Michael Avenatti is widely known for representing Stormy Daniels in her claims regarding an alleged affair with President Donald Trump that eventually led to a $130,000 settlement payment to Daniels from Trump’s attorney, Michael Cohen.
However, in a recent series of tweets, Avenatti alleges that multinational sportswear conglomerate Nike engaged in a pay-for-play scandal to recruit the best high school-aged basketball players to Nike-sponsored colleges.
Avenatti argues that there is injury to other universities which are not given the opportunity to recruit the same athletes that go to Nike schools like Duke.
The allegations are similar to the recent case against Adidas, whose director of global marketing, James Gatto, consultant and basketball organizer Merl Code and client recruiter Christian Dawkins were sentenced to prison for steering high-profile recruits to Adidas-sponsored programs.
Avenatti claimed on Twitter, while releasing more than 41 confidential documents, that the evidence he presented shows Nike bribed players to attend colleges that Nike sponsored, including recent phenomenon Zion Williamson, whose mother Avenatti said, was paid for “consulting services.”
Despite significant evidence of wrongdoing by Nike, Avenatti’s information dump has inflicted more legal consequences upon him than Nike or college basketball’s reputation.
Avenatti was arrested and charged with four federal extortion and conspiracy offenses. According to the complaint filed against him, his tactics included bullying phone calls, hostile in-person meetings and damaging social media posts to extort Nike for close to $26.5 million.
If convicted, Avenatti could face up to 47 years in prison. In addition, Avenatti also faces wire and bank fraud charges in California based on his involvement in an intellectual property case that resulted in a $1.6 million payment, all of which allegedly went to Avenatti and not to his client.
It appears that Avenatti first contacted Nike to request a meeting to discuss “a potentially damaging issue” in early March 2019. Avenatti expressed displeasure that an Amateur Athletic Union coach that he represented would not be having his contract renewed by Nike.
Avenatti allegedly stated that the coach had a multitude of documents showing payments by Nike employees to families of the top high school basketball players in the nation.
Avenatti then warned Nike that he would be holding a news conference to expose all of the company’s wrongdoing, which happened to be at the beginning of the NCAA tournament and near Nike’s quarterly earnings call.
Avenatti planned to take advantage of the events of significance to destroy Nike’s brand image and tank its stock price. The only way to stop him, he claimed, was to pay the coach $1.5 million to “resolve any legal claims the AAU coach may have against Nike” for the nonrenewal of his contract and hire Avenatti and his co-conspirator, alleged to be celebrity attorney Mark Geragos, to “internally investigate” Nike for close to $25 million.
Nike delayed and contacted the U.S. Attorney’s Office for the Southern District of New York to alert them of Avenatti’s scheme to extort the company.
Nike, with the help of the U.S. attorney, then monitored a call between the company and Avenatti and his co-conspirator, where he reiterated the need to resolve the matter. This was followed by a meeting with the parties in New York, where he continued to elaborate on how he would trigger Nike’s demise.
Avenatti was quite disturbed by the Nike delay, so he proceeded to tweet out all the documents.
Nike’s power is likely to show in the outcome of the case against Avenatti. Although Avenatti will claim that he was attempting to strong-arm Nike like many attorneys do in negotiations, the level and type of tactics utilized will be highlighted by prosecutors to show that he went too far.
Avenatti could argue that pompous remarks or “puffing” does not equal literal attempts to extort. Another strategy for Avenatti could be to maintain that his methods were all based on his duty to zealously represent his client, but the likelihood of that argument being effective is small, since Avenatti’s actions were not just viewable to him and Nike’s attorneys, but was instead plastered on social media where millions viewed the documents within minutes of their release.
The legal consequences for Avenatti will likely include a short prison term, in concert with severe financial penalties, and a lengthy suspension of his law license (if not a complete disbarment).
The trail that Avenatti has left in his wake will be his undoing, as most of what he said either was recorded or is in the multitude of emails and text messages between him, his co-conspirator, and Nike officials.
Further, it is not inconceivable that Avenatti’s co-conspirator and the AAU coach client would agree to testify against him in exchange for decreased penalties, piling on additional evidence to support the prosecution.
Avenatti, knowing the conviction rate statistics better than most (around 90% in federal cases), will likely choose a plea deal if one is available to him.
As for Nike, the difference between a possible case against them for Avenatti’s accusations and the previous matter against Adidas is the level of information that Avenatti released. His approach specifically named and linked individual players and their families to the bribery scheme, something that was absent in the Adidas case.
Authorities did not include player names in Adidas’ case because of the notion that the athletes themselves should not be held liable for the corruption that is rampant in college recruiting.
In addition, the consequences to Nike would likely be similar to Adidas, meaning that the individuals involved could be prosecuted, but the entity level should be safe, unless a top executive such as CEO Mark Parker, knew what was going on and failed to warn employees and shareholders.
In terms of the players, including Zion Williamson, who are accused to be the beneficiaries of Nike’s wrongdoing, Avenatti’s track record of inconsistency and a lack of credibility will likely reduce the seriousness with which prosecutors view the case.
In addition, at least at this point, specifically pertaining to Williamson, the only claims against him are uncorroborated tweets about payments to his mother. Williamson projects to be the No. 1 pick in the upcoming draft, which poses an even greater need for him to stay out of this controversy as it continues.
In light of recent NCAA missteps related to investigations and penalties levied against some of its member institutions including Penn State and the University of Miami, look for the NCAA enforcement staff to wait until the government has completed its investigation (and in some cases sentencing of individuals) before bringing any cases regarding NCAA rules infractions.