United States v. Avenatti ( 2023 )

21-1778(L)
United States v. Avenatti
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2022
Nos. 21-1778(L), 22-351(CON)
UNITED STATES OF AMERICA,
Appellee,
v.
MICHAEL AVENATTI,
Defendant-Appellant.
__________
ARGUED: JANUARY 19, 2023
DECIDED: AUGUST 30, 2023
__________
Before: WALKER, RAGGI, and PARK, Circuit Judges.
________________
On appeal from a judgment of conviction entered in the
Southern District of New York (Gardephe, J.), defendant, a California-
licensed attorney, challenges (1) the sufficiency of the evidence
supporting his conviction for transmitting extortionate
communications in interstate commerce to sportswear leader Nike,
see 18 U.S.C. § 875(d); attempted Hobbs Act extortion of Nike, see id.§ 1951; and honest-services wire fraud of the client whom defendant
was purportedly representing in negotiations with Nike, see id.
§§ 1343, 1346. Defendant further challenges (2) the trial court’s jury
instruction as to honest-services fraud, and (3) the legality of a
$259,800.50 restitution award to Nike.
AFFIRMED.
_________________
DANIEL HABIB, Appeals Bureau, Federal
Defenders of New York, Inc., New York,
NY, for Defendant-Appellant.
MATTHEW D. PODOLSKY, Assistant United
States Attorney (Daniel C. Richenthal,
Robert B. Sobelman, Danielle R. Sassoon,
Assistant United States Attorneys, on the
brief), for Damian Williams, United States
Attorney for the Southern District of New
York, New York, NY, for Appellee.
_________________
REENA RAGGI, Circuit Judge:
Attorney Michael Avenatti appeals from an amended
judgment of conviction entered on February 18, 2022, in the United
States District Court for the Southern District of New York (Paul G.
Gardephe, Judge), after a jury found Avenatti guilty of transmitting
extortionate communications in interstate commerce, see 18 U.S.C.
§ 875(d) (Count One); attempted Hobbs Act extortion, see id. § 1951
(Count Two); and honest-services wire fraud, see id. §§ 1343, 1346
(Count Three). Sentenced, inter alia, to an aggregate prison term of 30
months and ordered to pay $259,800.50 in restitution under the
Mandatory Victims Restitution Act of 1996 (“MVRA”), id. §§ 3663A,
3664, Avenatti challenges (1) the sufficiency of the evidence
2
supporting each count of conviction, (2) the trial court’s failure to give
his requested jury instruction as to honest-services fraud, and (3) the
legality of the restitution order. Because none of these challenges has
merit, we affirm the judgment of conviction.
BACKGROUND
I. Trial Evidence
The crimes of conviction took place in March 2019 while
Avenatti was representing Los Angeles youth sports coach Gary
Franklin in negotiations with sportswear leader Nike. 1 Critical to the
two extortion crimes was Avenatti’s threat to cause Nike reputational
and financial injury if it did not pay him millions of dollars. Critical
to the fraud crime was a scheme to deprive Franklin of Avenatti’s
honest legal services in negotiations with Nike by (unbeknownst to
Franklin) conditioning a settlement with Franklin on Avenatti’s own
receipt of a solicited multi-million-dollar bribe. Because Avenatti
argues that the trial evidence was insufficient to support conviction
on any of these crimes, we recount that evidence in some detail and
in the light most favorable to the prosecution. See United States v.
Raniere, 55 F.4th 354, 364 (2d Cir. 2022).
A. Gary Franklin’s Relationship with Nike
Prosecution witness Franklin was the founder and program
director of California Supreme (“Cal Supreme”), a nonprofit youth-
basketball organization. For many years, Franklin himself coached
Cal Supreme’s premier age-17-and-under team, a number of whose
1In this opinion we use “Nike” to refer to the parent company as well as to
various subsidiaries and subordinate entities.
3
members went on to play for college and professional basketball
teams.
Sometime in 2006-2007, Nike began sponsoring Cal Supreme,
providing approximately $192,000 in annual support and affording
access to Nike’s Elite Youth Basketball League. 2 According to
Franklin, about a decade into this relationship, Nike employees Jamal
James and Carlton DeBose directed him to pay additional Nike
money to certain players’ parents and handlers and to conceal those
payments with false invoices. Franklin also accused James and
DeBose of bullying him to step down from his coaching role with Cal
Supreme in favor of a player’s parent.
As a result of these events, in February 2018, Franklin sought
advice from Jeffrey Auerbach, an entertainment industry consultant
whose son had played on a Cal Supreme team. When, in September
2018, Nike stopped sponsoring Cal Supreme altogether, Franklin
asked Auerbach for help getting the sponsorship renewed. Auerbach
testified that he told Franklin that the payments he had been directed
to make were similar to payments that had resulted in the conviction
of an Adidas executive in the Southern District of New York. 3
The following year, on February 6, 2019, Auerbach contacted a
Nike executive whom he knew to pursue Franklin’s complaints.
When the executive told Auerbach that he would have to discuss the
matter with Nike’s outside counsel, Boies Schiller Flexner LLP (“Boies
2Nike provided $72,000 in cash, with Franklin keeping $30,000-35,000 as
salary. The remainder was supplied as sports equipment.
3 See generally United States v. Gatto, 986 F.3d 104 (2d Cir. 2021) (upholding
conviction of Adidas executive).
4
Schiller”), Auerbach and Franklin decided that they too needed the
assistance of an attorney.
B. Avenatti’s Initial Communications with Franklin
On February 28, 2019, Auerbach, on Franklin’s behalf,
contacted Michael Avenatti, a California-licensed attorney. Auerbach
told Avenatti that Nike employees James and DeBose had “abused
and bullied” Franklin to make payments to players’ families, that
Franklin “felt really terribly about it,” and that he wanted to “report
it to Nike” and “go with them [i.e., Nike] to the authorities.” Trial Tr.
715. Auerbach stated that Franklin also “wanted to reestablish his
relationship with Nike,” but that “above all” he wanted “justice,”
which to Franklin meant making sure James and DeBose “did not hurt
any other coaches and program directors.” Id. Auerbach testified that
he did not raise the possibility of either an internal investigation or a
press conference with Avenatti, deeming the former unnecessary
because Franklin “knew what happened,” and the latter “damaging
and detrimental to reaching [Franklin’s] goals.” Id. at 717-18.
Avenatti met with Franklin and Auerbach on March 5, 2019.4
The two men explained to Avenatti Franklin’s concerns with Nike’s
withdrawn sponsorship of Cal Supreme and showed Avenatti
documents—including bank statements, text messages, and emails—
that detailed payments that Franklin had made to certain players’
parents and handlers at James’s and DeBose’s direction. Franklin
4Before this meeting, Avenatti asked Los Angeles attorney Mark Geragos,
who knew Nike’s general counsel, to work with him on the Franklin matter.
Neither Franklin nor Avenatti would know of Geragos’s involvement until
after Avenatti’s arrest.
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testified that he considered the documents confidential and never
gave Avenatti permission to publicize them. At the March 5 meeting,
Auerbach and Franklin also both detailed the “justice” that Franklin
was seeking: (1) to reestablish a sponsorship relationship with Nike,
(2) to resume coaching his former team, (3) to have James and DeBose
fired, (4) to receive whistleblower protection, and (5) to be paid some
sort of compensation by Nike. Franklin emphasized that maintaining
a relationship with Nike was important to him and that again
coaching his former team was “the most important thing.” Id. at 1542.
While Auerbach referenced Franklin’s desire to report misconduct “to
the government . . . with Nike,” neither he, Franklin, nor Avenatti
mentioned the possibility of public disclosure or any internal
investigation at Nike. Id. at 730.
Although no retainer agreement was entered into on March 5
(or at any time thereafter), Avenatti signaled to Franklin that he
would serve as his lawyer, instructing Franklin “not [to] speak” to the
FBI or to any official or person who might approach him but, rather,
to “tell them to talk to your attorney.” Id. at 742. Avenatti also told
Franklin, “we’re going to get you justice,” and “we need to get you
immunity.” Id.C. Avenatti’s Financial Difficulties
In March 2019, Avenatti’s financial situation was precarious.
Evidence showed that outstanding judgments against him totaled
approximately $11 million, and that in November 2018, his law firm
had been evicted from its Los Angeles office for non-payment of rent.
Sometime in the period March 15-25, 2019, Avenatti’s office manager
recalled him saying that he was working on something that could
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allow him to “clear the deck of what was owed and start a new firm.”
Id. at 1405-06. Avenatti said “something having to do with an in-
house or internal investigation,” but she could not remember the
particulars. Id. at 1406.
As the following trial evidence showed, what Avenatti was
working on in mid-March 2019 was a scheme to use an internal
investigation retainer agreement as the vehicle for extorting millions
of dollars from Nike to his own benefit and in breach of the fiduciary
duty he owed Franklin.
D. Avenatti’s Discussions with Nike
1. Initial Contact
On March 12, 2019, Geragos contacted a Nike attorney to
request a meeting for Avenatti. When Geragos advised Avenatti that
the Nike attorney had referred him to Boies Schiller, Avenatti’s
response revealed that he had already identified an internal
investigation and a threat of public disclosure as crucial to his
negotiations with Nike. In a March 13 text message, he instructed
Geragos to insist on dealing directly with Nike because Boies Schiller
would “never step aside and allow [Avenatti and Geragos] to run an
investigation” at Nike. Id. at 1858; Gov’t Ex. 103B. In a March 14 text
message, Avenatti asked for a status report on “Nike and whether I
need to start arranging my presser,” i.e., press conference. Trial Tr.
1858-59; Gov’t Ex. 103C.
Also on March 13, 2019, Boies Schiller partner (and prosecution
witness) Scott Wilson called Geragos to inquire as to the subject of the
requested meeting. Geragos told him the matter “was too sensitive to
7
discuss over the phone,” but “suggested that Nike might have an
Adidas problem.” Trial Tr. 203-04. The men agreed to meet in New
York on March 19, 2019, along with Nike’s vice-president and chief
litigation officer Robert Leinwand.
On March 17, 2019, when Geragos confirmed this appointment
to Avenatti, Avenatti replied that if the meeting “doesn’t work out,”
he had arrangements in place to hold a press conference on March 20,
2019, and to have a story appear in the New York Times. Gov’t
Ex. 103D. Phone records showed that Avenatti had contacted New
York Times reporter Rebecca Ruiz on March 16, 2019.
On March 18, 2019, the day before the scheduled Nike meeting,
Avenatti met with Franklin and Auerbach. Auerbach had earlier
emailed Avenatti documents marked “Privileged & Confidential”
detailing Franklin’s dealings with Nike, including specific payments
Franklin made to identified persons with respect to identified players.
Gov’t Exs. 305, 308. At the March 18 meeting, Auerbach provided
Avenatti with still more such documents, which he and Franklin also
considered confidential.
Avenatti told Franklin and Auerbach that at the next day’s
meeting with Nike, he expected to get Franklin some sort of immunity
and $1 million in compensation, and to get James and DeBose fired.
He would also try to reestablish a relationship between Nike and Cal
Supreme. When Franklin asked about regaining control of his 17-
and-under team, Avenatti said he did not think that likely. Franklin
nevertheless understood that Avenatti would at least try to achieve
that goal as well as the others. Avenatti made no mention of his plans
8
to demand an internal investigation retainer or to make public
Franklin’s story.
2. The March 19, 2019 Meeting
The March 19 meeting was held at the Manhattan office of
Geragos’s law firm and attended by him, Avenatti, Wilson,
Leinwand, and Boies Schiller associate Benjamin Homes. 5 Avenatti
stated that he represented a whistleblower with information about
Nike paying amateur players, corroborated by documents
implicating Nike employees James and DeBose. Later in the meeting
he would identify Franklin as the whistleblower.
Adopting what the Nike representatives perceived as an
aggressive and bullying tone, Avenatti stated that “Nike was going to
do two things”: (1) “pay a civil settlement to his client” for “breach
of contract, tort, or other claims”; and (2) hire Avenatti and Geragos
“to conduct an internal investigation into corruption in basketball.”
Trial Tr. 213. 6 As to the second demand, Avenatti stated that if Nike
preferred to have other attorneys conduct an internal investigation, it
would still have to pay Avenatti and Geragos in an amount twice
5 Leinwand and Homes also testified for the prosecution at trial.
6 Wilson testified that he understood the two demands as “[s]eparate but
both mandatory.” Trial Tr. 243. Wilson and Leinwand were taken aback
by the second, thinking it reflected a conflict of interest. As Wilson put it:
“I never heard of it, that [an attorney who was] adverse to you, [could] also
represent you in a tense, high-profile, problematic criminal investigation.”
Id. at 312.
9
whatever it paid the lawyers who actually did the investigatory
work. 7
Avenatti made no mention of Nike firing James and DeBose,
although Franklin had identified that as one of his specific objectives.
Nor did he ask for Nike to renew its sponsorship of Cal Supreme or
explore the possibility of Franklin’s resuming his coaching role with
Cal Supreme’s 17-and-under team. Indeed, rather than raise the last
possibility, Avenatti conceded it. Homes recalled him “stat[ing] as a
matter of fact that Gary Franklin . . . would never be able to work with
Nike again.” Id. at 1431.
Avenatti told Nike’s representatives that if his two demands
were not promptly met, “he was going to blow the lid on this
scandal.” Id. at 217. He proposed to do so not by bringing a lawsuit
on his client’s behalf but, rather, by having a New York Times reporter
write a story and by himself holding a press conference the next day.
These actions, he predicted, “would take billions of dollars off the
company’s market cap.” Id. at 218. Avenatti then showed the Nike
representatives some of the documents Franklin and Auerbach had
given him.
When Wilson stated that Nike would need more than a day to
respond to the stated demands, Avenatti opposed delay, noting that
it was the eve of NCAA basketball’s “March Madness” and of Nike’s
7Wilson understood this to mean that “if [Nike] hired another law firm” to
conduct an internal investigation and “they did a lot of work and it cost
[Nike] $5 million, [Avenatti] would get paid $10 million or two times that
for no work.” Trial Tr. 267.
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earnings call. 8 Urging forbearance, Wilson observed that a public
scandal could “destroy the life or destroy the career of some of these
kids” whose parents or handlers had received payments. Id. at 259.
In response, Avenatti shouted, “I don’t give a f--k about those kids.”
Id. at 1170. He said that delay would “f--k him and Mr. Geragos”—
making no mention of any effect on his client Franklin. Id. at 1506. 9
After the meeting, Avenatti spoke by telephone with Franklin
and Auerbach, reporting that “things went well,” that he had told
Nike it had a problem, and that another meeting would be held on
March 21. Id. at 1567. He made no mention of his retainer demand or
of his threat to hold a press conference or otherwise publicize the
information that Franklin and Auerbach had given him.
Meanwhile, a few hours after the meeting, Wilson and
Leinwand contacted federal prosecutors in the Southern District of
New York, disclosed what had occurred at the meeting, and agreed
to cooperate in an investigation of Avenatti and Geragos. As a result,
their subsequent conversations with Avenatti and/or Geragos were
recorded by the FBI.
