Nike is under investigation by the U.S. Securities and Exchange Commission (SEC) over allegations that it made illegal payments to youth basketball players, it was disclosed Wednesday in court. The revelation comes amid the extortion trial of Michael Avenatti, the famous attorney who represented Stormy Daniels in her lawsuit against President Donald Trump, who stands accused of trying to extort the apparel power.
Avenatti is pleading not guilty to three criminal accounts in the trial, which began this week with jury selection in Manhattan. He accused Nike officials of making illicit payments to elite youth basketball players on Nike's basketball circuit and of concealing those payments. He claims he has evidence of Nike's wrongdoing -- and allegedly extorted Nike when, after making the accusations, he agreed not to bring the evidence to light if Nike paid up. The evidence he gathered came while representing client Gary Franklin, a former coach on Nike's EYBL circuit.
Franklin now alleges Avenatti defrauded him by using his own allegations as a means to line his own pockets.
Nike, since the allegations, has denied any wrongdoing. It did not immediately respond to request for comment by CBS Sports on Wednesday evening.
It's the first time since Avenatti's allegations against Nike were made that Nike itself is under investigation. According to Bloomberg, the news surfaced Wednesday in court when Howard Srebnick, Avenatti's defense attorney, disclosed that the SEC is investigating Nike and taking over evidence previously gathered from the Justice Department.
College basketball has been marred with controversy in recent years after federal investigators linked Adidas to improper payments to recruits in an effort to steer them to Adidas-sponsored schools. Several trials have come about including with assistant coaches and ex-Adidas execs, with several being found guilty of bribery charges.