Politics

A veteran white-collar defense lawyer explains why Michael Avenatti is in deep legal peril

Key Points
  • The charges against celebrity lawyer Michael Avenatti are "very significant," says attorney Thomas Gorman.
  • Avenatti is accused of trying to extort up to $25 million from Nike by threatening to hurt the athletic apparel giant financially with negative publicity.
  • "Since they are on tape, it's going to be hard for Mr. Avenatti to dispute these," Gorman says.
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Lawyer Michael Avenatti arrested in New York

The charges against celebrity lawyer Michael Avenatti are "very significant," veteran white-collar defense attorney Thomas Gorman told CNBC on Monday.

Avenatti is accused of trying to extort up to $25 million from Nike by threatening to hurt the athletic apparel giant financially with negative publicity.

His arrest on Monday came about 15 minutes after he tweeted that he would be holding a press conference to disclose a "major high school/college basketball scandal perpetrated by" Nike that he claims to have uncovered.

"That's over the top," Gorman said on "The Exchange."

"This is clearly not the way to present a whistleblower claim. There are proper ways to present a whistleblower claim. You can take the client down to the Securities and Exchange Commission, for example. They have a whole process to do this. The client can get paid money if it pans out," he added.

The real problem for Avenatti is that he was caught on tape, said Gorman, who has defended companies and individuals in SEC and Justice Department investigations.

According to the complaint, Avenatti and a cooperating witness spoke with Nike attorneys by phone and during that call "Avenatti stated, with respect to his demands for payment of millions of dollars, that if those demands were not met 'I'll go take ten billion dollars off your client's market cap ... I'm not f---ing around.'"

"Since they are on tape, it's going to be hard for Mr. Avenatti to dispute these," Gorman said.

He just needs to look at another high-profile case — that of former hedge-fund manager Raj Rajaratnam — to see how crucial those recordings can be. Rajaratnam is now serving prison time for insider trading.

"What convicted him was not the other evidence. It was the tapes," Gorman said.

Avenatti, who once represented porn star Stormy Daniels in her lawsuits against President Donald Trump and his former attorney Michael Cohen, is also facing separate charges of embezzlement in Los Angeles.

— CNBC's Dan Mangan and Kevin Breuninger contributed to this report.