Federal prosecutors have initiated a criminal investigation into the Los Angeles Clippers concerning allegations of circumventing the NBA's salary cap through secret, off-the-books sponsorship deals for player Kawhi Leonard. The inquiry is being conducted by the U.S. Attorney’s Office for the Eastern District of New York in Brooklyn, a unit with prior experience in major sports integrity cases.
Investigators are reportedly focusing on undisclosed endorsement agreements, including a $28 million deal with the now-bankrupt green finance company Aspiration Partners. Prosecutors are examining whether Clippers owner Steve Ballmer and team executives facilitated these side deals to compensate Leonard in ways that would exceed NBA salary cap restrictions.
The Securities and Exchange Commission (SEC) has also become involved. Daktronics, a supplier of displays for the Clippers' Intuit Dome, confirmed that regulators have requested records related to its sponsorship agreements with Leonard.
The federal probe significantly escalates the scandal, which the NBA previously addressed with its own penalties. The league imposed a $30 million fine on the Clippers, ordered the forfeiture of five consecutive first-round draft picks from 2029 through 2033, and suspended owner Steve Ballmer for one year. Two senior Clippers executives also received suspensions.
The NBA described the team's actions as a "pattern of misconduct" following a yearlong review. Leonard’s uncle and manager, Dennis Robertson, received a five-year ban from the league, and Leonard was ordered to pay $700,000 in restitution.
The Clippers organization has vehemently denied the NBA's findings, stating in a release that the league's investigation was biased and designed to support a predetermined narrative. The team announced its intention to challenge the findings and penalties through arbitration.
Kawhi Leonard acknowledged lapses in judgment by individuals within his inner circle, stating, "Integrity and respect for this game are fundamental to who I am." He added that he entered into his Clippers contract and other agreements in good faith, without knowledge of any efforts to circumvent the salary cap.
Attorneys for Steve Ballmer have criticized the NBA's investigation, calling it a "witch hunt." They have asserted that league counsel privately acknowledged facts that contradicted the NBA's public stance and that federal authorities previously considered Ballmer a victim of fraud rather than a participant.
The Clippers and Ballmer are reportedly considering a federal lawsuit against the NBA to challenge the sanctions. However, the ongoing criminal investigation could potentially delay any civil litigation, particularly if key witnesses exercise their Fifth Amendment right against self-incrimination.
Spokespersons for the U.S. Attorney’s Office, the Clippers, and the NBA have declined to comment on the federal investigation.