Most Read
Image 01 Image 02 Image 03

Feds Charge Michael Avenatti with Extortion, Embezzlement

Feds Charge Michael Avenatti with Extortion, Embezzlement

California US Attorney Nick Hanna called the allegations “a series of allegations that paint an ugly picture of lawless conduct and greed.”

https://www.youtube.com/watch?v=-vYVDPbL_EA

At 11:16AM, lawyer Michael Avenatti tweeted about his press conference tomorrow morning, which would cover a high school/prep school scandal that involves Nike.

Only 46 minutes later, a CNN reporter tweeted that the Southern District of New York charged Avenatti for “attempting to extract more than $20M in payments from a publicly traded company by threatening to use his ability to garner publicity to inflict substantial financial & reputational harm on the company if his demands were not met.”

The DOJ also announced Avennati’s arrest on a separate charge of federal bank fraud and wire fraud.

*This is a BREAKING STORY. Will update as information rolls out…

New York

Here is Avenatti’s tweet:

https://twitter.com/MichaelAvenatti/status/1110213957170749440?ref_src=twsrc%5Etfw

Erica Orden tweet not even an hour later:

The charges include conspiracy to transmit interstate communications with intent to extort, conspiracy to commit extortion, and extortion.

The federal prosecutors wrote in documents that Avenatti and a client claimed “they had evidence that Nike had funneled money to recruits in exchange for their commitments to college teams sponsored by Nike and that they would release them in order to damage Nike’s reputation and market capitalization unless Nike paid them between $15 and $25 million.” The document stated the alleged crime took place this month.

Sources told The Wall Street Journal that Mark Geragos, the attorney for Jussie Smollett, is Avenatti’s co-conspirator.

The complaint states that Avenatti and his co-conspirator met with Nike’s attorneys where they “threatened to release damaging information” if Nike “did not agree to make multi-million dollar payments to them, as well as an additional $1.5 million payment to a client Avenatti claimed to represent.” CNN announced that Geragos is no longer a contributor.

Avennati appeared confident with the scheme because he allegedly told Nike if the company did not do his bidding, “he would ‘go take ten billion dollars off your client’s market cap … I’m not f***ing around.'”

From USA Today:

“Avenatti’s conduct had nothing to do with valid advocacy on behalf of a client or any other kind of legitimate legal work. Instead, Avenatti used illegal and extortionate threats for the purpose of obtaining payments for himself,” said Geoffrey Berman, U.S. attorney for the Southern District of New York. “A suit and a tie doesn’t mask what at its core was an old-fashioned shakedown.”

Prosecutors described the effort, which played out largely over the past week, as a “multimillion-dollar extortion scheme.” The investigation is continuing, and prosecutors said they have not decided whether to charge Avenatti’s associate, who two people familiar with the matter said is Mark Geragos, a celebrity lawyer who represented “Empire” star Jussie Smollett. The people were not authorized to speak publicly.

Nike released this 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. 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.”

U.S. v. Michael Avenatti – Sealed Complaint for Extortion by Legal Insurrection on Scribd

California

The Department of Justice also charged Avenatti with federal bank fraud and wire fraud charges. He faces up to 50 years in prison. From the DOJ:

Attorney Michael Avenatti was arrested today pursuant to a criminal complaint alleging he embezzled a client’s money in order to pay his own expenses and debts — as well as those of his coffee business and law firm — and also defrauded a bank by using phony tax returns to obtain millions of dollars in loans.

Avenatti, 48, of Century City, was arrested today pursuant to a two-count felony complaint charging him with wire fraud and bank fraud. He also was arrested pursuant to a separate federal case filed in New York.

According to an affidavit filed with the criminal complaint in this case, Avenatti negotiated a settlement which called for $1.6 million in settlement money to be paid on January 10, 2018, but then gave the client a bogus settlement agreement with a false payment date of March 10, 2018. The affidavit states that Avenatti misappropriated his client’s settlement money and used it to pay expenses for his coffee business, Global Baristas US LLC, which operated Tully’s Coffee stores in California and Washington state, as well as for his own expenses. When the fake March 2018 deadline passed and the client asked where the money was, Avenatti continued to conceal that the payment had already been received, court documents said.

