United States v. Avenatti

Decision Date06 July 2021
Docket Number(S1) 19 Cr. 373 (PGG)
PartiesUNITED STATES OF AMERICA, v. MICHAEL AVENATTI, Defendant.
CourtU.S. District Court — Southern District of New York
MEMORANDUM OPINION & ORDER

Paul G. Gardephe, United States District Judge.

Michael Avenatti is charged in the (S1) Indictment with transmitting interstate communications with intent to extort, in violation of 18 U.S.C. § 875(d) (Count One); Hobbs Act extortion in violation of 18 U.S.C. § 1951 (Count Two); and honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346 (Count Three). The Government charges that Avenatti - who is licensed to practice law in California - transmitted in interstate commerce threats “to cause financial harm to Nike and its reputation if Nike did not agree to make multimillion dollar payments to Avenatti”; “used threats of economic and reputational harm in an attempt to obtain multimillion dollar payments from Nike”; and used interstate communications to “engage[] in a scheme to obtain payments for himself from Nike based on confidential information provided to Avenatti by [client Gary Franklin] for the purpose of furthering Avenatti's representation of [Franklin] without [Franklin]'s knowledge or approval, ” thereby depriving Franklin of the “duty of honest services” he was owed. ((S1) Indictment (Dkt. No. 72) ¶¶ 20, 22, 24 (emphasis omitted))

Avenatti proceeded to trial on January 27, 2020. After a three-week trial, on February 14, 2020, the jury returned a verdict finding Avenatti guilty on all counts. (Verdict (Dkt. No 265))

Avenatti has moved for a judgment of acquittal or a new trial pursuant to Rules 29 and 33 of the Federal Rules of Criminal Procedure. (Def. Mot. (Dkt. No. 291)) Avenatti argues that (1) the evidence at trial is insufficient to prove that he acted “wrongfully” and with “intent to defraud”; and (2) the statutes under which he was convicted are unconstitutionally vague-as-applied. (Id. at 24-31)[1] Avenatti also contends that this Court erred in (1) excluding certain text messages and emails; and (2) responding to a jury note regarding permissible inferences from exhibits admitted to show state of mind. (Id. at 32-40)

In a June 4, 2021 letter, Avenatti moves to compel the Government to produce Section 3500 material and alleged Brady/Giglio material concerning Judy Regnier, a Government witness at trial. In a July 5, 2021 letter, Avenatti moves for a new trial on the same basis. (July 5, 2021 Def. Ltr. (Dkt. No. 333)) In his June 4, 2021 letter, Avenatti also raises concerns regarding press access to voir dire. (June 4, 2021 Def. Ltr. (Dkt. No. 315))

For the reasons stated below, Avenatti's post-trial motions will be denied.

BACKGROUND

I. THE EVIDENCE AT TRIAL

A. Nike's Sponsorship of Franklin's Basketball Program

In 2005, Gary Franklin was the director and head coach of an amateur youth basketball program (the “Basketball Program”) based in Los Angeles, California. (Trial Transcript (“Tr.”) 1520) In 2006 or 2007, NIKE USA, Inc. (“Nike”) began to sponsor Franklin's Basketball Program, which later became part of Nike's Elite Youth Basketball League (the “EYBL”). Nike formed the EYBL in 2010 as a collection of travel teams made up of talented high school basketball players. (GX 305; Tr. 1524, 1529) Some players from Franklin's Basketball Program went on to compete at Division I or Division II universities, and some went on to play professionally in the National Basketball Association (the “NBA”) or overseas. (Tr. 1521-22)

In 2016, Carlton Debose - Nike's director of Elite Youth Basketball (“EYB”) -and Jamal James - Nike's manager of EYB - were two of Franklin's primary contacts at Nike. (GX 201; Tr. 1527, 1530, 1622) According to Franklin, DeBose and James pressured him to engage in misconduct, including making improper cash payments to players' families and submitting falsified invoices to Nike. (Tr. 716, 1622-27)

After the 2018 season, Nike did not renew its sponsorship contract with Franklin. (Tr. 266, 1528-30) Franklin also lost control of the team he had coached for boys who were 17 years old and younger. Franklin believed that DeBose and James displaced him from the 17 and under team in retaliation for Franklin's refusal to select certain players for the team. (Tr. 162832)

Prior to terminating the sponsorship, Nike had contributed $72, 000 a year for Franklin's Basketball Program. (Tr. 266, 776, 1524-28) Of that sum, Franklin generally kept $30, 000 to $35, 000 as his salary for operating the program. (Tr. 1523) Nike also supplied Nike merchandise and other “gear” to the Basketball Program. The total value of Nike's sponsorship of the Basketball Program amounted to approximately $192, 000 a year. (Tr. 720, 1528; GX 201)

