Prosecutors: Avenatti was $15 million in debt when he extorted Nike

NEW YORK — Michael Avenatti had a clear motive to extort Nike, prosecutors say — he was $15 million in debt.

The new details about the lawyer’s financial woes emerged in legal filings in federal court in Manhattan late Tuesday. A trial over Mr. Avenatti’s alleged shakedown of the shoe giant is scheduled for next month.

“The Government does not intend to argue that the defendant was wealthy (and the evidence shows that he was not),” Assistant U.S. Attorney Matthew Podolsky wrote.

“The Government expects that the evidence at trial will show that, at the time of his charged conduct, the defendant was in significant debt.”

Mr. Avenatti owed money to his co-counsel in the troubled negotiations with Nike, celebrity attorney Mark Geragos, as well as former clients, a former law partner and two exwives, prosecutors said.

“Any claim that I was $15 million in debt is ludicrous and absurd. I am looking forward to the trial in this case at which time I will be fully exonerated and the truth will be known,” Mr. Avenatti said in an email.

Mr. Avenatti, who rocketed to fame through his representation of porn star Stormy Daniels, is accused of trying to extort Nike out of more than $20 million or he’d go public with allegations that the company secretly paid basketball prospects.

In a separate legal filing, Mr. Avenatti’s attorney, Scott Srebnick, revealed new details about the evidence of secret payments that resulted in negotiations with Nike in March. Prosecutors say during those talks Mr. Avenatti crossed the line from advocate to extortionist.

Nike’s Elite Youth Basketball League, which features top high school players, was rife with secret payments, according to Mr. Avenatti. Such payments are a violation of NCAA rules and potentially a federal crime.

Carlton DeBose, the director of the youth league, said he was “willing to bet that 38 of 40 teams in the EYBL had to pay a moderate to considerable ransom to families just to play in the EYBL,” according to Mr. Avenatti. Another Nike executive allegedly admitted to “carrying large amounts of cash through airport security” to pay players.

The embattled attorney learned of the payments through his representation of Gary Franklin Sr., a prominent figure in the youth basketball world. Mr. Franklin claimed that Nike execs pressured him to pay players beginning in 2016. Disgusted with the arrangement, Mr. Franklin hired Mr. Avenatti to help him reach a confidential settlement with Nike and end the culture of payouts, the attorney claims.

Mr. Avenatti then brought on Mr. Geragos to help negotiate with Nike. Mr. Geragos was familiar with the shoe company through his representation of Colin Kaepernick.

Mr. Avenatti argues that Nike attorneys, once confronted with damning evidence of the payouts, contacted the feds and claimed they were being extorted.