Shares of Nike fell more than 1 percent on Monday following a tweet from California-based lawyer Michael Avenatti alleging Nike’s involvement in a “major high school/college basketball scandal.” But the stock recovered after the celebrity attorney was arrested on accusations he had attempted to extort millions from the athletic apparel company.
Avenatti, who represented porn star Stormy Daniels in her lawsuit against President Donald Trump, tweeted that Nike’s “criminal conduct” involves the highest levels of Nike and “some of the biggest names in college basketball.”
About 15 minutes after the tweet, Avenatti was arrested in midtown Manhattan for his alleged involvement in scheme to extort Nike for $20 million dollars. He also faces separate federal charges in a case in Los Angeles where he is accused of wire and bank fraud. In the second case, he allegedly embezzled his own client’s money to pay his expenses and debts and used phony tax returns to obtain millions of dollars in loans.
Nike’s stock fell to $80.89, its low for the day, after Avenatti’s tweet. The stock, which has a market value of $128. 1 billion, has since recovered some of its losses and is trading at about $81.35. Earlier Monday, Nike shares traded as high as $83.22.
Federal officials said there will be a press conference in Los Angeles at 2:30 p.m. EST to discuss the wire and bank fraud charges.
Avenatti is due to be presented in Manhattan federal court on Monday. That complaint said Avenatti, 48, had threatened to hold a news conference on the eve of Nike’s earnings release to detail “allegations of misconduct by employees of Nike.”
The athletic apparel company reported a top and bottom line earnings beat on Thursday. Nike shares are up more than 10 percent year-to-date.
Nike officials weren’t immediately available for comment.