Michael Avenatti desired cash, it appears. Possibly he thought he needed it. That much is clear from the two sets of federal charging files filed against him Monday, one in New York and another in California. In the California case, a 197- page document describes how authorities believe Avenatti misrepresented tax returns to receive a loan from a Mississippi bank and likewise kept for himself a $1.6 million settlement that was supposed to go to a client. In the latter case, according to the complaint, Avenatti took the cash, then made a phony document telling his customer that the cash was coming in March, and failed to pay up when March rolled around.
This wasn’t Avenatti’s just monetary problem. Avenatti’s law company twice filed for bankruptcy in the last 3 years. “Who cares?” Avenatti told the Los Angeles Times after the most recent personal bankruptcy filing earlier this month.“Old company that we have not operated under for a extremely long time.”
So maybe it’s no coincidence that, according to the case filed in New York, Avenatti attempted to extort Nike for millions of dollars.
According to federal prosecutors, Avenatti informed the billion-dollar business that he represented a former AAU coach who had evidence of Nike paying players and he would keep peaceful about it, for a price. The charging documents read like Avenatti had saw too lots of mob films. They say he wanted $1.5 million for his client, and $3 million for himself. Then he desired $5 million, then $7 million, then $9 million, then between $15 million and $25 million. After a negotiation that was privately recorded, Avenatti allegedly lowered his cost to $22.5 million to get rid of it in “one fell swoop.”
“I simply wan na share with you what’s gon na take place if we wear’t reach a resolution,” Avenatti said, according to the unsealed problem. “As quickly as this becomes public, I am going to get calls from all over the country and all kinds of individuals—this is constantly what occurs—and they are going to say I’ve got an e-mail or a text message or—now, 90 percent of that is going to be bullshit since it’s constantly bullshit 90 percent of the time, always, whether it’s R. Kelly or Trump, the list goes on and on—but 10 percent of it is really going to be true, and then what’s going to take place is that this is going to snowball … and every time we got more details, that’s going to be the Washington Post, the New York Times, ESPN, a press conference, and the business will pass away—not pass away, but they are going to incur cut after cut after cut after cut, and that’s what’s going to take place as soon as this thing becomes public.”
In another taping, as explained in the complaint, Avenatti informs Nike he is going to “take 10 billion dollars off your client’s market cap.”
In Spite Of Monday’s charges, Avenatti is tweeting through it. He’s accused two players and their associates of getting cash payments from Nike. He’s also accused a couple of current and former Nike employees of vague crimes relating to paying basketball gamers. He likewise says that Nike will have to answer to the U.S. Securities and Exchange Commission. This is, most likely, some of the information he was allegedly trying to extort Nike with. This is, in theory, the excellent shit.
And no one truly cares. His tweets about the subject have so-so engagement. A few sites have reported on his comments, however there’s no media storm over it. Nike’s stock, which dipped after Avenatti previewed the Nike claims on Twitter before his arrest, is humming along as typical. (It dropped 6 points last Friday, the day after it posted earnings.)
As for why, it helps to recall that a variation of this has took place extremely recently. In 2017, the federal government charged several college basketball coaches with fraud as part of a scheme in which Adidas would covertly pay gamers, which made it possible for the players to keep their college eligibility while being paid. An Adidas executive, James Gatto, was likewise charged, and defendants, consisting of Gatto and ex-Adidas expert Merl Code, were found guilty.
And Adidas stock is essentially at the same level it was before the charges were filed. Matt Powell, a senior market consultant at the NPD G roup who studies these kinds of things, told Deadspin he has seen no ill impacts to Adidas: “I have not seen any material effect to Adidas’ service since of the convictions. I have not had any negative feedback from my Twitter fans either.”
The market doesn’t seem to care. The public doesn’t seem to care. In fact, a lot of people appear to like it when tennis shoe business make payments to high school kids. The reaction to the Adidas case—some convictions, some small NCAA reforms, a shrug from fans—shows that people put on’t really care if college professional athletes are paid.
There was a time when a teenage athlete taking loan to play sports was stunning; it is not in 2019. Even if Avenatti had held his press conference prior to Nike’s earnings call, it wouldn’t have torpedoed the company’s market capitalization. Adidas had an executive convicted of a federal crime and the market and the public barely discovered.
In theory, this could lead to broader discussions in politics and law enforcement of the NCAA cartel and the expected outcome of black markets when anything (be it drugs or “earning power from basketball”) is restricted. The NCAA helped create this circumstance, where gamers or players’ households and handlers are paid in secret by shoe business in order to guide them to universities. Tennis shoe companies make use of it. Avenatti presumably tried to weasel some cash out of the system for himself, too.
Avenatti may have tried to style himself as a hero, but all he did was presumably use the exact same corrupt system for himself too.