The Los Angeles Clippers are facing a federal investigation over allegations that the franchise circumvented the NBA’s salary cap to compensate star forward Kawhi Leonard.
The criminal investigation is being led by the U.S. Attorney’s Office for the Eastern District of New York in Brooklyn and is reportedly in its earliest stages.
The federal investigation follows a nearly yearlong NBA inquiry conducted by law firm Wachtell, Lipton, Rosen & Katz.
The league found a “pattern of misconduct and multiple significant rules violations” by the Clippers, who had previously been punished for salary-cap circumvention.
The NBA subsequently fined the franchise $30 million, removed five future first-round draft picks and suspended owner Steve Ballmer for one year.
Leonard was also fined $700,000 as part of the league’s punishment.
Alleged endorsement arrangements examined
The NBA investigation found that the Clippers helped arrange off-court income opportunities for Leonard through companies doing business with the team.
Among the deals examined was an endorsement agreement involving scoreboard manufacturer Daktronics, with the league alleging that money from a major scoreboard contract for Intuit Dome was redirected to Leonard.
The NBA also investigated arrangements involving Aspiration Partners, Boingo Wireless and Lockton Insurance.
The federal investigation would represent a second government inquiry into the financial dealings involving Leonard.
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