By Joseph Ax and Brendan Pierson
NEW YORK (Reuters) - Michael Avenatti, the lawyer who represented adult film star Stormy Daniels in her legal battles with U.S. President Donald Trump, was charged Monday with extortion in what prosecutors called an attempt to "shake down" Nike Inc for over $20 million.
Avenatti, who was also hit with separate federal charges alleging embezzlement and fraud in California, was arrested in New York and was expected to appear in federal court late in the day.
Avenatti, who lives in Los Angeles, could not be reached for comment.
Prosecutors said Avenatti and another lawyer, who was not named in court papers, met with Nike's attorneys on March 19 and said they had a client, a former amateur athletic coach, who had evidence that Nike employees had bribed top high school players to play for Nike-sponsored teams.
The unnamed co-conspirator is the well-known defence lawyer and CNN contributor Mark Geragos, the New York Times and the Wall Street Journal reported, citing sources. Geragos did not respond to a request for comment.
Avenatti told Nike he would go public unless it paid his client $1.5 million and hired him and the other lawyer to conduct an internal investigation for between $15 million and $25 million, according to the complaint. Avenatti also offered to accept a $22.5 million payment for his silence, prosecutors said.
A former executive at Nike rival Adidas was recently convicted in federal court in Manhattan of participating in a similar scheme, part of a sweeping probe by prosecutors of corruption surrounding the National Collegiate Athletic Association. The case, which is ongoing, has ensnared several prominent basketball coaches.
In one call, Avenatti threatened, "I'll go take ten billion dollars off your client's market cap... I'm not fucking around," according to the complaint.
Geragos, who has represented celebrities like Michael Jackson and Winona Ryder, is currently defending the actor Jussie Smollett, who is charged with falsely reporting that he was the victim of a racially motivated attack in Chicago.
A CNN spokeswoman said on Monday that the network had dropped Geragos as a contributor.
It was not immediately clear why Geragos has not been charged.
The charges were revealed shortly after Avenatti said on Twitter that he would hold a news conference on Tuesday to reveal "a major high school/college basketball scandal" that reached "the highest levels of Nike."
"A suit and tie does not mask the fact that, at its core, this was an old-fashioned shakedown," Geoffrey Berman, the U.S. Attorney in Manhattan, said at a news conference.
Nike said in a statement that it "will not be extorted" and alerted investigators to Avenatti's demands immediately.
Federal prosecutors in California unveiled separate charges against Avenatti on Monday, accusing him of misusing a client's $1.6 million settlement to pay for his own expenses as well as those for his coffee business.
He was also charged with defrauding a Mississippi bank of $4.1 million in loans by submitting false tax returns for 2011-2013 that inflated his income.
Avenatti faces up to 30 years in prison on the most serious charge in California and up to 20 years for the top charge in New York.
He gained international notoriety for representing Daniels, the porn star whom Trump is accused of paying off during the 2016 presidential campaign to keep quiet about an alleged affair. Trump has denied having an affair with Daniels, whose real name is Stephanie Clifford.
Daniels, who is no longer represented by Avenatti, 48, said she was "saddened but not shocked" by his arrest, adding that she fired him after learning he had acted "dishonestly" with her.
(Reporting by Joseph Ax and Brendan Pierson in New York; additional reporting by Daniel Trotta and Jonathan Stempel in New York, Brendan O'Brien in Milwaukee and Nivedita Balu in Bengaluru; editing by Scott Malone, Susan Thomas, Leslie Adler and Dan Grebler)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Updated Date: Mar 26, 2019 04:06:44 IST