Avenatti also allegedly defrauded a bank in Mississippi by submitting to the lender false tax returns in order to obtain three loans totaling $4.1 million for his law firm and coffee business in 2014. According to the affidavit, Avenatti obtained the loans by submitting fabricated individual income tax returns (Forms 1040) for 2011, 2012, and 2013, reporting substantial income even though he had never filed any such returns with the Internal Revenue Service. The phony returns stated that he earned $4,562,881 in adjusted gross income in 2011, $5,423,099 in 2012, and $4,082,803 in 2013, according to the affidavit. Avenatti allegedly also claimed he paid $1.6 million in estimated tax payments to the IRS in 2012 and paid $1.25 million in 2013. In reality, Avenatti never filed personal income tax returns for 2011, 2012 and 2013 and did not make any estimated tax payments in 2012 and 2013. Instead of the millions of dollars he claimed to have paid in taxes, Avenatti still owed the IRS $850,438 in unpaid personal income tax plus interest and penalties for the tax years 2009 and 2010, court papers state. The affidavit also alleges that, as part of his loan applications, Avenatti also submitted a fictitious partnership tax return for his law firm.

Nick Hanna, U.S. Attorney for the Central District of California, described Avenatti as “a corrupt lawyer who instead fights for his own selfish interests by misappropriating close to a million dollars that rightfully belonged to one of his clients.”

Hanna called the charges against Avennati “a series of allegations that paint an ugly picture of lawless conduct and greed.”

DONATE

Donations tax deductible
to the full extent allowed by law.

Comments

The Law Firm of Cohen & Avenatti. Has a ring to it. They can corner the market on imprisoned extortionists while in prison.

    JusticeDelivered in reply to Pasadena Phil. | March 25, 2019 at 3:21 pm

    Hopefully, he will take down Stormy, not in the usual way.

    For months Avenatti has been predicting (with great confidence) that @DonaldJTrumpJr was going to be indicted.

    Now he’s the one who is facing charges. https://t.co/UsQgGfzbbg

    — Yashar Ali ???? (@yashar) March 25, 2019
    —————————————————–

    Good news for my friend @MichaelAvenatti, if you plead fast enough, you might just get to share a cell with Michael Cohen! #basta

    — Donald Trump Jr. (@DonaldJTrumpJr) March 25, 2019

DouglasJBender | March 25, 2019 at 2:21 pm

Sad. He seems like he would have made a fine President.

2019 just keeps accelerating…

Sacrifice everything, even if you believe in nothing.

I have to wonder if Avenatti would’ve got away with this stuff if he had not been involved with Stormy Daniels.

Anyhow, I’m delighted to know that he could spend a significant amount of time in prison.

    fishstick in reply to Tiki. | March 25, 2019 at 3:15 pm

    likely would have

    which makes Avenatti more the retard

    it is one thing for a politician to use his position to defraud the government

    but it is another thing entirely for a lawyer to commit various frauds in the private sector then have the audacity to dance in the public spotlight

    healthguyfsu in reply to Tiki. | March 25, 2019 at 4:03 pm

    Nothing to do with Stormy directly…

    There’s a reason he became a loudmouth dem blowhard out of nowhere, and it was probably to try an cover his impending doom for as long as possible.

    As soon as the Mueller probe was done and Stormy fired him, it was time for the law to give him the thumbs down because he was of no use to the swamp.

    The SDNY and the state of California are not exactly stocked with Trump supporters. This will probably be used to cover partisan motives when they try another Trump investigation.

      amatuerwrangler in reply to healthguyfsu. | March 25, 2019 at 6:28 pm

      One correction: the case in CA is also a federal case, Central District of CA. The CA Atty Gen is too busy suing the feds to keep sanctuary cities funded to bother with fraud and tax evasion,although they will probably piggy-back onto the fed case to get CA income tax that is due. The CA return requires a copy of the IRS forms to accompany it.

    Arminius in reply to Tiki. | March 26, 2019 at 5:30 am

    I don’t think there was any possibility he would have gotten away with it. This case dates back to 2011 when he simply stopped paying payroll taxes. As a former restaurant owner I can tell you the IRS will come after you for that no matter how low profile you are. As I listened to the briefing it started out as a civil matter in 2016, which would mean the IRS had already exhausted other means to collect the debt short of taking Avenatti to court. Apparently Avenatti cooked his own goose by stonewalling and thwarting the legal procedures which meant he gave the collections agents more time and more motivation to continue digging into Avenatti. Remember, Avenatti already owed more than $850k in taxes, penalties and fees in personal income tax dating back to 2009/10. The more the collections agents looked into it they turned it over to criminal investigations sometime in 2018.

    No one had ever heard of Stormy Daniels or Michael Avenatti before Nov. 4, 2016, a few days before the election, and even then very few people had heard of her because it was only a minor story in the WSJ about her cancelling an appearance on Good Morning America where she was going to allege she had an affair.