3. The March 20, 2019 Call
Soon after 5:00 p.m. on March 20, 2019, Wilson participated in
a recorded telephone call with Avenatti and Geragos. In this call,
8 Wilson understood Avenatti to be referencing “a moment when [Nike’s]
stock price might be particularly volatile and particularly subject to the
impact of news stories breaking right then.” Trial Tr. 258.
9Asked at trial whether Avenatti had said that delay would “f--k him and
Mr. Geragos or f--k Mr. Franklin?,” Homes replied, “No, no. F--k him and
Mr. Geragos.” Trial Tr. 1506-07.
11
which is the subject of Count One, Wilson stated that Nike was “not
going to give you everything you want, but I think we can give you
much of what you want.” Gov’t Ex. 1T at 3. 10 Avenatti responded by
reiterating his two demands: “we’re gonna get a million five for our
guy, and we’re gonna be hired to handle the internal investigation,”
emphasizing that “if you don’t wanna do that, we’re done.” Id. at 4.
As to the retainer demand, Avenatti warned that Nike should not be
thinking “[a] few million dollars,” because, at that amount “it’s worth
more in exposure to me to just blow the lid on this thing.” Id. So, if
Nike were thinking a retainer could “be capped at 3 or 5 or 7 million
dollars, like let’s just be done.” Id. at 5.
When Wilson said he needed some idea what Avenatti would
charge for an internal investigation, Avenatti asked what Boies
Schiller would charge. When Wilson suggested “millions,” Avenatti
pushed back: “No you guys would charge . . . tens of millions of
dollars, if not hundreds.” Id. at 8-9. Avenatti reiterated that an
agreement to pay him “single digit millions”—“five, six, eight, nine
million dollars,”—was “not in the ballpark.” Id. at 10. Eventually,
Wilson said that he “suppose[d]” an “investigation like this” could
10Government Exhibit 1T is a transcript that was received as an aid to the
jury in listening to admitted Government Exhibit 1, the actual recording of
the March 20, 2019 call. For ease of reference, we cite to transcripts
throughout this opinion, although we have reviewed the original
recordings received in evidence.
12
“hit the ten to twenty million dollar range”—Avenatti characterized
the amount as within a “degree of reasonableness.” Id. at 12. 11
The men agreed to another meeting on Monday, March 25.
4. The March 21, 2019 Meeting
Wilson, Homes, Avenatti, and Geragos in fact met the
following afternoon. Starting with what he characterized as “the
easiest part,” Avenatti handed Wilson a draft settlement agreement
among Nike, Franklin, and Cal Supreme, which obligated Nike to pay
Franklin $1.5 million in return for a general release of any claims
against the company. Gov’t Ex. 2T at 10. That document made no
mention of Avenatti’s retainer demand.
Instead, Avenatti proposed for that demand to be addressed in
a separate “confidential retainer agreement” among Nike, himself,
and Geragos. Id. at 15. Avenatti produced no draft for such an
agreement, but stated that it would have to provide for Nike to pay
him and Geragos a “12 million dollar retainer upon signing,” and for
that amount to be “deemed earned when paid.” Id. at 14. Avenatti
said the agreement could be capped at $25 million, but would have to
11Wilson testified that he proposed this range because he “was worried that
if I gave [Avenatti] the impression that Nike wouldn’t pay . . . he would
have . . . immediately gone to the press and started executing on his
threat. . . . [S]ince he repeatedly said he didn’t think that the payment on
the second component could be less than in the single-digit millions, I
picked the first double-digit millions . . . and said . . . maybe it could be
that.” Trial Tr. 293.
13
guarantee a minimum total payment of $15 million. 12 In response to
Wilson’s inquiry as to the intended scope of the internal investigation,
Avenatti stated that it was “payments made to players in order to
route them to various colleges, or shoe contracts, prior to them being
eligible to receive any such payments.” Id. As to billing rates and
costs, Avenatti proposed blended hourly rates of $950 for attorneys
and $450 for paralegals and reimbursement of all out-of-pocket
expenses.
When Wilson observed that he had never received a $12 million
retainer from Nike or done $10 million of work on an investigation
for the company, Avenatti was dismissive, vulgarly suggesting he
was in a stronger bargaining position with respect to Nike than
Wilson had ever been: “Have you ever held the balls of the client in
your hand where you can take 5, 6 billion dollars in market cap off of
‘em?” Id. at 23. Avenatti stated that, when compared to the damage
he could cause Nike, his $25 million demand was not “a lot of money
in the grand scheme of things.” Id. at 24.
Avenatti assured Wilson that if Nike acceded to his retainer
demand, Avenatti would maintain strict confidentiality and hold no
press conferences unless “directed to do so by Nike” because, at that
point, “Nike’s our client.” Id. at 14. He emphasized further that it
would be “up to the client [i.e., Nike] as to whether they want to self-
12In short, Nike would be obligated to pay Avenatti $12 million as soon as
a retainer agreement was signed; deem that amount earned when paid, i.e.,
without any work having been done; and guarantee a total minimum
payment of $15 million regardless of the amount of work ultimately
performed.
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disclose” the results of any investigation, or whether “they wanna do
it or anything else, just like any other client.” Id. at 17-18.
After hearing Avenatti out, Wilson stated that the first demand,
“settlement of Mr. Franklin’s civil claims for 1.5 million dollars”
would not “be the stumbling block here.” Id. at 18. As to the second
demand, however, Wilson asked if there were “a way to avoid your
press conference without hiring you and [Geragos] to do an internal
investigation?” Id. Again, Avenatti was dismissive: “I’m not gonna
answer that question.” Id. When Wilson explained that he was asking
if everything could be done under a settlement agreement without
Nike retaining Avenatti and Geragos to conduct an internal
investigation, Avenatti rejected the idea of Nike making any greater
payment to Franklin: “I don’t think that it makes any sense for Nike
to be paying, um, an exorbitant sum of money to Mr. Franklin, in light
of his role in this.” Id. at 20.
Later in the meeting, Avenatti stated that if Nike “wants to have
one confidential settlement agreement—and we’re done, they can
buy that for 22 and a half million dollars,” id. at 24, a number he would
later characterize as “magical,” id. at 28. Assuring Nike that it could
structure such a payment to ensure that it was “[f]ully confidential,”
Avenatti promised his own “assistance . . . as it relates to Mr.
Franklin.” Id. at 25. Avenatti then confirmed Wilson’s understanding
that Nike could now consider “two scenarios”: “There’s the 1.5, plus
the internal investigation and the parameters you [i.e., Avenatti]
described or 22[.5].” Id. at 28.
Avenatti proceeded to rework the original draft settlement
agreement, giving Wilson a copy that, instead of providing for Nike
15
to transfer $1.5 million “to an account designated by Franklin’s
counsel,” provided for the insertion of a yet-to-be-specified amount
for such transfer. Gov’t Ex. 205 ¶ 1.1.
Warning Wilson not to underestimate how badly he could
injure Nike “if we don’t reach a resolution,” Avenatti stated that once
he held a press conference, “this will snowball,” with “parents, and
coaches, and friends, and all kinds of people” contacting him,
and every time we get more information, that’s gonna be
The Washington Post, The New York Times, ESPN, a
press conference—and the company will die, not die, but
they’re going to incur cut after cut after cut after cut, and
that’s what’s gonna happen. As soon as this thing
becomes public. So, it is in the company’s best interest to
avoid this becoming public . . . .
Gov’t Ex. 2T at 26-27.
As the meeting concluded, Avenatti stated that any agreement
had to be finalized by the next Monday (March 25, 2019) or “we’re
done.” Id. at 29.
E. Events Leading to Avenatti’s Arrest
In a telephone call later on March 21, Avenatti assured Franklin
and Auerbach that things were “going well” but made no mention of
the two options he had given Nike or of the action he intended to take
as soon as the call concluded. Trial Tr. 1569. Specifically, after
speaking with Franklin and Auerbach, Avenatti tweeted an article
about the Adidas scandal and stated, “Something tells me that we
have not reached the end of this scandal. It is likely far far broader
than imagined.” Gov’t Ex. 106. When Franklin saw the tweet, he was
16
“very concerned and puzzled” as to why Avenatti would send such
a communication if negotiations with Nike were “going well.” Trial
Tr. 1576. 13 Wilson, however, immediately recognized the tweet for
what it was: a signal from Avenatti that he could “make good on the
threats” to injure Nike if his demands were not promptly met. Id. at
350.
At approximately 11:54 a.m. on Monday, March 25, 2019, FBI
agents arrived at Franklin’s home. Franklin immediately called
Avenatti who told him, “turn your phone completely off. And don’t
talk to them. I hope Nike is not trying to f--k you.” Id. at 1579.
Avenatti then said, “I’m going to go public,” hanging up before
Franklin could respond. Id. at 1580.
Avenatti proceeded to place several calls to New York Times
reporter Rebecca Ruiz. See Gov’t Ex. 702. Shortly after noon, he
tweeted announcement of a press conference:
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
13Franklin testified that at that point he understood Avenatti to be (1) asking
Nike “to look into Carlton DeBose and Jamal James’ actions”;
(2) negotiating a “restitution settlement of a million dollars” for him; and
(3) discussing renewal of Nike’s “relationship” with Franklin,
“sponsorship” of his team, and how he and Nike “were going to go to the
authorities and report” past misconduct. Trial Tr. 1577. Avenatti had never
raised the first and third points with Nike. Also, he had never spoken to
Franklin about “holding a press conference,” demanding an “internal
investigation” of Nike, “asking Nike to hire him [i.e., Avenatti] or make any
types of payments to him,” or “making a settlement for [Franklin]
dependent on [Avenatti] being hired or paid by Nike.” Id. at 1577-78.
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criminal conduct reaches the highest levels of Nike and
involves some of the biggest names in college basketball.
Gov’t Ex. 107.
Auerbach viewed the tweet with “utter shock and horror,”
deeming it “[c]ompletely opposite” the goals Franklin had described
to Avenatti because “you don’t threaten, you don’t hold press
conferences with people you’re trying to forge a positive relationship
with.” Trial Tr. 815. Immediately, Auerbach sent Avenatti a text
message saying that the tweet was “very upsetting to say the least,”
and asking Avenatti to call him “before going public in any way.”
Gov’t Ex. 310. Franklin was also “[v]ery, very upset” by Avenatti’s
tweet “[b]ecause this is not how I wanted things handled. Never
wanted to go public or have any type of press conference at all.” Trial
Tr. 1584. Rather, he intended for the information he had provided
Avenatti “to remain confidential.” Id.At 12:39 p.m., Avenatti was arrested by FBI agents in the
vicinity of Boies Schiller’s Manhattan office.
II. Conviction and Post-Conviction Proceedings
After a three-week trial, the jury found Avenatti guilty on each
of the charged counts. The district court denied a renewed defense
motion for acquittal based on insufficient evidence, and a motion for
a new trial. See FED. R. CRIM. P. 29, 31; United States v. Avenatti
(Avenatti I), No. 19-cr-373, 2021 WL 2809919 (S.D.N.Y. July 6, 2021).
On July 8, 2021, the court sentenced Avenatti to concurrent
prison terms of 24 months on Count One, 30 months on Count Two,
and 30 months on Count Three. It also imposed concurrent
supervised release terms of one year on Count One, three years on
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Count Two, and three years on Count Three, as well as a total special
assessment of $300.
The court did not then rule on the government’s request for a
restitution award of $1 million to Nike under the MVRA. 14 Observing
that Nike’s submitted billing records had “been redacted in such a
way [as] to make it impossible to determine whether the fees sought
fall within the recoverable categories as set forth in Lagos v. United
States, 138 S. Ct. 1684 (2018),” Sent’g Tr. 46, the district court
“deferred” its “determination as to restitution” until October 8, 2021,
pending further submissions by Nike and the parties, id. at 48; see July
15, 2021 Judgment 7. 15
In fact, it was not until seven months later, on February 18,
2022, that the district court entered an amended judgment of
conviction ordering Avenatti to pay Nike $259,800.50 in restitution. 16
In a detailed memorandum and order, the district court rejected
Avenatti’s argument that Nike was not a “victim” under the MVRA
14The government submitted that Nike was entitled to such an award based
on attorneys’ fees incurred “in connection with its cooperation with the
Government’s investigation and prosecution” of Avenatti. United States v.
Avenatti (Avenatti II), No. 19-cr-373, 2022 WL 452385, at *2 (S.D.N.Y. Feb. 14,
2022) (internal quotation marks omitted); see 18 U.S.C. § 3663A(b)(4). Nike
claimed “at least $1,705,116.45” in such fees, but initially sought restitution
“only for $1 million,” Avenatti II, 2022 WL 452385, at *3 n.2 (internal
quotation marks omitted), subsequently reduced to $856,162, see id. at *4.
15In Lagos, the Supreme Court construed the MVRA to allow restitution for
expenses incurred by victims of specified crimes in assisting “government
investigations and criminal proceedings,” but not private investigations.
138 S. Ct. at 1690 (emphasis added) (construing 18 U.S.C. § 3663A(b)(4)).
16 See infra at 67-69 (discussing reason for delay).
19
and, therefore, not entitled to any restitution award. See United States
v. Avenatti (Avenatti II), No. 19-cr-373, 2022 WL 452385, at *8 (S.D.N.Y.
Feb. 14, 2022). Nevertheless, the district court concluded that only
some of Nike’s legal fees were recoverable under 18 U.S.C.
§ 3663A(b)(4), thus awarding the company approximately one-third
of what it had sought in its supplemental filing. Nike does not appeal
this decision. Only Avenatti appeals from the amended judgment.
DISCUSSION
On this appeal, Avenatti challenges the district court’s
(1) denial of his Rule 29 motion for acquittal based on insufficient
evidence as to all three counts of conviction, (2) refusal to give his
proposed honest-services fraud instruction as to an attorney’s duties
to a client under California law, and (3) award of restitution to Nike.
After careful review, we conclude that these challenges are meritless.
I. Sufficiency of the Evidence
Avenatti argues that the trial evidence was insufficient to prove
(1) the wrongfulness element of his extortion crimes, and (2) the mens
rea and bribery elements of honest-services fraud. We review these
preserved sufficiency challenges de novo, mindful that Avenatti faces
a heavy burden because, as the Supreme Court has instructed and this
court has repeatedly acknowledged, we must sustain the jury’s
verdict if, crediting every inference that could have been drawn in the
government’s favor and viewing the evidence in the light most
favorable to the prosecution, “any rational trier of fact could have
found the essential elements of the crime beyond a reasonable doubt.”
Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original);
accord United States v. Raniere, 55 F.4th at 364. In applying this
20
standard, we “must analyze the evidence in conjunction, not in
isolation, and apply the sufficiency test to the totality of the
government’s case and not to each element, as each fact may gain
color from others.” United States v. Raniere, 55 F.4th at 364 (internal
quotation marks omitted). Further, we must respect that “the task of
choosing among competing, permissible inferences is for the jury, not
for the reviewing court.” Id. (internal quotation marks omitted).
Following these principles here, we conclude that the trial
evidence was sufficient to support Avenatti’s conviction on each
count of conviction.
