Judge allows Nike's extortion case against Michael Avenatti to proceed

A federal judge on Monday declined to dismiss criminal charges against attorney Michael Avenatti, who is accused of attempting to extort as much as $25 million from Nike to keep him from exposing alleged misdeeds in the apparel company's grassroots basketball division.

In his ruling, U.S. District Court Judge Paul G. Gardephe wrote that the federal indictment adequately alleges that "Avenatti used threats of economic and reputational harm to demand millions of dollars from Nike."

Avenatti's trial is scheduled to begin Jan. 21 in New York.

"The Indictment adequately alleges that Avenatti engaged in 'wrongful' conduct, because it pleads facts demonstrating that Avenatti used threats of economic and reputational harm to demand millions of dollars from Nike, for himself, to which he had no plausible claim of right," Gardephe wrote. "While Avenatti's client may have been in a position to make demands on Nike, Avenatti had no right -- independent of his client -- to demand millions of dollars from Nike (1) based on confidential information supplied by his client; (2) without his client's knowledge; and (3) to his client's detriment. Whether or not Avenatti engaged in such conduct is, of course, a question for the jury."

Avenatti pleaded not guilty to felony charges related to conspiracy to commit extortion, wire fraud and extortion. He contends he was seeking the money from Nike to compensate his client, former grassroots basketball coach Gary Franklin, and for Avenatti to conduct an internal probe of Nike's conduct with amateur athletes.

"Once the actual evidence is presented in the Nike trial, I will be fully exonerated because I did absolutely nothing wrong," Avenatti wrote on social media on Monday.

Avenatti alleges that Nike employees funneled tens of thousands of dollars to elite basketball players and their families and handlers to ensure they played for Nike-sponsored grassroots teams and college basketball programs.

Avenatti, who is most famously known for representing porn actress Stormy Daniels in her lawsuits against President Donald Trump, is attempting to introduce evidence that he contends uncovers misconduct by several employees working in Nike's Elite Youth Basketball League (EYBL).

In a separate court filing on Monday, Avenatti's attorneys revealed that Franklin, a former coach of the Nike-sponsored California Supreme team, secretly recorded Nike employees when he became uncomfortable with their requests.

According to the filing, Franklin recorded telephone conversations with EYBL executives Jamal James, Nico Harrison and Carlton DeBose, as well as attorney Bryan Freedman and Mel McDonald, a California-based basketball trainer connected to NBA players Deandre Ayton and Bol Bol.

According to the filing on Monday, Avenatti's attorneys are aware of 16 specific calls that Franklin recorded, and they were seeking additional calls between Franklin and Nike employees, including those concerning "the payments to amateur basketball players and/or their families or agents between January 1, 2016 and March 25, 2019."

On Monday, Gardephe denied a subpoena request by Avenatti's attorneys for Franklin's audio recordings and related transcripts, as well as un-redacted versions of all text messages and emails between Franklin and Jeffrey Auerbach, a California-based sports management consultant.

"In sum, the Court does not expect the validity or nature of Franklin's claim against Nike to be a central issue at trial," Gardephe wrote in his decision. "Instead, the critical issue at trial will be whether the Government has proven beyond a reasonable doubt that Avenatti demanded $15 to $25 million for himself in exchange for not conducting a press conference at which Nike's alleged misconduct would be revealed, and whether he did so without his client's knowledge and consent."

Avenatti's lawyers argued that the recordings, emails and text messages revealed misconduct by Nike employees. In one email to Franklin, which was included in a court filing, Auerbach wrote:

"Gary-listende (sic) to the tape. This guy is something else. OUT OF TOUCH. He's got nerve. He and Carlton come into your house, your program, which you've been running long before they ever got to Nike, and give you a directive you can't refuse (so why even ask?) and inject criminal elements and behavior in the form of Mel McDonald, order payoffs, and insist you turn over your 17 EYBL team to an overzealous and crazed parent illegally paying a handler (and God knows who else) for the use of a star high school player (Bol Bol) all to make his son look better on the court. Jamal and Carlton put you through the [expletive] ringer, decimated your program, hurt your brand, cost you money and mental anguish, and NOW he's talking to you like you did something wrong (not them) and he's willing to leave 'all that stuff' behind. End of the day, we're all part of the Nike family. A family that insists and directs you to work with a man arrested and charged with extortion 3 years before they introduced you to him for DeAndre (sic). Nike brought criminal behavior and corruption into your house, your club...How about you recalibrate my ass."

According to court records, federal prosecutors advised Avenatti's attorneys this past weekend that they were producing an additional 4,000 pages of Nike-related documents. According to Avenatti's attorneys, Nike has turned over more than 20,000 pages of documents to the federal government since Avenatti's arrest in March.

"The documents corroborated what Coach Franklin had told Mr. Avenatti about the involvement of Nike executives -- several of whom are the subject of the subpoenas -- in a scheme to funnel money to high school players, their families and/or handlers," Avenatti's attorneys wrote in a recent motion. "To be sure, the documents showed that the conduct extended far beyond Coach Franklin and the California Supreme."

Nike and federal prosecutors are attempting to quash subpoenas that Avenatti's attorneys sent to five Nike employees: John Slusher, Lynn Merritt, Harrison, DeBose and James.