Remember Stormy Daniels?
This post is not about her, but her attorney, Michael Avenatti. And a case he propelled against Nike. He is incarcerated for felony fraud and extortion. There’s a fine line between aggressive demand letters and extortion.
In [the] federal court complaint filed in the Southern District of New York, the government accuse[d] Avenatti of extortion by threatening to publicly release, through a press conference and otherwise, damaging information about the misconduct of Nike employees unless Nike made multimillion dollar payments to Avenatti and a significant payment to his client. According to the complaint, he demanded that the monies be paid quickly, and announced a press conference on his Twitter feed at which time he would expose Nike. Among even more colorful and profane language, according to the complaint, Avenatti allegedly stated, “I’ll go and I’ll go take 10 billion dollars off your client’s market cap… I’m not [bleeping] around.” One of the alleged extortion methods was an unsolicited offer that Avenatti and an unnamed co-conspirator would conduct an “internal investigation” for which Avenatti and his co-conspirator would be paid $15 to 25 million. If the demands were met, he promised confidentiality and that his client would “ride off into the sunset.” Federal prosecutors called this conduct “an old-fashioned shakedown.”…
However, if the methods used – false information, publicity, grossly exaggerated economic demands with a flimsy connection to the claim, and unusual payments directly to the attorney threatening to file a criminal complaint – are illegitimate, such conduct could cross the line between aggressive and zealous advocacy and extortion.
On February 14, 2020, he was found guilty on all three counts related to attempted extortion of Nike. The judge sentenced him to 30 months in prison.
The Second Circuit upheld the conviction on appeal.
In Avenatti’s case, the panel acknowledged that he had some claim to the demand of payment, but as in the Jackson case, there was no nexus between the threat and that claim. The panel rejected each of Avenatti’s four arguments to the contrary. First, the jury was entitled to find that Avenatti had no reasonable belief that his demand for an internal-investigation retainer served his client’s goals. The demand was actually contrary to those goals, in that it risked injuring Franklin’s reputation without ensuring any benefit to him. Moreover, the retainer demand was unrelated to what Franklin identified as his key goals in his dispute with Nike—getting to coach the team again, re-establishing Cal Supreme’s relationship with Nike, and seeing the Nike employees fired. Indeed, Avenatti never even raised those goals during the negotiations, and the evidence showed that the retainer demand was a sticking point, rather than an aid, in fulfilling the goal of compensating Franklin financially.
Second, the evidence showed that Avenatti never intended to conduct a bona fide internal investigation of Nike’s sponsorship practices. The price tag for this investigation was far higher than any Nike’s counsel had ever received, and Avenatti never provided any explanation of the scope of that investigation, or why it would cost so much. Instead, the jury was entitled to conclude that the retainer demand was not made for a real internal investigation, but as the price for Avenatti’s silence. Silence purchased based on threats to cause harm is the essence of extortion.
Third, the panel analyzed Avenatti’s follow-up offer to receive one lump-sum payment of $22.5 million without signing a separate retainer agreement. The panel observed that Avenatti never retracted his original retainer demand, so this offer was irrelevant to whether Avenatti committed extortion by making the original demand. And even if he had retracted it, the jury could reasonably have concluded that Avenatti would have diverted the bulk of that money to himself, rather than Franklin.
Fourth, the panel rejected the argument that the retainer demand was a legitimate attempt to recover attorneys’ fees. The panel explained that the retainer demand was unrelated to any legal work Avenatti had performed for Franklin, and that, at best, it would cover future fees for a separate engagement which conflicted with his representation of Franklin. And finally, the panel noted that the jury was entitled to see through the technicalities of the retainer demand and see it as a threat unrelated to any provision of legal services. In a footnote, the panel calculated that even if he and Geragos had worked 24 hours a day for the entire time period in which he represented Franklin, and each had billed $1000 per hour, they still would have merited nowhere near what Avenatti demanded from Nike for a retainer. Op. at 39 n. 24.
As of the date of this post, Mr. Avenatti is still incarcerated. He is scheduled for release in 2035. He had also pled guilty to wire fraud and obstruction of administration of Internal Revenue Code.
Onward to Maryland.
Stephen Snyder is a famous Maryland medical malpractice plaintiff’s attorney. On November 22, 2024, after a nine day trial, he was found guilty of attempted extortion, and other assorted charges.
