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Michael Avenatti Charged In Two States In Two Separate Cases; U.S. Attorney Nick Hanna Spoke Earlier To Reports On California's Charges Against Michael Avenatti; U.S. Attorney Geoffrey Berman Speaks Live On New York's Case Against Michael Avenatti; Suicide Rates Increase Across The U.S.; The Unanswered Questions From The Mueller Report Summary. Aired 2:30-3p ET
Aired March 25, 2019 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[14:30:00] BROOKE BALDWIN, CNN ANCHOR: Before we listen to these New York prosecutors speaking live, let's listen to prosecutors in California just moments ago.
(BEGIN VIDEO CLIP)
NICK HANNA, U.S. ATTORNEY, CENTRAL DISTRICT OF CALIFORNIA: In December 2017, Mr. Avenatti negotiated a settlement for a client that involved an intellectual property dispute. Under the settlement, $1.6 million was due to be paid by January 10, 2018. At a meeting in his law office, Newport Beach, Mr. Avenatti gave the client a bogus settlement agreement that listed a later date, March 10, 2018, as the date by which the payment was due. The $1.6 million was wired on January 5th to an account controlled by Mr. Avenatti.
Mr. Avenatti then used his client's money to pay expenses for his own coffee business, Global Barista, LLC, which did business as Tully's Coffee, as well as to pay his own personal expenses. When the fake March 10 deadline came and went, the client asked Mr. Avenatti where his settlement money was.
Mr. Avenatti never told him the money had arrived. And to add insult to injury, between April and November of 2018, Mr. Avenatti, quote, unquote, "advanced" $130,000 to his client so the client could meet his own financial obligations while he waited for the supposedly late settlement money to arrive. In essence, it appears Mr. Avenatti loaned the client's own money to the client, money that Mr. Avenatti had already secretly collected.
To this day, nearly 15 months later, Mr. Avenatti's client is still waiting for the bulk of his settlement
(END VIDEO CLIP)
BALDWIN: So that's the crux of the -- this case and the charges in which Mr. Avenatti faces there in California. That was the U.S. attorney there. We're waiting for Geoffrey Berman, who is U.S. attorney out of SDNY.
And our former Assistant SDNY Federal Attorney, Elie Honig, is here with me. And before we listen to Geoffrey Berman, you look at these cases, one of the questions I was asking you is, how the heck is this all coming down in one day. You're telling me the New York case, which just started a week ago.
ELIE HONIG, CNN LEGAL ANALYST: Yes.
BALDWIN: Explain that for me.
HONIG: It's a term called deconfliction that we use in law enforcement. I think New York developed a case on him that very quickly, very recently was happening fast. Then you enter the name into the system, whatever the index is. Looks like this is an FBI case and it will say, boom, there's a hit.
Someone else has a case on this person, Michael Avenatti. In this case, I'm sure it hit off the California case. Calls were changed. Probably said, you have your case, California, we have our case, they're separate, let's coordinate and bring them out on the same day because, if California arrests him first, it's going to ruin New York's ability to build their case. I think they coordinated.
I don't think this is a coincidence. This is standard practice in law enforcement to coordinate for the same day.
BALDWIN: It's this extortion conspiracy, which is what he's facing in New York, the biggie, and then the extortion of Nike for $20 million. We're going to get into that.
Again, we're about to hear from the U.S. attorney out of New York speaking.
You and I will continue this conversation. You and I will continue after this break.
We'll be right back.
[14:35:13] GEOFFREY BERMAN, U.S. ATTORNEY, SOUTHERN DISTRICT OF NEW YORK: -- charges are based on Avenatti's attempt to extract more than $20 million in payments from a public company by threatening to use his ability to garner publicity to inflict financial and reputational harm on the company. Avenatti's conduct had nothing to do with zealous advocacy for a client or any other kind of legitimate legal work.
Instead, Avenatti used illegal and extortionate threats for the purpose of obtaining millions of dollars in payments for himself. Avenatti repeatedly pressured the company to agree to pay or risk having Avenatti hold a press conference that he claimed would dramatically drive down the stock price of the company and its market value. As Avenatti threatened in one recorded meeting, if the company did not
meet his demands, the company might die, but if not, it was, quote, "going to be inflicted with cut after cut after cut after cut."
As alleged, the entire scheme played out in less than a week. Avenatti first met with representatives of the company last Tuesday, March 19, Manhattan. At this meeting, Avenatti said he represented a client who coached an amateur high school basketball team sponsored by the company, which is Nike. The team had recently lost that contract worth $72,000 a year.
And Avenatti claimed the coach had information about potential misconduct by employees at Nike. The allegations of misconduct were similar in kind to those that formed the core of a prior criminal prosecution brought by our office, that payments were made to families of high school basketball players.
