March Madness

In Vermont, Rule 8.4(c) makes it professional misconduct for a lawyer to engage in a serious crime.

Most who know me or follow this blog know that I’m not only a former high school basketball coach, but a huge fan of college hoops.  Coupled with my day job, it’s not surprising then that so many have asked for my thoughts on Michael Avenatti.

As my brother said yesterday, “it sure is something.”

Yes, yes it is.

It’s something for many reasons.  Including the fact that federal criminal charges of wire & bank fraud have been lost in the news shuffle.

Some background.

For over a year, the Adidas scandal has rocked major college basketball.  The scandal involves allegations that Adidas executives, AAU coaches, and college coaches conspired to funnel money to the families of high-profile recruits.  Earlier this month, three were sentenced for their roles in the scheme.  More trials are scheduled for later this year.

Flash-forward to yesterday.

Shortly after noon on the east coast, Michael Avenatti tweeted that, today, he’d hold a press conference at which he’d disclose a “major high school/college basketball scandal perpetrated by @Nike.”  As a basketball fan, I was intrigued as to which big-time coaches and players would be named.

Alas, within 30 minutes of his tweet, Avenatti was in federal custody.  SI.com has two stories on his arrest and arraignment: this one by former Vermont Law School professor Michael McCann, and another on how unusual the arraignment was.

As the initial reports trickled out, I was confused as to how Avenatti could be charged with a crime.  The stories seemed to suggest that, on behalf of a client, he asked Nike to settle potential civil claims in exchange for a confidentiality agreement.

Not exactly.

Again, McCann’s post includes the criminal complaint and sets out the allegations against Avenatti. In short, the federal government charges that Avenatti told Nike’s lawyers that he’d go public with the alleged scandal unless Nike (1) paid $1.5 million to his client; and (2) paid Avenatti and an unnamed co-conspirator either (a) between $15 million and $22.5 million to conduct an internal investigation into the alleged scandal; or, (b) $22.5 million to remain silent; or (c) double whatever it ends up paying any firm that it might hire to conduct the internal investigation.

To me, an intriguing question is this:  what if Avenatti and his client have evidence of another sneaker scandal?  Already today, he’s taken to Twitter (1) to say that the truth will eventually come out; (2) accuse Nike of improper conduct; and (3) make allegations against players and Nike executives. Will he explore a cooperation deal to resolve his own charges? Would Nike’s lawyers have dropped the dime if they thought he actually had the goods?

Who knows.

Anyhow, serious charges.  And not the first against Avenatti this month.

Yes, the Nike charges are dominating the news.  But, as McCann noted, last Friday, the federal government filed this criminal complaint against Avenatti.  It charges him with wire and bank fraud.  As summarized by the Los Angeles Times, the California case alleges that Avenatti:

  • fraudulently obtained  $4.1 million in loans;
  • did not file tax returns for years;
  • took $1.6 million that belonged to a client; and,
  • attempted to cover-up his crimes.

That such allegations against a licensed lawyer are lost in the shuffle of the basketball-related charges is something.

Yes, yes it is.

March Madness indeed.

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