A lawyer for Nike testified Thursday that he felt like a stickup victim when well-known attorney Michael Avenatti demanded up to $25 million to stop him from igniting a media scandal by publicizing claims that Nike employees paid the families of elite high school basketball players.
The lawyer, Scott Wilson, is the first witness in the criminal trial of the California attorney, who maintains he did nothing illegal in his representation last March of a coach who ran an amateur basketball league and felt cheated by Nike.
Avenatti, 48, was arrested 10 months ago and charged with trying to extort millions of dollars from Nike and with defrauding the company. He maintains he is innocent and says he's been unfairly targeted because of his former representation of porn star Stormy Daniels in lawsuits against President Donald Trump.
Assistant U.S. Attorney Matthew Podolsky asked Wilson if he thought he was engaging in negotiations when he discussed with Avenatti whether Nike should agree to hire Avenatti for $15 million to $25 million to conduct an internal corruption probe of the company.
“What I thought I was engaging in was a stickup,” Wilson said. He recalled making repeated efforts to make Avenatti think he was seriously considering meeting the demands to stop Avenatti from creating a storm of negative media attention for Nike if his demands were not met within hours.
“I wanted him to feel like there was a possibility so he wouldn't pull the trigger,” Wilson said in a Manhattan courtroom where opening statements occurred a day earlier.
Wilson said Avenatti first made his threats known on March 19, a Tuesday, saying he'd go to the media the next day with negative publicity about Nike just as the so-called “March Madness” NCAA basketball tournament was starting and on the eve of Nike's quarterly earnings report.
The witness for the government testified that Avenatti bragged that he had reporters on call who would write what he wanted to generate a “media scandal” that would cause billions of dollars of damage to Nike's stock.
Wilson said that within hours of hearing Avenatti's demands, including $1.5 million for the California coach who was his client, he reported them to Manhattan federal prosecutors.
He said he believed he was required to do so as part of Nike's cooperation with the government in a probe of corruption in college basketball.
The probe revealed that representatives at shoe companies that sponsor major college programs sometimes funneled money to the families of NBA-bound high school and college basketball players. Four assistant basketball coaches at major schools eventually pleaded guilty to roles in the scheme.
Wilson said that his first encounter with Avenatti left him so rattled that he asked the lawyer if he was wearing an electronic recording device.
He said Avenatti laughed and opened his jacket to prove that he was not.
“I was slightly concerned I was being asked to do something wrong and maybe he was recording to get me in trouble,” Wilson said. “I was really quite shocked.”
After Wilson told prosecutors, an investigation ensued and the FBI recorded a meeting with Avenatti and Wilson two days later. That video recording was shown in court Thursday.
During that meeting, Avenatti offered to go away entirely if Nike made a $22.5 million payment to him or to cause a media firestorm, Wilson said.
“I thought this was a crazy thing to be saying to me,” Wilson said. “We were in the Twilight Zone.”
Avenatti's lawyers say their client was doing what lawyers do everyday, conducting tough negotiations for a client and arranging to be paid for a costly internal investigation of Nike.
Avenatti also faces an April trial in New York on charges that he cheated Daniels of book proceeds and a May trial in Los Angeles on charges that he defrauded clients and others of millions of dollars. He has denied all charges.