A. The Extortion Crimes
1. The “Wrongfulness” Element
Avenatti’s convictions for transmission of interstate
communications with intent to extort, see 18 U.S.C. § 875, and
attempted extortion, see id. § 1951, required proof that he wrongfully
threatened to harm Nike. This wrongfulness element is explicit in the
text of § 1951(b)(2). See id. (“The term ‘extortion’ means the obtaining
of property from another, with his consent, induced by wrongful use
of . . . fear . . . .” (emphasis added)). This court has construed § 875(d)
also to require proof of wrongfulness. See United States v. Jackson
(Jackson I), 180 F.3d 55, 70 (2d Cir. 1999) (holding that § 875(d)
incorporates “traditional concept of extortion, which includes an
element of wrongfulness”). Because Jackson I and its successor case,
United States v. Jackson (Jackson II), 196 F.3d 383 (2d Cir. 1999), provide
useful guidance as to the wrongfulness element of extortion, we
discuss these cases at the outset before turning to Avenatti’s particular
sufficiency challenge.
21
a. Jackson I
In Jackson I, the defendant claimed to be the unacknowledged
child of an entertainment celebrity. When she threatened to sell her
paternity story to a tabloid journal unless the celebrity paid her $40
million, the defendant was charged with, and ultimately convicted of,
extortion in violation of § 875(d). This court reversed, identifying
charging error in the district court’s failure to instruct the jury as to
wrongfulness. We explained that “a threat to cause economic loss is
not inherently wrongful”; rather, “it becomes wrongful only when it
is used to obtain property to which the threatener is not entitled.”
Jackson I, 180 F.3d at 70. Thus, “the objective of the party employing
fear of economic loss or damage to reputation will have a bearing on
the lawfulness of its use, and . . . it is material whether the defendant
had a claim of right to the money demanded.” Id. Put another way,
when a party threatens harm to demand property to which he has no
claim of right, the threat is extortionate.
But, as Jackson I went on to note, even when a party demands
property to which he has a claim of right, the threat used to support
the demand can be extortionate if the threat itself lacks a nexus to the
claim of right. See id. (holding “threat to reputation that has no nexus
to a claim of right” to be “inherently wrongful”). To illustrate, Jackson
I considered two hypotheticals: (1) a consumer’s demand for
compensation for injuries caused by a defective product, and (2) a
club’s demand for members to pay outstanding dues. See id. at 70-71.
In both scenarios, the demands bear the requisite nexus to claims of
right, the first in tort, the second in contract. Thus, when the demands
are supported by threats that also bear a nexus to the claims of right—
22
e.g., the injured purchaser’s threat to lodge a complaint with a
consumer protection bureau or the club’s threat to publish a list of
members who owe dues—there is no wrongfulness and, therefore, no
extortion. See id. at 71. But if these same demands are supported by
threats lacking such a nexus—e.g., threats to disclose sexual
indiscretions by the manufacturer’s president or the delinquent club
member—then, even though the demands relate to a claim of right,
the threats are wrongful and extortionate.
In sum, Jackson I instructs that “where a threat of harm to a
person’s reputation seeks money or property to which the threatener
does not have, and cannot reasonably believe she has, a claim of right,
or where the threat has no nexus to a plausible claim of right, the
threat is inherently wrongful.” Id. (emphasis added). As this quoted
language shows, Avenatti is mistaken in reading Jackson I to require
only “a nexus between the threat and the claim, not the demand and
the claim” to avoid conviction for extortion. Appellant Br. 44
(emphases in original). The wrongfulness element is satisfied if either
the demand or the threat supporting that demand lacks a nexus to a
claim of right.
b. Jackson II
The day after this court announced its decision in Jackson I, the
Supreme Court ruled that “the omission of an element [from a jury
charge] is subject to harmless-error analysis.” Neder v. United States,
527 U.S. 1, 15 (1999). Accordingly, we agreed to rehear Jackson I to
determine whether the district court’s failure to charge the
wrongfulness element of extortion was harmless. See Jackson II, 196
F.3d at 386-87.
23
In concluding that the omission was harmless, Jackson II
reiterated that a threat to harm reputation if a demanded payment is
not made is wrongful “only if the defendant has no plausible claim of
right to the money demanded or if there is no nexus between the
threat and the defendant’s claim.” Id. at 387 (emphasis added).
Nevertheless, we held the failure to give a wrongfulness instruction
in that case harmless because the evidence plainly demonstrated that
neither the money demanded nor the threat supporting that demand
related to a claim of right.
Focusing first on the demand, Jackson II concluded as a matter
of law that the defendant’s monetary demand did not relate to a
plausible claim of right to child support because it was “utter[ly]
implausib[le] that a court would order a child support payment in a
sum even remotely approaching the many millions of dollars
demanded.” Id. at 388. This clarified that a party with a plausible
claim of right to some payment may nevertheless commit extortion
when, by threat of reputational harm, he demands a payment far in
excess of any amount that the claim will plausibly support. 17
As to threat, Jackson II observed that, even if the defendant had
a plausible claim of filial right, she could not demonstrate the
requisite nexus between that right and her threat because “the
commencement of a paternity suit was not the right Jackson sought
to sell. Rather, she demanded money in exchange for not giving her
17 Jackson II also concluded as a matter of law that defendant had no
plausible inheritance right claim because that would require the celebrity
father to be deceased when he was, in fact, very much alive. See 196 F.3d at
387.
24
story to The Globe, though the publication of her story neither would
establish paternity nor was a prerequisite to a paternity suit.” Id. In
these circumstances, this court concluded as a matter of law that the
defendant’s demand was “inherently wrongful” because the threat to
disclose the defendant’s paternity to a tabloid journal had no potential
on its own to secure any payment to which she had a claim of right
from the celebrity father. Rather, the “threat to disclose was the only
leverage [the defendant] had to extract money from him”; once she
actually acted on that threat by making the disclosure, the defendant
“would lose that leverage.” Id. at 388-89 (quoting Jackson I, 180 F.3d
at 71).
The principles enunciated in Jackson I and Jackson II thus signal
that, in the context of a reputational threat, the wrongfulness element
of extortion requires consideration of both the demand made and the
threat used to support it. If each bears a nexus to a claim of right, the
threat is not wrongful as required to constitute extortion. But if there
is no nexus between a claim of right and either the thing demanded
or the reputational threat used to support that demand, then the
threat is wrongful and extortionate. See United States v. Farooq, 58
F.4th 687, 693 (2d Cir. 2023) (so applying Jackson I test).
In applying these principles here, we note that in this case,
unlike in Jackson, the jury was properly charged as to the
wrongfulness element of extortion. Thus, we need not decide, as in
Jackson II, whether the evidence compelled a finding of wrongfulness
as a matter of law. Rather, on Avenatti’s sufficiency challenge, we
need decide only whether any rational jury could find wrongfulness
on the evidence presented viewed in the light most favorable to the
25
prosecution. Compare Jackson v. Virginia, 443 U.S. at 319 (discussing
sufficiency standard), with Neder v. United States, 527 U.S. at 15(discussing harmless-error standard).
2. The Evidence Was Sufficient To Prove
Wrongfulness
Avenatti’s sufficiency challenge to the extortion counts of
conviction fails because the evidence, viewed in the light most
favorable to the prosecution, permitted a reasonable jury to conclude
that he had no claim of right to a personal payment from Nike, let
alone to a $15-25 million payment as distinct from a $1.5 million
payment to his client Franklin. Further, to the extent Avenatti sought
to secure his $15-25 million demand through an agreement whereby
Nike would retain Avenatti and Geragos to conduct an internal
investigation, there is no evidence that the men had any plausible
claim of right to be hired by the company for that purpose. 18 In the
absence of a plausible personal claim of right, there is nothing to
which Avenatti’s demand or threat can have a nexus.
Avenatti advances several arguments in urging a contrary
conclusion. None persuades.
a. Avenatti’s Retainer Demand Bore
No Nexus to Franklin’s Claim of
Right
Avenatti argues that his retainer demand was not extortionate
because it bore the requisite nexus to his client Franklin’s claim of
18While Avenatti’s retainer demand pertained to himself and Geragos, for
ease of reference, we hereafter reference it only as it pertains to Avenatti.
26
right against Nike in that Avenatti’s retention “aligned with
Franklin’s objectives.” Appellant Br. 34. Even if we assume arguendo
that Franklin had a claim of right (whether in tort or contract),
Avenatti’s argument would fail because it required the jury to find
that he (1) reasonably believed that his retainer demand served
Franklin’s claims, and (2) intended to pursue a bona fide internal
investigation of Nike. Because the evidence does not compel either
conclusion, we must assume that the jury did not so find.
i. There Was No Reasonable
Belief that the Retainer
Demand Served Franklin’s
Goals
To begin, the evidence sufficed to permit a reasonable jury to
conclude—as Nike’s own outside counsel had—that Avenatti, in
soliciting a multi-million-dollar retainer agreement with Nike, was
operating in conflict with, rather than in pursuit of, Franklin’s
interests. See supra at 10 n.6. 19 In urging otherwise, Avenatti
suggested at oral argument that his representation of Nike would not
have commenced until the conclusion of his representation of
Franklin. See Oral Arg. Tr. 14. But that assertion is in tension with his
briefed contention that he reasonably believed that retention by Nike
19Having recounted the trial evidence in some detail in the Background
section of this opinion, and there provided citations to the record, we here
simply cite to that Background section where possible when quoting or
discussing evidence pertinent to Avenatti’s arguments.
27
would allow him to continue to serve Franklin’s goals. See Appellant
Br. 34-35.
In any event, because the demanded internal investigation
risked exposing misconduct by Franklin as well as Nike, Avenatti
would necessarily be laboring under a continuing conflict of
interest. 20 This is evident from the fact that Avenatti assured Nike
that it alone would decide what to do with the results of his internal
investigation, see supra at 16, but secured no such protection for
Franklin, who was never told of the retainer demand. On this record,
the jury was not compelled to find that Avenatti reasonably believed
that his retainer demand aligned with Franklin’s objectives. Instead,
a reasonable jury could have concluded that the demanded retainer
would do so little to further Franklin’s goals that Avenatti could not
reasonably have thought that his retainer demand served that
purpose. That conclusion is evident when we consider Franklin’s
goals as revealed to Avenatti.
We begin with one goal that Avenatti did pursue: Franklin’s
wish to be compensated for injuries to himself and Cal Supreme. Trial
evidence showed that Nike’s sponsorship agreement with Cal
20 See CAL. R. PROF. CONDUCT 1.7(b) (West 2023) (“A lawyer shall not,
without informed written consent . . . represent a client if there is a
significant risk the lawyer’s representation of the client will be materially
limited by the lawyer’s responsibilities to or relationships with another
client . . . or by the lawyer’s own interests.”); see also CAL. BUS. & PROF. CODE
§ 6068(e)(1) (West 2023) (requiring attorney “[t]o maintain inviolate the
confidence, and at every peril to himself or herself to preserve the secrets,
of his or her client”); CAL. R. PROF. CONDUCT 1.6(a) (prohibiting lawyer from
revealing information protected by Business and Professions Code
§ 6068(e)(1)).
28
Supreme had an annual value of $192,000, approximately $30,000-
35,000 of which Franklin kept as salary. Evidence also showed that
Nike was willing to pay Franklin $1.5 million, see supra at 16—an
amount seemingly satisfactory to him, see Trial Tr. 1577.
Unbeknownst to Franklin, however, Avenatti refused to settle
Franklin’s claims for $1.5 million unless Nike also guaranteed
Avenatti a multi-million-dollar retainer. Indeed, he repeatedly
threatened to walk away from negotiations unless he was guaranteed
such a retainer. See supra at 13, 16-17. From the totality of this
evidence, a reasonable jury could have concluded that Avenatti’s
retainer demand was more of an obstacle to, rather than a means for,
achieving Franklin’s compensation goal and, thus, that Avenatti did
not demand a retainer to serve Franklin’s goals, but only to secure a
multi-million-dollar payoff for himself.
A second Franklin goal was to have Nike employees James and
DeBose fired. Although Avenatti specifically told Franklin he would
pursue this goal, see supra at 9, the evidence shows that he never once
raised it in negotiations with Nike. Nor was the jury compelled to
conclude that Avenatti thought that he needed to conduct a multi-
million-dollar internal investigation before he could reasonably
request such firings. Evidence showed that Franklin had already
given Avenatti documentary proof of misconduct by these
employees. See Gov’t Exs. 305, 308. It also showed that in demanding
a retainer, Avenatti did not insist that Nike agree to discipline or
discharge those employees exposed as corrupt by his internal
investigation. To the contrary, he repeatedly assured Nike that, in
acceding to his retainer demand, the company would not have to do
anything with the results of his investigation. See supra at 16. Indeed,
29
the only thing the demanded retainer would require Nike to do was
to pay Avenatti $12 million, deemed earned when paid, and
guarantee him a total minimum payment of $15 million. See supra at
15. This was sufficient evidence for a reasonable jury to conclude that
Avenatti did not demand a retainer agreement in order to get James
and DeBose fired.
Franklin identified two goals as particularly important to him:
(1) maintaining a relationship with Nike, and (2) getting to coach his
team again (“the most important thing”). Supra at 6. While Avenatti
told Franklin that he thought their attainment—particularly the
second—was unlikely, he never told his client that he planned to
concede them outright, as he did when he told Nike representatives
“as a matter of fact, that Gary Franklin, his client, would never be able
to work with Nike again.” Trial Tr. 1431. Viewing this evidence in
the light most favorable to the prosecution, a reasonable jury could
conclude that Avenatti, far from believing that his retainer demand
would serve Franklin’s two most important objectives, deliberately
abandoned these goals in pursuing a multi-million-dollar payment
for himself. Indeed, the conclusion is only reinforced by evidence
showing that, in March 2019, Avenatti had a pressing personal need
for over $11 million. See supra at 7.
When considered in light of Avenatti’s failure to pursue
Franklin’s goals, his other actions also support a jury finding that he
did not reasonably believe that his retainer demand aligned with
Franklin’s goals. Specifically, what Avenatti threatened to disclose if
his demand was not met was information that Franklin considered,
and had sometimes even expressly marked, confidential. See supra at
30
6, 9, 19. For this reason alone, Avenatti fails convincingly to analogize
his threatened disclosure to the hypotheticals in Jackson I. See supra at
23-27. Indeed, Avenatti’s threatened disclosure not only breached
client confidence, but also exposed Franklin, his former players, and
their families to serious reputational—and possibly legal—harm.
