Federal prosecutors have opened a criminal investigation into whether the Los Angeles Clippers helped arrange hidden endorsement contracts for star forward Kawhi Leonard as a way to pay him more than the NBA salary cap allowed, according to people briefed on the matter.
The inquiry, in its earliest stages and being handled by the U.S. attorney’s office in Brooklyn, began before the NBA announced sweeping punishments last week. Prosecutors have issued at least one subpoena. The precise targets, scope and potential crimes remain unclear. A spokesman for the office declined to comment. The Clippers and NBA did not immediately respond to questions about whether they received a subpoena or are cooperating.
The Brooklyn office has a lengthy record of investigating professional sports, including recent high-profile NBA gambling and wire-fraud cases. That history, combined with the interstate nature of the sponsorship arrangements and the existing federal fraud case tied to one of the companies involved, helps explain why federal authorities are examining conduct the league has already treated as a civil and contractual violation.
On Sept. 2, after a nearly yearlong independent investigation by the law firm Wachtell, Lipton, Rosen & Katz, the NBA concluded the Clippers engaged in a “pattern of misconduct” and multiple significant violations of salary-cap circumvention rules in the collective bargaining agreement.
Investigators said the team affirmatively initiated off-court income opportunities between Leonard and four companies that did business with the franchise: Aspiration Partners, Boingo Wireless, Daktronics and Lockton Insurance. The Clippers facilitated the endorsement agreements, induced the companies to sign Leonard by offering them team business, paid personal expenses for Leonard and his representatives without proper reimbursement, and failed to report improper solicitations made on Leonard’s behalf by his then-business manager and uncle, Dennis Robertson.
Leonard, through Robertson’s conduct, was found to have pressured the Clippers for those opportunities, obtained them and failed to reimburse the team for personal expenses. The league said Leonard received tens of millions in endorsement pay from the four companies. One published account of the report put the figure at $66 million.
The penalties were the harshest in NBA history:
- Five first-round draft picks forfeited (2029 through 2033)
- $30 million team fine
- Owner Steve Ballmer suspended from all league and team activities for one year
- President of Business Operations Gillian Zucker suspended without pay for one year
- President of Basketball Operations Lawrence Frank suspended without pay for six months
- Five years of league monitoring and compliance
- Leonard required to pay the league $700,000
- Robertson banned from doing business with NBA teams for five years
Commissioner Adam Silver called the violations “flagrant” and said the penalties reflected their seriousness. The NBA and National Basketball Players Association agreed the sanctions are final and binding. Wachtell Lipton said it continues to receive information and the league may take further action.
The Clippers “vehemently reject” the findings and have said they will challenge them. Leonard said he entered the agreements in good faith and had no knowledge of any intent to circumvent the cap. Ballmer has described himself as a victim of fraud by Aspiration.
Salary-cap circumvention is first and foremost a league and CBA matter. Criminal exposure is not automatic. Prosecutors appear to be examining whether the arrangements crossed into federal offenses such as wire fraud (use of interstate wires or emails to execute a scheme to defraud), conspiracy, or related financial crimes.
Several factors make the case attractive to federal authorities:
- Aspiration was already the subject of a major wire-fraud prosecution. Payments to Leonard and investments by Ballmer sit inside that company’s documented financial collapse.
- Multiple companies, contracts, emails and interstate communications were involved.
- The NBA investigation accused at least one senior Clippers executive of providing false or misleading statements to investigators.
- Daktronics disclosed that the Securities and Exchange Commission had contacted the company about its dealings with Leonard around the same time the NBA announced its penalties.
- The Brooklyn office has developed expertise in sports-related fraud and integrity cases.
Authorities began looking before the NBA announced discipline, suggesting the federal interest was not simply a follow-on to Silver’s decision. It is still early. Many high-profile sports investigations never produce charges. No one has been named as a target.
