DOJ Opens Criminal Probe of Clippers Over Kawhi Leonard Deals

The DOJ opened a criminal probe into the Clippers over Kawhi Leonard salary-cap circumvention, days after the NBA's record penalties.

The Department of Justice has opened a criminal investigation into the LA Clippers' alleged circumvention of the NBA salary cap through a series of endorsement deals with Kawhi Leonard, The New York Times reported Thursday. The U.S. attorney's office in Brooklyn, in the Eastern District of New York, is leading the inquiry, which is in its early stages. Prosecutors have issued at least one subpoena, though the investigation's scope, targets and possible crimes under review remain unclear, and it is not known whether charges will be brought or evidence presented to a grand jury.

The federal escalation comes just days after the NBA delivered what many considered the conclusion of the matter. On Sept. 2, the league announced its own penalties following a yearlong investigation, and the Clippers were already vowing to fight. A criminal probe by the same Brooklyn office that pursued the Tim Donaghy betting scandal and charged Chauncey Billups and Emmanuel Clase in illegal gambling cases represents a far more serious turn than league discipline alone, raising the possibility of criminal liability on top of record NBA sanctions.

The NBA's investigation, conducted by the law firm Wachtell, Lipton, Rosen & Katz, found a pattern of misconduct and multiple significant rules violations by the Clippers, described by the league as a prior offender of salary-cap circumvention rules. According to the Toronto Sun's account of the findings, Kawhi Leonard's uncle and business partner Dennis Robertson allegedly pressured the Clippers into endorsement deals worth tens of millions more than Leonard's contract, including a $28 million deal with the now-bankrupt Aspiration Partners firm, a relationship first uncovered by journalist Pablo Torre.

President Lawrence Frank was suspended six months, business operations president Gillian Zucker a year, Leonard was fined $700,000, and Robertson was banned from NBA business dealings for five years. Criminal exposure for the franchise, its executives, or Leonard would far exceed those league sanctions.

The Clippers have vehemently rejected the Wachtell findings, calling them the product of a heavily biased investigation seeking to justify a predetermined narrative rather than facts and evidence, and have vowed to fight, with The Times reporting the team is weighing options including a lawsuit against the league or asking a judge for a restraining order. Leonard, in a statement issued through the NBPA and agent Harrison Gaines, said he accepted full responsibility for lapses in judgment by people within his inner circle and regretted the distraction caused to fans and his family.

Much remains unresolved. The federal probe is in its early stages, with unclear targets and possible crimes, and no one has been charged. Meanwhile, the June trade agreement that would send Leonard back to the Toronto Raptors — a deal bringing Brandon Ingram, Gradey Dick and draft compensation to Los Angeles — has yet to be finalized, as Toronto opted to hold off until the NBA completed its investigation. The SEC has also reportedly reached out to Daktronics, a company the NBA's report singled out, per Yardbarker's account of the Times reporting, suggesting parallel scrutiny may continue.