Franklin testified that this was precisely why he was “not at all”
interested in making his experiences with Nike public: “I didn’t want
to, you know, hurt Nike’s reputation, didn’t want to hurt any of the
kids’ reputations or the parents. I didn’t want to hurt my reputation
or the program’s reputation.” Trial Tr. 1536-37. The evidence,
however, showed Avenatti ignoring these concerns in pursuit of his
own enrichment. Thus, when Wilson, in urging Avenatti to give Nike
more than a day to consider his demands, suggested that public
disclosure might hurt Franklin’s former players, Avenatti replied, “I
don’t give a f--k about those kids,” and stated that delay would hurt
him—not his client Franklin—in bargaining with Nike. Supra at 12 &
n.9. This evidence provided a solid basis for the prosecution to
argue—and for the jury to conclude—that Avenatti’s threat of public
disclosure showed that he did not reasonably believe that his retainer
demand would serve Franklin’s interests but, rather, recognized that
it served only his own. See, e.g., Trial Tr. 2139-40 (arguing, “Avenatti
didn’t care that a press conference would mean accusing his own
client of being involved in potentially criminal activity. . . . He cared
about getting paid.”); id. at 2276 (arguing, “Gary Franklin told you
why he does what he does. . . . The kids. . . . Michael Avenatti did not
care. . . . It’s OK for him not to personally care. It is not OK for him to
ignore the fact that his client cares. And he knew it.”).
31
In sum, the evidence did not compel a jury finding that
Avenatti demanded a $15-25 million retainer from Nike because he
reasonably believed that it served Franklin’s interests. Rather, the
evidence sufficed to support a jury finding that the demand was
pursued only to enrich Avenatti and, thus, that it lacked the necessary
nexus to Franklin’s own claim of right to preclude a finding of
wrongfulness.
ii. There Was No Intent To
Conduct a Bona Fide
Investigation
Avenatti’s nexus argument also assumes his intent to conduct
a bona fide internal investigation of Nike, one that he fairly valued at
$15-25 million. The evidence not only did not compel that conclusion,
but also convincingly supported a contrary one.
Whether a payment demand made under threat of harm is
extortionate depends not only on whether a party has a claim of right
to some amount of money, but also on whether he has a plausible
claim of right to the amount of money demanded. A plausibility
standard does not contemplate exacting scrutiny of a claim’s value.
Nevertheless, where it is “utter[ly] implausib[le]” that a claim of right
could yield an award in the amount demanded, the nexus necessary
to preclude a jury finding of extortion is lacking. Jackson II, 196 F.3d
at 388 (assuming defendant’s claim of right to filial support, holding
it “utter[ly] implausib[le]” that court would order support in amount
remotely approaching $40 million demand). Avenatti claims that he
reasonably demanded a $15-25 million retainer to conduct an internal
investigation of Nike based on the $10-20 million amount Nike’s
32
outside counsel “would have charged” for such work. Reply Br. 17.
The jury, however, was not compelled to accept this argument,
having heard Wilson state that he had never received a $10 million
retainer from Nike, and having heard Avenatti repeatedly press for a
concession as to the possibility of an internal investigation costing in
excess of $10 million. See supra at 14-15. We need not pursue the point
further, however, because when the retainer amount is considered
together with other evidence favorable to the prosecution, we must
conclude that a reasonable jury could have found that Avenatti
demanded this money not as fair compensation for a bona fide internal
investigation of Nike, but as a payoff for his own silence. 21
Specifically, evidence shows that in demanding a $15-25
million retainer, Avenatti provided Nike with only the briefest
description of its scope, and with nothing about the necessary work
anticipated to conduct a proper investigation, the number of persons
or amount of time likely to be required, or how the work would be
tracked and reported. See supra at 15. Instead, Avenatti’s focus in
demanding the retainer was on how much and how quickly he would
be paid. From the start, he made clear that a retainer amount of less
21 Although the amount of Avenatti’s demand was not determinative of
extortion, see Trial Tr. 1288-89 (government’s argument); id. at 2330 (district
court’s instruction), it was some evidence of his intent to the extent the
demand was untethered to any claim of right, see id. at 1289 (arguing
“amount is evidence of his intent because it was not tethered to anything”);
id. at 1292 (observing, in overruling defense objection, that if person says he
“want[s] $25 million and there is no discussion of how many lawyers are
going to work on it, what their billing rates are going [to be], how many
interviews . . . then the government is entitled to argue this was a number
pulled out of the air”).
33
than $10 million would not be sufficient for him to abandon his public
disclosure threat. As he told Nike in dismissing the possibility of a
retainer in a lesser amount, “it’s worth more in exposure to me to just
blow the lid on this thing.” Supra at 12. In short, a below-$10 million
retainer was not inadequate because of the time and effort anticipated
to conduct a bona fide internal investigation. Rather, it was inadequate
value for what Avenatti was really selling: the threatened press
conference. 22
The jury heard this for itself on the March 21, 2019 recording
where Avenatti describes the particularly vulnerable position in
which he held Nike by virtue of his ability to hold a press conference
that would “take 5, 6 billion dollars in market cap off” the company.
Supra at 14. Avenatti tells Wilson that compared to that damage, his
$15-25 million retainer demand is not “a lot of money in the grand
scheme of things.” Id. Wilson, in turn, shows that he perfectly
understands what Avenatti is selling and questions only the price:
“I’ve seen some press conferences in my day, I’ve seen some of your
press conferences, I’m not sure I’ve seen a 25 million dollar press
conference.” Gov’t Ex. 2T at 24. Avenatti does not disabuse Wilson
of his understanding of the product being sold. He clarifies only the
number: “This is not gonna be a single press conference.” Id. Matters
will “snowball,” and as Avenatti receives more information, he will
hold more press conferences with the net result that Nike will “incur
cut after cut after cut after cut.” Supra at 16. For this reason, Avenatti
22Avenatti was also selling Nike his influence with Franklin, a point we
pursue infra at 41-52 in considering Avenatti’s challenge to his conviction
for honest-services fraud.
34
states, “it is in the company’s best interest to avoid this becoming
public,” something it can do only by agreeing to his retainer demand.
Id. 23
The terms of that demand further support the conclusion that
Avenatti did not intend to conduct a bona fide investigation. Nike
would be obligated to pay Avenatti $12 million upon signing the
retainer agreement and to deem that amount earned when paid, i.e.,
earned before Avenatti conducted any investigation. Further, Nike
would have to guarantee Avenatti a total minimum payment of $15
million, no matter how little work he did on an investigation. When
these terms are considered together with the quoted evidence of
negotiations, a reasonable jury could conclude that Avenatti did not
demand a $15-25 million retainer because he intended to conduct a
bona fide internal investigation of Nike, much less do so in furtherance
of his client Franklin’s objectives. Rather, the jury could conclude that
the demanded retainer agreement was merely a vehicle for extorting
millions of dollars from Nike not to hold a press conference that
would not only embarrass the company but also cause “billions” of
dollars’ damage to its market value.
In short, sufficient evidence permitted a reasonable jury to find
that there was no nexus between a claim of right by Franklin and
23Insofar as Avenatti tells Wilson that Nike is “gonna have to self-report,”
Gov’t Ex. 2T at 27, the jury was not compelled to conclude therefrom that
Avenatti intended to conduct a bona fide investigation for the demanded
multi-million-dollar retainer. Rather, the evidence permitted a reasonable
jury to conclude that the retainer was simply the vehicle that Avenatti
offered Nike to buy his silence on a threat to injure the company’s market
position.
35
Avenatti’s multi-million-dollar retainer demand and, thus, to find the
wrongfulness necessary to extortion.
b. Avenatti’s $22.5 Million Demand
Bore No Nexus to Franklin’s Claim
of Right
Avenatti argues that, even if his retainer demand lacks the
requisite nexus to Franklin’s claim of right, his March 21, 2019
alternative proposal for an outright settlement of $22.5 million
satisfies that requirement. This argument also fails to persuade.
First, Avenatti’s wire communication of an extortionate threat
was completed on March 20, 2019, before Avenatti made this
alternative offer on March 21. Thus, that later offer is irrelevant to the
sufficiency of proof as to Count One.
Second, even as to Avenatti’s attempted Hobbs Act extortion,
the subject of Count Two, the evidence shows that Avenatti did not
withdraw his extortionate $15-25 million retainer demand on March
21. He only offered an alternative to it. Thus, a reasonable jury could
have found that Avenatti was still trying to extort a multi-million-
dollar payment from Nike for himself.
Third, Avenatti’s argument assumes that the demanded $22.5
million (or at least the bulk of it) was destined for Franklin. The
evidence did not compel the jury to reach that conclusion; rather it
could reasonably have concluded that the money was destined
largely for Avenatti. The $22.5 million number that Avenatti
described as “magical,” supra at 15, is the sum of $1.5 million (the
amount long destined for Franklin) plus $21 million (slightly above
the midpoint of Avenatti’s $15-25 million retainer demand). From
36
this, the jury could reasonably have inferred that the $22.5 million
demand was just a different way of packaging the retainer demand to
achieve the same relative payoffs for Avenatti and Franklin, albeit
somewhat more generously and quickly for Avenatti.
In urging otherwise, Avenatti argues that because Franklin
would have had to sign a final settlement agreement, he would
necessarily have learned the $22.5 million number. But the jury also
was not compelled to reach that conclusion. The revised agreement
that Avenatti prepared on March 21, 2019, left the settlement number
blank. Moreover, it provided for any payments to go to “an account
designated by Franklin’s counsel.” Id. Thus, a reasonable jury could
have concluded that, just as Avenatti had used a retainer agreement
as the vehicle for him to receive millions of dollars from Nike without
Franklin knowing it, Avenatti would have arranged to receive the
bulk of a $22.5 million settlement also without Franklin knowing,
much less receiving, it. For all these reasons, the jury was not
compelled to find a nexus between the alternative $22.5 million
demand and Franklin’s claim of right so as to preclude a finding of
wrongfulness.
c. Avenatti’s Demands Bore No Nexus
to a Claim of Right to Attorneys’
Fees
Avenatti argues that even if he was “acting out of self-interest
and had no intention of conducting a real investigation—so that his
demand was, in essence, a request for his own fees—that did not
make it wrongful for purposes of the federal criminal extortion
statutes.” Appellant Br. 39. In thus suggesting that he had a personal
37
claim of right to fees distinct from any claim of Franklin’s, Avenatti
submits that California law permits an attorney simultaneously to
negotiate settlement of a client’s claims and compensation of his own
fees, despite the conflict of interest between attorney and client in
those circumstances. See Ramirez v. Sturdevant, 26 Cal. Rptr. 2d 554,
564-66 (Ct. App. 1994). The problem with this argument is that the
evidence did not compel a jury to find that Avenatti’s self-interested
pursuit of a retainer agreement with Nike was, in fact, a request for
his own fees.
While California law sometimes permits an attorney
simultaneously to negotiate a settlement of his client’s claims and his
own fees, the fees for which he may thus negotiate are those incurred
in representing that client. See id. Here, no record evidence suggests
that Avenatti, in demanding a retainer agreement with Nike, was
asking the company to cover fees earned representing Franklin in his
dispute with Nike. To the contrary, Avenatti told Nike that by
entering into the demanded retainer, the company would become
Avenatti’s “client,” implying—at best—that the retainer would cover
Nike’s future fees, not Franklin’s incurred ones. Supra at 14. Further,
whatever claim of right Avenatti might have had to fees already
earned representing Franklin in negotiations with Nike, a reasonable
jury could conclude that they were not the subject of the demanded
retainer agreement because it was “utter[ly] implausib[le]” that such
fees had reached an amount “even remotely approaching the many
38
millions of dollars demanded” by Avenatti. Jackson II, 196 F.3d at
388. 24
Insofar as Avenatti suggests the demanded retainer was
intended to compensate for anticipated future “fees” representing
Nike, he points to no law or case in which California—or any other
state—excuses the conflict of interest inherent in an attorney
negotiating a settlement on behalf of one client while simultaneously
soliciting future legal business from the client’s adversary. Indeed,
when as here the solicited future business is an investigation posing
risks for the initial client (Franklin), California law specifically
prohibits the solicited representation absent the initial client’s
informed written consent. See supra at 28 n.20 (quoting relevant
sections of California law). 25 No matter. Even if it were ethically
permissible for Avenatti to negotiate a settlement for his client
24 The record is devoid of evidence as to Avenatti’s billing rates or the
precise time he spent on Franklin’s behalf. Nevertheless, it shows that
Avenatti first spoke with Geragos about Franklin’s concerns on March 1,
2019, and that Avenatti was arrested on the morning of March 25, 2019.
Even assuming what is highly unlikely—that the two men worked 24 hours
a day for those 25 days (i.e., 25 x 24 x 2 = 1,200 hours), each billed $1,000 per
hour (i.e., 1,200 x $1,000 x 2 = $2,400,000), and had $250,000 each in expenses
(i.e., $250,000 x 2 = $500,000)—that totals $2,900,000, nowhere near the $12
million for which the demanded retainer would have required immediate
payment (deemed earned when paid) or the guaranteed total $15 million
minimum payment. Nor is there evidence of any other rational fee
arrangement—e.g., contingency—that would support such an
extraordinary payment.
25Given Avenatti’s failure ever to mention his retainer demand to Franklin,
and his plan to document the retainer separately from Franklin’s settlement
and release, a reasonable jury could conclude that Avenatti did not intend
to secure Franklin’s informed consent.
39
Franklin against Nike while at the same time soliciting his own
retainer by Nike, as we have already stated, that does not support a
“claim of right” by Avenatti to fees not yet earned or to payments
under a retainer agreement not yet finalized. See supra at 27-28.
Moreover, the evidence did not compel a finding that
Avenatti’s demand for either a $15-25 million retainer or a $22.5
million payment was aimed at securing compensation for any legal
fees earned representing Nike. For reasons already discussed, the
evidence supported a jury finding that Avenatti never intended to
conduct a bona fide internal investigation of Nike or to perform any
other legal work for the company. See supra at 32-35. Rather, the
evidence admitted a finding that what Avenatti was selling at the
price of a $15-25 million retainer (or a $22.5 million payment) was his
forbearance on a threat to publicize information so injurious to Nike’s
reputation that he predicted it would take “billion[s]” of dollars off
the company’s market value. See supra at 27-32. This threat bore no
nexus to a personal claim of right by Avenatti, and certainly not to a
claim of right to attorneys’ fees. Indeed, once Avenatti acted on the
threat, he would lose “the only leverage [he] had to extract” the
millions of dollars from Nike that he demanded for himself. Jackson
II, 196 F.3d at 388-89 (internal quotation marks omitted).
Thus, neither Avenatti’s retainer demand nor the threat of
harm with which he supported it bore a nexus to any personal claim
of right to legal fees so as to preclude a jury finding of wrongfulness.
To summarize, we conclude that Avenatti’s sufficiency
challenge to the two extortion counts of conviction fails on the merits.
The evidence, viewed in its totality and in the light most favorable to
40
the prosecution, was sufficient to permit a reasonable jury to find that
neither Avenatti’s $15-25 million retainer demand nor his $22.5
million alternative bore the requisite nexus to any claim of right that
Franklin may have had. Moreover, the evidence was sufficient to
permit a reasonable jury to find that neither those demands nor
Avenatti’s injurious-publicity threat bore the requisite nexus to any
personal claim of right to seek attorneys’ fees. Accordingly, the
evidence was sufficient to support the finding of wrongfulness
necessary to extortion.
