The Los Angeles Clippers, severely punished last week by the NBA for what the league said were salary cap rules violations involving star forward Kawhi Leonard, are under criminal investigation by federal prosecutors, the New York Times reported Thursday evening.
The U.S. Attorney’s Office for the Eastern District of New York in Brooklyn is conducting the investigation, which is in early stages, per the report, which cited sources briefed on the matter. It reportedly was unclear whether the investigation would lead to criminal charges or the presentation of evidence to a grand jury.
The Times reported that prosecutors have issued at least one subpoena as part of the investigation, which began before the NBA announced its conclusions after an independent, yearlong probe into the Clippers’ dealings related to Leonard.
A spokesperson for the U.S. attorney’s office declined to comment, and spokespeople for the Clippers and the NBA did not respond to messages seeking comment, the Times reported. ESPN also reported on Thursday night that it had not gotten responses from representatives of those organizations.
The NBA fined the Clippers $30 million and stripped away five first-round draft picks to punish the franchise for circumventing salary cap rules involving Leonard, who was ordered to pay $700,000, the league announced on Sept. 2.
The NBA’s investigation “found a pattern of misconduct and multiple significant rules violations by the Clippers organization, a prior offender of the salary cap circumvention rules,” the league said in a statement.
The heart of the issue was the team introducing Leonard to club sponsors for off-court income opportunities and endorsement agreements, offering the companies business from the team as inducements and paying personal expenses for Leonard and his representatives, among other violations, according to the report commissioned by the NBA.
The businesses identified were Boingo Wireless, Daktronics, Lockton Insurance and Aspiration Partners, the latter a financial technology firm that went bankrupt last year. Aspiration allegedly signed Leonard to a $28 million endorsement deal and had a 23-year, $300 million sponsorship deal with the Clippers.
An executive for Daktronics announced to investors on Sept. 2 that the scoreboard company had been contacted by the Securities and Exchange Commission about dealings with Leonard. The executive said the company was cooperating.
The NBA’s investigators said the Clippers directed a kickback from a scoreboard contract for the team’s home arena, Intuit Dome in Inglewood, Calif., to Leonard in an endorsement deal.
The league said the Clippers must forfeit a first-round pick in each draft from 2029 to 2033. Team owner Steve Ballmer and two executives received suspensions.
The NBA gave owner Steve Ballmer a one-year suspension from all league and team activities “for knowingly seeking to help Mr. Leonard obtain off-court income opportunities, for approving a business deal that he knew was a precondition for Aspiration to enter into an endorsement agreement with Mr. Leonard, and for his failure to create conditions under which his organization abided by the NBA’s circumvention rules,” the league stated.
The Clippers issued a statement on Sept. 2 disputing the league’s conclusions and the validity of the investigation. The team and Ballmer repeatedly have denied any wrongdoing related to Leonard’s contract.
The Times reported that Ballmer and the Clippers are considering suing the NBA and asking a judge to issue a restraining order, according to sources.
Leonard, through new agent Harrison Gaines, issued a statement saying he had “no knowledge of any intent on anyone’s part to circumvent the salary cap.”
“Integrity and respect for this game are fundamental to who I am,” Leonard, 35, said in the statement. “I accept full responsibility for lapses in judgment by people within my inner circle and regret the distraction this situation has caused the fans and my family.”
The NBA said the Clippers failed to report improper solicitations for off-court income made on Leonard’s behalf by Dennis Robertson, his uncle and then-business manager. Robertson was banned by the NBA for five years from doing business or engaging with league teams and their affiliates.
The Toronto Raptors, who lost Leonard to the Clippers via free agency after winning the 2019 NBA championship, agreed in principle to a trade on June 30 to bring him back. The deal has yet to be executed as the teams waited for the league’s investigation to be completed.
The law firm of Wachtell, Lipton, Rosen & Katz conducted the investigation and continues to receive information, leaving open the possibility of further action as appropriate, the league said.
Leonard is a two-time NBA Finals MVP, having won the award in title runs with the San Antonio Spurs (2014) and Toronto (2019).