    So Avenatti was already on the IRS radar years before the Stormy Daniels story broke, and had no doubt already decided to pursue collecting Avenatti’s back payroll taxes in court earlier than November 2016.

    As I recall it didn’t really become a major story until January 2017 when a deputy WH press secretary gave the first on-the-record response to media questions.

    But the IRS wheels were already turning at that point. The execrable Avenatti didn’t help himself by arrogantly embracing his new role as celebrity lawyer after he stupidly decided he was going to take on the IRS and somehow weasel out of paying a genuine tax debt. Nobody gets away with that; clearly Avenatti is a super genius and a wizard of an attorney in his own mind, but that’s why he keeps losing. He’s in fact an idiot. In contest of brain power between him and Smollett who paid his attackers with a check, they both lose.

    I can’t believe that when Nike’s attorneys invited him to their offices where the asked Avenatti, pretty please, tell us one more time in excruciating detail just how your extortion plot is going to work, how much do you want us to pay you, and what you’re going to do if we don’t pay you off? And he said, “Sure! I’ll be happy to do that in your offices where I can not be assured of privacy.”

    pwaldoch in reply to Tiki. | March 26, 2019 at 8:15 am

    Tiki, I agree with you. If Avanati would have just kept his head down he might have gotten away with his extortion schemes. But he had to be a glory hound.

      Arminius in reply to pwaldoch. | March 26, 2019 at 10:35 am

      I couldn’t disagree more. The IRS had been on his trail for years before Avenatti made himself world famous as the Creepy Porn Lawyer. If you have a now ten year old bill for unpaid income taxes of nearly one million dollars, and a now eight year old bill for who knows how much in unpaid payroll taxes, you will attract the IRS’ attention without ever having to appear on TV. And the prosecutors found out about the embezzlement and extortion from criminal complaints from the private parties Avenatti had/was attempting to rip off. I don’t know about you but if you steal my $1.6M dollar settlement money I don’t care how famous you are as a attorney, I’m not letting it go. Nike certainly wasn’t going to let Avenatti rip them off for over $20M. They didn’t even hesitate; as soon as Avenatti finished making the extortion threats in house counsel was on the phone to the US attorney for the SDNY.

      Arminius in reply to pwaldoch. | March 26, 2019 at 10:51 am

      Your timeline doesn’t work. The IRS decided to make collecting Avenatti’s outstanding debts a civil matter sometime in 2016 (they would have first tried to collect the debt administratively, so this wasn’t the first the IRS had heard of Avenatti). Stormy Daniels didn’t bring Avenatti onboard as her lawyer (and/or whatever else) until the spring of 2017.

      The IRS attention came first. The high profile came later. He could have kept his head down all he wanted, he was already doomed when he decided to seek out the spotlight.

    MajorWood in reply to Tiki. | March 26, 2019 at 10:56 am

    It seems like the typical ponzi scheme which just keeps accelerating out of control. It will be hard to keep up with the rich and famous when he is poor and infamous. Even Ray Donovan isn’t taking his calls.

Someone at Nike knew who to call to tee this up.

    n.n in reply to Andy. | March 25, 2019 at 3:18 pm

    Nike kneeled and the storm has passed.

    OleDirtyBarrister in reply to Andy. | March 25, 2019 at 3:45 pm

    The more apt statement is that Nike has the money to hire any law firm it wants to hire and employs more than with attorneys on staff that were formerly US Attorneys and Assistant US Attorneys and they knew who to call in the FBI and DOJ.

      I’m sure you’re right. But the US attorney in charge in the SDNY said Nike’s in house counsel simply called his office to report the extortion threat.

      Probably any attorney who paid attention in law school (you know, the days when they hold classes on paying your personal and corporate taxes, and not to commit felonies like embezzling from clients and extorting money from businesses) and a few years of experience would have known to do that. Besides, it sounds like Nike had already had dealings with the SDNY so their attorneys would not be strangers to the feds.

      I believe it was the U.S. attorney and his assistants who brought in the FBI once they were notified of the crime.

    Arminius in reply to Andy. | March 26, 2019 at 1:09 pm

    It’s no real mystery. A former Adidas executive was prosecuted for the same illegal payment scheme to families of student athletes; exactly the allegations Avenatti was trying to use to extort Nike.

    Since Nike had been cooperating with the investigation being run out of the US attorney’s office for the SDNY, after Avenatti’s threats they simply called that same office and reported the threats.

    It’s in their press release. Just scroll up and read it.

I’m guessing creepy porn lawyers don’t do well in orange jump suits.

This mendacious, self-serving and self-aggrandizing sociopath-snake will soon join his fellow shakedown artist, Stephen Donziger, in a well-deserved disbarment and disgraceful exit from the legal profession.