In that meeting, and in subsequent conversations that were recorded as part of our investigation, Avenatti threatened to hold a press conference at which he would make these allegations public if the public did not agree to his financial demands.
Avenatti promised to forgo the press conference and allow the company to avoid financial harm if the company agreed to pay his client $1.5 million and, for Avenatti himself, to retain Avenatti and another conspirator to conduct a multi-million-dollar internal investigation that the company did not request.
Avenatti made clear can that he was approaching the company at a time intended to maximize the potential financial damage of such a press conference namely on the eve of the annual NCAA tournament and the company's quarterly earnings call. As Avenatti threatened on one call reported, if the company did not exceed to his financial demands, and in his words, quote, "I'll go take $10 billion off your clients' market cap."
In a recorded meeting the next day with representatives of the company, Avenatti made clear he expected to be paid up to $25 million with $12 million to be paid up front and deemed "earned" when paid. When asked by a lawyer for the company why the company would agree to such an arrangement, Avenatti responded, in substance, that he had the company in a very vulnerable position where he could wipe out $5 billion to $50 billion of its market capital.
When the company's lawyers resisted paying Avenatti to conduct an internal investigation, Avenatti told the company, it could skip paying for an internal investigation if, instead, it simply paid him $22.5 million. Then Avenatti said he would, quote, "ride off into the sunset."
Pressure and a sense of urgency were used in delivering these threats. As you can see from the timeline, this all happened in a period of three days.
On day one, March 19th, Tuesday, this was the first meeting between Avenatti, representatives of Nike, and the conspirator. At this meeting, Avenatti, for the first time, made his extortion demands and threats. Following that meeting, representatives from Nike called prosecutors in my office and informed our office of the extortion demands and threats made by Avenatti.
Going forward, all interactions between Nike representatives and Avenatti were recorded and overseen by the FBI and my office.
[14:40:12] On day two, Wednesday, March 20th, it was a recorded phone call with Avenatti, the conspirator, and representatives from Nike where Avenatti again made his threats and demands.
And on day three, there was a meeting, which was recorded, on Thursday, March 21st, last Thursday, in which Avenatti repeated his demands and threats. And as you can see, he graphically described his hold on the company.
At the end of this meeting on Thursday, they agreed that there would be one final meeting the coming Monday, which is today. And at that meeting, Nike would either accede to Avenatti's demands or suffer the consequences.
After that meeting, about two hours after that meeting, Avenatti decided to turn up the heat on Nike. He issued a tweet, and it said, "Something tells me that we have not reached the end of this scandal." And by scandal, he's talking about the college basketball corruption prosecutions brought by the Southern District of New York.
"The scandal, it's likely far, far broader than imagined." While this tweet went out to the public, it was intended and designed for an audience of one. This was Michael Avenatti's shot across Nike's bough.
Through the alleged course of conduct, Avenatti used legal terms like "claims" and "settlements" and "retainers," but these were mere devices to provide cover for Avenatti's extortion demands for a massive payday for himself.
By engaging in the conduct alleged in the complaint, Avenatti was not acting as an attorney. A suit and tie doesn't mask the fact that, at its core, this was an old-fashioned shake down.
The charges announced today reflects the hard work not only of this office, but our law enforcement partners at the Federal Bureau of Investigation. So my left is my good friend, Bill Sweeney, the assistant director in charge of the FBI's New York field office. I want to thank him and his team for their professionalism in seeing this investigation through.
I want to acknowledge and thank the career prosecutors and agents in my office for their role in the investigation and prosecution of this case. To my right is Matt Debowski (ph), Robert Boom (ph), Rob Silverman (ph) and their supervisor in the Public Corruption Unit, Edward Discan (ph). The talent and professionalism of these dedicated public servants is really extraordinary.
Our legal system, our system of justice requires and relies on attorneys, members of the bar, to not simply follow the law, but uphold its finest principles and ideals. For when lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys. They are acting as criminals. And they will be held responsible for their conduct.
I'd now like to invite Bill Sweeney to the podium.
BILL SWEENEY, ASSISTANT DIRECTOR-IN-CHARGE, FBI NEW YORK FIELD OFFICE: Thanks, Geoff.
Earlier this afternoon, Michael Avenatti --
BALDWIN: That was Geoffrey Berman, U.S. attorney for the Southern District of New York, detailing this case that New York now has on Michael Avenatti, a man who, at one point, expressed interest in running to be the next president of the United States. A man who represented adult film star, Stormy Daniels, who, by the way, has reacted to this saying she is saddened, but not shocked by the news of Avenatti's charges.
Again, these are two separate cases, it's California and New York, and you just heard the details out of New York.