The evidence at trial showed that Snyder, a plaintiffs medical malpractice attorney in the Baltimore area, represented two medical malpractice claimants who allegedly experienced injury following organ transplants at the University of Maryland Medical Center (“UMMC”). One of those claimants received a kidney transplant. From in or around January 2018 through September 2018, Snyder attempted to extort the University of Maryland Medical System (“UMMS”) by threatening to “destroy” the UMMC transplant department unless UMMS paid him $25 million personally, and separate from any settlement with his client.
Specifically, Snyder threatened a public relations campaign that would falsely accuse UMMC of tricking unsophisticated patients into accepting diseased organs. Snyder claimed that he would run a front-page ad in the Baltimore Sun, hold a press conference, and create an internet advertisement that would direct anyone searching for the UMMC transplant program to his law firm’s website. Snyder also threatened to release commercials that he created that conveyed his false message and accused UMMC of putting “profits over safety.” Snyder played these commercials during meetings with attorneys representing UMMS. Snyder claimed that the parties could enter into a sham consulting agreement that would provide cover for the $25 million payment.
Snyder made his extortionate demands and threats over a series of meetings and phone calls with attorneys for UMMS in 2018. One of those meetings, which occurred on August 23, 2018, was recorded by Federal law enforcement using hidden video cameras.
Prosecutors asked the federal judge to sentence Mr. Snyder to three years in prison followed by three years of supervised release.
“Snyder’s crimes threatened the reputation of a health care institution that provides lifesaving transplants,” the government’s sentencing memorandum, dated March 19, states.
Snyder was 77 at the time of his conviction.
On April 2, 2025, the judge sentenced Snyder to three years of probation with six months of home confinement.
U.S. District Judge Deborah Boardman cited Snyder’s rapidly declining physical health and cognitive ability in giving him a sentence with no prison time. She said a prison sentence was not necessary to deter him or other attorneys from committing similar crimes.
Here’s how the scheme would work.
Prosecutors had contended that Snyder promised to refrain from disparaging the medical system’s transplant program in exchange for the consulting deal, which would prevent him from suing on behalf of medical-malpractice clients because of a conflict of interest. Snyder has said he offered to become a consultant to “help prevent any future tragedies.”
Details from the trial.
Snyder contended that he was entrapped by the medical system, which strung him along while the FBI recorded several of his phone calls. He also said he had consulted with two ethics experts who said the consulting agreement would be legal and ethical.
The Baltimore Banner reports that Snyder has won multiple nine-figure settlements and jury verdicts over the course of his 50-year career.
“But by his own admission,” the publication reports, “Snyder is not at the top of his game. He has told the court that he is in poor health and struggling. He repeatedly ran afoul of the judge. Most of his direct and cross-examinations were peppered with sustained objections for not following court rules and [the judge’s] orders, including 100 in one day of testimony.”
U.S. District Judge Deborah Boardman of the District of Maryland found Snyder in contempt after he delivered his closing argument Thursday, WBAL-TV reports.
According to WBAL-TV, Boardman had “warned Snyder not to argue with witnesses, not to testify through statements, not to bring up topics he was aware the judge barred from the case in October—but he kept doing it anyway, including four times during his 75-minute closing argument.”
There’s a fine line between zealous prosecution of a client’s case and extortion. But demanding eight figure “consulting gigs” to avoid future litigation or destruction of a defendant’s reputation does not seem like a close call.
What do you think?
Sounds like good, old fashioned blackmail to me. The line between it and legal behavior is a pretty bright one.
Whenever a professional is in a position to mine data to find mistakes, errors, omissions, false statements, arithmetical errors, payments and fraudulent admissions, there is potential for the auditor to find them. None of us is perfect and there is high statistical probability that with deep enough mining, defamatory evidence will rise to the surface. I liken it to the rising of garbage from the bottom of the sea. Counsel is just providing identification and buoyancy. Using it for blackmail is always a possibility. But should it be a temptation?
These two attorneys succumbed to the temptation to make enormous amounts of money by threatening the release of that data, combined with (in Snyder’s case) actual fabrication of new Media allowing him to spread the garbage far and wide. Anyone can make mistakes: According to the article, Avenatti was sentenced to 30 months. If he was supposed to start his incarceration on February 14th, 2020, (by way of example) he should be eligible for release August 14, 2022. I never trust myself to do these calculations on my fingers but prefer to ask Google. I always prefer to blame Google for calculation errors.