Franklin was disappointed that Nike had decided to terminate its sponsorship of the Basketball Program, and he blamed James and DeBose for the lost sponsorship. (Tr. 1530, 1628-32) In February 2018, Franklin spoke with Jeffrey Auerbach about trying to regain the sponsorship. (Tr. 1530-31, 1634) Auerbach is a producer-writer and consultant in the entertainment industry, and his son had played on one of Franklin's basketball teams. (Tr. 1531, 1635-36) Franklin also told Auerbach about James and DeBose's misconduct, and about what Franklin perceived as rampant corruption in Nike's EYBL. (Tr. 1534, 1637-38, 1651) Franklin wanted Nike to investigate James and DeBose, and to fire them. (Tr. 1648-49) For more than a year, Franklin and Auerbach communicated about these issues in person, by telephone, and through text messages and email. (Tr. 713, 1635)

In January 2019, Franklin sent a letter to Trent Copeland requesting legal advice concerning his business relationship with Nike. (Tr. 952-54, 1683-89) Copeland was Franklin's friend and an attorney. During a January 2019 meeting, Franklin told Copeland that he wanted (1) to be reinstated as the coach of his 17 and under team; (2) DeBose and James fired; and (3) their wrongdoing reported to the FBI. (Tr. 1655-56, 1683-85) Franklin also told Copeland that he wanted Nike to provide financial restitution to the Basketball Program, to indemnify Franklin and his team from any wrongdoing, and to pay all related legal expenses. (Tr. 1686) Franklin did not retain Copeland as his lawyer, however. (Tr. 1688-89)

At this time - early 2019 - Franklin wanted

Nike to look into Jamal James' and Carlton DeBose's actions. And I felt like, you know, they were mistreating me. I felt that they were bullying me. And so I wanted those guys to be looked into. And I also wanted my program back, to be back with Nike. And I felt that the activities that was going on with Jamal James and Carlton DeBose, that they had damaged my program in terms of, you know, the support financially, so I wanted, you know, also to seek that as well.... Well, I mean, I wanted to have my relation - my contract back with Nike, I wanted to have my relationship back. Because, you know, I had a great relationship with Nike over time so I wanted to have my relationship back.

(Tr. 1534) Franklin told Auerbach that he wanted DeBose and James investigated and fired. (Tr. 770, 1648)

On February 6, 2019, Auerbach - acting on behalf of Franklin - contacted John Slusher, a senior executive at Nike. (Tr. 767-68, 893, 1533-34; GX 304) Auerbach presented Franklin's complaints about DeBose and James - and the loss of the Nike sponsorship - to Slusher. Slusher referred Auerbach and Franklin to Nike's outside counsel - Andrew Michaelson at the law firm Boies Schiller Flexner. (Tr. 745, 765-66, 771-73, 786; GX 304) During his call with Slusher, Auerbach did not suggest that he and Franklin were planning on calling a press conference, nor did he suggest that Nike pursue an internal investigation. (Tr. 745-46, 771)

After Auerbach's phone conversation with Slusher, Franklin felt that it was necessary for him to retain an attorney, in part because Slusher had referred Auerbach and Franklin to Nike's outside counsel. (Tr. 901, 1536)

B. Auerbach Contacts Avenatti

On February 28, 2019, Auerbach - acting on behalf of Franklin - contacted Defendant Michael Avenatti. Neither Auerbach nor Franklin had had any prior contact with Avenatti. (Tr. 713-14, 900) Avenatti returned Auerbach's call the next day, and the two spoke for twenty to twenty-five minutes. (Tr. 714-16) Auerbach

told [Avenatti] a little bit about Gary [Franklin] and what he had endured, you know, over the last two years and basically asked him if he was familiar with the Adidas college basketball scandal and case and - yeah....I told him that Gary had been directed and he was abused and bullied into carrying out certain acts that he was - he felt like he was going to lose his sponsorship if he didn't do it. And he felt really terribly about it. And was wanting to report it to the authorities, report it to Nike, and that he wanted to go with them to the authorities and that he also wanted to reestablish his relationship with Nike but he wanted justice above all and that to him meant making sure these two executives at Nike EYBL, Carlton [DeBose] and Jamal [James], did not hurt any other coaches and program directors.

(Tr. 715)

Neither Auerbach nor Avenatti mentioned the possibility of holding a press conference or of pressuring Nike to conduct an internal investigation. According to Auerbach, a press conference “would be damaging and detrimental to reaching Gary's goals, ” which included reestablishing his relationship with Nike. As to an internal investigation, Auerbach testified that “Gary knew what happened and he didn't need an internal investigation.” Avenatti did not suggest that a resolution of Franklin's dispute with Nike might include Nike making payments to Avenatti. (Tr. 717-18)

After the call, Auerbach sent Avenatti an email...

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