Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘legal extortion’

Jury finds Avenatti guilty in $20 million Nike extortion attempt

A jury has found celebrity lawyer Michael Avenatti guilty of two counts of extortion and one of honest services fraud related to his hold-up of apparel company Nike [earlier here, see also]

“And it’s worth more in exposure to me to just blow the lid on this thing. A few million dollars doesn’t move the needle for me. I’m just being really frank with you … I’ll go take $10 billion off your client’s market cap. But I’m not f—ing around.”

Avenatti demanded more than $20 million from Nike while keeping his client in the dark, testimony revealed. He said the company should hire him and another prominent attorney representing Franklin, Mark Geragos, to conduct an internal investigation.

A lawyer trying to extort a fortune from a deep pocket target. The things that go on in this world. [Stephen Rex Brown, New York Daily News;

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Nevada’s antitrust deal sheds light on Elizabeth Warren’s big plan

T-Mobile and Sprint, the #3 and #4 wireless carriers, would like to combine so as to more effectively compete with Verizon and AT&T, the two dominant players in the cellular service market. Various states went to court against the merger, arguing (dubiously) that the combination would harm consumers and drive up prices. And now, via Reuters, this:

Also on Monday, Nevada said it would withdraw from the lawsuit in exchange for early deployment of the next generation of wireless in the state, creation of 450 jobs for six years and a $30 million donation to be distributed by Nevada Attorney General Aaron Ford and aimed at helping women and minorities, Ford’s office said.

How blatant can you get? The best touch, of course, is the $30 million fund with which to ingratiate lucky beneficiaries around the state. (“The recipients of these grants for the use of the charitable contribution will be at the discretion of Nevada’s attorney general” — that is, the same AG Ford who filed and settled the state’s case, and from whose press release is excerpted that sentence.) It looks a lot like the familiar cozytown set-up in many cities in which permission to build a large development or win a public contract just might call for a hefty donation to a local nonprofit with ties to the mayor and council.

Notwithstanding the best efforts from some quarters to develop per se rules in hopes of generating clear and predictable legal outcomes, antitrust law remains a world of subjective interpretation in which government office-holders are left with great discretion regarding how and against whom to wield enforcement power. Whether you want to call it logrolling or use a less flattering term like “extortion,” the temptation is to trade off antitrust leniency for some of the other sorts of favors business might be able to render government actors.

All of which brings us to presidential candidate Elizabeth Warren’s and other candidates’ new proposals for antitrust, which a CNBC headline accurately reports (as to Warren’s) “would dramatically enhance government control over the biggest U.S. companies.” In particular, the proposals would invite the government far more deeply into oversight of business practices, including refusal to share “essential” facilities with competitors, pricing goods below the cost of production, and much more, as well as mergers and acquisitions.

It’s hard to know whether Sen. Warren sees all this new arbitrary discretion as a bug, or a feature, in her enormous plan. Either way, an accumulation of power that tempting will sooner or later attract appointees seeking either a political whip hand over the U.S. corporate sector, a source of payouts like that in Nevada, or both. [cross-posted from Cato at Liberty]

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Celebrity attorney Michael Avenatti charged with extortion

Federal prosecutors in New York have charged celebrity attorney Michael Avenatti with trying to extort $20 million from Nike by threatening to vent allegations that he threatened would knock billions off its market capitalization. A simultaneous federal indictment in California charges Avenatti with embezzling from a client and defrauding a bank. [Chris Dolmetsch and Erik Larson, Bloomberg]

Two tweets 47 minutes apart tell quite a story [Joe Weisenthal] The complaint filed in New York also describes an unnamed co-cpnspirator, who is not charged with any wrongdoing; Wall Street Journal reporting says that figure is California-based celebrity attorney Mark Geragos, a longtime Overlawyered favorite who has lately represented Jussie Smollett and Colin Kaepernick and until this week was billed as a legal commentator at CNN, where Avenatti too has made frequent guest appearances.