Let's get into the nitty-gritty. Elie Honig is with me.
It's your former office there, SDNY.
So what I'm understanding is this is all with Nike. He said he has a client who's a high school coach and they believe this coach has this information on Nike alleging misconduct on behalf of Nike employees, and if you don't let me do this internal investigation an pay my guy $1.5 million, there's going to be a problem, dot, dot, dot. Eventually, it's they obviously expressed they don't want to do this investigation. He says, well, I can ride off into the sunset with a cool $22.5 million. They say, not so fast.
HONIG: Right. More to the point, they go to the FBI in the Southern District of New York. If you're going to try to extort someone, don't extort Nike. They're pretty well represented and pretty savvy.
[14:45:07] This is an interesting case. This is actually a close call in terms of extortion. I think we saw the U.S. attorney already anticipating that. Because two sentences in, he was this was not just aggressive ad advocacy. That's going to be Michael Avenatti's defense here. Look, my client had some sort of legal claim.
Some sort of contractual claim against you, Nike, and I offered to come in and do the legal work. Yes, demands for high. Yes, I used harsh language and was aggressive, but welcome to the real world.
This is how business and hard knuckled legal negotiations work and the trick for the prosecutors here is going to show that the use, the threats here were what's called very helpfully, wrongful. Welcome to the law. But you have to look at all the different facts and decide did the cross a line. I think here the prosecutors are going to say he exerted this immense
time pressure. He alleged it right when the NCAA tournament was about to start. When the company meeting was about to happen. He threatened not just their profitability, but their market cap. He used his own fame. Basically says in these recorded calls, people pay attention to me and I can really damage you.
And the question for a jury maybe will be, is that over the line? That's a defensible case though.
BALDWIN: So that is a defensible case. So between the case in New York and the case in California, which make him sweat a tad more.
HONIG: I never say that. There's less of a threat out of New York. More of a threat out of California. The California case is really straightforward financial fraud. Two aspects to the California case. The more problematic one is the theft of $1.6 million from his own client. It doesn't get any worse than that from an attorney.
HONIG: His client got the settlement. Avenatti lied to him, allegedly falsified documents, and pocketed the money for himself and then paid the client a little bit of it but pocketed the rest. I don't know how you defend against that.
The other piece is a garden-variety bank fraud where he inflated his assets -- a lot of people living above their means do this. And he got $4 million in loans that I assume he wouldn't have otherwise. Those are first, second-year type prosecutor cases. That's a straightforward financial and you can do it all on financial documents.
BALDWIN: OK. Elie Honig, you are the best.
HONIG: Thank you.
BALDWIN: Thank you so much.
We will have much more on this.
Also, more on the reaction of the Mueller report summary, including what Robert Mueller told the Department of Justice three weeks ago.
And all the unanswered questions, everything from the Trump Tower meeting to Paul Manafort sharing polling data.
Stand by. You're watching CNN.
[14:51:58] BALDWIN: Three suicides in just a matter of days. They have shaken two communities that are still grieving from deadly school shootings. Police in Newtown, Connecticut, found the body of Jeremy Richmond. His daughter was killed in the Sandy Hook Elementary shooting in 2012. Richmond died of an apparent suicide inside the building that houses the foundation he dedicated to his daughter and to mental health issues.
On Saturday, a second Parkland, Florida, student died in an apparent suicide. A name and age haven't been released, but authorities confirm he is a juvenile.
This comes just days after another Marjory Stoneman Douglas High School shooting survivor took her own life not long after being diagnosed with PTSD. Her mother said she had suffered from survivor's guilty because her best friend was killed in last year's shooting.
When you look at the last 20 years, suicide rates have increased in nearly every state. In 25 states, the rate of suicide is up by 30 percent, underscoring the importance of having a conversation about this very issue.
Dr. Kelly Posner Gerstenhaber is with me, the founder of the Center for Suicide Risk Assessment.
And, Dr. Posner, thank you so much for being here and having a difficult but incredibly important conversation.
You know, when you heard that one child then another took their own lives after 17 people were murdered in Parkland, and especially after you helped lead the event there last year, and now the Sandy Hook dad, though not connected, how do you handle this?
DR. KELLY POSNER GERSTENHABER, FOUNDER, CENTER FOR SUICIDE RISK ASSESSMENT, COLUMBIA UNIVERSITY: Well, Brooke, I have to say sadly, you know, these occurrences aren't surprising. But the very good new ss that we can work very hard to prevent them. Let me start by setting the context of what, how suicide is of crisis proportions already for youth and their communities.
Did you know it's the number-one cause of death in adolescent girls across the globe? Second leading cause of death in 10 to 24-year- olds. Kills more people than car accidents, more firemen than fire. We can prevent this. What do we know that we need to do? You know that 50 percent of suicides see their primary care doctor the month before they die.
