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2nd Circuit rejects Avenatti's 'meritless' Nike extortion appeal as bankruptcy deposition looms
The first of Avenatti's three federal criminal appeals ended Wednesday with a detailed order explaining why Avenatti's three felony convictions for extorting Nike are just.

An appellate court on Wednesday affirmed imprisoned ex-California attorney Michael Avenatti’s felony convictions for extorting Nike, rejecting his “meritless” arguments that his $25 million demand reasonably related to his work as an attorney.
The federal New York case was the first brought against the once-high profile lawyer, who in 2018 sued then-President Donald Trump on behalf of porn star Stormy Daniels and briefly flirted with a bid for the Democratic nomination for the U.S. presidency.
Avenatti, 52, was sentenced in July 2021 to 30 months in prison, which he’s serving partly at the same time as his 2 1/2 year sentence for stealing from Daniels and in addition to a 14-year sentence in California federal court for stealing $10 million from several clients. He’s incarcerated at at the Terminal Island prison near Long Beach, where a U.S. Bankruptcy Court judge recently ordered him to sit for a video deposition with a lawyer for the trustee for his bankrupt law firm.
Issued by the 2nd Circuit Court of Appeals, the 79-page ruling resolves the first of Avenatti’s three federal criminal appeal by concluding the evidence presented in his three-week trial in January and February 2020 was sufficient for any reasonable juror to convict him.
The ruling notes a conflict between Avenatti’s written brief and the oral argument: In the brief, he says he believed Nike hiring him to investigate the company would help his client Gary Franklin, but his federal defender Daniel Habib’s oral argument suggested Avenatti’s work with Nike “would not have commenced until the conclusion of his representation of Franklin.”
Franklin is a youth basketball coach in Los Angeles who claimed to have been a conduit for illegal payments between Nike and underage players. He testified in trial that he retained through Avenatti through entertainment industry consultant and basketball dad Jeffrey Auerbach because he wanted to come clean about two Nike employees pressuring him to funnel payments to players, but Avenatti added his own demand of $15-$25 million without Franklin’s knowledge when Nike already was willing to pay Franklin $1.5 million.
“On this record, a reasonable jury could have found that in negotiating with Nike, Avenatti was not serving Franklin’s interests, but rather using them to enrich himself,” according to Wednesday’s ruling, written by Judge Reena Andrea Raggi with concurrence from Judges John M. Walker Jr. and Michael H. Park.
The ruling identifies Avenatti’s misdeeds:
“First, Avenatti leveraged his client’s claim to enrich himself, in clear conflict with his client’s interests. …
Second, Avenatti sacrificed his client’s interests in favor of his own. …
Third, Avenatti took active steps to ensure that Franklin would never know that, in settling his claims against Nike, Avenatti had so enriched himself at Franklin’s expense.”
At the time of the Nike scheme, Avenatti was deep in debt and under federal investigation in the Los Angeles-based Central District of California for stealing from clients, dodging taxes and defrauding the Internal Revenue Service and U.S. Bankruptcy Court. His law firm had been evicted from its office in Newport Beach for missing rent, he owed his former law partner Jason Frank at least $15 million personally and through his now-bankrupt law firm, and Frank’s lawyer and new law partner, former Assistant U.S. Attorney Andrew Stolper, was pursuing the debt through judgment debtor exams monitored by federal agents.
Shortly before his arrest, Avenatti told his office manager he was working on something that could solve his problems.
“What Avenatti was working on in mid-March 2019 was a scheme to use an internal investigation retainer agreement as the vehicle for extorting millions of dollars from Nike to his own benefit and in breach of the fiduciary duty he owed Franklin,” according to the ruling.
The jury found Avenatti guilty of transmitting extortionate communications in interstate commerce, attempted Hobbs Act extortion and honest-services wire fraud.
Mark Geragos teams with Avenatti, then distances himself
Avenatti teamed with prominent Los Angeles-based attorney Mark Geragos to confront Nike’s lawyers at the prestigious law firm Boies Schiller Flexner LLP.
Boies partner Scott R. Wilson, now a partner at DLA Piper LLP, and Robert Leinwand, Nike’s vice-president and chief litigation officer, contacted the FBI after the first meeting on March 19, 2019, to tell them of Avenatti’s demands, and the men secretly recorded future meetings.
Avenatti faced 108 to 135 months in prison under U.S. Sentencing Guidelines, but U.S. District Judge Paul G. Gardephe in the Southern District of New York imposed the lesser 30-month sentence because Avenatti’s stint in “horrific” jail conditions, including solitary confinement, and the judge’s belief that Geragos was “a central figure in the criminal conduct” but never was charged.