LukeHandCool | March 25, 2019 at 3:11 pm

And this just days after President Trump is vindicated in the Great Russia Collusion Hoax.

Poetic justice, you’ve rarely shown such great timing.

The possibility that it is true that Nike made payments just got washed over with reference to his other schemes

    Arminius in reply to elle. | March 26, 2019 at 5:43 am

    No, the US attorney mentioned during his briefing that his office had already brought cases against Nike (whether he meant cases against different individuals at the company or cases against multiple companies involving pay offs to student athletes’ families including Nike wasn’t clear). He also said the investigation into the pay offs was ongoing.

    Arminius in reply to elle. | March 26, 2019 at 6:05 am

    I re-watched the briefing. I had things a bit wrong. The US attorney said the information that Avenatti tried to blackmail Nike with was similar to information that formed the core of a prior criminal prosecution involving payments.

    So the payments were multiple, but he only referred to a single case. Somehow it got mixed up in my memory that both the payments and cases were multiple.

    He also said the investigation is ongoing. But it may very well be that Avenatti was simply recycling old information that the feds already have and in fact may have already used. We can’t know that yet. But they’re not simply brushing off Avenatti’s allegations.

      Arminius in reply to Arminius. | March 26, 2019 at 9:20 am

      It bothered me that the U.S. attorney was vague about the details of the criminal prosecution, and naturally refused to answer questions beyond “The investigation is continuing.”

      It turns out that it was an Adidas executive that they prosecuted. Nobody at Nike was prosecuted. And I don’t even know whether or not the Adidas executive was convicted.

      Anyway, the attorneys at the SDNY aren’t done with the matter.

Couldn’t have happened to a more deserving guy.

He seems to have gotten away with his assorted crimes for quite a while. That by itself is alarming. The longer a criminal is left at large and unrecognized, the longer his list of victims.

OleDirtyBarrister | March 25, 2019 at 3:50 pm

Saggy Daniels parted company with him just in the nick of time in a tremendous coincidence.

Saggy had complained that Avenatti had not accounted to her for the money raised through crowdfunding.

Then there is the issue with the former partner or associate who has a big judgment and got a receiver appointed. His judgment creditor detailed a lot of facts in support of contentions of fraud in the prior bankruptcy. Avenatti filed another bankruptcy to cover his trail.

I would not be surprised to learn in the future that: (1) Saggy Daniels was questioned by the feds or was subpoenaed to appear before a grand jury; and (2) the charges increase in California due to fraud in the bankruptcy, more fraud, bank fraud, tax evasion, tax fraud, etc., etc.

CNN legal analyst charged as co-conspirator:

https://www.washingtonexaminer.com/opinion/trump-era-justice-mark-geragos-attorney-for-jussie-smollett-and-colin-kaepernick-charged-as-avenatti-co-conspirator

CNN’s very bad year keeps getting worse: Horrid ratings, Donald Trump, Jr./BuzzFeed, Covington Catholic, Jussie Smollett, Mueller report and now this.

It couldn’t happen to a more deserving organization.

johnny dollar | March 25, 2019 at 4:23 pm

I wonder if he can still do interviews from prison?

SURPRISE! SURPRISE! SURPRISE!

It’s hard to believe that SDNY even had time to look at the creepy porn lawyer with all of their Trump investigations.

    n.n in reply to txvet2. | March 25, 2019 at 5:42 pm

    I have to wonder if Nike’s choice to kneel, and Avenatti’s failure to abort the DNC and establishment’s “burden”, influenced their evolution.

Hey Avenatti! Now, when you get to meet Bubba and Thor in the shower, you are gonna be the porn star! Hahahahaha! Hang on tight to that bar of soap.

Hopefully Stormy gave him some pointers on what it’s like to be used for sex than cast aside.

There is a fine line between a legitimate settlement offer on behalf of a client and extortion, but creepy porn lawyer seems to have hurdled that line without any finesse.

ScottTheEngineer | March 25, 2019 at 6:44 pm

I had to share this.

Bubba: You wants to be the husband or you wants to be the wife?”
Avenatti: “Uh…I want to be the husband.”
Bubba: “Alright then, get over here and suck your wife’s d***!”

Just checked CNN. Guess what they’re talking about: Trump – Mueller

Hmmm….he shoulda consulted with Jesse Jackson to see how to get away with it.

Can someone remind me how many times Mr. Avenatti appeared on CNN last year? I can’t seem to find that tidbit anywhere on the news…

Font Resize
Contrast Mode
Send this to a friend