Avenatti hit with Nike extortion claims, other charges

The Canadian Press

Published

6 years ago

9 minute read

LOS ANGELES — A year ago, Michael Avenatti’s star was rising as the combative, media-savvy lawyer representing porn actress Stormy Daniels in her legal battles against President Donald Trump.

He hammered the president as a regular fixture on cable news and baited and bashed critics on Twitter while flirting with his own run for the White House.

Those days seemed like a distant memory as Avenatti was arrested Monday and federal prosecutors on both coasts announced charges that could send him to prison for the rest of his life.

Avenatti tried to shake down Nike for as much as $25 million by using his prominent position to threaten the company with bad publicity, federal prosecutors said. He was also accused of stealing a client’s settlement money to pay his own expenses and filing fake tax returns to get $4 million in loans from a Mississippi bank to fund a lavish lifestyle.

He was arrested at a New York law firm where he had gone to meet with Nike executives. It was just minutes after he tweeted that he planned to hold a news conference Tuesday to “disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered.”

“When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals,” said Geoffrey S. Berman, the U.S. attorney in New York.

Prosecutors in New York said their investigation began only last week while California investigators had been building a tax case against Avenatti for more than a year.

The allegations “paint an ugly picture of lawless conduct and greed,” said U.S. Attorney Nick Hanna in Los Angeles. Avenatti describes himself on Twitter as “fighter for good,” but the accusations describe “a corrupt lawyer who instead fights for his own selfish interests.”

Avenatti, 48, was ordered released on $300,000 bond after a brief court appearance Monday evening in New York. He did not enter a plea. Emerging from the courthouse, he said he expected to be cleared of the charges.

“For the entirety of my career, I have fought against the powerful. Powerful people and powerful corporations. I will never stop fighting that good fight,” he said. “I am highly confident that when all 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’s fame from the Daniels case made him a leading figure in the anti-Trump movement, with relentless cable news appearances, a hard-punching style and a knack for obtaining information about others’ wrongdoing.

His sharp reversal of fortune led critics to hit back on Twitter. Donald Trump Jr., whom Avenatti inaccurately predicted would be charged in the investigation into ties between his father’s 2016 presidential campaign and Russia, gloated.

“Good news for my friend @MichaelAvenatti, if you plead fast enough, you might just get to share a cell with Michael Cohen!” he wrote, referring to the former Trump lawyer set to go to prison next month for crimes that include orchestrating hush-money payments to Daniels. Trump Jr. mocked Avenatti by ending with the lawyer’s trademark hashtag #basta, an Italian word meaning “enough.”

Prosecutors said Avenatti and a co-conspirator initially approached Nike on behalf of a client who coached an Amateur Athletic Union basketball program sponsored by the company in California.

They claimed to have evidence of misconduct by Nike employees and threatened to hold a news conference last week on the eve of a company’s quarterly earnings call and the start of the NCAA tournament. Avenatti told Nike the company could either pay them $15 million to $25 million to investigate the allegations, or pay him more than $22 million for his silence, the criminal complaint said.

Two people familiar with the investigation confirmed the unidentified co-conspirator was Mark Geragos , a Los Angeles criminal defence lawyer known for his work with celebrities. The people spoke on condition of anonymity because the information was not made public by prosecutors.

Geragos, a CNN contributor, has a client list that has included Michael Jackson, Winona Ryder, Scott Peterson, Colin Kaepernick and most recently Jussie Smollett, the actor accused of fabricating a racist, anti-gay attack in Chicago. Geragos did not respond to messages seeking comment. Within hours, CNN cut ties with him.

While lawyers sometimes make demands to seek out-of-court settlements, it crosses the line to extortion if they threaten to go public with damaging information to get something of value or gain leverage in a civil dispute, attorney Neama Rahmani said.

“The Department of Justice historically has been very cautious when charging attorneys, so they likely have evidence that Avenatti seriously crossed this line,” said Rahmani, a former federal prosecutor.

Nike officials told investigators Avenatti claimed to know of rules violations by an amateur basketball team sponsored by Nike. Executives immediately reported the threats to federal authorities.

The company “firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors,” Nike said in a statement.

Avenatti rose to national prominence by representing Daniels, whose real name is Stephanie Clifford, in a lawsuit to break a confidentiality agreement to speak about her alleged affair with Trump. He also made headlines in recent weeks representing two women who accused R&B star R. Kelly of sexual abuse.

Daniels said she was “saddened but not shocked” by the arrest. She issued a statement Monday on Twitter saying she fired Avenatti a month ago after “discovering that he had dealt with me extremely dishonestly.” She said she would not elaborate.

While Avenatti’s lawsuit effectively tore up the gag order that threatened financial penalties if Daniels spoke about the case, a defamation lawsuit filed on her behalf against Trump backfired, and a court ordered her to pay the president’s $293,000 in legal fees.

Avenatti himself has been dogged with tax and financial troubles in recent years.