Geragos has addressed his role in the Nike saga in court filings in an ongoing malpractice lawsuit brought against him by Franklin in Los Angeles County Superior Court. A July 23, 2021, filing says Franklin “erroneously assumes that Avenatti lied to Franklin but was truthful with Geragos” after Avenatti brought Geragos into the case because of his relation with Nike’s general counsel.
“Geragos valued his relationship with Nike, was never going to be adverse to Nike in a legal matter, and saw himself as a calming force on Avenatti,” according to a July 23, 2021. “Geragos was not comfortable with Avenatti’s conduct and terminated his involvement with Nike and Avenatti in relation to Franklin at the March 21, 2019 meeting or immediately afterward outside of Nike’s presence.”
Geragos did not testify in Avenatti’s trial after Judge Gardephe rejected a motion from Avenatti to compel his testimony or force prosecutors to grant him immunity. Geragos’ ties to Avenatti appeared again in the trial over Avenatti stealing from Daniels: He loaned Avenatti $250,000 after Avenatti complained to a mutual friend, lawyer Sean Macias, about his mounting debt, without mentioning he’d already stolen one of Daniels’ $147,500 payments for her book, Full Disclosure, and the porn star had been asking him for the money.
Wednesday’s ruling names Geragos 30 times, but not in connection with some of Avenatti’s worst behavior. That includes when Wilson told Avenatti he’d never received a $12 million retainer from Nike or done $10 million of work in an investigation for the company, and Avenatti replied, “Have you ever held the balls of the client in your hand where you can take 5, 6 billion dollars in market cap off of ‘em?”
Still, the order includes Geragos in a footnote that discusses the outlandishness of Avenatti’s request.
“Even assuming what is highly unlikely—that the two men worked 24 hours a day for those 25 days (i.e., 25 x 24 x 2 = 1,200 hours), each billed $1,000 per hour (i.e., 1,200 x $1,000 x 2 = $2,400,000), and had $250,000 each in expenses (i.e., $250,000 x 2 = $500,000)—that totals $2,900,000, nowhere near the $12 million for which the demanded retainer would have required immediate payment (deemed earned when paid) or the guaranteed total $15 million minimum payment. Nor is there evidence of any other rational fee arrangement—e.g., contingency—that would support such an extraordinary payment.”
‘I don’t give a f--k about those kids’
The ruling dismisses Avenatti’s argument that his work for Nike would have been legitimate, and it details how contrary Avenatti’s actions were to Franklin’s wishes.
Franklin identified two goals as particularly important to him: maintaining a relationship with Nike and getting to coach his team again, which he testified was “the most important thing.”
“While Avenatti told Franklin that he thought their attainment—particularly the second—was unlikely, he never told his client that he planned to concede them outright, as he did when he told Nike representatives ‘as a matter of fact, that Gary Franklin, his client, would never be able to work with Nike again.’ … Viewing this evidence in the light most favorable to the prosecution, a reasonable jury could conclude that Avenatti, far from believing that his retainer demand would serve Franklin’s two most important objectives, deliberately abandoned these goals in pursuing a multi-million-dollar payment for himself. Indeed, the conclusion is only reinforced by evidence showing that, in March 2019, Avenatti had a pressing personal need for over $11 million.”
The ruling recounts how Franklin said he didn’t want to harm his former players’ reputations, but Avenatti told Nike’s lawyers, “I don’t give a f--k about those kids,” and said a delay would harm him.
“This evidence provided a solid basis for the prosecution to argue—and for the jury to conclude—that Avenatti’s threat of public disclosure showed that he did not reasonably believe that his retainer demand would serve Franklin’s interests but, rather, recognized that it served only his own,” the ruling says.
Avenatti’s press conference threats also helped thwart his argument that his $15-25 million demand was legitimate. Wednesday’s ruling cites Avenatti’s own words when he threatened disclosure before concluding, “In short, a below-$10 million retainer was not inadequate because of the time and effort anticipated to conduct a bona fide internal investigation. Rather, it was inadequate value for what Avenatti was really selling: the threatened press conference.”
Ruling cites storied prosecution of Bill Cosby’s extortionist

The ruling cites two appellate opinions issued in the case of Autumn Jackson, who in 1997 was sentenced to 26 months in prison for trying to extort $40 million from Bill Cosby over claims she’s his unacknowledged child. (Jackson’s federal defender was Robert Baum, who also defended Avenatti in the Nike case and was counsel in the Stormy Daniels trial, in which Avenatti represented himself.)
Jackson was released in June 1999 pending re-trial after the 2nd Circuit overturned her jury conviction for extortion because the trial judge didn’t properly instruct the jury that a threat of financial harm is wrongful when it’s done to obtain property to which the person making the threat isn’t entitled. The opinion noted, however, that even someone rightfully entitled to property can commit extortion over it “if the threat itself lacks a nexus to the claim of right,” according to 2nd Circuit’s summary on Wednesday.
