‘Nike Was Worried About the Truth Coming Out’ — And Other Explosive Allegations From Day 1 of Avenatti’s Extortion Trial
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Michael Avenatti’s Nike extortion trial is under way.
On Wednesday, U.S. prosecutors and Avenatti’s defense team delivered their opening statements in Manhattan federal court, with the prosecution arguing that the attorney tried to “shake down” Nike and the defense saying the Beaverton, Ore.-based company wanted to “contain” Avenatti.
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The celebrity lawyer has been charged with three counts (honest service wire fraud, intent to extort and violation of the Hobbs Act, which criminalizes extortion) for his alleged attempt to extort more than $20 million from the Swoosh in exchange for not publicly revealing alleged illicit payments by the brand to student athletes. He has pled not guilty to all charges. The trial could last for more than two weeks; if found guilty, Avenatti could be sentenced to more than 40 years in prison.
Below, FN rounds up the main takeaways from day 1 of the trial.
Prosecution: Avenatti ‘sold out’ his client
Avenatti purportedly learned of supposed illicit payments made by Nike to student athletes through his client, Gary Franklin, a former coach in Nike’s Elite Youth Basketball League. Prosecutors allege that Avenatti had his personal interests in mind rather than Franklin’s when negotiating with Nike, arguing that Avenatti had no right to ask for $20 million from the brand.
“This is a case about a shakedown,” assistant U.S. attorney Robert Sobelman told jurors on Wednesday. “Like all lawyers, [Avenatti] was supposed to look out for his client. Instead, he sold out his client and threatened to harm a major company. All to line his own pockets.”
Avenatti is accused of having asked Nike to pay Franklin $1.5 million to keep quiet about alleged improper payments to student athletes; prosecutors say Avenatti concurrently demanded the company pay him and attorney Mark Geragos a minimum of $15 million to conduct an internal investigation into the grassroots basketball league’s activities.
Prosecution: Avenatti had a ‘modern weapon’
Avenatti’s celebrity status and large social following (about 800,000 Twitter followers at the time) posed a real threat to Nike, the prosecution argued.
“The defendant had a weapon, a very modern weapon,” Sobelman said. “He had a big following on social media and a big presence on TV and in the news, and he found a way to use that weapon.”
In March 2019, Avenatti was arrested 15 minutes after tweeting a plan to reveal that Nike had allegedly made payments to student athletes. He had tweeted the plan just days before the start of the NCAA men’s basketball tournament and just ahead the brand’s third-quarter earnings report.
Defense: Avenatti was hired ‘to be Avenatti’
Howard Srebnick, part of the defense team, argued that Franklin hired “Avenatti to be Avenatti,” claiming that Avenatti was merely acting on behalf of his client, who hired Avenatti with the understanding that “he’s aggressive” and “sometimes he might even be offensive.”
“[The ask to Nike] wasn’t extortion, this wasn’t fraud. That was litigation. That’s exactly what it was,” Srebnick continued. “It was done in the spirit of getting the client what the client wanted.”
Avenatti has been charged with honest wire services fraud for purportedly lying to his client; the defense has denied all allegations of fraud.
Defense: Nike didn’t ‘want the truth coming out’
According to the defense, Nike’s internal and external legal team tried to set up Avenatti by asking him for a specific dollar amount during a March meeting. Srebnick said that the Swoosh’s “mission was to contain Mr. Avenatti.”
“Nike was worried about the truth coming out,” Srebnick told jurors, explaining that the brand was at the time under federal investigation over claims it illicitly paid student athletes. The attorney said the Justice Department had handed over evidence of misconduct by Nike to the U.S. Securities and Exchange Commission; the SEC probe was confirmed on the witness stand by former Nike lawyer Scott Wilson.
Former Nike lawyer: Avenatti ‘threatened’ me
Wilson told jurors Avenatti used “shocking” language in conversations with Nike, alleging that Avenatti promised to “take millions off the company’s market cap” and “engage in a media war” if his demands were not met.
“When I met Mr. Avenatti, he threatened to go public with allegations that Nike had been involved in corruption in youth basketball unless we paid him off,” Wilson told jurors.
The attorney added that he “understood [Avenatti] to be threatening” him during negotiations, which took place in March at Geragos’ Fifth Avenue office.
The trial continues today with more testimony from Wilson.
FN has reached out to Nike for comment.
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