A U.S. bankruptcy court ordered his former firm to pay $10 million to a lawyer who claimed it had misstated its profits.

The bank fraud case involved $4 million in loans he got from The Peoples Bank in Biloxi, which prosecutors said he obtained by filing fraudulent tax returns claiming $14 million in income over three years. However, he never filed tax returns those years, nor paid the $2.8 million he reported on the forms. In fact, he still owed more than $850,000 to the IRS at the time for previous income.

Mark Pearson, the assistant agent in charge of IRS criminal investigations in Los Angeles, said Avenatti’s crimes supported a $200,000-a-month lifestyle, a car racing venture and pricey homes in the wealthy Orange County communities of Newport Beach and Laguna Beach.

Convictions on all charges carry up to 47 years in the New York case and 50 years in the California case, prosecutors said.

___

Melley reported from Los Angeles. Associated Press writers Jim Mustian in New York, Michael Balsamo in Washington and John Antczak in Los Angeles also contributed to this report.

Brian Melley And Larry Neumeister, The Associated Press

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Ottawa’s avalanche of spending hasn’t helped First Nations

Published on November 19, 2024

Todayville

From the Fraser Institute

By Tom Flanagan

When Justin Trudeau came to power in 2015, he memorably said that the welfare of Indigenous Canadians was his highest priority. He certainly has delivered on his promise, at least in terms of shovelling out money.

During his 10 years in office, budgeted Indigenous spending has approximately tripled, from about $11 billion to almost $33 billion. Prime Minister Trudeau’s instruction to the Department of Justice to negotiate rather than litigate class actions has resulted in paying tens of billions of dollars to Indigenous claimants over alleged wrongs in education and other social services. And his government has settled specific claims—alleged violations of treaty terms or of the Indian Act—at four times the previous rate, resulting in the award of at least an additional $10 billion to First Nations government.

But has this avalanche of money really helped First Nations people living on reserves, who are the poorest segment of Canadian society?

One indicator suggests the answer is yes. The gap between reserves and other communities—as measured by the Community Well-Being Index (CWB), a composite of income, employment, housing and education—fell from 19 to 16 points from 2016 to 2021. But closer analysis shows that the reduction in the gap, although real, cannot be due to the additional spending described above.

The gain in First Nations CWB is due mainly to an increase in the income component of the CWB. But almost all of the federal spending on First Nations, class-action settlements and specific claims do not provide taxable income to First Nations people. Rather, the increase in income documented by the CWB comes from the greatly increased payments legislated by the Liberals in the form of the Canada Child Benefit (CCB). First Nations people have a higher birth rate than other Canadians, so they have more children and receive more (on average) from the Canada Child Benefit. Also, they have lower income on average than other Canadians, so the value of the CCB is higher than comparable non-Indigenous families. The result? A gain in income relative to other Canadians, and thus a narrowing of the CWB gap between First Nations and other communities.

There’s an important lesson here. Tens of billions in additional budgetary spending and legal settlements did not move the needle. What did lead to a measurable improvement was legislation creating financial benefits for all eligible Canadian families with children regardless of race. Racially inspired policies are terrible for many reasons, especially because they rarely achieve their goals in practise. If we want to improve life for First Nations people, we should increase opportunities for Canadians of all racial backgrounds and not enact racially targeted policies.

Moreover, racial policies are also fraught with unintended consequences. In this case, the flood of federal money has made First Nations more dependent rather than less dependent on government. In fact, from 2018 to 2022, “Own Source Revenue” (business earnings plus property taxes and fees) among First Nations bands increased—but not as much as transfers from government. The result? Greater dependency on government transfers.

This finding is not just a statistical oddity. Previous research has shown that First Nations who are relatively less dependent on government transfers tend to achieve higher living standards (again, as measured by the CWB index). Thus, the increase in dependency presided over by the Trudeau government does not augur well for the future.

One qualification: this finding is not as robust as I would like because the number of band governments filing reports on their finances has drastically declined. Of 630 First Nation governments, only 260 filed audited statements for fiscal 2022. All First Nations are theoretically obliged by the First Nations Financial Transparency Act, 2013, to publish such statements, but the Trudeau government announced there would be no penalties for non-compliance, leading to a precipitous decline in reporting.

This is a shame, because First Nations, as they often insist, are governments, not private organizations. And like other governments, they should make their affairs visible to the public. Also, most of their income comes from Canadian taxpayers. Both band members and other Canadians have a right to know how much money they receive, how it’s being spent and whether it’s achieving its intended goals.

Author:

Tom Flanagan

Professor Emeritus of Political Science and Distinguished Fellow, School of Public Policy, University of Calgary

Uncategorized

Musk, Ramaswamy to lead Trump efforts to cut waste, fraud in federal government

Published on November 13, 2024

Todayville

From The Center Square

By Brett Rowland

During his campaign, Ramaswamy proposed cutting 75% of the federal workforce. Musk recently suggested that he could cut $2 trillion from the federal budget, or about one-third of total U.S. spending.

