Michael Avenatti, the former attorney for adult film star Stormy Daniels and Trump nemesis, was arrested on Monday on charges that he allegedly tried to extort up to $25 million from Nike by threatening to link the sports apparel giant to a "major high school and college basketball scandal."
Shortly after Avenatti tweeted that he would be disclosing details of the scandal which was "perpetrated by Nike" on Tuesday, he was arrested by FBI agents in New York City.
U.S. prosecutors also said Avenatti is facing bank and wire fraud charges in California.
Nike shares dipped on the news before recovering most of the losses.
Shortly, following Avenatti's arrest, his former client Stormy Daniels tweeted that she is "not shocked" by the news reports that he has been criminally charged.
"I made the decision more than a month ago to terminate Michael's services after discovering that he had dealt with me extremely dishonestly and there will be more announcements to come," Daniels tweeted.
Both U.S. Attorney's offices in New York and Los Angeles have filed separate charges against Avenatti.
In California, prosecutors are accusing him of embezzling money from one client to cover his own debts and for using phony tax returns to obtain millions of dollars in loans from a bank.
While New York prosecutors are charging Avenatti and an unnamed co-conspirator for trying to extort Nike into paying them between $15 million and $25 million or they would release information linking the sports giant to a major high school/college basketball scandal.
Prosectors said Avenatti and the co-conspirator met with Nike's attorneys on March 19 and later follow-up with them on March 20, saying if the demands were not met, he would take "ten billion dollars off of [Nike's] market cap," the complaint said. According to court papers, the co-conspirator, who was not identified in court papers, is also an attorney licensed to practice in California and like Avenatti, represents celebrities and public figures.
In a statement to FOX Business, Nike said it "will not be extorted or hide information that is relevant to a government investigation."
"Nike has been cooperating with the government’s investigation into NCAA basketball for over a year. When Nike became aware of this matter, Nike immediately reported it to federal prosecutors. When Mr. Avenatti attempted to extort Nike over this matter, Nike with the assistance of outside counsel at Boies Schiller Flexner, aided the investigation. Nike firmly believes in ethical and fair play, both in business and sports, and will continue to assist the prosecutors," the company said.
The Associated Press contributed to this report.