U.S. judges challenge Michael Avenatti bid to toss Nike conviction

By Jonathan Stempel

NEW YORK (Reuters) - A federal appeals court on Thursday appeared skeptical of throwing out Michael Avenatti's conviction for extorting Nike Inc, as the fallen celebrity lawyer tries to shorten his scheduled 19 years in prison.

The conviction arose from Avenatti's tape-recorded threat to "blow the lid" on Nike's alleged corrupt payments to families of college basketball prospects, and damage Nike's stock price, unless the sportswear company paid up to $25 million for him to conduct a probe plus $1.5 million to his whistleblowing client.

In arguments before the 2nd U.S. Circuit Court of Appeals in Manhattan, federal public defender Daniel Habib said Avenatti was merely advocating for his client Gary Franklin, a youth basketball coach, and that "all agree" it was no crime to threaten to expose corruption.

But the three-judge appeals court questioned whether the heavily indebted Avenatti was looking out for himself before Franklin, who testified that he didn't want a probe and merely wanted his Nike sponsorship back.

"This is what I would charitably call a curious negotiation," Circuit Judge Reena Raggi said to Habib. "You're arguing to us that the jury as a matter of law could not find that it was extortionate ... and I'm having trouble with that."

Circuit Judge John Walker said jurors could find Avenatti's demand for a probe "a cover for this rather massive payment that went way beyond anything that was contemplated by Mr. Franklin, in order to save a firm that was in financial difficulty."

Federal prosecutor Matthew Podolsky said the jury could convict Avenatti by finding it was Avenatti's "intent to be influenced in his representation of Franklin ... by a payment."

Nike has denied wrongdoing.

In 2018, Avenatti shot to fame representing porn actress Stormy Daniels in litigation against Donald Trump stemming from an affair that the former U.S. president says never happened.

But his career was destroyed after his March 2019 arrest in the Nike case, where he was convicted of extortion and honest services fraud and sentenced to 2-1/2 years in prison.

Avenatti subsequently was convicted of defrauding Daniels out of money from a book contract, and admitted to cheating four other clients including a paraplegic out of millions of dollars.

He is appealing the Daniels conviction, which added 2-1/2 years to his prison time, and his 14-year sentence over his guilty plea.

The case is U.S. v. Avenatti, 2nd U.S. Circuit Court of Appeals, No. 21-1778.

(Reporting by Jonathan Stempel in New York; editing by Diane Craft)