President-elect Donald Trump picked Tesla CEO Elon Musk and businessman Vivek Ramaswamy to lead a newly created Department of Government Efficiency.

The department’s acronym, DOGE, is a nod to Musk’s favorite cryptocurrency, dogecoin. Trump said the new group will pave the way for his administration to “dismantle government bureaucracy, slash excess regulation, cut wasteful expenditures and restructure federal agencies.”

Trump laid out lofty goals for the group in his announcement this week.

“It will become, potentially, ‘The Manhatten Project,’ of our time,” Trump’s announcement said. “Republican politicians have dreamed about the objectives of ‘DOGE’ for a very long time.”

It won’t be an official government agency, which will likely allow Musk and Ramaswamy to avoid public financial disclosures.

Trump said the change he’s looking for won’t come from within the existing federal government.

“To drive this kind of change, the Department of Government Efficiency will provide advice and guidance from outside the government, and will partner with the White House and Office of Management & Budget to drive large scale structural reform and create and entrepreneurial approach to government never seen before,” the announcement noted.

Trump said he looks forward to what Musk and Ramaswamy can accomplish.

“Importantly, we will drive out the massive waste and fraud which exists throughout our annual $6.5 trillion of government spending,” he said.

Trump also gave them a deadline: July 4, 2026.

“A smaller government, with more efficiency and less bureaucracy will be the perfect gift to America” on the 250th anniversary of the Declaration of Independence, according to the announcement.

Ramaswamy, who dropped out the race for the GOP nomination to endorse Trump in January, has previously proposed significant cuts. During his campaign, Ramaswamy proposed cutting 75% of the federal workforce.

Musk recently suggested that he could cut $2 trillion from the federal budget, or about one-third of total U.S. spending. He’s been tossing out ideas on X, previously Twitter before Musk bought the company and changed the name.

“The world is suffering slow strangulation by overregulation. Every year, the noose tightens a little more,” Musk wrote in a post on X on Wednesday. “We finally have a mandate to delete the mountain of choking regulations that do not serve the greater good.”

Musk also said he isn’t a threat to democracy, but a threat to bureaucracy.

DOGE already has an X account. It’s first post: “Working overtime to ensure your tax dollars will be spent wisely!”

Some budget experts have called Musk’s pledge to cut $2 trillion a pipe dream, noting that many of the problems DOGE wants to address have proven intractable.

Brian Riedl, a senior fellow at the Manhattan Institute think tank, called Musk’s proposal “a random number unattached to reality.”

Marc Goldwein, the senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said it could be done with 10 aggressive policies, mostly focused on Medicare and Medicaid.

“The government can legitimately save trillions over a decade by reducing waste and improving efficiency – and I hope we do,” Goldwein wrote on X. “Achieving these savings requires major changes to how and how much we pay for health care.”

Medicare (annual cost of about $1 trillion) is a federal health insurance program for people 65 or older, and some people younger than 65 with certain disabilities or conditions. Medicaid (annual cost of about $558 billion) is a joint federal and state program that helps cover medical costs for some people with limited income and resources.

The Government Accountability Office, which serves as the research arm of Congress, estimated annual fraud losses cost taxpayers between $233 billion and $521 billion annually, in a report in April. The fraud estimate’s range represents 3% to 7% of average federal obligations. The Office of Management and Budget publicly questioned that estimate, calling it “not plausible.”

“OMB has significant concerns that this report will not further efforts to prevent and reduce fraud, but rather will create confusion and promote misleading generalizations that have no factual connection to specific federal programs,” Jason Miller, the deputy director for management at the Office of Management and Budget, wrote of OMB concerns in a three-page letter to officials with the Government Accountability Office.

On the campaign trail, Ramaswamy detailed his plan to reduce the federal workforce by 75% during an event at the America First Policy Institute in Washington in 2023.

Ramaswamy said he would shutter the FBI (about 35,000 employees); the Bureau of Alcohol, Tobacco, Firearms a nd Explosives (5,099 employees); the U.S. Department of Education (about 4,200 employees); the Nuclear Regulatory Commission (about 3,000 employees); and the Department of Agriculture’s Food and Nutrition Services (about 1,500 employees).

Under Ramaswamy’s campaign plan, some 15,000 FBI employees would be moved to other agencies such as the U.S. Marshals Service, U.S. Secret Service, Treasury’s Financial Crimes Enforcement Network, Drug Enforcement Administration, Defense Intelligence Agency, and Commerce’s Bureau of Industry and Security.

Some groups called the Department of Government Efficiency goals a stretch. Others had more pointed things to say.

Lisa Gilbert, co-president of Public Citizen, a progressive consumer advocacy organization founded by Ralph Nader, said the government agencies and regulations Ramaswamy proposed cutting are in place to protect people.

“The purpose of government regulations is to protect the American people,” she said in a statement. “We all depend on these regulations to protect our air, water, workers, children’s safety, and so much more. ‘Cutting red tape’ is shorthand for getting rid of the safeguards that protect us in order to benefit corporate interests.”