In a twist, the U.S. Supreme Court ruled one day after Jackson’s convictions were reversed that omitting elements from jury instructions is subject to “harmless-error analysis.” That means in order to overturn a conviction, an appellate court must determine not just that an error exists but that the error affected the outcome of the trial in order. The 2nd Circuit reconsidered Jackson’s appeal and determined the instructional error was harmless.
Wednesday’s opinion distinguishes Jackson’s case by noting that the jurors who convicted Avenatti were properly instructed, so the only thing to consider on appeal is whether “any rational jury could find wrongfulness on the evidence presented viewed in the light most favorable to the prosecution.” It says a reasonable jury concluded Avenatti had no right “to a personal payment from Nike, let alone to a $15-25 million payment as distinct from a $1.5 million payment to his client Franklin.”
“On this record, a reasonable jury could have concluded that Avenatti had thus positioned himself to influence Franklin to accept a $1.5 million payment to settle his claims with Nike without Franklin ever needing to know, much less approve, Avenatti’s own multi-million-dollar side agreement with Nike,” according to the ruling.
The ruling also affirms Judge Gardephe’s February 2022 order that Avenatti pay $259,800.50 in restitution to Nike to cover some of the money the company paid its Boies Schiller attorneys, and it rejects Avenatti’s argument that there was no “quid” in the alleged quid pro quo agreement because he didn’t offer to help Nike in return for the money, but the court said Avenatti persuading an unwitting Franklin to accept the deal counts as a quo.
“Indeed, trial evidence permitted a reasonable jury to find that Avenatti was already laying the groundwork to deliver this quo in return for Nike’s quid,” according to the ruling.
Avenatti to sit for video deposition in prison
The ruling comes as lawyers for the trustee for Avenatti’s bankrupt law firm are preparing to take his deposition in an adversary action against his former law partner Filippo Marchino and Marchino’s The X-Law Group.
Avenatti called in from prison to an Aug. 14 hearing before U.S. Bankruptcy Judge Scott Clarkson on Trustee Richard Marshack’s motion to compel his deposition.
“Plaintiff is authorized to conduct a deposition of Michael John Avenatti, Prisoner Register No. 86743-054 (‘Mr. Avenatti’), in coordination with the Federal Bureau of Prisons (‘BOP’), via remote videoconference means. Plaintiff is authorized to conduct the deposition over two full-day, eight-hour sessions in coordination with the BOP,” according to an order filed Tuesday.
The trustee’s lawsuit against Marchino accuses him of conspiring to help Avenatti hide his assets by transferring cases to Marchino’s newly formed law firm that had settlements the trustee says should have gone to Avenatti’s firm and can now be used to pay Avenatti’s creditors, foremost of whom is Frank, his other former law partner.
“Mr. Avenatti, through a paralegal named Emma Hernandez, wrote an email to (among others) Trustee and implied that he had information that ‘Mr. Marchino . . . was permitted to abscond with millions in [the Debtor’s] assets.’ Mr. Avenatti has stated a willingness to provide his deposition in this adversary proceeding,” according to the motion.
Marchino currently is locked in a three-way battle for Avenatti’s jet, which Avenatti bought with settlement money meant for client Alexis Gardner, who is now represented by Marchino. Marchino is trying to get the jet for Gardner, while Frank and Stolper want it for Frank’s debt and William Parrish wants it because he paid for half of it. The issue is before Senior U.S. District Judge James V. Selna in Santa Ana, who requested more briefing after a hearing in June.
Selna on July 25 authorized the jet to be auctioned and the proceeds sent to the court until he decides who gets how much. His tentative ruling divides the proceeds this way:
In other Avenatti-related litigation, Daniels’ lawsuit in the Southern District of New York against literary agent Luke Janklow is entering the discovery phase after a tentative settlement fell through.
Avenatti’s next appeal is his 2nd Circuit appeal in the Daniels case. The court solicited dates for oral argument in June but has not yet scheduled anything. Briefs have been filed; the online case file is here.
Avenatti also is appealing his 14-year prison sentence from Judge Selna to the 9th Circuit. His opening brief is due Nov. 6.
I realized when putting together this article that the transcript from Avenatti’s Dec. 5 sentencing is now available in PACER, so I downloaded it solely to screenshot Assistant U.S. Attorney Brett Sagel’s decisive summary of Avenatti’s overwhelming fraudulence. This is for all the people who act like he was a serious lawyer who lost his way.
“To his core, defendant has always been and always will be out for himself, confident he can beat the system, confident he can bamboozle his way out of anything. He thinks he is the smartest guy in the room without any humility, incorrigible to a fault, the ultimate revisionist of history.”
Read the full transcript here.
Previous coverage:
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2nd Circuit rejects Avenatti's 'meritless' Nike extortion appeal as bankruptcy deposition looms
I just love your articles, there's always some tidbit that we non-lawyers miss.