B. Honest-Services Fraud
Avenatti stands convicted of transmitting interstate wire
communications in a scheme to defraud Franklin of his “intangible
right” to Avenatti’s “honest services” as his attorney in negotiations
with Nike. 18 U.S.C. § 1346 (stating that term “scheme or artifice to
defraud,” as used inter alia in wire fraud statute, see id. § 1343,
“includes a scheme or artifice to deprive another of the intangible
right of honest services”).
Honest-services fraud differs from traditional fraud. In
traditional fraud, the victim’s loss is the defendant’s gain. See Skilling
v. United States, 561 U.S. 358, 400 (2010) (stating that in traditional
fraud, “victim’s loss of money or property supplie[s] the defendant’s
gain, with one the mirror image of the other”). By contrast, in honest-
services fraud, while “the offender profit[s], the betrayed party
suffer[s] no deprivation of money or property; instead, a third party,
who ha[s] not been deceived, provide[s] the enrichment.” Id.In Skilling, the Supreme Court rejected a facial vagueness
challenge to § 1346 honest-services fraud. See id. at 402-05. In doing
41
so, however, the Court clarified that honest-services fraud does not
reach all “undisclosed self-dealing,” i.e., action taken to further one’s
“own undisclosed financial interests while purporting to act in the
interests of those to whom he owes a fiduciary duty.” Id. at 409
(internal quotation marks omitted). Rather, to be guilty of honest-
services fraud, a defendant acting “in violation of a fiduciary duty”
must have engaged in a “bribery or kickback scheme[].” Id. at 407. 26
“[B]ribery is generally understood to mean the corrupt payment or
offering of something of value to a person in a position of trust with
the intent to influence his judgment or actions.” United States v. Ng
Lap Seng, 934 F.3d 110, 131 (2d Cir. 2019) (citing Perrin v. United States,
444 U.S. 37, 43-46 (1979) (tracing ordinary meaning of bribery to
common-law origins)); see also United States v. Quinn, 359 F.3d 666, 674
26In reaching this conclusion, the Court traced the history of honest-services
fraud before McNally v. United States, 483 U.S. 350 (1987) (rejecting concept
of honest-services fraud and holding mail fraud statute limited to
“protection of property rights,” id. at 360), the case that triggered
Congress’s enactment of § 1346. The Court construed the definite article in
the phrase “the intangible right to honest services,” 18 U.S.C. § 1346(emphasis added), to signal Congress’s intent to cover the “core” of pre-
McNally honest-services caselaw, which had, “[i]n the main . . . involved
fraudulent schemes to deprive another of honest services through bribes or
kickbacks supplied by a third party who had not been deceived.” Skilling
v. United States, 561 U.S. at 404. The Court concluded that persons engaged
in such schemes had sufficient notice of the unlawfulness of their conduct
to avoid constitutional vagueness concerns. See id. at 412. Some years
earlier, this court, sitting en banc, had also concluded that the fiduciary
breach entailed in paying or soliciting bribes fell “squarely within the
meaning of ‘scheme or artifice to deprive another of the intangible right of
honest services’ as distilled from the pre-McNally private sector cases.”
United States v. Rybicki, 354 F.3d 124, 142 (2d Cir. 2003) (en banc) (rejecting
vagueness challenge based on lack of notice).
42
(4th Cir. 2004) (affirming solicitation-of-bribery conviction because,
although no bribe was paid, defendants “sought . . . a thing of value
with the corrupt intent of being influenced in the performance of an
official act”). “It is this quid pro quo element,” i.e., the “‘specific intent
corruptly to give [or in the case of solicitation, receive] something of
value in exchange’ for action or decision that distinguishes bribery
from the related crime of illegal gratuity.” United States v. Ng Lap
Seng, 934 F.3d at 132 (brackets omitted) (quoting United States v. Sun-
Diamond Growers of Cal., 526 U.S. 398, 404-05 (1999) (emphasis in
original)). Thus, following Skilling, this court has held that for
conduct to constitute honest-services fraud, it “must involve a quid
pro quo, i.e., an ‘intent to give or receive something of value in
exchange for an . . . act.’” United States v. Nouri, 711 F.3d 129, 139 (2d
Cir. 2013) (ellipses in original) (quoting United States v. Bruno, 661 F.3d
733, 743-44 (2d Cir. 2011)).
Avenatti argues that the trial evidence was insufficient to prove
the quid pro quo required to satisfy the bribery element of honest-
services fraud. He also raises a sufficiency challenge to the proof of
fraudulent intent. Record evidence defeats both arguments. 27
27Ciminelli v. United States, 143 S. Ct. 1121 (2023), and Percoco v. United States,
143 S. Ct. 1130 (2023), recent Supreme Court decisions cited to us after
argument by Avenatti, do not pertain to his challenges. See Appellant’s
May 16, 2023 28(j) Letter. At issue in Ciminelli was traditional, not honest-
services, fraud. Thus, its rejection of a “right-to-control theory” of
“property” for purposes of satisfying the loss-of-property element of
traditional fraud, see 143 S. Ct. at 1127, has no bearing on Avenatti’s
sufficiency challenge to his conviction for honest-services fraud.
43
1. Quid Pro Quo
Avenatti submits that even if the multi-million-dollar retainer
he solicited from Nike satisfied the quid requirement for bribery, there
was no evidence to prove the requisite quo because he never offered
to take any action favorable to Nike in return. Instead, he offered only
inaction, specifically, forbearance on his threat of public disclosure of
Nike’s misdeeds.
In reversing an honest-services fraud conviction in Percoco, the Supreme
Court ruled that a jury instruction, derived from United States v. Margiotta,
688 F.2d 108 (2d Cir. 1982), was unconstitutionally vague in stating the
standard for determining when a private person owes a fiduciary duty to
the public. Percoco v. United States, 143 S. Ct. at 1138 (identifying error in
instruction that defendant owed duty of honest services to public if (1) “he
dominated and controlled any governmental business,” and (2) “people
working in the government actually relied on him because of a special
relationship he had with the government,” id. at 1135 (internal quotation
marks omitted)). No fiduciary duty to the public is at issue in this case, and
Avenatti does not—and cannot—argue that he lacked notice that, as an
attorney, he owed a fiduciary duty to his client. See United States v.
Chestman, 947 F.2d 551, 568 (2d Cir. 1991) (describing attorney-client
relationship as “hornbook fiduciary relation[ship]”).
Insofar as Avenatti points us to Percoco’s reiteration of Skilling’s ruling that
“undisclosed self-dealing” does not constitute honest-services fraud,
Appellant’s May 16, 2023 28(j) Letter 2 (quoting Percoco v. United States, 143
S. Ct. at 1137), the district court specifically so charged the jury and
instructed that Avenatti could be found guilty of honest-services fraud only
if the government “prove[d] beyond a reasonable doubt that [he] solicited
a bribe from Nike in the course of his representation of Mr. Franklin in
exchange for which he offered to take actions regarding the settlement of
Mr. Franklin’s claims.” Trial Tr. 2342. Thus, in text, we discuss why the
evidence was sufficient to permit a reasonable jury to conclude that
Avenatti had so acted.
44
We need not here decide whether demanding a payment in
return for forbearing on a threat to harm can ever, by itself, satisfy the
quid pro quo requirement for bribery. 28 The evidence in this case,
viewed in the light most favorable to the prosecution, shows Avenatti
offering to do more than forbear on his threat to injure Nike through
public disclosure. It shows Avenatti also offering to take action,
specifically, to use his particular influence as Franklin’s attorney to
have his client settle his potential claims against Nike for receipt of
$1.5 million, but only if Nike guaranteed a multi-million-dollar
payment to Avenatti himself. In short, the quo Avenatti offered Nike
was “‘to disregard his duty’” to Franklin “while continuing to appear
devoted to it” in advising him to accept a settlement that would enrich
Avenatti far more than Franklin. United States v. Ng Lap Seng, 934 F.3d
at 131 n.24 (quoting United States ex rel. Sollazzo v. Esperdy, 285 F.2d
341, 342 (2d Cir. 1961) (“Bribery in essence is an attempt to influence
another to disregard his duty while continuing to appear devoted to
it or to repay trust with disloyalty.”)).
In urging otherwise, Avenatti argues that a $1.5 million
payment to Franklin would have realized more for the client than the
$1 million Avenatti had promised to obtain for him. The argument
fails because a person need not suffer economic harm to have been
denied the honest services of a fiduciary. See generally United States v.
Tanner, 942 F.3d 60, 65 (2d Cir. 2019) (stating that government was not
required to prove that defendant’s acts “caused or were intended to
28 See generally Evans v. United States, 504 U.S. 255, 267 n.18 (1992)
(recognizing possibility of charging extortion and bribery based on same
conduct in some contexts and of such charges being “mutually exclusive”
in other contexts).
45
cause . . . financial harm” to company owed fiduciary duty; “it
needed to prove only that [company] lost its right to [fiduciary’s]
honest services at least in part because of [third party’s] bribes and
kickback”).
Here, the evidence showed that, at the same time Avenatti
demanded a $1.5 million payment for Franklin, he was abandoning
other objectives that he had told Franklin he would pursue, e.g.,
getting James and DeBose fired, see supra at 29-31, and, instead,
demanding a multi-million-dollar retainer for himself, see supra at 32.
Moreover—without ever telling Franklin—Avenatti conditioned
acceptance of a $1.5 million payment for his client on Avenatti’s
receipt of the demanded retainer. In this way, he not only leveraged
his client’s claim to his own advantage but also effectively held
Franklin’s acceptance of a $1.5 million settlement hostage to
Avenatti’s personal receipt of a larger payout. When Nike expressed
a willingness to pay more in settlement to Franklin if it could avoid
the demanded retainer, Avenatti rejected out of hand the possibility
of a higher payment for his client at Avenatti’s own expense.
On this record, a reasonable jury could have found that in
negotiating with Nike, Avenatti was not serving Franklin’s interests,
but rather using them to enrich himself. That, in turn, supported a
finding that, in return for Nike agreeing to Avenatti’s own payment
demand, Avenatti offered to use his influence with the unwitting
Franklin to have him accept $1.5 million in settlement of his claims.
Avenatti most clearly offered this quo at the March 21, 2019
meeting. In making an alternative demand for a one-time payment
of $22.5 million—which the jury could reasonably have concluded
46
was destined mostly for Avenatti, see supra at 36-37—he offered his
“assistance . . . as it relates to Mr. Franklin.” Supra at 15. A reasonable
jury could have found that this made explicit what had been implicit
in all Avenatti’s dealings with Nike: if Nike paid Avenatti millions of
dollars, he would advise his client to settle his claims with Nike; but
without such a payment to Avenatti, he would make sure there was
no settlement with Franklin.
Thus, at his first, March 19, 2019 meeting with Nike
representatives, Avenatti stated that to settle with Franklin, Nike is
“going to do two things”: (1) “pay a civil settlement” to Franklin for
“breach of contract, tort, or other claims,” and (2) hire Avenatti “to
conduct an internal investigation into corruption in basketball.”
Supra at 9. As Wilson testified, he understood the demands were
“[s]eparate but both mandatory.” Supra at 9 n.6 (emphasis added).
Then, on the March 20, 2019 telephone call with Wilson,
Avenatti reiterated that any settlement with Franklin depended on a
payout to Avenatti: “I mean we’re gonna get a million five for our
guy, and we’re gonna be hired to handle the internal investigation,
and if you don’t wanna do that, we’re done.” Supra at 12. Further, in
making clear that settlement was contingent on Nike agreeing to a
retainer in excess of $10 million, Avenatti warned that if Nike thought
it could cap the demanded retainer “at 3 or 5 or 7 million, . . . let’s just
be done.” Id. Avenatti made plain the consequences of being “done”:
he would hold a press conference that would not only embarrass Nike
but also take billions of dollars off the company’s market value. See
supra at 16. Implicit in this extortionate threat was an offer of
forbearance if Nike agreed to both of Avenatti’s demands. But also
47
implicit was an offer of action: if Nike agreed to Avenatti’s demands,
he would act to secure his client’s consent to settlement of his claims.
Avenatti could make this offer only because he enjoyed an attorney-
client relationship of trust with Franklin. It was this trust that he
offered to violate (the quo) in return for Nike meeting his payment
demand (the quid).
Indeed, trial evidence permitted a reasonable jury to find that
Avenatti was already laying the groundwork to deliver this quo in
return for Nike’s quid. Thus, at the same time that Avenatti was
repeatedly assuring Franklin that negotiations with Nike were going
well, see supra at 11, 16, he was concealing from his client that (1)
Avenatti was pursuing only one of Franklin’s objectives
(compensation) while abandoning all others, (2) Avenatti had
conditioned settlement of Franklin’s claims (for $1.5 million
compensation) on a multi-million-dollar retainer for himself, (3) Nike
was inclined to pay Franklin $1.5 million in settlement—and possibly
more if it could avoid Avenatti’s retainer demand, (4) Avenatti had
specifically shot down the idea of Nike paying a larger amount to
Franklin, and (5) Avenatti had proposed preparing two documents to
effect his demands—a $1.5 million settlement agreement between
Franklin and Nike (that Franklin would sign) and a $15-25 million
retainer agreement between Avenatti and Nike (that Franklin would
not sign), see supra at 9-16. On this record, a reasonable jury could
have concluded that Avenatti had thus positioned himself to
influence Franklin to accept a $1.5 million payment to settle his claims
with Nike without Franklin ever needing to know, much less
approve, Avenatti’s own multi-million-dollar side agreement with
Nike. Moreover, the jury did not have to infer that knowledge of the
48
side deal would have mattered to Franklin in assessing a settlement
recommendation from Avenatti. Franklin specifically testified to that
effect. See Trial Tr. 1571-72 (responding “Yes” to question whether he
would have “wanted to know if the defendant was making a
settlement for you dependent on him getting hired by Nike”).
Avenatti’s alternative $22.5 million proposal compels no
different conclusion because, as discussed supra at 36-37, a reasonable
jury could have concluded that the bulk of this amount was destined
for Avenatti, not Franklin. Thus, Avenatti did not tell Franklin about
the proposal, or how he planned to effect it, for much the same reason
he never told him about the demanded retainer: the less Franklin
knew about how his own receipt of a $1.5 million settlement was
conditioned on a multi-million-dollar payment for Avenatti, the
easier it would be to influence him to settle his claims.
In offering corruptly to influence Franklin’s acceptance of the
proposed settlement, Avenatti may well have been serving his own
interests more than Nike’s. In short, his demanded quid was far more
valuable than his offered quo. But in determining whether a person
has solicited a bribe, the relevant inquiry is not the likelihood of the
solicited party meeting a demand in return for the offered act, or even
whether that party values the offered act. What matters is that an act
was corruptly offered in return for the demanded thing of value. 29
29See 11 C.J.S. Bribery § 14 (2023) (“Where it is alleged the accused solicited
a benefit as consideration for an official act, it is not necessary for the state
to prove the party to whom the solicitation was made accepted the
proposition or even understood the unlawful nature of the proposition to
obtain a conviction for bribery; proof that the solicitation was made by the
49
Here, the evidence was sufficient to allow a reasonable jury to
conclude that Avenatti offered to breach his attorney-client
relationship with Franklin to influence him to settle his claims with
Nike, but only if Nike paid Avenatti many millions of dollars. This
satisfied the quid pro quo requirement for bribery.