BALDWIN: I read that you wrote that. How is that, when you go to your doctor, you make this point, our society doesn't think of mental illness say cancer or heart disease, but when you see your doctor, what kinds of questions do they need to be asking their patients?
POSNER GERSTENHABER: Well, what they have started to ask and what they need to ask is you know, about suicidal ideation and behavior. Something called the Columbia Protocol, a simple set of questions that can be in everybody's hands so we can identify the people who need help. Before, we didn't know who to worry about and what questions to ask.
I wanted to say that many adolescents that show up to the emergency department that try to take their own lives are not there for psychiatric reasons. If we're not asking everybody, we're not going to find the people suffering in silence. Brooke, we know that even that's not enough. The undersecretary wrote an urgent memo that we must go beyond the doctor's office.
We must put it in everybody's hands, the coach, the teacher, the peer, before they ever, if they ever get to the doctor. That's how we'll find people who are suffering and connect them to the care they need to prevent these tragedies.
[14:55:35] BALDWIN: Can we go there right now? We have prepped a graphic.
Guys, throw it up on the screen.
These are the questions. This is the Columbia Protocol. This what anyone can be asking. So can you just run through, starting with number one, have you wished you were dead or wished you could go to sleep and not wake up. What are those key questions, Dr. Posner, that any parent, anyone watching right now can ask of someone they love?
POSNER GERSTENHABER: Can and should. So have you wished you were dead or actually have thoughts of killing yourself? And if that's yes, have you thought of how? Have you had these thoughts and had some intention on acting on them or have you start to work out details on how to kill yourself?
And very importantly, have you started to do anything, prepared to do anything to end your life, like write a note or collect pills. We were never asking about all these serious suicidal behavior before these simple questions. If they say they had some intension to act on their thoughts, that's where risk jumps like 50 percent.
And again, when people are actually -- when people with suffering, they want to be saved. They want to be asked. So it's very important to treat this like blood pressure. If you -- so we can identify people who actually need help.
BALDWIN: Yes. I'm talking to Ryan Petty (ph), who you know well, founder of the Walk Up Foundation. We'll talk to him next hour about signs of progress.
But, Dr. Posner, thank you so much. We've had the suicide prevention hot line up on the screen, 1-800-273-TALK. Thank you. Thank you very much.
POSNER GERSTENHABER: Thank you, Brooke. I'm grateful to be here.
BALDWIN: Thank you.
To the Mueller investigation. Nearly two-year investigation, it is over. But even with the end of the investigation, despite Attorney General Bill Barr's four-page summary to Congress, we are left with so many questions. Questions Barr's letter doesn't even begin to answer.
Let's dig into that with my next guest, Garrett Graff.
Garrett Graff, nice to see you. You wrote this piece for "Wired" and the headline is "Mueller Says No
Collusion, Barr Raises a Million Questions." So let's just dive into some of your questions, starting with there was a lot of talk about Trump's former campaign chairman, you know, handing over the polling data to an alleged Russian spy. What's the story there?
GARRETT GRAFF, CNN CONTRIBUTOR: Yes, you know, the four-page Barr report on the Mueller report has left us really no closer to answering any of the thousand or million unanswered questions that Bob Mueller left us. Sort of these puzzle pieces scattered around that we don't really know how they fit together.
And chief among them might be this question about this seemingly suspicious handover of highly detailed polling data from Paul Manafort to Konstantin Kilimnik, this operative with ties to Russian intelligence, Manafort's long-time Ukrainian business partner. Which, remember, is a fact that Bob Mueller has never told the public.
We only know this because Paul Manafort's lawyers can't redact documents correctly. And so this is -- this is something that Bob Mueller obviously finds significant but has never told us. And we don't have any understanding of how this fits into any of the larger picture of either Paul Manafort's activities or the Trump campaign's activities during the 2016 election.
BALDWIN: What about questions about Trump Tower Moscow?
GRAFF: Yes, I mean again, this meeting over the course of this spring of 2016, we see Paul, we see Michael Cohen doing this extensive business deal negotiations directly at times with the office of President Putin in Russia. The deal falls apart on the same day that it becomes public that the DNC has been hacked by Russia.
And you know, again, this is something that we saw Michael Cohen lie about to Congress. This is what we pleaded guilty to. And we have no understanding of sort of how and whether this fits into the broader picture, even though we know that Donald Trump was kept up to date about this, that Don Jr and Ivanka were kept up to date on this. And that, you know, for more than two years, Donald Trump himself lied to the American public about this.
[15:00:01] BALDWIN: You also talk about the clues that Mueller sprinkled all these bread crumbs in his previous court filings, yet now, no resolution?