He phoned the U.S. Attorney’s Office in Manhattan soon after his initial huddle with Avenatti and celebrity lawyer Mark Geragos, who’d set up the meeting and has not been charged in the extortion case.
Wilson warned Avenatti that his accusations, if made public, could ruin the careers of the young players on Franklin’s team. According to Wilson’s testimony, Avenatti replied, “I don’t give a fuck about these kids.”
The FBI recorded Wilson’s next meeting with Avenatti two days later, and Avenatti claimed he’d walk away for $22.5 million. Wilson testified that “I thought this was a crazy thing to be saying to me” and “We were in the Twilight Zone.” (Wilson did concede during testimony that the Securities and Exchange Commission has been investigating Nike’s allegedly corrupt payouts to players.)
“I don’t give a fuck about these kids.”
— Michael Avenatti, according to a witness at trial
Meanwhile, Auerbach, an entertainment industry executive and friend of Franklin, testified that he suggested the coach contact Avenatti, because of his reputation as a tough negotiator in the Daniels legal drama.
Auerbach, who was part of the conversations with Avenatti and Franklin, told jurors that Avenatti was never authorized to threaten Nike with a media frenzy—or to demand a hefty payout for himself. He called Avenatti’s scheme “really damaging, counter-intuitive and detrimental to Gary’s goals,” and added, “You just don’t threaten people you are forging and trying to establish a relationship with.”
The entertainment executive said he was shocked when Avenatti posted a cryptic status on Twitter with a link to a college basketball corruption trial involving Nike’s competitor Adidas, followed by a tweet with his plans “to disclose a major high school/college basketball scandal perpetrated by @Nike.”
When Franklin took the stand, he said he wanted Avenatti to negotiate with Nike to reinstate his team’s annual sponsorship, secure a $1-million settlement for his program and alert Nike to the rogue executives who were making illegal payments. Franklin testified he “never wanted to go public or have any press conference at all,” because of the damage it would cause to his young players, their families, and his team.
“I trusted him as my lawyer. This is not how I wanted things handled,” Franklin said.
Avenatti’s longtime office manager, Judy Regnier, testified that his firm had been evicted from its $50,000-a-month office space in Newport Beach, causing her and other employees to work from their homes in March 2019. Around the time he was meeting with Nike, Avenatti told Regnier he was hatching a plan to “clear the debt and start a new firm.”
Avenatti seemed to see “the light at the end of the tunnel,” Regnier recalled in court, adding that the lawyer told her “he would be able to live his life as he wanted to live it.”