2. Intent To Defraud
Because Avenatti’s sufficiency challenge to the proof of his
intent to defraud Franklin largely echoes his wrongfulness challenge,
it fails for much the same reason. See supra at 26-41. Rather than
repeat the totality of the evidence there discussed, we highlight three
facts that, when viewed in the light most favorable to the prosecution,
support a reasonable jury finding that Avenatti intended to defraud
Franklin of the honest services owed to him as an attorney’s client.
First, Avenatti leveraged his client’s claim to enrich himself, in
clear conflict with his client’s interests. 30 Specifically, at the same time
accused with the purpose to promote or facilitate the exchange of the
benefit for the official action is all that is required.”); see also United States v.
Quinn, 359 F.3d at 677 (upholding solicitation conviction even though
solicitee did not intend to pay bribe because “[i]t is the defendants’ intent
that is relevant,” not the solicitee’s).
30As the district court charged the jury without objection, an attorney’s
“duty of loyalty” to a client obligates the lawyer to put the “client[’s]
interests first.” Trial Tr. 2337. “Moreover, a lawyer shall not, without
informed written consent from the client, represent a client if there is a
significant risk that the lawyer’s representation of the client will be
materially limited by the lawyer’s responsibilities to or relationships with
another client, a third party, or by the lawyer’s own interests.” Id. (emphasis
added); see United States v. Schwarz, 283 F.3d 76, 96 (2d Cir. 2002) (finding
unwaivable conflict of interest where counsel had “substantial self-interest
50
that Avenatti demanded $1.5 million in compensation for Franklin,
Avenatti also demanded an even greater payoff for himself, making
plain that there could be no discussion of the former without Nike’s
agreement to the latter. See supra at 47-49. Further, while Avenatti
proposed for the payoff to take the form of a $15-25 million retainer,
a reasonable jury could have concluded that this represented neither
fees already earned by Avenatti in representing Franklin in
negotiations with Nike nor fees that Avenatti expected to earn in
conducting a future bona fide internal investigation of Nike. Rather, a
reasonable jury could have concluded that a retainer agreement was
merely a convenient vehicle for Avenatti to receive the personal
multi-million-dollar payment he was demanding from Nike to
encourage his client to agree to settlement.
Second, Avenatti sacrificed his client’s interests in favor of his
own. Specifically, when Nike suggested that it might be possible to
settle the matter by paying Franklin something more than $1.5 million
without a retainer for Avenatti, Avenatti stated, “I don’t think that it
makes any sense for Nike to be paying, um, an exorbitant sum of
money to Mr. Franklin, in light of his role in this.” Supra at 15. A
reasonable jury could have concluded that an attorney who thus
sought to avoid higher compensation for his client in order to
maintain the viability of his own multi-million-dollar retainer
demand was not providing honest services for his client but, rather,
in the two-year, $10 million retainer agreement” his firm had with
organization whose civil case could be significantly affected by defendant’s
criminal case).
51
was intent on defrauding him into accepting a settlement that
enriched the lawyer more than the client.
Third, Avenatti took active steps to ensure that Franklin would
never know that, in settling his claims against Nike, Avenatti had so
enriched himself at Franklin’s expense. In urging otherwise, Avenatti
argues that Franklin would have had to sign off on any settlement,
and thus have known its terms. Not so. As the evidence showed, on
March 21, 2019, Avenatti proposed using two documents to effect his
demands: (1) a $1.5 million settlement agreement between Franklin
and Nike, and (2) a $15-25 million retainer agreement between
Avenatti and Nike. A reasonable jury could conclude that Franklin
would have to sign only the first agreement, not the second. For this
reason and because the settlement agreement made no mention of the
retainer agreement, a reasonable jury could further conclude that
Avenatti’s intent was to conceal from Franklin the fact that he had
used his client’s claims to negotiate a better deal for himself than for
his client, and thereby, fraudulently to influence Franklin to accept
the proposed settlement. It could also conclude that Avenatti would
have found some way to do the same if Nike had accepted his
alternative $22.5 million proposal.
In sum, a reasonable jury could have concluded from the trial
evidence that Avenatti, while representing his client Franklin in
negotiations with Nike, used a quid pro quo to solicit a bribe from Nike,
and, moreover, did so with the intent to defraud Franklin of the
honest services owed to him by his attorney. Thus, Avenatti’s
sufficiency challenge to his honest-services fraud conviction fails on
the merits.
52
II. Jury Instruction: Honest-Services Fraud
Because “a violation of a fiduciary duty[] is an element of
honest services fraud,” United States v. Napout, 963 F.3d 163, 181 (2d
Cir. 2020) (internal quotation marks omitted), the district court
charged the jury at length regarding the duties an attorney owes a
client, specifically, the duties imposed by California law on attorneys
such as Avenatti licensed to practice in that state. 31 Avenatti argues
31We quote the district court’s instruction on this point in its entirety,
highlighting language focusing on California law:
Lawyers owe a duty of loyalty to their clients. This means that, when
acting on behalf of a client, lawyers must put their clients’ interests
first.
Moreover, a lawyer shall not, without informed written consent
from the client, represent a client if there is a significant risk that the
lawyer’s representation of the client will be materially limited by the
lawyer’s responsibilities to or relationships with another client, a
third party, or by the lawyer’s own interests. Informed consent
means a client’s agreement to a proposed course of conduct after the
lawyer has communicated and explained (i), the relevant
circumstances; and (ii) the material risks, including any actual and
reasonably foreseeable adverse consequences of the proposed course
of conduct.
A conflict of interest requiring informed written consent exists if
there is a significant risk that a lawyer’s ability to consider,
recommend, or carry out an appropriate course of action for the
client will be materially limited as a result of the lawyer’s other
responsibilities, interests, or relationships, whether legal, business,
financial, professional, or personal.
Under California law, it is the client who defines the objectives of the
representation and not the lawyer. A lawyer cannot act without the client’s
authorization, and a lawyer may not take over decision-making for a client,
unless the client has authorized the lawyer to do so. A lawyer must abide
53
by a client’s decision concerning the objectives of the representation and
shall reasonably consult with the client as to the means by which the
objectives are to be pursued. Subject to requirements of client
confidentiality, a lawyer may take such action on behalf of the client as is
impliedly authorized to carry out the representation. The client has the
ultimate authority to determine the purposes to be served by the legal
representation, however, within the limits imposed by law and the lawyer’s
professional obligations. A lawyer retained to represent a client is
authorized to act on behalf of the client, such as in procedural matters and
in making certain tactical decisions. A lawyer is not authorized merely by
virtue of the lawyer’s retention to impair the client’s substantive rights or
the client’s claim itself.
In the context of settlement, only the client may decide whether to make or
accept an offer of settlement.
Lawyers owe a duty of confidentiality to their clients. The duty includes
information that the client wants kept in confidence because it might be
embarrassing or otherwise detrimental to the client. The duty of
confidentiality requires a lawyer not to reveal confidential client
information unless the client has given informed consent to the disclosure,
as I have previously defined that term. A lawyer shall not use a client’s
confidential information to the disadvantage of the client unless the client
gives informed consent.
Lawyers are required to keep clients reasonably informed of significant
developments in matters with regard to which the attorney has agreed to
provide legal services and to respond promptly to reasonable status
inquiries of clients. A lawyer must also reasonably consult with the client
about the means by which the lawyer will try to achieve the client’s goals
and objectives; keep the client reasonably informed about significant
developments relating to the representation; and explain a matter to a client
to the extent reasonably necessary to permit the client to make informed
decisions during the representation. Reasonably refers to the conduct of a
reasonably prudent and competent lawyer. A lawyer owes his client a duty
of full and frank disclosure of all relevant information relating to the subject
matter of the representation.
54
that the district court erred by failing to give his proposed jury
instructions as to an attorney’s authority (1) generally to act on his
client’s behalf, and (2) specifically to settle claims.
We review alleged charging errors de novo, applying a
harmless-error standard if the defendant voiced an objection in the
district court. See United States v. Zhong, 26 F.4th 536, 549-50 (2d Cir.
2022). On harmless-error review, a defendant must demonstrate
(1) that “the instruction given was erroneous, i.e., that when viewed
as a whole, the instruction misled or inadequately informed the jury
as to the correct legal standard”; (2) that his requested instruction
“was correct in all respects”; and (3) “ensuing prejudice.” United
States v. Felder, 993 F.3d 57, 63 (2d Cir. 2021) (internal quotation marks
omitted). Put another way, an omitted instruction will warrant relief
from conviction only “if (1) the requested instruction was legally
correct; (2) it represents a theory of defense with basis in the record
that would lead to acquittal; and (3) the theory is not effectively
presented elsewhere in the charge.” United States v. Prawl, 168 F.3d
622, 626 (2d Cir. 1999) (internal quotation marks omitted). Avenatti
cannot satisfy this standard as to either of his charging challenges. 32
A lawyer shall promptly communicate to the lawyer’s client all amounts,
terms, and conditions of any written offer of settlement made to the client.
An oral offer of settlement made to a client in a civil matter must also be
communicated if it is a significant development in the representation.
Trial Tr. 2337-40 (emphasis added).
32We therefore need not consider the government’s argument that because
Avenatti’s second charging challenge was not adequately preserved in the
district court, it is reviewable on appeal only for plain error. See United
55
A. Attorney’s General Authority To Act on Client’s Behalf
Avenatti faults the district court for failing to include the
following language in the part of its charge referencing an attorney’s
authority to act for his client:
A lawyer begins with broad authority to make choices
advancing the client’s objectives. . . .
In the absence of an agreement or instruction, however,
a lawyer has the authority to take any lawful measure
within the scope of representation that is reasonably
calculated to advance a client’s objectives as defined by
the client.
Appellant Br. 50-51 (ellipses in original) (quoting Special App’x 47).
Avenatti submits that inclusion of this language would have allowed
him to advance “‘a theory of defense with basis in the record that
would lead to acquittal,’ namely: When Avenatti asked Nike to hire
him and Geragos to conduct an internal investigation, he reasonably
believed himself to be acting within his authority in pursuit of
Franklin’s objectives.” Id. at 55 (citation omitted) (quoting United
States v. Prawl, 168 F.3d at 626).
Assuming arguendo that Avenatti’s proposed language finds
some support in California law, he nevertheless fails to demonstrate
error because the challenged instruction, when viewed as a whole,
did not mislead or inadequately inform the jury as to the correct legal
standard respecting an attorney’s authority to act for his client. See
United States v. Felder, 993 F.3d at 63. Rather, as the district court
States v. Jenkins, 43 F.4th 300, 302 (2d Cir. 2022) (reviewing unpreserved
charging challenge for plain error).
56
correctly observed, what it provided was “a slightly different
iteration” of Avenatti’s proposed authority instruction, thereby
“allow[ing] each side to make [its] arguments.” Trial Tr. 2034-35; see
United States v. Evangelista, 122 F.3d 112, 116 (2d Cir. 1997)
(“[D]efendants are not necessarily entitled to have the exact language
of the charge they submitted to the district court read to the jury.”
(internal quotation marks omitted)).
Thus, respecting attorney authority, the district court correctly
instructed as follows:
[A] lawyer may take such actions on behalf of the client
as is impliedly authorized to carry out the
representation. The client has the ultimate authority to
determine the purposes to be served by the legal
representation, however, within the limits imposed by
law and the lawyer’s professional obligations. A lawyer
retained to represent a client is authorized to act on
behalf of the client, such as in procedural matters and in
making certain tactical decisions. A lawyer is not
authorized merely by virtue of the lawyer’s retention to
impair the client’s substantive rights or the client’s claim
itself.
Trial Tr. 2338. While the instruction did not explicitly define
“impliedly authorized” to include the “broad authority to make
choices advancing the client’s objectives”—the language Avenatti
sought—that concept is adequately conveyed by the challenged
instruction’s reference to “such actions as . . . carry out the
representation,” as well as its recognition of attorney authority to act
on “procedural matters” and to make “certain tactical decisions.”
“Choices advancing the client’s objectives” are reasonably described
57
as “tactical.” See WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY
2327 (Philip Babcock Gove ed., 2002) (“WEBSTER’S”) (defining
“tactical” as “designed to achieve a given purpose”). Avenatti
nevertheless argues that a juror might have thought that an internal
investigation of Nike did not fit within the category of “certain tactical
decisions” that the challenged charge stated an attorney was
authorized to make. Appellant Br. 61 (emphasis added). We are not
persuaded. Nothing in the charge implied, nor did the prosecution
argue, that an internal investigation demand in genuine pursuit of a
client’s objectives is not a tactical decision that an attorney is
authorized to make. 33
In any event, the district court’s charge allowed Avenatti to
argue the exact defense theory for which he sought his proposed
charge, i.e., that, in demanding an internal investigation of Nike, “he
reasonably believed himself to be acting within his authority in
pursuit of Franklin’s objectives.” Id. at 55. Indeed, the district court
specifically charged the jury that this was Avenatti’s theory:
“According to Avenatti, when he was demanding that Nike hire him
and Geragos to perform an internal investigation at Nike, he was
pursuing Franklin’s objectives.” Trial Tr. 2329. Further, it explicitly
stated that Avenatti could not be found guilty of honest-services
fraud if he “honestly believed that Mr. Franklin had authorized him
to demand that Nike hire him and pay him millions of dollars to
33We understand the district court’s qualification to recognize the handful
of tactical choices that only a party can make. See McCoy v. Louisiana, 138
S. Ct. 1500, 1508 (2018) (recognizing that some decisions “are reserved for
the client—notably, whether to plead guilty, waive the right to a jury trial,
testify in one’s own behalf, and forgo an appeal”).
58
conduct an internal investigation of Nike.” Id. at 2344. Thus, in
summation Avenatti’s counsel vigorously argued this theory. See,
e.g., id. at 2235 (“Avenatti had every reason to believe he well
understood the objectives of his client . . . including an
investigation.”); id. at 2254 (“The issue here is: Did Mr. Avenatti
believe, did he understand he had the authority to demand an
investigation and be paid to do it? Did he believe he was fulfilling his
client’s objectives when he made the ask?”); id. at 2262 (“If Avenatti
thought that . . . his client and Mr. Auerbach had authorized him to
make these demands . . . , not guilty.”).
Avenatti’s problem then was not that the challenged charge
failed to provide him with a sufficient legal basis to argue his defense
theory. Rather, his problem was that compelling evidence indicated
that he had demanded a multi-million-dollar internal investigation
retainer from Nike not to achieve Franklin’s objectives but only to
enrich himself. Accordingly, we reject his challenge to the district
court’s general authority instruction as meritless.
B. Attorney’s Settlement Authority
Avenatti also faults the district court for failing to give the
following instruction:
In the absence of a contrary agreement or instruction, a
lawyer has authority to initiate or engage in settlement
discussions, although not to conclude them. . . .
Ultimately, the lawyer shall abide by the client’s decision
whether to settle the matter and the client must sign the
settlement agreement.
