Michael Avenatti pleads not guilty to new Nike extortion indictment

[December 18, 2019]  By Jonathan Stempel

NEW YORK (Reuters) - Michael Avenatti pleaded not guilty on Tuesday to an indictment accusing him of trying to extort as much as $25 million from Nike Inc <NKE.N> by threatening to go public with claims the company made improper payments to athletes.

Clasping his hands behind his back, the celebrity lawyer, who gained fame representing porn actress Stormy Daniels in a lawsuit against U.S. President Donald Trump, said "not guilty" after U.S. District Judge Paul Gardephe read each of the three counts against him in Manhattan federal court.

Avenatti declined to comment after the hearing.

Prosecutors have accused Avenatti, 48, of demanding money from Nike in exchange for agreeing to scrap a threatened news conference to discuss the athletic wear company's alleged improper payments to elite college basketball recruits.

A trial is scheduled for Jan. 21, 2020, and could last the rest of January. Nike has denied wrongdoing.

Since his March 25 arrest in the Nike case, Avenatti has defended himself against a variety of criminal charges.

Avenatti has pleaded not guilty in Manhattan to stealing about $300,000 from Daniels, whose real name is Stephanie Clifford, after helping her secure a book contract.

He has also pleaded not guilty in California to wire fraud, bank fraud and other crimes, including stealing from clients.

The amended Nike indictment dropped two conspiracy counts but added a charge of honest services fraud.

Prosecutors said Avenatti failed to reveal that Nike had offered to settle with his client, youth basketball coach Gary Franklin, so long as the Beaverton, Oregon-based company did not have to pay Avenatti himself.

Attorney Michael Avenatti exits the United States Courthouse in the Manhattan borough of New York City, U.S., October 8, 2019. REUTERS/Brendan McDermid/File Photo

At Tuesday's hearing, Avenatti's lawyer, Scott Srebnick, said that charge should be dismissed, citing a 2010 Supreme Court decision involving former Enron Corp Chief Executive Jeffrey Skilling limiting the claim to bribery and kickback cases.

"The government's whole theory was that Avenatti was shaking down Nike," but its case has "morphed" into alleged bribery solicitation, Srebnick said. "It's hard to know from this indictment exactly what this bribery scheme was."

Gardephe did not rule on the motion.

The judge also said he was "inclined" to let an expert witness testify for the prosecution about legal ethics rules, though not whether Avenatti violated them.

Prospective jurors are expected to receive questionnaires in advance about the case.

"Given how much press there has been about Mr. Avenatti, it seems obvious to me that a questionnaire is necessary," he said.

The case is U.S. v. Avenatti, U.S. District Court, Southern District of New York, No. 19-cr-00373.

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)

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