U.S. News

Michael Avenatti arrested on extortion, embezzlement charges

By Danielle Haynes and Daniel Uria   |   Updated March 25, 2019 at 8:31 PM
Attorney Michael Avenatti allegedly told Nike to pay him and his client more than $1 million to stop him from releasing damaging information about the company. File Photo by John Angelillo/UPI

March 25 (UPI) -- Federal authorities in Manhattan arrested attorney Michael Avenatti for allegedly attempting to extort up to $25 million from Nike, the Justice Department said Monday.

He also faces separate federal charges in Los Angeles for allegedly embezzling a client's money and defrauding a bank using phony tax return documents to obtain millions in loans.


In the New York-based criminal complaint, prosecutors said Avenatti threatened to release damaging information about Nike if the company didn't pay $1.5 million to a client who had the information. He also said Nike must retain him and another person for between $15 million and $25 million to conduct an internal investigation.

Avenatti was released on $300,000 bond Monday evening and was required to surrender his U.S. and Italian passports, ABC News reported.

He did not enter a plea in court Monday and he is next scheduled to appear in court April 1 in California and April 25 in New York.

The announcement of charges came hours after Avenatti tweeted about a news conference he planned to hold Tuesday to release the damaging information.

"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," he tweeted.

Prosecutors in New York planned to hold a news conference Monday afternoon detailing allegations in the criminal complaint.

The criminal complaint filed in Los Angeles accused Avenatti of negotiating a settlement for $1.6 million to be paid Jan. 10, 2018, but giving his client a phony settlement with a payment date of March 10, 2018. Avenatti then allegedly used his client's funds to pay his own bills for a coffee business that operated in California and Washington.

Prosecutors said Avenatti concealed the funds and lied to his client after the March 10 payment date passed.

"A lawyer has a basic duty not to steal from his client," U.S. Attorney Nick Hanna said. "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."

The complaint also said Avenatti submitted a false tax return to a Mississippi bank in order to secure three loans totaling $4.1 million for his law firm and coffee business in 2014.

Avenatti formerly represented adult film star Stormy Daniels -- born Stephanie Clifford -- in her defamation lawsuit against President Donald Trump's former personal lawyer Michael Cohen. He also was her lawyer in her lawsuit to end a hush-money agreement about an alleged sexual relationship with Trump. Judges dismissed both.