Crime

Michael Avenatti Charged With... A Whole Bunch Of Stuff Out Of Multiple USAOs

One of these cases seems a lot more troublesome for him than the other.

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Michael Avenatti (Photo by Jennifer S. Altman/For The Washington Post via Getty Images)

Above the Law’s 2018 Lawyer of the Year and former Thinking Like A Lawyer guest Michael Avenatti is not having the best morning.

Reports are just streaming in that he’s been arrested and charged by two different U.S. Attorney’s Offices for a whole bunch of different crimes. Let’s try to sort this developing story out.

First up, the SDNY claims Avenatti represented an AAU Basketball coach against Nike and threatened to “go take $10 billion off your client’s market cap” if the company didn’t settle his client’s dispute for $1.5 million and then engage Avenatti to conduct an internal investigation of Nike for somewhere between $15-25 million. The feds are calling this extortion and level four vaguely related counts covering all this alleged conduct.

Lawyers make settlement demands all the time. These can often be pretty outrageous to rattled some unsuspecting non-lawyer into negotiating against the wind and coughing up tons more than a claim is worth. It’s a form of extortion we all casually allow because we assume the entity on the receiving end is smart enough to hire an attorney who will tell them “that’s all bulls**t, give him $20K and he’ll go away.” Is this really going to be a crime now? An ethical violation, sure, but a federal crime? If so, I think a lot of lawyers are going to be very interested in how this turns out.

[UPDATE: Wall Street Journal has… some interesting updates:

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Well, that’s a whole lot to unpack.]

Second, and arguably much more significant, Avenatti was arrested based on charges brought by the Central District of California for wire fraud.

The U.S. Attorney in the Central District of California claims Avenatti embezzled client money to cover expenses for his coffee corporation which operates Tully”s Coffee stores in CA and Washington.

As for allegations of bank fraud, prosecutors say Avenatti submitted false tax returns to a bank in Mississippi to get $4.1 million in loans.

According to the detailed affidavit, Avenatti is accused of giving the bank tax records for 2011-13 even though the IRS claims he never filed any tax returns at all for 2011-13 and still owed on his 2009-10 income. Meanwhile, the authorities say he used a client’s settlement funds to pay expenses for a company Avenatti owned and told the client that the settlement had never come in.

These charges are way, way, way more serious than being a meanie to opposing counsel during settlement talks. Is the SDNY that insecure about getting scooped that they had to slap together this “he was a meanie-head during settlement” tripe just so they aren’t getting upstaged by California? Come on folks, let them have this one.

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In any event, this is developing quickly so we’ll have more to say over the coming days. In the meantime, you can read the SDNY charges here and the CDCA charges here — or just click to the next two pages.

MICHAEL AVENATTI CHARGED WITH EXTORTING NIKE… Arrested for Wire and Bank Fraud [TMZ]

HeadshotJoe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.

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