Los Angeles Clippers Face Federal Investigation Over Kawhi Leonard Payments

Federal prosecutors have opened a criminal investigation into whether the Los Angeles Clippers illegally worked around the NBA salary cap to pay Kawhi Leonard, according to a report from The New York Times.

The probe, led by the U.S. Attorney's Office in Brooklyn, is in its earliest stages, the Times reported, citing people briefed on the matter. At least one subpoena has already gone out as part of the inquiry.

The U.S. Attorney's Office declined to comment when contacted by ESPN. The Clippers and the NBA also did not respond to requests for comment.

This new federal case lands on top of the NBA’s own sweeping investigation, which concluded just days ago and delivered one of the harshest punishments the league has ever handed a franchise.

After a nearly yearlong inquiry conducted by the law firm Wachtell, Lipton, Rosen & Katz, the league found what it called “a pattern of misconduct and multiple significant rules violations by the Clippers organization, a prior offender of the salary cap circumvention rules.”

The price was brutal.

The NBA stripped the Clippers of five future first-round draft picks, fined the franchise $30 million and suspended owner Steve Ballmer for one year. Leonard was also ordered to pay the league $700,000.

Now, the scrutiny has moved beyond the league office and into federal territory.

This is the second time a government body has started asking questions about the Clippers’ financial dealings with Leonard. On Sept. 2, the same day the NBA announced its findings and sanctions, a Daktronics executive revealed on a quarterly earnings call that the scoreboard company had been contacted by the Securities and Exchange Commission about its business with Leonard.

Daktronics, which is tied to the massive scoreboard project at the Clippers’ new Intuit Dome arena, said it is cooperating with the SEC and declined to offer more details.

The NBA’s Sept. 2 report outlined the core of the alleged scheme. According to league investigators, the Clippers steered a kickback from a major Intuit Dome scoreboard contract to Leonard in the form of an endorsement deal. The report said the team not only directed the payment but also helped set the terms of a multiyear agreement worth millions of dollars.

What began as a cap-circumvention case inside the NBA’s disciplinary system has now spilled into the federal justice and securities arenas, dragging one of the league’s marquee franchises and one of its biggest stars into a far more serious spotlight.