As in many other situations, the question arises: what would the legal difference be between extortion and ordinary lawyer behavior in settlement negotiations? Part of the answer is that Avenatti was alleged to be angling for his own, rather than the client’s advantage. From p. 9 of the New York complaint:

Comments Jeb Kinnison on Twitter: “Must observe the forms. If only he’d started a nonprofit to take the payoffs and pay him a salary…” And another reader is reminded of the 2013 Paula Deen episode [American Thinker, earlier]

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Unions exploit California environmental law for leverage

The California Environmental Quality Act (CEQA) and other California laws are notorious for delaying and driving up the cost of building projects. Aside from their uses for neighbors pursuing Not In My Back Yard (NIMBY) goals, the environmental laws are also employed for leverage by labor unions who threaten to invoke them “to stop new construction unless they get a cut of the action. One developer is fighting back.” [Scott Shackford, earlier on CEQA]

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California: “Lawyer, wife convicted in extortion plot against businesses”

“A California attorney and his wife were convicted of engaging in a scheme to extort minority, immigrant-owned businesses.” [Associated Press] “[Rogelio] Morales and [Mireya] Arias engaged in a scheme in 2016 to file ‘meritless gender discrimination lawsuits to pressure minority business owners into giving them thousands of dollars in alleged “settlements,”‘ a prosecution trial brief said. Prosecutors said Morales and Arias would obtain services from the small businesses they targeted — salons or dry cleaners — and if they were charged differently for the same service, they would file a lawsuit claiming a violation of a California anti-discrimination law, prosecutors said.” [Richard K. De Atley, Press-Enterprise (Riverside, Calif.)]

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July 22 roundup

  • Facebook fought dragnet-with-gag-order subpoena in NY police/fire disability-fraud case [Mike Masnick, TechDirt]
  • Two lawyers charged in alleged plot to extort millions from wealthy sheik [ABA Journal]
  • Judge declares mistrial, plans new trial date in case of allegedly faulty guardrails [Bloomberg, more, background]
  • Last year Overlawyered made the “Hall of Fame” and from now through Aug. 8 you can nominate other sites for the ABA’s annual Blawg 100 honor;
  • Supreme Court, which seldom grants cases raising non-delegation doctrine, agrees to hear Dept. of Transportation v. Assn. of American Railroads [Roger Pilon/Cato, Gerard Magliocca] And Prof. Philip Hamburger, author of bracing new book Is Administrative Law Unlawful (earlier), has just guest-blogged about it for a week at Volokh Conspiracy, and has a related podcast at Law and Liberty;
  • David Henderson writes rave review of new Peter Schuck book Why Government Fails So Often [Regulation, PDF; excerpts also at Econlib and more, earlier on Schuck book]
  • Legal academia stunned, in grief after highly regarded criminal law specialist Dan Markel is murdered in his Tallahassee home [PrawfsBlawg, Dave Hoffman, Marc DeGirolami]

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June 26 roundup

  • Court slaps “nightmare” Sacramento litigant Raj Singh with sanctions [KXTV, auto-plays, earlier]
  • Child overprotection: “I don’t think they even drink liquid soap, the gateway drug for sunscreen.” [Lenore Skenazy, Free-Range Kids]
  • Three-fer: personal injury, qui tam lawsuits against guardrail maker coordinated by disappointed patent litigant [Insurance Journal]
  • Donald Trump hit with sanctions in lawsuit for not disclosing insurance policy [South Florida Business Journal, our Trump coverage]
  • On AirBnB and sharing services, it’s lefty economist Dean Baker (con) vs. David Henderson (pro). Go David! [EconLib] London black cabs seek level playing field with Uber. Good idea, let’s deregulate ’em both [Matthew Feeney, Cato]
  • Waffle House chairman claims attorneys committed extortion in ex-housekeeper’s sex lawsuit [Atlanta Journal-Constitution]
  • “Tenth Circuit Says No to ‘Death by Discovery’ in Dispute over Agreement to Arbitrate in Class Action” [Lars Fuller, Class Action Blawg on Howard v. Ferrellgas Partners LP]

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California: Lawyer’s nastygram threat is free speech, not extortion

In a menacing letter that included the draft of a complaint, well-known entertainment lawyer Martin Singer informed his target that “I have deliberately left blank spaces in portions of the complaint dealing with your using company resources to arrange sexual liaisons with older men such as ‘Uncle Jerry,’ Judge ——, a/k/a ‘Dad’ (see enclosed photo), and many others. When the complaint is filed with the Los Angeles Superior Court, there will be no blanks in the pleading.” Now California appeals court judge Steven Suzukawa has ruled that the threatened disclosure was appropriately related to the financial dispute at issue and did not constitute extortion as a matter of law. [Hollywood Reporter, earlier]

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August 10 roundup

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