Clippers under federal investigation for Kawhi Leonard salary cap avoidance, report says
From the Times:
The investigation is in its early stages and is being led by the U.S. attorney’s office in Brooklyn, which has a long history of investigating the NBA and professional sports, according to two of the people.
The scope of the investigation, objectives and possible crimes examined were unclear. But prosecutors issued at least one subpoena as part of the investigation, according to the two people.
Among the issues likely to come under scrutiny are a series of secret endorsement deals Leonard signed, and whether Steve Ballmer, the team’s owner, and other executives helped facilitate them as a way to compensate him at a level that exceeded the NBA salary cap.
Last Wednesday, Daktronics CFO Howard Atkins told investors on the company’s earnings call that Daktronics had not only received inquiries from the NBA regarding its sponsorship deal with Leonard, but also from the Securities and Exchange Commission and that the company was cooperating fully in the federal investigation, via Matt Sullivan of the Pablo Torre Finds Out podcast.
“Let me now briefly address an issue that has been in the media regarding the NBA’s investigation into Kawhi Leonard and the Clippers in connection with the league’s collective bargaining agreement that many of you may have heard about. As you might expect, we have received requests for information from the NBA,” Atkins said. “In addition, the Securities and Exchange Commission is requesting information from us regarding the company and Mr. Leonard. We take these requests seriously and are cooperating. At this point, out of respect for the respective processes, we will not provide further comment.”
Leonard, as of Thursday night, remains on the Clippers’ roster. The Raptors agreed to a trade earlier this offseason to bring Leonard back to Toronto, and it is expected to be completed now that the NBA’s investigation is complete, but it has been on hold since late June. Leonard was not suspended by the NBA and his contract was not voided.
It may seem strange that the government would be involved in a case like this, but as the Times notes, “for nearly two decades, the U.S. attorney’s office in Brooklyn has brought cases focused on integrity in professional sports.”
In 2007, the bureau and the FBI brought a case against an NBA referee who admitted to betting on games he officiated. Over the past two years, prosecutors from the Eastern District of New York’s office have charged eight current and former professional athletes in cases involving illegal betting. Among those charged are NBA Hall of Fame guard Chauncey Billups and star Major League Baseball closer Emmanuel Clase, both of whom have pleaded not guilty.
In 2015, federal prosecutors in Brooklyn charged dozens of defendants in a case that targeted widespread institutional corruption at FIFA, world soccer’s governing body. The case uncovered a scheme in which sports marketing executives paid $150 million in bribes to soccer officials in exchange for lucrative broadcast rights to tournaments.
It’s important to note that none of this means that criminal charges will necessarily be filed against the Clippers or Ballmer, only that the matter is being investigated.
Meanwhile, aside from this government investigation, Ballmer and the Clippers “vehemently” reject the NBA’s conclusions from its own investigation, conducted by the law firm Wachtell, Lipton, Rosen & Katz. The league’s investigation found that the Clippers effectively violated the league’s salary cap rules by “affirmatively initiating off-court income opportunities between Mr. Leonard and four different companies.”
“What the league told us privately differs from what they announced publicly today, and they have not held close to the commissioner’s standard. [Adam] Silver was established at the beginning of this investigation to ensure its impartiality and accuracy,” the Clippers said last week. “Over the past year, we cooperated fully and in good faith and now we will fight just as hard to prove our innocence. “We intend to vigorously challenge these findings and sanctions through all avenues available to us and look forward to an ethical and impartial arbitration process.”
