Federal prosecutors have launched a criminal investigation into allegations that the Los Angeles Clippers arranged secret, off-the-books sponsorship deals for Kawhi Leonard to circumvent the NBA’s salary cap, first reported by The New York Times.
The inquiry is being handled by the U.S. Attorney’s Office for the Eastern District of New York in Brooklyn, which has previously pursued major sports integrity cases involving NBA referee gambling and FIFA corruption.
Federal authorities began scrutinizing the Clippers’ alleged conduct before the NBA announced its penalties, including a $30 million fine, the forfeiture of five consecutive first-round picks from 2029 through 2033 and a one-year suspension for owner Steve Ballmer. Two top Clippers executives also received suspensions.
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The Times reported that a grand jury has already issued at least one subpoena in the investigation.
Investigators are zeroing in on undisclosed endorsement deals, including a reported $28 million agreement with Aspiration Partners.
The green finance company later collapsed into bankruptcy, while co-founder Joe Sanberg was sentenced to 14 years in federal prison for fraud.
Prosecutors are examining whether Clippers owner Steve Ballmer and team executives helped facilitate side deals that compensated Leonard beyond the NBA’s salary-cap limits.
The SEC has also entered the investigation. Daktronics, which supplied displays for the Clippers’ Intuit Dome, confirmed that regulators requested records tied to its sponsorship agreements with Leonard.
The federal investigation significantly escalates the Clippers’ scandal, which the NBA called a “pattern of misconduct” after a yearlong review by the law firm Wachtell, Lipton, Rosen & Katz.
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Leonard’s uncle and manager, Dennis Robertson, received a five-year ban from the NBA, while Leonard was ordered to pay $700,000 in restitution.
The Clippers strongly rejected the NBA’s findings, accusing the league of conducting a biased investigation designed to justify a predetermined narrative.
“We vehemently reject the NBA’s findings, which are the result of a heavily biased investigation seeking to justify a predetermined narrative rather than facts and evidence,” the franchise said in a statement.
The team added, “We intend to vigorously challenge these findings and penalties through every avenue available to us and look forward to an ethical and impartial arbitration process.”
David Kelley, Ballmer’s attorney, called the NBA’s investigation a “witch hunt” and a “gross injustice” in a letter to Commissioner Adam Silver.
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Kelley argued that league officials privately acknowledged facts that contradicted the NBA’s public position.
“League counsel has acknowledged in our discussions that the league does not believe there was an agreement between the Clippers and Aspiration to funnel money to Kawhi Leonard,” Kelley wrote.
He also emphasized that federal authorities previously determined Ballmer was “a victim of Joe Sanberg’s fraud, not a participant.”
Leonard defended his conduct while acknowledging mistakes by members of his inner circle.
“Integrity and respect for this game are fundamental to who I am,” Leonard said. “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.”
Leonard added that he entered into his Clippers contract and the other agreements “in good faith,” with no knowledge of any effort to circumvent the salary cap.
Ballmer and the Clippers are considering a federal lawsuit against the NBA to block the sanctions.
The criminal investigation could complicate that effort. Civil litigation may be delayed if key witnesses invoke their Fifth Amendment rights against self-incrimination.
Spokespersons for the U.S. Attorney’s Office, the Clippers and the NBA declined to comment on the investigation.
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