19 Cr. 373
S.D.N.Y.2020Background
- Michael Avenatti represented “Client-1,” a youth basketball coach whose program previously received an annual $72,000 Nike sponsorship; Client-1 gave Avenatti confidential information alleging Nike employee misconduct.
- Avenatti allegedly told Nike’s lawyers he would hold a press conference publicizing the information unless Nike paid multimillion-dollar sums: $1.5M for Client-1 and large retainers/payments to Avenatti and a partner; he sought immediate retainers and threatened reputational/market harm.
- Avenatti did not disclose to Client-1 that he was seeking payments for himself or that he intended to publicize the confidential information; he communicated threats and demands via interstate calls and Twitter.
- The superseding indictment charges Avenatti with (inter alia) honest services wire fraud (18 U.S.C. §§ 1343, 1346), alleging he used Client-1’s confidential information to solicit payments for himself without Client-1’s knowledge.
- Avenatti moved to dismiss Count Three, arguing (1) Skilling limits §1346 to bribes/kickbacks and the indictment does not allege a bribe/kickback, (2) the indictment fails to plead breach of a legally cognizable duty, and (3) the statute is unconstitutionally vague as applied.
- The Court denied the motion: it found the indictment legally sufficient to allege bribery-based honest-services fraud, that a payment or corrupt partner is not required at the pleading stage, and that vagueness challenges were premature.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indictment sufficiently alleges honest-services wire fraud under Skilling (bribe/kickback requirement) | Indictment tracks §1343/§1346 and alleges solicitation of payments in exchange for not publicizing client confidences—fits bribery-based honest-services fraud | Skilling confines §1346 to bribes/kickbacks; indictment lacks the words "bribe" or "kickback" and does not allege such a scheme | Court: wording not talismanic; facts alleged sufficiently plead solicitation of a bribe/quid pro quo; Count Three legally sufficient |
| Whether indictment pleads violation of a legally cognizable duty (attorney-client duty) | Attorneys owe duties of confidentiality, loyalty, honest services; indictment alleges Avenatti breached those duties by soliciting side-payments using client confidences without consent | No allegation Avenatti received money; demands were mere negotiation puffery; no official-act quid pro quo | Court: receipt not required; intent to obtain something of value suffices; allegations show breach of lawyer’s duties and are more than puffery |
| Whether statute is unconstitutionally vague as applied | Skilling provides required clarity; absence of a bribe allegation renders §1346 vague as applied here | Vagueness challenge is fact-specific and premature; trial record required | Court: denies vagueness challenge as premature and rejects the premise that no bribe was alleged |
| Whether a willing/corrupt counterparty (agreement) is required | (Raised by Avenatti) No explicit allegation Nike agreed to the corrupt exchange | Government contends proof of a corrupt partner is not required; focus is defendant’s intent | Court: agreement or corrupt partner is not required to plead bribery-based honest-services fraud; defendant’s intent suffices |
Key Cases Cited
- Skilling v. United States, 561 U.S. 358 (2010) (limits §1346 honest-services theory to bribery-and-kickback schemes)
- Hamling v. United States, 418 U.S. 87 (1974) (indictment sufficiency standard: must track statutory elements and fairly inform defendant)
- Sun-Diamond Growers of Cal. v. United States, 526 U.S. 398 (1999) (bribery requires specific intent to give/receive something of value in exchange for an act)
- United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012) (indictment may be legally insufficient if conduct falls outside statutory scope)
- United States v. Pirro, 212 F.3d 86 (2d Cir. 2000) (indictment must allege a violation of a known legal duty)
- United States v. Silver, 864 F.3d 102 (2d Cir. 2017) (in bribery-based honest-services cases, focus is on defendant’s intent to give/receive value; no corrupt partner requirement)