Nike Inc. (NKE - Get Report) shares were active Monday after the U.S. Justice Department said it would charge Michael Avenatti with extortion just minutes after the controversial attorney tweeted about exposing a "major high school basketball scandal" linked to the world's biggest sportswear company.
The DoJ said it would bring charges against Avenatti related to an attempt to extort more than $20 million from Nike, according to criminal complaint filed in New York and first reported by CNBC. CNBC reported that Avenatti demanded payments of $22.5 million from Nike under threat of releasing damaging information about the company he said would significantly impact its market value.
NIke shares ended the day up 14 cents at $82.33 after earlier trading as low as $80.89. The stock gained more ground in after-hours action.
The report followed a tweet from Avenatti, best known for representing adult film actress Stormy Daniels in her lawsuit against U.S. President Donald Trump, vowed to reveal "a major high school/college basketball scandal" that involved Nike executives and "involves some of the biggest names in college basketball".
Tmrw at 11 am ET, we will be holding a press conference to disclose a major high school/college basketball scandal perpetrated by @Nike that we have uncovered. This criminal conduct reaches the highest levels of Nike and involves some of the biggest names in college basketball.— Michael Avenatti (@MichaelAvenatti) March 25, 2019
Nike shares lurched into negative territory as news of the tweet first came to light, before quickly paring that decline in heavy trading volume as reports of the DoJ charges, and the arrest of Avenatti on unrelated -- but coordinated -- criminal bank fraud and wire fraud charges in Los Angeles, followed shortly after.
My statement regarding my former attorney Mr. Avenatti.. pic.twitter.com/9aKYCPNN6y— Stormy Daniels (@StormyDaniels) March 25, 2019
US attorney Nick Hanna said Avenatti, whom he called "a corrupt lawyer who instead fights for his own selfish interests by misappropriating close to a million dollars that rightfully belonged to one of his clients", faces a maximum of 50 years in federal prison if convicted on all counts of bank and wire fraud in California.