When doing consultation in defense of clients accused of Medicare Fraud using a Government created system of extrapolated penalties, based upon a collection of submitted chart notes, in almost every case, I saw errors of calculation by Government. I never trusted my own ability to calculate. I always used calculation assisted devices.
Snyder’s case was even more egregious because he even threatened to create Media to publicly defame his targets. The article states that Snyder was 77 at the time of his conviction. He was “lucky” to find a judge who apparently recognized his age, illnesses and alleged cognitive disability and avoid prison time. How much better would his retirement be by adding millions?
In both cases, I don’t understand their infatuation with money. I have known people who are extraordinarily rich. I was never envious of them. Rather, I found evidence in my own situation to be more than satisfied with my retirement and ability to spend on whatever I wanted. It was vastly more than my own parents. I am uninterested in either luxury cars or yachts. I can afford a 9’ Steinway but my hands are not what they were 30 years ago.
It is a mystery to me why these two lawyers were so infatuated with money that they chose to commit obviously illegal acts to get more. I have no connection to the values of their estates, but I estimate that even without blackmail, they were both vastly more than mine. I completely agree with Dr. Horton when he said: “It sounds like good old-fashioned blackmail to him.”
Michael M. Rosenblatt, DPM
Michael:
It is not just an infatuation with money. Both of these individuals would appear to have narcissistic personalities. It was not just the money. It was the fame, the adulation, the paid media appearances, the self aggrandizement.
The other problem here is that these folks think that they are above the law.
There was another case, in KY, with attorney Eric Conn. He had billboards up in several places describing himself as Mr. Social Security. He advertised that he could get social security benefits for those people that had not been able to get it. He had a large statue of the statue of liberty and Abraham Lincoln in his office front yard. Some patients had gone to attorneys that never dotted all of the i’s and crossed all of the t’s to get through the system. Eric Conn was very successful about doing that. His downfall was that he bribed a federal judge to expedite granting the disability status. This is not to say that the patients were not deserving. In fact many of those patients that were thrown off disability, are back on it. That was due to the efforts of a pro bono attorney in the area.
The judge as I recall went to jail briefly and then died. Eric Conn as I recall fled and was captured, and returned. He will be in prison for years to come.
If he had only been patient and not bribed the judge, he might still have his flocks of patients and billboards.
The pulmonologist that allegedly testified in front of congress that he just filled out the forms he was told to fill them out for Eric Conn clients, was apparently not legally affected in any way.
PRN physician recovery network and PHP’s commit extortion on innocent physicians nation wide. It’s not just greedy lawyers, plenty of physicians should be in jail too. Just like lawyers saying they are helping the client, physicians are hiding behind the same “ wolf in sheep’s clothing”. Nice they penalized those lawyers, but please look in the mirror when we have the same problem in our profession. PRN lacks real oversight, the state takes reports by corrupt physicians as the gospel truth without actually doing any real investigation themselves. The system is used by unethical physicians as a weapon to eliminate other physicians, sometimes. There is truly a need for those that need the help, but the system is not set up appropriately to protect the innocent. This leads to professional destruction, economic destruction and personal destruction too the innocent. The real impaired physicians after paying a fortune of money out of pocket and 5 year follow up go back to work. The innocent require a life time to try to recover!
John, if I understand your comment, you are describing that Medical Boards sometimes REQUIRE that physicians appearing before them must take “Board sponsored programs that the physician themselves must pay totally.” And that the Boards and their attorneys/staff gets a “cut” on those charged fees. Unless they pay, they have no hope of getting their license. This represents a kind of “in house” extortion.
The other part of that configuration is the Democrat sponsored “National Practitioner Data Bank.” Allegedly this was promoted to prevent errant physicians from traveling from state to state to get licensed. There would have been formats to prevent this from occurring without the Data Bank.
But Democrats were always concerned that doctors in private practice do not vote for them. They are still concerned. The data banks provided a good method to limit private practice and force doctors to work for large corporations. This makes them more “malleable.”
Individual doctors have always been a threat to regulatory Democrats.
Michael M. Rosenblatt, DPM