59
Appellant Br. 51 (ellipses in original) (quoting Special App’x 47). He
submits that this language would have allowed him to argue that, in
his settlement negotiations with Nike, he “was incapable of impairing
Franklin’s substantive rights, and never intended to conceal anything
from his client, because any settlement of Franklin’s claims would
have been reduced to writing and signed by the parties—including
Franklin.” Id. at 55 (internal quotation marks omitted).
The argument fails because the district court effectively
charged the jury that “only the client may decide whether to make or
accept an offer of settlement,” Trial Tr. 2338; that a lawyer was
obligated “promptly” to communicate to a client “any written offer of
settlement,” id. at 2339-40; and that Avenatti contended “that the
parties contemplated a written settlement, which would have
required Franklin’s signature,” id. at 2329. These instructions were
sufficient to allow Avenatti’s counsel to argue his defense theory,
which he, in fact, did. See id. at 2241 (“There would have to be letters
of engagement, all signed by the parties. Nothing was going to be
concealed from Mr. Franklin. Nothing.”); id. at 2258 (“Just because
the lawyer is looking to get paid, so long as the client signs off on it,
and there’s every, every piece of evidence needed in this case to prove
that Gary Franklin, if ever Nike was going to make an offer which
involved Avenatti getting paid, Franklin would have signed off on it
if he approved it. Nike would have required Franklin to sign off on
it if Franklin approved it.”).
Here too then, Avenatti’s problem was not that the district
court’s charge did not provide him with an adequate legal basis to
argue his defense theory. His problem was evidence refuting that
60
theory, specifically, evidence showing that Avenatti was planning to
use separate documents to reflect Nike’s $1.5 million settlement with
Franklin and its $15-25 million retainer of Avenatti, such that Franklin
would sign and approve only the former, while being wholly ignorant
of the latter.
Accordingly, Avenatti’s challenge to the district court’s
instruction as to an attorney’s settlement authority also fails on the
merits.
III. Restitution
The MVRA “requires a court to order full restitution to the
identifiable victims of certain crimes”—including Title 18 property
crimes—“without regard to a defendant’s economic circumstances.”
United States v. Zakhary, 357 F.3d 186, 189 (2d Cir. 2004) (citing 18
U.S.C. §§ 3663A, 3664). Avenatti argues that two errors of law require
reversal of the $259,800.50 MVRA award to Nike: (1) the district court
exceeded its authority in awarding restitution more than 90 days after
Avenatti’s initial February 8, 2021 sentencing, see 18 U.S.C.
§ 3664(d)(5); and (2) the MVRA does not apply to Nike because its
incurred attorneys’ fees do not manifest the “pecuniary loss” required
to identify the company as a “victim,” id. § 3663A(a)(2), (c)(1)(B). We
review a challenged restitution award only for abuse of discretion,
which may be evident where the award is grounded in an error of
law, which we review de novo. See United States v. Afriyie, 27 F.4th 161,
61
166 (2d Cir. 2022). Applying that standard here, we identify no
error. 34
A. Timeliness of Restitution Order
Title 18 U.S.C. § 3664 states procedures for issuing and
enforcing orders of restitution. One such procedure pertains when a
court lacks sufficient information at the time of sentencing to
determine the losses warranting restitution:
If the victim’s losses are not ascertainable by the date that
is 10 days prior to sentencing, the attorney for the
Government or the probation officer shall so inform the
court, and the court shall set a date for the final
determination of the victim’s losses, not to exceed 90
days after sentencing.
Id. § 3664(d)(5).
There is no question here that the February 18, 2022 restitution
award, entered 221 days after Avenatti’s initial July 8, 2021
sentencing, falls outside this statutory 90-day period. That, however,
does not mean that the district court lacked authority to enter the
challenged restitution award. In Dolan v. United States, 560 U.S. 605(2010), the Supreme Court expressly ruled that “[t]he fact that a
sentencing court misses the statute’s 90-day deadline, even through
its own fault or that of the Government, does not deprive the court of
the power to order restitution,” id. at 611. In so holding, the Court
declined to construe the statutory 90-day deadline as either a
“jurisdictional condition” or a “claims-processing rule.” Id. at 610
34Because we identify no error, we need not consider the government’s
argument that Avenatti’s timeliness challenge was forfeited below and,
thus, reviewable only for plain error. See supra at 55 n.32.
62
(internal quotation marks omitted). Rather, it construed the provision
as “a time-related directive that is legally enforceable but does not
deprive a judge or other public official of the power to take the action
to which the deadline applies if the deadline is missed.” Id. at 611.
Avenatti does not dispute that Dolan binds this court. Instead,
he urges us to read the decision narrowly to authorize restitution
awards more than 90 days after sentencing only in cases where the
sentencing court “‘made clear prior to the deadline’s expiration that
it would order restitution.’” Appellant Br. 62 (quoting Dolan v. United
States, 560 U.S. at 608). When we consider the quoted language in
context, we do not think it compels Avenatti’s conclusion.
This is what the Supreme Court said in Dolan:
We hold that a sentencing court that misses the 90-day
deadline nonetheless retains the power to order
restitution—at least where, as here, the sentencing court
made clear prior to the deadline’s expiration that it
would order restitution, leaving open (for more than 90
days) only the amount.
560 U.S. at 608 (emphasis added). As the highlighted text indicates,
Dolan does not hold that a court is barred from awarding restitution
more than 90 days after sentencing unless it “made clear prior to the
deadline’s expiration that it would order restitution.” It states only
that a court retains the power to award restitution more than 90 days
after sentencing “at least where” it made its intent to award restitution
clear within 90 days of sentencing. Id. (emphasis added). In other
words, Dolan identifies the clearest—not the exclusive—circumstance
63
for a court to continue to exercise its MVRA restitution authority past
the statutory 90-day period. 35
In applying Dolan in the circumstances of this case, we consider
six factors that the Supreme Court identified as informing its
conclusion that a missed 90-day deadline “does not deprive the court
of the power to order restitution.” Id. at 611. These are, (1) the
statute’s failure to specify a consequence for noncompliance with its
timing provision, which cautions against judicially imposed coercive
sanctions, see id. at 611 (collecting cases); (2) the statutory importance
of imposing restitution in the “full amount of each victim’s losses,” id.
at 612 (quoting 18 U.S.C. § 3664(f)(1)(A)); (3) recognition that the
statute’s time provision “is primarily designed to help victims of crime
secure prompt restitution rather than to provide defendants with
certainty as to the amount of their liability,” id. at 613 (emphasis in
original); (4) the fact that denial of court authority will most harm
crime victims “who likely bear no responsibility for the deadline’s
being missed and whom the statute also seeks to benefit,” id. at 613-
14; (5) precedent concluding that other missed statutory deadlines do
not deprive courts of power to act, see id. at 614-15 (collecting cases);
and (6) defendants’ general ability to mitigate any harm to themselves
from a missed 90-day deadline, e.g., by alerting the court that the
“deadline will be (or just has been) missed,” id. at 615-16.
The Court derived the first five factors from the “the language,
the context, and the purposes” of § 3664(b)(5). Id. at 611. Those
remain the same regardless of whether a district court makes clear
within 90 days of sentencing that it will order some amount of
restitution. Thus, these factors all support the district court’s
35 See generally WEBSTER’S 1287 (defining “at least” as “at the lowest
estimate : as the minimum” or “in any case : at any rate”).
64
authority to enter the challenged restitution order in this case. It is
the sixth factor that may vary with the circumstances of a particular
case. This court’s pre-Dolan precedent effectively accounts for that.
At the same time that we—like the Supreme Court—recognize that
§ 3664(d)(5)’s deadline “is more consistent with Congress’s concerns
about preventing the dissipation of a defendant’s assets, than with
protecting a defendant from a drawn-out sentencing process,” United
States v. Stevens, 211 F.3d 1, 4 n.2 (2d Cir. 2000), our precedent affords
a defendant the opportunity to challenge a restitution order as
untimely by showing that the delay caused him actual prejudice, id.
at 5-6; accord United States v. Zakhary, 357 F.3d at 191 (holding “district
court’s failure to determine identifiable victims’ losses within ninety
days after sentencing” is “harmless error . . . unless [defendant] can
show actual prejudice from the omission”).
Avenatti argues that our pre-Dolan precedent is incompatible
with Dolan, which “does not use a harmless error analysis.”
Appellant Br. 68 (quoting CATHARINE M. GOODWIN, FEDERAL
CRIMINAL RESTITUTION § 10:22 (Aug. 2021 ed.)). But Dolan’s focus was
on a court’s authority to award restitution more than 90 days after
sentencing, not on whether it could be error—possibly harmless—for
the court not to have acted within that 90-day period. We think the
possibility of § 3664(d)(5) error is implicit in Dolan’s recognition that
the statutory 90-day deadline is “legally enforceable.” 560 U.S. at 611.
We think the possibility of such error being harmless is implicit in
Dolan’s recognition that (1) a missed § 3664(d)(5) deadline does not
“deprive the court of the power to order restitution,” id.; (2) the
deadline “seeks speed primarily to help the victims of crime and only
secondarily to help the defendant,” id. at 613; and (3) defendants
generally have the ability to avoid or mitigate any harm from a missed
§ 3664(d)(5) deadline, id. at 615-16. Together, these principles support
65
the conclusion that a delay of more than 90 days in awarding
restitution, if error at all, is not one affecting a defendant’s substantial
rights and, thus, is properly deemed harmless to the defendant
“unless he can show actual prejudice from the omission.” United
States v. Zakhary, 357 F.3d at 191; see United States v. Stevens, 211 F.3d
at 5-6. 36
Avenatti can show no prejudice here. Even if the district court
did not expressly state within the 90-day period that it would award
Nike some amount of restitution, it did make clear at the time of the
July 8, 2021 sentencing that the question of restitution was still
pending before the court and that further submissions were necessary
for a decision on any award. The district court stated as follows:
As to Nike, the submissions to date are not adequate to
permit me to make a determination as to restitution. The
billing records submitted in support of the application
have been redacted in such a way to make it impossible
to determine whether the fees sought fall within the
recoverable categories as set forth in Lagos v. United
States, 138 S. Ct. 1684 (2018).
Sent’g Tr. 46. Then, after detailing certain specific concerns, the court
stated, “I will give the government and Nike another opportunity to
make a submission as to restitution that complies with Lagos.” Id. at
47-48. On this record, Avenatti cannot have thought that the district
court was entering “a final sentence” on July 8, 2021, and “thus
relinquishing authority to order restitution, only then to impose
restitution more than ninety days thereafter.” United States v. Gushlak,
36In so holding, we avoid one commentator’s concern that Dolan might
support a delayed restitution award “even if the defendant were to prove
prejudice.” GOODWIN, supra at 65, § 10:22.
66
728 F.3d 184, 191 n.4 (2d Cir. 2013). That concern, which Dolan’s
proviso sought to guard against, see id., is simply not present here. In
sum, because the district court made clear at sentencing that the
question of restitution was still very much pending, Avenatti cannot
claim any prejudice from disturbed expectations of repose.
Further, in Dolan, the Supreme Court observed that a defendant
can be expected to mitigate the harm of § 3664(d)(5) delay if he
“obtains the relevant information regarding the restitution amount
before the 90-day deadline expires.” 560 U.S. at 615-16. Avenatti
received all information relevant to restitution well before that
deadline. The prosecution filed its supplemental submissions (with
Nike’s exhibits attached) on July 15, 2021. Avenatti filed his
supplemental opposition a week later, on July 21, 2021. Thus, he
cannot complain of any prejudice to his ability to be heard. See
generally United States v. Stevens, 211 F.3d at 6 (finding § 3664(d)(5)
delay harmless where, inter alia, “defendant has not alleged that any
documents or witnesses became unavailable after the 90-day period
had run”).
Moreover, at no time thereafter did Avenatti alert the district
court to the approaching (or missed) § 3664(d)(5) 90-day deadline. See
Dolan v. United States, 560 U.S. at 615-16. The omission is telling in
light of the apparent reason for delay in issuing the challenged award.
On July 14, 2021—approximately one week after the initial sentencing
and while the district court was awaiting the parties’ supplemental
filings—the prosecution, on behalf of Nike, requested that the
“payment of any restitution award” to the company “be delayed until
any individual victims in the defendant’s other pending cases are
paid restitution, if ordered.” Avenatti II, 2022 WL 452385, at *4 n.3
67
(internal quotation marks omitted) (emphasis added). 37 While the
request did not expressly seek delay of a restitution award (as distinct
from its payment), as the district court subsequently explained, it did
not understand the MVRA to authorize it “to create a schedule for
restitution payments that takes into account a hypothetical restitution
order in another case, in which no judgment of conviction has been
entered.” Id. at *11. Thus, it delayed its restitution decision in the
instant case—at least for a time. We need not here decide whether the
district court correctly understood its authority. We note simply that
Avenatti, with knowledge of the prosecution’s application for delay,
neither opposed the request nor urged the district court to decide
before expiration of the § 3664(d)(5) deadline whether it would award
some amount of restitution.
Rather, it was the district court that, on February 14, 2022, itself
decided that it would “not further delay the determination of
restitution in the instant case.” Id. at *4 n.3 (discussing status of
Avenatti’s other criminal cases). In a thorough written opinion, the
court addressed each part of Nike’s restitution claim and Avenatti’s
opposition thereto and, on February 18, 2022, entered an amended
judgment ordering Avenatti to pay Nike $259,800.50 in restitution,
considerably less than the $1 million originally sought, or the $856,162
sought in the supplemental filing. 38 Nothing in the record suggests
37See United States v. Avenatti, No. 19-cr-374 (S.D.N.Y.) (charging wire fraud
and aggravated identity theft); United States v. Avenatti, No. 19-cr-61 (C.D.
Cal.) (charging wire and bank fraud, identity theft, tax crimes, and perjury).
38The district court concluded that, under the MVRA, Nike was entitled to
recover attorneys’ fees incurred in “(1) participating in recorded meetings
and calls, conferring with the prosecutors and the FBI, and responding to
the government’s requests for documents and information; (2) preparing
Nike and Boies Schiller witnesses for interviews by the government and to
68
that Avenatti would have received a more favorable restitution ruling
if the order had been entered within 90 days of sentencing or that he
was otherwise prejudiced by the delay.
In sum, Avenatti’s timeliness challenge to the district court’s
restitution award fails on the merits because (1) the factors informing
Dolan’s acknowledgment of district court authority to enter
restitution orders more than 90 days after sentencing apply equally
here, and (2) Avenatti has demonstrated no prejudice from entry of
the challenged award more than 90 days after sentencing.
B. “Pecuniary Loss”
In ordering restitution under the MVRA, a court must consider
two distinct questions: (1) does the MVRA apply in the case at hand;
and, if so, (2) what is compensable as restitution? See, e.g., United
States v. Razzouk, 984 F.3d 181, 186-90 (2d Cir. 2020) (considering first
testify at Mr. Avenatti’s trial; and (3) representing Nike in connection with
sentencing and restitution.” Avenatti II, 2022 WL 452385, at *9 (internal
quotation marks and brackets omitted). It concluded that Nike was not
entitled to recover fees incurred in analyzing court filings and motions in
Avenatti’s criminal case, or in attending pretrial conferences and portions
of the trial during which Nike witnesses did not testify, as neither such
review nor attendance had been requested by the government. Id. Nor was
Nike entitled to recover fees incurred in itself moving to quash Avenatti’s
subpoenas to the company and its employees, as these motions were
motivated by Nike’s “self-preservation” rather than a desire to provide
assistance to the government. Id. (internal quotation marks omitted).
