The Clippers’ salary cap circumvention scandal has made its way to the Justice Department.
On Thursday, The New York Times reported that federal prosecutors have opened a criminal investigation into the Clippers, related to the NBA’s findings that the team aimed to circumvent the league’s salary cap by setting up no-show endorsement deals for star Kawhi Leonard.
It isn’t known what crimes the Justice Department is investigating the Clippers for, according to the Times, or whether the investigation will result in charges.
The NBA released the findings of its investigation into the Clippers last week, while handing down one of the harshest penalties in league history. The investigation found that the team helped arrange four endorsement deals for Leonard with team sponsors that required little participation on his part, as a way to compensate him beyond his contract with the team and get around the league’s salary rules.
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NBA Commissioner Adam Silver stripped the Clippers of five first-round draft picks and suspended owner Steve Ballmer for a year, in addition to suspending two other team executives. Leonard must pay $700,000 in restitution, and Dennis Robertson, Leonard’s uncle and adviser, is banned from doing business in the NBA for five years.
Daktronics, which is one of the companies that made a deal with Leonard, is being probed by the Securities and Exchange Commission as a result of the NBA’s findings, the company’s CFO said on a recent earnings call.
According to the Times, the Justice Department’s investigation is being conducted by the U.S. attorney’s office in Brooklyn — which has a long history of investigating the NBA. In 2007, the office investigated former NBA referee Tim Donaghy, who bet on games he officiated and later served 15 months in prison, and in recent years the office has handled cases surrounding the federal gambling probe that led to the arrests of NBA players Terry Rozier and Malik Beasley as well as Trail Blazers coach Chauncey Billups.
After the NBA handed down its punishment, the Clippers issued a statement that said the team “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.” Ballmer’s attorney David Kelley, a former U.S. attorney for the Southern District of New York, released his own statement calling the investigation a “witch hunt,” but no mechanism exists within the NBA to challenge the league’s decision.
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