Michael Avenatti, who shot to fame as the lawyer of adult film star Stormy Daniels, was arrested on Monday on charges of trying to extort more than $20 million from Nike and for embezzling from a client.
was arrested in New York based on separate complaints filed in that city as well as Los Angeles.
Lawyer Michael Avenatti is facing fraud charges. Source: AAP
According to the complaint filed in New York and involving the sports apparel giant, Avenatti devised a scheme to extort millions of dollars from Nike by threatening to damage the company's reputation right before its quarterly earnings and the start of the NCAA men's basketball tournament.
"Calling this anticipated payout a retainer or a settlement doesn't change what it was -- a shakedown," New York prosecutor Geoffrey Berman told reporters.
"When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys," he added. "They are acting as criminals, and they will be held responsible for their conduct."
The complaint states that Avenatti, 48, and a California-based lawyer known for representing celebrities met with attorneys for Nike on March 19 and threatened to disclose allegations of misconduct concerning the company unless a payment was made.
Adult film actress Stormy Daniels, alleges she had an affair with US President Donald Trump. Source: Sayles
The following day, in a phone conversation with the attorneys, Avenatti stated that if his demands were not met he would "take 10 billion dollars off your client's market cap ... I'm not fucking around," according to the complaint.
Authorities said he haggled with Nike attorneys over the amount he should be paid, finally telling them he would "ride off into the sunset" if he received $22.5 million.
Berman said his office launched a probe after being contacted by Nike.
'Lawless conduct and greed'
Less than an hour before his arrest was announced, Avenatti tweeted that he would be holding a press conference on Tuesday 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 added.
Ms Daniels said she was “saddened but not shocked” to learn of the charges filed against Mr Avenatti. Source: AP
In a statement, Nike said it had reached out to federal officials as it would not stand being extorted.
"Nike has been cooperating with the government's investigation into NCAA basketball for over a year," the statement said. "When Nike became aware of this matter, Nike immediately reported it to federal prosecutors."
"Nike firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors," it added.
According to the two-count criminal complaint filed in Los Angeles, Avenatti -- embezzled a client's money in order to pay his own expenses and debts and also defrauded a bank by using phony tax returns to obtain millions of dollars in loans.
"The investigation paints an ugly picture of lawless conduct and greed," Nicola Hanna, the US Attorney for the Central District of California, told reporters.
At odds with Avenatti's claim to be fighting for the most vulnerable, Hanna said a two-year probe conducted by his office paints a picture of "a corrupt lawyer who instead fights for his own selfish interests by misappropriating close to a million dollars that rightfully belong to one of his clients."
"Lawyers have a sworn duty to obey the law and protect their clients," Hanna said. "Mr Avenatti has breached that duty and violated the principles of honesty and fairness that he claims to uphold."
He said Avenatti, who was to make an initial court appearance in New York on Monday afternoon, faces up to 50 years in prison if found guilty in the case.
Avenatti faces up to 50 years in prison if found guilty in the case. Source: AAP
He faces up to 47 years in prison on the four extortion-related charges filed in New York.
Daniels - who dropped Avenatti as her lawyer earlier this month - reacted swiftly, saying in a tweet that while she was saddened by the news reports, she was not shocked.
"I made the decision more than a month ago to terminate Michael's services after discovering that he had dealt with me extremely dishonestly and there will be more announcements to come," she said.
"I ask that the media respect my decision to withhold further public comment regarding Mr. Avenatti at this time."
