Federal Prosecutors Open Criminal Investigation Into Clippers Over Kawhi Leonard Pay Scheme

Since the NBA fined the Los Angeles Clippers $30 million and suspended owner Steve Ballmer for a year last week, the scandal has jumped from a league punishment to a federal case. The New York Times reported Thursday that the U.S. Department of Justice has opened a criminal investigation into whether the Clippers, Ballmer and Kawhi Leonard circumvented the NBA's salary cap through secret sponsorship deals.

The report, credited to NYT reporters Michael Schmidt, William Rashbaum and Santul Nerkar, was picked up and confirmed in substance by Yahoo Sports, ABC7 Los Angeles, TMZ, BasketNews, Larry Brown Sports and the New York Post. All of them are relaying the same original reporting, not independent confirmation. Treat this as one source, not seven.

The probe is being handled by the U.S. Attorney's Office for the Eastern District of New York in Brooklyn, an office with a long track record in sports cases. It's the same office that prosecuted disgraced NBA referee Tim Donaghy in 2007 and that's currently pursuing charges tied to an illegal gambling probe involving former All-Star Chauncey Billups and Cleveland Guardians closer Emmanuel Clase.

According to the Times, prosecutors are looking at whether Ballmer and Clippers executives used hidden endorsement arrangements, centered on a no-show sponsorship deal with the now-bankrupt environmental startup Aspiration, to pay Leonard outside the NBA's salary-cap rules. BasketNews reported that federal authorities were reportedly examining the matter even before the NBA handed down its own punishment.

Prosecutors have issued at least one subpoena, per the Times, but the investigation is described as being in its earliest stages. Sources told the paper it's unclear whether it will lead to charges or ever reach a grand jury, and the scope, targets and specific crimes being examined are still unknown.

What the NBA Already Did

The federal news follows an NBA investigation conducted by the outside law firm Wachtell, Lipton, Rosen & Katz, which found what commissioner Adam Silver called "a pattern of misconduct and multiple significant rules violations" by the Clippers organization. Silver called the team a "prior offender of the salary cap circumvention rules."

The league's punishment was severe: a $30 million fine, a one-year suspension for Ballmer, the loss of five first-round draft picks from 2029 to 2033, and suspensions for Clippers president of business operations Gillian Zucker (one year) and president of basketball operations Lawrence Frank (six months). Leonard had to pay $700,000 in restitution, and his uncle and former business manager, Dennis Robertson, was banned from all NBA business dealings for five years.

The Clippers' Defense

The Clippers aren't conceding anything. In a statement after the NBA's findings, the team said it "vehemently" rejects the league's conclusions, calling the investigation "heavily biased" and accusing the NBA of "seeking to justify a predetermined narrative rather than facts and evidence." The team says what the league told it privately differs from what was announced publicly, and it intends to "vigorously challenge" both the findings and the penalties.

Leonard has separately said, "Integrity and respect for this game are fundamental to who I am," and that he accepts "full responsibility for lapses in judgment by people within my inner circle," pointing blame there rather than accepting the league's framing that he was a knowing participant. Ballmer has said Aspiration "conned" him, arguing he was the one defrauded by the vendor rather than someone who orchestrated a cap workaround. Those are the strongest counter-arguments on the record, and none of the federal reporting so far establishes that prosecutors have concluded otherwise. The Times' own account explicitly says it's unclear whether charges will ever be filed.

A spokesperson for the U.S. Attorney's Office declined to comment when asked by the Times about the federal probe. The Clippers and the NBA did not respond when asked for comment and confirmation that they'd received a subpoena, according to the report.

What's Unresolved

A proposed trade sending Leonard from the Clippers to the Toronto Raptors remains on hold, which Larry Brown Sports described as happening under "increasingly curious circumstances," though no source has tied that delay directly to the federal probe. Whether Brooklyn prosecutors present evidence to a grand jury, and whether any individual—Ballmer, Leonard, Robertson or a Clippers executive—becomes a formal target, remains the open question hanging over the franchise heading into the new NBA season.