A federal investigation has been opened into the Los Angeles Clippers for allegedly circumventing the NBA’s salary cap to compensate Kawhi Leonard, The New York Times reported Thursday, citing people briefed on the matter.
The Times reported that the criminal investigation, led by the U.S. Attorney’s Office in Brooklyn, is in its earliest stages.
A spokesman for the U.S. Attorney’s Office did not immediately respond to a request for comment from ESPN. Neither did spokespeople for the Clippers and the NBA.
The investigation follows the NBA’s near yearlong investigation into the Clippers by the law firm Wachtell, Lipton, Rosen & Katz, which “found a pattern of misconduct and multiple significant rules violations by the Clippers organization, a prior offender of the salary cap circumvention rules.”
The NBA issued a severe punishment for the team, including the loss of five future first-round draft picks, a fine of $30 million and a yearlong suspension of owner Steve Ballmer.
At least one subpoena has been issued as part of the investigation by federal prosecutors, The Times reported.
The federal investigation would mark the second instance that a government entity is inquiring about the Clippers and their financial dealings with Leonard, who must pay the NBA $700,000 as part of his punishment.
On Sept. 2, the same day the NBA announced its findings and punishment for the Clippers and Leonard, an executive for scoreboard company Daktronics announced on a quarterly earnings call that the company had been contacted by the Securities and Exchange Commission about its dealings with Leonard.
The executive said on the call that Daktronics was cooperating and wouldn’t comment further.
In the Sept. 2 report from Wachtell Lipton, league investigators said the Clippers directed a kickback from a massive scoreboard contract for Intuit Dome to Leonard in the form of an endorsement deal and even set the terms of a multiyear deal worth millions of dollars.
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