Tax evasion, extortion, Avenetti is looking at a long prison sentence.
Stormy Daniels’ ex-lawyer Michael Avenatti arrested for alleged $20 million extortion scheme against Nike, embezzling client’s money, defrauding bank
PUBLISHED 2 HOURS AGO UPDATED MOMENTS AGO
Celebrity lawyer Michael Avenatti is arrested on charges of trying to extort up to $25 million from Nike by threatening to reveal negative publicity.
Avenatti also is charged in a separate federal case of embezzling a client’s money “in order to pay his own expense and debts,” and of “defrauding a bank in Mississippi.”
Avenatti had represented porn star Stormy Daniels in her lawsuit against President Trump and his former lawyer Michael Cohen related to a nondisclosure agreement she had signed on the eve of the 2016 presidential election to keep quiet about her alleged affair with Trump.
Michael Avenatti arrested for alleged $20 million extortion attempt against Nike
Celebrity lawyer Michael Avenatti was arrested Monday on charges of trying to extort up to $25 million from Nike by threatening to reveal claims of misconduct by company employees.
Avenatti also is charged in a separate federal case in Los Angeles with embezzling a client’s money “in order to pay his own expenses and debts” and those of his law firm and coffee company, and of “defrauding a bank in Mississippi,” prosecutors said.
The famously aggressive litigator had represented porn star Stormy Daniels in lawsuits against President Donald Trump and his former lawyer Michael Cohen related to a nondisclosure agreement she signed on the eve of the 2016 presidential election to keep quiet about her alleged affair with Trump in exchange for a $130,000 payment. Last year, Avenatti announced that he was considering running for president.
Daniels replaced Avenatti as her lawyer earlier this month after a fallout with him.
Daniels, in a statement released by her new lawyer Clark Brewster, told CNBC that, “Knowing what I know now about Michael, I’m saddened but not shocked regarding his arrest.”
“I made the decision weeks ago to terminate Michael’s services after discovering that he had dealt with me extremely dishonestly, and I will have my own announcement coming soon,” Daniels said.
Avenatti, 48, was arrested in Midtown Manhattan at the law offices of Boies Schiller Flexner at 12:30 p.m. ET by FBI agents, about 15 minutes after he tweeted that he would be disclosing a big high school and college basketball scandal “perpetrated by” Nike that he supposedly had uncovered.
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.
12:16 PM – Mar 25, 2019
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According to a criminal complaint, Avenatti had offered to not hold that press conference “only if Nike made a payment of $1.5 million to a client of Avenatti’s in possession of information damaging to Nike … and agreed to ‘retain’ Avenatti and [another person] to conduct an ‘internal investigation’ — an investigation that Nike did not request — for which Avenatti and [the other person] demanded to be paid, at a minimum, between $15 [million] and $25 million.”
The complaint says that on Wednesday, Avenatti and a cooperating witness spoke by phone with lawyers for Nike “during which Avenatti stated, with respect to his demands for payment of millions of dollars, that if those demands were not met ‘I’ll go take ten billion dollars off your client’s market cap … I’m not f—ing around.’”
Avenatti is due in Manhattan federal court on Monday on charges of conspiracy, extortion and transmitting interstate communications with intent to extort. He is charged in the Los Angeles case with two criminal counts, wire fraud and bank fraud.
Andrew Cullen | Reuters
Nike had no immediate comment. The White House did not immediately comment.
In the Los Angeles federal case, Avenatti is accused in a 197-page complaint of negotiating a $1.6 million settlement for a client in a civil case, but then giving the client “a bogus settlement agreement with a false payment date of March 10, 2018.”
The U.S. Attorney’s Office in Los Angeles said “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,” according to prosecutors.
“Mr. Avenatti is facing serious criminal charges alleging he misappropriated client trust funds for his personal use and he defrauded a bank by submitting phony tax returns in order to obtain millions of dollars in loans,” U.S. Attorney Nick Hanna said.
Hanna’s office said Avenatti also allegedly defrauded a bank in Mississippi by submitting to that bank fake tax returns to get three loans totaling $4.1 million for his law firm and coffee business in 2014.
The tax returns indicated that he had “substantial income even though he had never filed any such returns with the Internal Revenue Service,” the prosecutor’s office said. “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. … 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,” Hanna’s office said.
“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. Avenatti also submitted a fictitious partnership tax return for his law firm,” the investigators said
Read the New York federal criminal complaint against Michael Avenatti:
Read the Los Angeles federal criminal complaint against Avenatti:
Michael Avenatti arrested for alleged $20M extortion plot against Nike, embezzling client’s money
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