The celebrity lawyer Michael Avenatti faces charges in what prosecutors have described as a scheme to extort millions of dollars from Nike.CreditCreditCheryl Senter/Associated Press
Just after making bail last Monday, the celebrity lawyer Michael Avenatti did what he had always done in the swirl of a hot story. He called a reporter.
It did not seem to matter that he was now facing criminal charges in what federal prosecutors in Manhattan described as a scheme to extort millions of dollars from Nike, or that federal prosecutors in California had just filed unrelated charges that he had defrauded a former client and a bank.
Mr. Avenatti, the lawyer who represented the pornographic film actress Stormy Daniels in her lawsuits against President Trump, walked into a cellphone store last Monday night and used the landline to call a reporter for The New York Times, beginning a campaign to deny all allegations against him and defend himself in the court of public opinion.
“I’m the most well-known attorney in the United States right now, for better or worse,” he said on Thursday in an interview. “And that’s been true for a long time now. For a year.”
It has been a long year. The man who many on the left predicted would take down Mr. Trump, who had become a fixture on cable news networks, orbited in celebrity circles and even flirted with a presidential run himself, could now face years in federal prison, a turnabout the Trump camp noted with glee.
“It went from Avenatti 2020 to Avenatti 20-to-25,” Donald Trump Jr. said last week at a political rally for his father in Michigan.
On inspection, some of the same qualities that brought Mr. Avenatti fame now appear to be contributing to his potential fall.
Grasping for big wins, the brash lawyer often promised more than he delivered. And his cocksure public image masked disarray, now evident in a trail of civil disputes, bankruptcy filings and alleged financial crimes going back several years, according to court papers and interviews. Late last year, he was accused of domestic violence by a former girlfriend, though Los Angeles prosecutors have declined to file charges while leaving the case open.
Such troubles would drive many people underground. Yet Mr. Avenatti has never relented. He has kept pushing stories. Two weeks ago, he contacted reporters, including two from The Times, suggesting he had a story related to a sportswear company and promising it would be big.
It was. But it turned out to be about him.
Mr. Avenatti represented the pornographic film actress Stormy Daniels in her lawsuits involving President Trump.
CreditYana Paskova/Getty Images North America
A Year in the Spotlight
It was only a year ago that Mr. Avenatti burst onto the scene, trumpeting on Twitter that a salacious case he had taken on could bring down the president.
A coalition of online anti-Trump figures from the left and right was rising, calling itself #TheResistance, and Mr. Avenatti was seen as one of its most vocal leaders. He used tough, crude language and gambling metaphors. He said the person who could best beat Trump was “a white male.” He called himself a fighter, and looked the part. His hashtag was #basta, meaning “enough.”
As he battled on behalf of Ms. Daniels — who received hush money before the 2016 election to keep quiet about a sexual encounter she said she had with Mr. Trump — he raised his own profile in more than 300 television appearances and countless interviews, some with The Times. Everything about him became news, from his Tom Ford suits to his low body-fat percentage.
He regarded the media as a cudgel for his cases, maximizing exposure, inviting new evidence from would-be whistle-blowers and sometimes inciting responses from the White House. As often as he provoked eye-rolling, his claims frequently flitted over airwaves and onto news sites with little scrutiny. He appeared to relish rationing out bits of real news to reporters, whom he was quick to cut out if he found their coverage unfavorable. Along the way, the right-wing press claimed that much of the response to him was credulous, and that he was inserting himself in legal battles beyond his expertise.
“I was and am a real lawyer,” he said on Thursday. “I’m not just some TV lawyer.”
Mr. Avenatti drew attention in Iowa last summer with a speech that sounded like he was gearing up for a run for president.
CreditGeorge Etheredge for The New York Times
His client list followed the story of the moment: Here he was suddenly fighting for separated immigrant families along the southern border, then representing an accuser of Judge Brett M. Kavanaugh before he was confirmed to the Supreme Court. Mr. Avenatti later popped up in the R. Kelly sexual abuse investigation, representing multiple accusers and saying he submitted video evidence to state prosecutors in Chicago.
Last summer, after Christine Blasey Ford said that now-Justice Kavanaugh had sexually assaulted her when they were in high school, Mr. Avenatti came forward with another accuser, Julie Swetnick. With little detail, Ms. Swetnick escalated the allegations, describing parties attended by the judge’s circle of friends, where girls had been gang-raped.
On the eve of Dr. Blasey and Judge Kavanaugh’s testimony to Congress, some felt the claims brought by Mr. Avenatti’s client were gasoline on a fire, intensifying the political frenzy around what was widely considered a test for the #MeToo movement. Noting inconsistencies in Ms. Swetnick’s account, the chairman of the Senate Judiciary Committee questioned whether Mr. Avenatti had deliberately misled Congress and referred him and his client for criminal investigation.
