LA Clippers Salary Cap Scandal Faces DOJ Probe After NBA Suspends Steve Ballmer, Report Says

The Justice Department has initiated a criminal investigation into allegations that the Los Angeles Clippers used secret endorsement deals to boost its star player Kawhi Leonard’s income while violating the NBA’s salary cap, the New York Times reported, just a week after the league suspended the team’s billionaire owner Steve Ballmer for a year.

Key Facts

Citing unnamed sources briefed on the matter, the Times reported that the matter is being investigated by prosecutors in the U.S. Attorney’s Office in Brooklyn and the probe is in its “earliest stages.”

The report noted that prosecutors have already issued a subpoena as part of the probe, but details of the crimes being investigated remain unclear.

The DOJ investigation began before the NBA handed out its own punishments against the Clippers—including a year-long suspension of the team’s owner and ninth-richest person in the world.

The Clippers and the NBA have not yet publicly commented on the reported probe.

The Securities and Exchange Commission has also sought information from Daktronics, the electronic signage and scoreboard company, about its alleged endorsement deal with Leonard, the company disclosed last week. Daktronics Chief Financial Officer Howard Atkins said in the company’s earnings call: “We have received requests for information from the NBA. Additionally, the Securities and Exchange Commission is seeking information from us concerning the company and Mr. Leonard.” Atkins said the company takes the requests seriously and is cooperating, but won’t comment further. The third-party probe commissioned by the NBA found that Daktronics and two other firms had paid Leonard $18 million by August 2021 as part of “highly unusual” endorsement agreements.

Last week, the NBA announced a series of punishments against the Clippers and Ballmer after ordering a third-party probe on the matter. The historic ban handed to Ballmer was for him trying to help Leonard “obtain off-court income opportunities” and for “approving a business deal that he knew was a precondition” for fintech company Aspiration to agree to an endorsement deal with Leonard. The Clippers were also hit with a $30 million fine and stripped of five first-round draft picks from the 2029, 2030, 2031, 2032 and 2033 NBA Drafts. Leonard avoided suspension but was ordered to pay the league $700,000 in restitution. The star forward is expected to join the Toronto Raptors for the upcoming season.

In a statement shared with mutliple media outlets, the Clippers pushed back against the NBA’s decisions and said: “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 team claimed it cooperated “fully and in good faith” with the investigation an it now intends to “vigorously challenge these findings and penalties through every avenue available to us and look forward to an ethical and impartial arbitration process.” In a separate statement, 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.”

Justice Dept. Opens Inquiry Into Clippers’ Dealings With Star Player (New York Times)

Billionaire Clippers Owner Steve Ballmer Suspended 1 Year Over Salary Cap Scandal (Forbes)

This article was originally published on Forbes.com