Federal Prosecutors Open Criminal Investigation Into LA Clippers Over Kawhi Leonard Deals
Federal prosecutors have opened a criminal investigation into the Los Angeles Clippers over the team’s dealings with Kawhi Leonard, escalating a controversy that has already led to major NBA penalties over off-court payments tied to the star forward.
The U.S. Attorney’s Office for the Eastern District of New York in Brooklyn is conducting the investigation and has issued at least one subpoena. The inquiry began before the NBA announced its findings against the Clippers on Sept. 2, according to The New York Times.
Prosecutors have not disclosed which federal offenses they are examining or identified any targets. It also remains unclear whether the investigation will result in criminal charges or evidence being presented to a grand jury.
The federal inquiry follows a nearly yearlong NBA investigation that found the Clippers circumvented salary-cap rules by helping Leonard obtain income through companies doing business with the team. The league fined the Clippers $30 million, took away five first-round draft picks and suspended owner Steve Ballmer from league and team activities for one year.
A violation of NBA salary-cap rules does not by itself establish a federal crime. Prosecutors would need evidence supporting a separate violation of federal criminal law, making the conduct surrounding the sponsorship and endorsement agreements more significant than the league penalties alone.
According to the NBA, the Clippers initiated off-court income opportunities between Leonard and four companies with team business relationships: Aspiration Partners, Boingo Wireless, Daktronics, and Lockton Insurance. Investigators found that the team facilitated endorsement agreements, offered business to companies as an incentive to enter the deals, and paid personal expenses on behalf of Leonard and his representatives.
One of the central transactions involved Aspiration, a financial technology company that agreed to pay Leonard $28 million under an endorsement contract. Aspiration also entered into a reported 23-year, $300 million sponsorship agreement with the Clippers.
The NBA concluded that Ballmer knowingly sought to help Leonard secure off-court income and approved a business arrangement he knew was a condition of Aspiration entering into an endorsement agreement with the player. The league also faulted him for failing to ensure the organization followed its salary-cap rules.
Aspiration later filed for bankruptcy. Its co-founder Joseph Sanberg was sentenced in June to 14 years in federal prison after pleading guilty to defrauding investors and lenders of at least $248 million. Sanberg’s criminal case was separate from the NBA investigation into the Clippers.
Leonard was ordered to pay the NBA $700,000 over improper benefits. His uncle and former business manager, Dennis Robertson, was banned from doing business with NBA teams and their affiliates for five years after the league said the Clippers failed to report improper solicitations made on Leonard’s behalf.
Two Clippers executives were also suspended. President of Business Operations Gillian Zucker received a one-year suspension without pay, while President of Basketball Operations Lawrence Frank was suspended without pay for six months.
The Clippers initially rejected the NBA’s findings and called the investigation heavily biased. Leonard said he had no knowledge of any intent to circumvent the salary cap and accepted responsibility for lapses in judgment by people within his inner circle.
Ballmer reversed course Sunday night, saying the Clippers would comply with the NBA’s punishment rather than pursue the challenge the organization had previously considered. The team has paid the $30 million fine, although Ballmer said disagreements remain over parts of the league’s findings.
The decision resolves the Clippers’ immediate fight over the NBA penalties but leaves the federal investigation open. Prosecutors have not announced criminal charges against the team, Ballmer, Leonard, or any Clippers executive.