In his push against the judge, Mr. Avenatti said he had witnesses who could corroborate his client’s claims, but he never delivered. And at the peak of the Stormy Daniels case, he said he had more women alleging hush money payments tied to Mr. Trump, but he produced none.
Mr. Avenatti denied that he had chased the cases for attention.
“I haven’t repositioned myself to remain in the spotlight,” he said, claiming he had received 50 to 200 unsolicited requests for representation daily over the last year. “In many instances, the cases that I’ve gotten involved in have changed the spotlight.”
Though lacking any political experience, when he hinted at a run for president, he was taken somewhat seriously. “We must be a party that fights fire with fire,” Mr. Avenatti said at a Democratic fund-raiser in Iowa last August, sounding like a candidate. “When they go low, I say hit back harder.”
He bristled at the idea that he had emerged out of nowhere.
“I don’t feel like I get enough credit for my track record of success relating to cases,” Mr. Avenatti said, raising his voice with exasperation. “People act like I was a nobody before Stormy Daniels, and it’s ridiculous.”
As a plaintiff’s lawyer, Mr. Avenatti had won some big settlements. He sued KPMG for audit malpractice, and the company settled for $22 million. He won $80 million from a cemetery accused of overstuffing its plots, and half a billion from the makers of defective surgical gowns. Two of his cases before Ms. Daniels had landed him on “60 Minutes,” he pointed out.
But his law firm, which in recent years had eight to 10 lawyers, all of whom have now left, had also filed for bankruptcy. It did so again this past month, estimating liabilities of up to $50 million.
A former partner at Mr. Avenatti’s firm, Jason Frank, claimed in federal court this year that Mr. Avenatti had committed bankruptcy fraud in a previous filing, hiding millions of dollars from the government. Last fall, a California court ordered Mr. Avenatti to pay millions to Mr. Frank for work he had done for the firm. After Mr. Avenatti failed to produce the financial records required of him in that case this year, he gave up control of his firm, which is now in the hands of a court-appointed receiver.
The federal charging documents in California, unsealed last week as part of the criminal case against him, provided new details about past financial trouble. Mr. Avenatti had a checkered history with the Internal Revenue Service dating back years. In 2014, he submitted fake tax returns in loan applications to a Mississippi bank, prosecutors said, claiming to have paid the I.R.S. millions of dollars in years when he had filed no returns at all. He owed the I.R.S. more than $850,000 in unpaid personal income taxes at the time. Mr. Avenatti said on Thursday that the bank loans had been repaid.
Meanwhile, he spent company money as if it were his own, prosecutors said. From 2011 to 2017, his law firm paid more than $216,000 to Neiman Marcus, according to the federal charges filed in California. The firm is also accused of spending $68,500 at a luxury watch store; putting almost half a million dollars toward Mr. Avenatti’s mortgage; and paying hundreds of thousands of dollars to Porsche and a car dealership.
At one point, prosecutors said, Mr. Avenatti directed employees at a coffee company he owned — Global Baristas, which ran Tully’s coffee stores — to deposit cash receipts into a bank account associated with his car-racing business. Other money from Tully’s went toward his rent and shopping expenses, according to the filings.
But even as criminal charges loom, Mr. Avenatti wants a little more credit for what he has done. He claimed his aggressive tactics had won the government its guilty plea from Michael D. Cohen, Mr. Trump’s former lawyer, who last year was convicted of campaign finance crimes connected to the hush money payment to Ms. Daniels.
“That would have been a two-day story were it not for me,” Mr. Avenatti said. “Look at the other scandals Trump has been involved in. Compare the amount of coverage.”
Mr. Avenatti speaking last year in New Hampshire.CreditCheryl Senter/Associated Press
Mr. Avenatti and Ms. Daniels officially parted ways this year, Ms. Daniels announced on Twitter weeks ago. He fired back with his own statement in minutes, framing it as his decision: “On February 19, we informed Stormy Daniels in writing that we were terminating our legal representation of her for various reasons that we cannot disclose publicly due to the attorney-client privilege.”
He lost both of her cases against the president while claiming de facto victory. A federal judge in California dismissed the suits, ordering her to pay Mr. Trump’s legal fees, totaling $293,000.
A Reversal of Fortune
Mr. Avenatti was arrested last Monday afternoon in New York’s new Hudson Yards development, outside the offices of Nike’s law firm, Boies Schiller Flexner, with which he had talked repeatedly in preceding days. He was accused of trying to extort more than $15 million from the apparel giant, which had in turn contacted the authorities.
