Michael Avenatti sentenced to 2 1/2 years for trying to extort Nike

Attorney Michael Avenatti arrives for his sentencing hearing in an extortion scheme against Nike, at the United States Courthouse in the Manhattan borough of New York City (REUTERS)
Attorney Michael Avenatti arrives for his sentencing hearing in an extortion scheme against Nike, at the United States Courthouse in the Manhattan borough of New York City (REUTERS)

Summary

  • The prison term caps a public downfall for the California lawyer who represented Stormy Daniels in her legal battles with former President Donald Trump

Michael Avenatti was sentenced Thursday to 2 1/2 years in prison for trying to extort Nike Inc. for more than $20 million, capping the public downfall of a celebrity lawyer whose star turn as Stormy Daniels’s pugnacious lawyer ended in criminal charges.

Mr. Avenatti, 50 years old, was convicted after a jury trial in February 2020 on all three counts he faced: extortion, transmission of interstate communications with intent to extort, and wire fraud. The case grew out of Mr. Avenatti’s threats to expose purported corruption in Nike’s elite basketball program unless the apparel giant paid him to conduct an internal investigation.

Before handing down the sentence, U.S. District Judge Paul Gardephe called Mr. Avenatti’s conduct outrageous and said he operated as if laws that apply to everyone else didn’t apply to him.

“Mr. Avenatti had become drunk on the power of his platform," Judge Gardephe said in a Manhattan federal courtroom.

The Manhattan U.S. attorney’s office had asked Judge Gardephe to impose a “very substantial sentence" in line with probation officials’ recommendation of eight years imprisonment. Prosecutors said Mr. Avenatti “betrayed his client’s trust and sought to enrich himself by weaponizing his public profile in an attempt to extort a publicly traded company out of tens of millions of dollars."

Lawyers for Mr. Avenatti proposed a six-month prison term, noting his convicted offenses weren’t violent and didn’t cause financial loss. Mr. Avenatti sought, unsuccessfully, to have the verdict overturned and says he wasn’t allowed to present important evidence at trial. His lawyers have previously said they would pursue an appeal.

Mr. Avenatti, fighting back tears, told the judge that he was grateful for the love of his family, even when he least deserved it. He said he had always wanted to fight for the little guy against the Goliaths. “For years, I did just that," he said. “But I lost my way."

Judge Gardephe cited several reasons in handing down a sentence below that recommended by federal guidelines, including Mr. Avenatti’s remorse in court and what he called horrific conditions at the New York federal jail where Mr. Avenatti had been held.

Thursday’s sentencing caps just one of Mr. Avenatti’s legal battles. He also faces a litany of tax and bank charges in California with a trial set to begin next week in federal court in Santa Ana, Calif. A trial in New York is scheduled to start next year on federal charges that he embezzled money from Ms. Daniels.

Mr. Avenatti has pleaded not guilty to the charges and has denied wrongdoing.

Judge Gardephe ordered Mr. Avenatti to report to prison on Sept. 15, after what is expected to be the conclusion of his trial in California. When Mr. Avenatti leaves prison, he will face three years of supervised release, Judge Gardephe ordered.

Based in Southern California, Mr. Avenatti had a reputation as a rainmaker and a showman even before his representation of Ms. Daniels made him a household name. In 2018, after The Wall Street Journal revealed a hush-money payment made to the adult film star to conceal her alleged sexual encounter with former President Donald Trump, Mr. Avenatti became a combative and telegenic staple on nightly news shows, and he and Ms. Daniels were splashed across glossy magazine spreads.

But Mr. Avenatti’s business affairs had been unraveling for years, court filings show. By early 2019, prosecutors showed at trial, Mr. Avenatti was about $11 million in debt, and a probe by the Internal Revenue Service in California had become a criminal investigation into his business and financial affairs. Prosecutors in New York and California have described a pattern of stealing from clients to enrich himself and cover mounting losses, allegations Mr. Avenatti has denied.

Around February 2019, Mr. Avenatti began representing a youth basketball coach whose elite team had recently lost a sponsorship deal with Nike.

On March 19, 2019, Mr. Avenatti—accompanied by Los Angeles lawyer Mark Geragos—met in New York with two of Nike’s outside lawyers from law firm Boies Schiller Flexner LLP. Mr. Avenatti said his client had evidence that Nike employees had funneled illegal secret payments to the families of top high-school basketball players, according to evidence presented at trial. Mr. Avenatti threatened to expose the payments at a news conference the next day unless Nike paid his client a $1.5 million settlement and hired Messrs. Avenatti and Geragos to conduct an internal investigation, according to evidence at trial.

Mr. Geragos wasn’t charged, and didn’t testify at the trial. His lawyers disputed Mr. Avenatti’s efforts, before the trial, to characterize him as an accomplice.

The coach testified at trial that he didn’t know about Mr. Avenatti’s proposed quid-pro-quo arrangement.

In a statement provided by a spokeswoman, Nike said: “The verdict and sentence speak for themselves."

After the March 19 meeting, Nike’s lawyers contacted the Manhattan U.S. attorney’s office. Nike had been cooperating with the office in its investigation into alleged corruption in college basketball.

In the following days, at the direction of law enforcement, Boies Schiller lawyers recorded conversations with Mr. Avenatti, in which he repeated his alleged threats and proposed a minimum $12 million retainer or a confidential $22.5 million settlement to make the matter disappear. In one call, Mr. Avenatti threatened to “go take 10 billion dollars off your client’s market cap."

On March 25, Mr. Avenatti tweeted that he planned to hold a news conference the following day to disclose “criminal conduct" at the “highest levels of Nike." Within hours, FBI agents arrested Mr. Avenatti outside Boies Schiller’s Manhattan offices and charges were unsealed against him in New York and California.

Corrections & Amplifications

Michael Avenatti is scheduled to be sentenced Thursday. An earlier version of this article incorrectly said in one sentence that he was to be sentenced Wednesday. (Corrected on July 8, 2021)

Write to Rebecca Davis O’Brien at Rebecca.OBrien@wsj.com and Corinne Ramey at Corinne.Ramey@wsj.com

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