The controversy surrounding Kawhi Leonard and the Los Angeles Clippers has moved beyond the NBA.
Federal prosecutors have opened a criminal investigation into the Clippers’ dealings with Leonard, examining the sponsorship arrangements that the NBA previously determined were used to provide the star forward with impermissible off-court compensation outside his playing contract. The U.S. Attorney’s Office in Brooklyn is leading the investigation, and at least one subpoena has already been issued.
The federal inquiry follows the NBA’s own year-long investigation into whether the Clippers circumvented salary-cap rules by helping arrange endorsement opportunities for Leonard with companies that had business relationships with the franchise.
Earlier this month, the league concluded that Los Angeles committed multiple violations of its circumvention rules. According to the NBA, the Clippers initiated off-court income opportunities for Leonard involving Aspiration Partners, Boingo Wireless, Daktronics and Lockton Insurance, while also providing business to those companies in connection with the arrangements.
The most prominent arrangement involved Aspiration, the now-bankrupt financial-services company in which Clippers owner Steve Ballmer had invested. Leonard reportedly had a four-year, $28 million endorsement agreement with the company, while questions emerged over what work, if any, he was required to perform under the deal.
The NBA responded with some of the harshest sanctions ever imposed on a franchise for salary-cap violations. The Clippers were fined $30 million and stripped of their first-round draft picks from 2029 through 2033. Ballmer was suspended from league and team activities for one year, while president of basketball operations Lawrence Frank received a six-month suspension. Leonard was fined $700,000.
The Clippers have strongly rejected the NBA’s conclusions. The organization has described the league’s investigation as biased and has said it intends to challenge the findings and penalties through the available arbitration process.
Leonard has maintained that he entered the agreements in good faith and did not know of any effort to circumvent the salary cap. Following the NBA ruling, he said he accepted responsibility for lapses in judgment by members of his inner circle while denying knowledge of any improper scheme.
The Justice Department investigation is a separate matter from the NBA disciplinary process and raises a significantly different set of questions. Violating NBA salary-cap rules is an internal league matter; a federal criminal investigation must determine whether any conduct potentially violated U.S. law. The existence of an investigation does not itself establish that Ballmer, Leonard, the Clippers or anyone else committed a federal crime.
Prosecutors are now examining the circumstances surrounding the sponsorship deals, with the investigation still at an early stage.
The NBA has already reached its own conclusion and imposed sweeping punishment, but federal prosecutors operate under a different legal standard and with different investigative powers.
For the Clippers, what began as a salary-cap controversy has therefore entered a far more serious phase. The franchise is already dealing with historic NBA sanctions and a major restructuring of its basketball operations. Now the same arrangements that triggered those penalties are being scrutinized by federal law enforcement.