In earlier meetings, he had told Nike’s lawyers that he represented a youth basketball coach who once had a contract with the company, federal prosecutors in Manhattan said. Through the coach, Gary Franklin Sr., Mr. Avenatti said he had gathered information showing Nike had made payments to high school basketball players — an N.C.A.A. violation and, in certain circumstances, a possible fraud.
He then requested $1.5 million for Mr. Franklin, according to the complaint unsealed in New York last week. He also demanded that Nike hire him to conduct an internal investigation into its criminal exposure, for which he and another lawyer would receive a minimum $15 million to $25 million. Alternatively, according to the complaint, Mr. Avenatti demanded $22.5 million to buy his silence and resolve Mr. Franklin’s potential claims.
Mr. Franklin could not be reached for comment.
According to the Justice Department, Mr. Avenatti had threatened: “Every time we got more information, that’s going to be The Washington Post, The New York Times, ESPN, a press conference, and the company will die — not die, but they are going to incur cut after cut after cut after cut, and that’s what’s going to happen as soon as this thing becomes public.”
Mr. Avenatti has maintained he was simply doing what he is known for: lawyering aggressively.
He had sought to establish a media strategy from the start. On March 16, he began contacting two Times reporters about potential news related to the Justice Department’s investigation of recruiting in college basketball, which had already implicated Adidas. On March 19, prosecutors said, he met with Nike’s lawyers.
Last Monday, Mr. Avenatti asked that Times reporters meet him that afternoon at the Fifth Avenue offices of Mark Geragos, a celebrity lawyer with whom he said he was working. Within minutes of the call, Mr. Avenatti telegraphed on Twitter that he planned to hold a news conference the next day to release explosive details on crimes “reaching the highest level of Nike.”
He was arrested within the hour.
In the days since, Mr. Avenatti has again gone on the offensive on Twitter and in interviews, claiming that he is a victim of Nike’s “dishonest” lawyers. Before limiting public access to his tweets this week, he posted a screenshot of alleged text messages between Mr. Franklin, the coach, and a Nike employee, making broad reference to money changing hands.
The United States attorney in Manhattan, Geoffrey S. Berman, outlined the extortion charges against Mr. Avenatti, which he said included seeking millions of dollars to not disclose potentially damaging information about Nike.
The way Mr. Avenatti approached Nike reflected seemingly little research, according to people who closely follow the company. Nike has ridden out scandal before, including in the Justice Department’s prosecution of international soccer officials for bribery and corruption in the FIFA case, in which Nike was implicated but not charged.
It is unclear if Mr. Avenatti possessed evidence directly tying Nike to any payments, and prosecutors and Nike both declined to comment.
“Avenatti was an idiot to think that he was going to make a company like Nike buckle,” said John Horan, the longtime publisher of Sporting Goods Intelligence, an industry newsletter.
Mr. Avenatti insisted that he simply wanted to clean up what he called corruption within Nike and conduct an internal inquiry to ensure things improved. “This was a complete hit job by Nike. It was designed to do damage to me and inoculate themselves,” he said by phone from California.
He had flown back to his home state, preparing to answer to the charges filed there. The charges include not just that he defrauded a bank through false tax returns, but also that he diverted $1.6 million in settlement proceeds in January 2018 to pay his own debts, instead of passing on the share owed to a client. The complaint said Mr. Avenatti lied to the client, Gregory Barela, telling him the settlement from a dispute with an out-of-state corporation had never been paid.
Mr. Avenatti on Thursday questioned the credibility of Mr. Barela, who had provided prosecutors with documents to inform their complaint, which also cited bank records. Mr. Barela could not be reached for comment.
For all the attention the Nike case is getting, the charges filed in California may be Mr. Avenatti’s bigger problem, said Peter Johnson, who teaches at the University of California, Los Angeles’s law school. The Nike allegations hinge on Mr. Avenatti’s intent — whether it was extortion or zealous advocacy — which is harder to determine. But the charges in California draw on a paper trail that could make it clearer to establish fraud.
“It’s about whether in fact he committed fraud on paper, and for the prosecution that’s an easier case to prove,” Mr. Johnson said.
As his star falls, some now question how he managed to stir so much enthusiasm in the first place.
David Karpf, a professor of media and public affairs at the George Washington University, viewed Mr. Avenatti as part of a larger phenomenon of “resistance grifters,” or people harnessing anti-Trump outrage for financial gain.
“People face this overwhelming flow of information, and they lack context and understanding,” Dr. Karpf said. “So anybody who can speak with a confident tone offering some explanation can find an audience.”
Mr. Avenatti dismissed the grifter allegations as motivated by jealousy.
“Haters are going to be haters,” he said of his critics. “A lot of people love to build you up only so they can turn around and tear you down.”
Michael Avenatti embraced news media attention even after being arrested in Manhattan this past week.CreditJohannes Eisele/Agence France-Presse — Getty Images