Further, insofar as Boies Schiller had employed “block billing for its time
entries,” a process that “mixe[d] and mingle[d] recoverable expenses . . .
with non-recoverable expenses,” the district court “subtracted from the
total requested amount any entry that contains an unrecoverable expense,”
and specifically identified each such entry in its opinion. Id. at *10 & nn.6,
8.
69
whether MVRA applied to conviction and then whether loss was
correctly calculated).
As to the first question, the MVRA authorizes restitution only
when (1) a defendant is being sentenced for a specified crime
including, as relevant here, a Title 18 “offense against property,” 18
U.S.C. § 3663A(c)(1)(A)(ii) 39; and (2) “an identifiable victim or victims
has suffered a physical injury or pecuniary loss,” id. § 3663A(c)(1)(B).
The MVRA defines “victim” as,
a person directly and proximately harmed as a result of
the commission of an offense for which restitution may
be ordered including, in the case of an offense that
involves as an element a scheme, conspiracy, or pattern
of criminal activity, any person directly harmed by the
defendant’s criminal conduct in the course of the scheme,
conspiracy, or pattern.
Id. § 3663A(a)(2). Read together, these statutory sections signal that
the MVRA applies to a person who has suffered physical injury or
pecuniary loss as a direct and proximate result of the commission of
a specified crime. Only where that is the case does a court proceed to
the second question to determine what is compensable as restitution.
On that point, the MVRA states, as pertinent here, that “in the
case of an offense resulting in . . . loss . . . of property,” for which
“return of the property . . . is impossible,” a restitution order shall
require the defendant to pay the victim “the value of the property” on
either the date of loss or the date of sentencing, whichever is greater.
39Avenatti does not dispute that the extortion crimes for which he has been
ordered to make restitution to Nike are offenses against property.
70
Id. § 3663A(b)(1). In addition, and “in any case,” the MVRA mandates
that a restitution order require the defendant to “reimburse the victim
for lost income and necessary child care, transportation, and other
expenses incurred during participation in the investigation or
prosecution of the offense or attendance at proceedings related to the
offense.” Id. § 3663A(b)(4). Such “‘other expenses’ may include
attorneys’ fees,” United States v. Afriyie, 27 F.4th at 163, but only if
incurred during participation in a government investigation or
prosecution of the offense or attendance at criminal proceedings
related to the offense, see Lagos v. United States, 138 S. Ct. at 1690(holding that § 3663A(b)(4) does not cover costs of private
investigation or attendance at civil proceedings); accord United States
v. Afriyie, 27 F.4th at 171 (holding § 3663A(b)(4) to reference criminal
investigation).
Avenatti argues that the district court erred at the first step of
inquiry. He submits that the MVRA does not apply in this case
because the attorneys’ fees for which Nike sought compensation did
not constitute a “pecuniary loss” within the meaning of
§ 3663A(c)(1)(B). He insists that even if such fees are “other expenses
incurred during participation in the investigation or prosecution” of
an offense so as to be compensable under § 3663A(b)(4) if the MVRA
applies, they do not themselves constitute the “pecuniary loss”
necessary for the MVRA to apply. 40
40Avenatti does not dispute that where a victim sustains a pecuniary loss,
he is entitled to restitution of § 3663A(b)(4) expenses even if they do not
themselves constitute pecuniary loss.
71
Avenatti points to no precedent from this court or the Supreme
Court that so holds. The binding caselaw he does cite discusses
§ 3663A(b)(4) only in addressing the second MVRA question—What
is compensable as restitution?—without speaking to the first—Does
the MVRA apply? 41 Nevertheless, some support for Avenatti’s
argument can be found in an unpublished district court decision from
outside this circuit: United States v. Yu Xue, No. 16-cr-22, 2021 WL
2433857 (E.D. Pa. June 15, 2021). In sentencing a defendant for
conspiracy to steal trade secrets, the court found the secrets’ owner to
have sustained “$0 of fraud loss under the Sentencing Guidelines.”
Id. at *2 & n.4 (referencing government concession that “there is no
fair market” for the trade secrets (brackets omitted)). It therefore
declined to award restitution of attorneys’ fees incurred by the owner
during the government’s investigation and prosecution of the offense,
concluding that the MVRA did not apply to the defendant “because
there was no pecuniary loss” to the secrets’ owner. Id. at *3.
The district court here was not persuaded by the reasoning in
Yu Xue. See Avenatti II, 2022 WL 452385, at *7. Instead, it followed
that of our colleague, Judge Chin, sitting by designation in United
41See, e.g., Lagos v. United States, 138 S. Ct. at 1690 (holding cost of private
post-offense investigation not recoverable under § 3663A(b)(4), but leaving
other parts of restitution award undisturbed); United States v. Afriyie, 27
F.4th at 166 (“Afriyie does not challenge that MSD . . . is a victim covered
by the MVRA . . . [or] that his crimes of conviction . . . are covered
offenses.”); United States v. Amato, 540 F.3d 153, 159 (2d Cir. 2008) (“It is
undisputed that § 3663A(b)(4) applies to the fraud offenses committed by
the defendants in the present case.”), abrogated in part by Lagos v. United
States, 138 S. Ct. 1684 (abrogating § 3663A(b)(4) award of attorneys’ fees to
extent incurred in private investigation).
72
States v. Kuruzovich, No. 09-cr-824, 2012 WL 1319805 (S.D.N.Y. Apr.
13, 2012), abated, 541 F. App’x 124 (2d Cir. 2013) (abating restitution
order in light of defendant’s death and insolvency of estate). The
defendant in that case was convicted of blackmailing his corporate
employer with threatened reports of illegal activity. While
participating in the government’s investigation and prosecution of
that crime, the company incurred $59,652.85 in legal fees. Judge Chin
ordered defendant to pay this amount in restitution. Recognizing that
the MVRA applies when a person “has suffered a ‘pecuniary loss’ as
a result of the offense conduct,” Judge Chin found the employer to
have “suffered direct pecuniary loss in the form of legal expenses
incurred.” Id. at *4. He explained,
[defendant] threatened to make serious allegations of
insider trading and other illicit activity against the
Company to various government authorities. As the
Company’s CEO testified, such allegations could have
destroyed the Company. Retaining outside legal counsel
to review documents requested by the government in the
course of its investigation and prosecution and to
address concerns over confidentiality and privilege was
necessary to the Company’s participation in the
investigation and prosecution of defendant. See 18 U.S.C.
§ 3663A(b)(4). Such costs were a direct and foreseeable
result of defendant’s wrongful conduct and are
recoverable as restitution to the Company.
Id. at *5 (internal quotation marks, first internal citation, and brackets
omitted).
The district court in Yu Xue was dismissive of Kuruzovich
because (1) it was decided before Lagos, “where the [Supreme] Court
held that the language in § 3663A(b)(4) should be narrowly
73
interpreted”; and (2) the MVRA’s language “distinguishes between
pecuniary loss and necessary expenses.” 2021 WL 2433657, at *6. This
does not persuade. Lagos held only that the “other expenses” phrase
of § 3663A(b)(4) should be construed narrowly, a conclusion reached
“in large part” based on the text and context of that subsection. 138
S. Ct. at 1688. Nowhere in Lagos did the Court suggest that text or
context compels a narrow construction of the phrase “pecuniary loss”
in § 3663A(c)(1)(B). In general, a “pecuniary loss” is “[a] loss of
money or of something having monetary value.” Loss, BLACK’S LAW
DICTIONARY (11th ed. 2019); see WEBSTER’S 1338 (defining “loss” as
“the act or fact of losing: failure to keep possession: DEPRIVATION”).
Attorneys’ fees that the target of a specified crime incurs as a result of
that crime fall within this commonly understood definition of
pecuniary loss. As to Yu Xue’s second ground for dismissing
Kuruzovich, the district court points to nothing in the text of the MVRA
indicating that attorneys’ fees qualifying as compensable expenses
under § 3663A(b)(4) at the second step of MVRA analysis can never
also manifest the “pecuniary loss” necessary to make the MVRA
applicable at the first step of analysis.
We need not pursue the point, however, because we are not
presented here with the factual premise underlying the Yu Xue
decision, i.e., that the alleged victim’s only loss was “other expenses
incurred during participation in the investigation or prosecution of
the offense.” 18 U.S.C. § 3663A(b)(4). Here, the record evidence
demonstrates that Nike sustained a pecuniary loss in the form of
attorneys’ fees incurred before there was any government
investigation of Avenatti’s crimes of conviction. This is sufficient for
the MVRA to apply in this case whether attorneys’ fees subsequently
74
incurred during the government’s investigation also constitute a
pecuniary loss under § 3663A(c)(1)(B) or only “other expenses” under
§ 3663A(b)(4). 42
Specifically, the trial record shows that Avenatti sought a
meeting with Nike representatives in March 2021. This caused Nike
to request that Boies Schiller attorneys represent it at the March 19,
2021 meeting where Avenatti first made his extortionate demands.
Not surprisingly, Boies Schiller billed Nike for its attorneys’ time
preparing for and attending that meeting. 43 In sum, it was Avenatti’s
42Although the district court did not expressly rely on this ground in
awarding restitution, this court is “free to affirm on any ground that finds
support in the record, even if it was not the ground upon which the trial
court relied.” Wells Fargo Advisors, LLC v. Sappington, 884 F.3d 392, 396 n.2
(2d Cir. 2018) (internal quotation marks omitted).
Insofar as the government argues that Nike also suffered a pecuniary loss
when its market cap declined by $300 million in response to Avenatti’s
March 25, 2021 tweet, that argument fails for lack of record evidence of
causation. See 18 U.S.C. § 3664(e) (holding that government bears “burden
of demonstrating” victim loss “as a result of the offense”).
43See, e.g., Ex. C to Nike’s Restitution Request 4, Avenatti II, 2022 WL 452385(No. 19-cr-373), ECF No. 329-4 (detailing Wilson’s billable hours on March
18 and 19, 2019, to “[p]repare for 3/19 M. Geragos and M. Avenatti meeting;
confer with P. Skinner re same; . . . Conf with R. Leinwand and B. Homes
and prepare for same; conf with M. Avenatti and M. Geragos, with R.
Leinwand and B. Homes, and breakout confs,” etc.). Although Nike
originally sought restitution for these fees, it did not renew its request in
the government’s July 15, 2021 supplemental filing because block billing
made it difficult to distinguish these “clearly recoverable” costs from
unrecoverable costs. Ex. A to Gov’t’s Supplemental Restitution Submission
2, Avenatti II, 2022 WL 452385 (No. 19-cr-373), ECF No. 338-1. While Nike’s
failure to renew is relevant to a second-step determination of what can be
75
pursuit of his own criminal objectives that caused Nike to sustain the
pecuniary loss of Boies Schiller’s fees in connection with the March
19, 2021 meeting. This pecuniary loss was foreseeable by Avenatti,
who knew that he would be dealing with Nike’s outside counsel at
the March 19 meeting. Moreover, Nike’s loss cannot be classified as
“other expenses” under § 3663A(b)(4) because it was incurred before
the company participated in the government’s investigation and
prosecution of Avenatti. Indeed, Nike would have been obligated for
these attorneys’ fees even if there had never been a government
investigation of Avenatti, or even if Nike had never cooperated in
such an investigation. Nor can this loss be characterized as
unrecoverable “costs of a private investigation that the victim chooses
on its own to conduct.” Lagos v. United States, 138 S. Ct. at 1690. Nike’s
obligation to pay Boies Schiller for its work in connection with the
March 19 meeting arose before Avenatti revealed his extortionate
scheme and, thus, could not have been for the purpose of
investigating the scheme.
Instead, the fees Nike incurred in connection with the March 19
meeting are properly recognized as pecuniary losses at the core of the
MVRA. Unlike § 3663A(b)(4) expenses, which an offender can
reasonably foresee accruing in the future should the government
investigate his criminal conduct, the fees Nike incurred in connection
with the March 19 meeting accrued in the course of Avenatti’s actual
extortion crimes against Nike. Cf. United States v. Amato, 540 F.3d 153,
162 (2d Cir. 2008) (observing that “[3663A](b)(4) seems to focus more
ordered as restitution, it is irrelevant to the identification of a pecuniary loss
for purposes of a step-one determination of whether the MVRA applies.
76
on the link between these expenses and the victim’s participation in
the investigation and prosecution than on the offense itself”),
abrogated in part by Lagos v. United States, 138 S. Ct. 1684.
Nor is a different conclusion warranted because Nike’s loss
took the form of attorneys’ fees. The target of an extortion crime can
suffer a pecuniary loss not only when he pays what is demanded, but
also when he spends his own money traveling to a meeting
demanded by his extortioner or when he retains counsel to participate
in such a meeting. In each instance, the target would not have
expended, and thereby lost, his money but for the crime. In each
instance, he would have sustained that loss regardless of whether the
crime was ever investigated or prosecuted.
Accordingly, because the record demonstrates that Avenatti’s
criminal conduct caused Nike to suffer a pecuniary loss before there
was any investigation or prosecution of his crimes, we can here
conclude that the district court correctly applied the MVRA in this
case, without needing further to consider whether that statute applies
where the victim’s only expenditures are those covered by
§ 3663A(b)(4).
CONCLUSION
To summarize:
(1) The trial evidence was sufficient to support Avenatti’s
conviction for the two charged extortion counts because a
reasonable jury could find therefrom that Avenatti’s threat
to injure Nike’s reputation and financial position was
wrongful in that the multi-million-dollar demand
77
supported by the threat bore no nexus to any claim of
right.
(2) The trial evidence was sufficient to support Avenatti’s
conviction for honest-services fraud because a reasonable
jury could find therefrom that Avenatti solicited a bribe
from Nike in the form of a quid pro quo whereby Nike
would pay Avenatti many millions of dollars in return for
which Avenatti—in addition to forbearing on his extortion
threat—would violate his fiduciary duty as an attorney by
influencing his client to accept a settlement of potential
claims without realizing that he was receiving only a small
fraction of the many millions of dollars that Nike would be
paying Avenatti.
(3) The district court adequately instructed the jury on an
attorney’s authority to act for his client, both generally and
specifically as pertains to settling claims.
(4) The district court did not exceed its authority under the
MVRA by awarding restitution more than 90 days after
initial sentencing, see 18 U.S.C. § 3664(d)(5), and Avenatti
has shown no prejudice from the delayed award.
(5) The MVRA applies in this case where, even before any
government investigation into Avenatti’s extortion crimes,
Nike sustained a pecuniary loss directly attributable to
those crimes as a result of incurring fees for its attorneys
to attend the meeting demanded by Avenatti at which he
first communicated his extortionate threat.
78
Accordingly, because Avenatti’s arguments on appeal all fail
on the merits, we AFFIRM the February 18, 2022 amended judgment
of conviction in its entirety.
79