01:26 - Source: CNN
Who is Michael Avenatti?
CNN  — 

The extortion charge against attorney Michael Avenatti in the Southern District of New York is full of headline-making details: vivid quotes on tape, celebrity attorneys and Nike, one of the world’s most recognizable companies.

By comparison, the bank fraud and wire fraud charges from federal prosecutors in California are considerably drier, relying on bank statements and financial documents.

But that dryness also means the fraud cases will likely be easier to prosecute – and therefore more dangerous for Avenatti’s precarious legal hopes.

“Generally speaking, the more you can rely on hard financial documents to prove your case, the better, because there’s not going to be really credibility issues,” CNN legal analyst Elie Honig said.

“It’s much more black-and-white when you’re dealing with documents than when you’re dealing with witnesses and interpretations of human motives and that kind of thing.”

Federal prosecutors in New York and in Los Angeles charged Avenatti in two separate criminal cases on Monday. The high-profile attorney, best known for representing adult film star Stormy Daniels in her lawsuit against President Trump, was arrested in New York and released on a $300,000 bond.

He says he is innocent of the charges.

“I am highly confident that when all of the evidence is laid bare in connection with these cases, when it is all known, when due process occurs, that I will be fully exonerated and justice will be done,” Avenatti said outside court on Monday.

The Los Angeles fraud charges

The 197-page criminal complaint out of Los Angeles accuses Avenatti of defrauding a client and defrauding a bank by providing false tax returns.

US Attorney Nick Hanna said the charges “paint an ugly picture of lawless conduct and greed,” calling Avenatti a “corrupt lawyer who fights for his own selfish interests.”

Hanna said the former charge is based on Avenatti’s role in an intellectual property case that resulted in a $1.6 million payment that was supposed to be paid to Avenatti’s client in January 2018.

But instead of paying the client, Avenatti lied and said the client would receive the payment in March 2018, and then used the money to pay his own coffee business and personal expenses, prosecutors said. Hanna said the client has still not received the bulk of his money.

In addition, prosecutors say Avenatti provided the client $130,000 of that payment and told the client that he would be able to loan him $100,000 in January 2019 so that the client could meet his financial obligations.

“Thus, it appears that Avenatti was offering to loan (the client’s) own money to (the client),” the complaint states.

The bank fraud aspect of the case relies primarily on financial transactions with a bank in Mississippi, according to the complaint.

In 2014, Avenatti received three separate loans from the bank totaling more than $4 million after he gave the bank what he said were his personal income tax returns for 2011, 2012 and 2013. He also told the bank he paid $1.6 million in taxes in 2012 and another $1.25 million in 2013, the complaint says.

However, Avenatti did not actually file personal income tax returns with the IRS for those years, prosecutors say. He also did not make any tax payments in 2012 and 2013, and instead owed more than $850,000 in unpaid personal income tax, plus interest and penalties, from previous years, the complaint states.

In all, the complaint looks to be a “garden variety” case of fraud, false tax returns and false statements to a bank, CNN analyst Jeffrey Toobin said.

Honig described it as a “straight paper case,” and one that first- or second-year prosecutors with limited experience can handle.

“You prove that Avenatti inflated his own assets and deflated his liabilities in order to get millions of dollars worth of bank loans that he wouldn’t otherwise have gotten. That’s a straightforward bank fraud case,” he said.

“There’s not an obvious defense to any of that,” he added.

The New York extortion charges

00:54 - Source: CNN
Michael Avenatti: Confident I will be fully exonerated

The New York extortion case, in comparison, has a gray area because it hinges on whether Avenatti’s demands cross the line from hard-knuckled business tactics into extortion.

The case is “not a slam dunk,” Renato Mariotti, a former federal prosecutor, said Monday.

According to the complaint, Avenatti met March 19 with attorneys for Nike and threatened to release what he said were allegations of misconduct by employees on the eve of both its quarterly earnings call and the start of the NCAA tournament.

Avenatti threatened to disclose the allegations at a press conference, according to the complaint, unless Nike made payments to him and an unnamed co-conspirator by hiring them to conduct an “internal investigation,” for which he later requested between $15 million and $25 million. Avenatti also allegedly demanded that Nike pay $1.5 million to an individual he claimed to represent.

Nike’s outside counsel contacted federal prosecutors about the threats, the complaint states. One of the attorneys, acting at the direction of law enforcement, then arranged a call and meeting with Avenatti that were recorded and monitored by investigators.

“And I’m not continuing to play games,” he said. “You guys know enough now to know you’ve got a serious problem. And it’s worth more in exposure to me to just blow the lid on this thing.”

“I’ll go take $10 billion off your client’s market cap … I’m not f***ing around,” Avenatti told Nike’s attorneys, according to the complaint.

Geoffrey Berman, US attorney for the Southern District of New York, told reporters that Avenatti’s actions amounted to an “old-fashioned shakedown.”

Still, a conviction on the charges would hang on whether a jury interprets this as extortion, which is defined in federal law as obtaining property induced by the “wrongful use” of actual or threatened force or violence.

“There is a very difficult legal line between aggressively negotiating to get a settlement and extortion,” said Mariotti, the former prosecutor. “There’s definitely a defense there. The other case we just heard about in California? Not so much.”

Honig, who prosecuted mob extortion cases as a prosecutor, also said he thought the extortion case was at least defensible for Avenatti.

“He’s in serious trouble in both cases. I just think I can see what his defense will be on the New York case,” Honig said.

CNN’s Stella Chan, Erica Orden, Kara Scannell and Eli Watkins contributed to this report.