Federal prosecutors have now entered the Kawhi Leonard endorsement-deal scandal, opening a criminal investigation into allegations that the Los Angeles Clippers helped set up secret sponsorship contracts designed to get around the salary cap.
The inquiry is still in its earliest phase, and no charges have been filed. But it marks a new front for Leonard and the Clippers, coming less than a month after the NBA handed down its own punishments.
According to The New York Times, “Federal prosecutors have opened a criminal investigation into allegations that the Los Angeles Clippers helped arrange secret sponsorship contracts for the star player Kawhi Leonard that circumvented the salary cap,” and “The investigation is in its earliest stages and is being conducted by the U.S. Attorney’s Office in Brooklyn, which has a long history of investigating the NBA and professional sports, according to two of the people.”
The federal case is separate from the league’s discipline. Investigators are not trying to determine whether the Clippers violated NBA rules; they are looking at whether any federal crimes were committed, including possible wire fraud, mail fraud, or tax offenses. At least one subpoena has already been issued.
“The authorities began scrutinizing the matter before the NBA leveled a series of severe punishments last week against the Clippers, its owner and two top executives after a law firm working for the N.B.A. and its commissioner, Adam Silver, concluded that the team had engaged in a wide-ranging effort to break its rules. The inquiry’s scope, targets, and the possible crimes being examined were unclear. But prosecutors have issued at least one subpoena as part of the investigation, according to the two people.”
The NBA’s own investigation had already uncovered extensive evidence tying the Clippers, including owner Steve Ballmer, to secret no-show endorsement arrangements for Leonard. The report said at least four companies were involved, and that they paid Leonard tens of millions of dollars. One of those companies was Daktronics, an NBA scoreboard maker, which has since drawn a separate SEC investigation.
What comes next is unclear, but the federal probe keeps the pressure on Leonard and the Clippers. Leonard, who got off easy in the scandal, could face serious trouble if prosecutors determine federal laws were broken. Unlike in the NBA process, where he has the backing of the players’ association, he would be on his own if the case reaches federal court.
For now, the case remains open and unresolved. Kawhi and the Clippers do not know what the final outcome will be, and all they can do is cooperate with federal authorities and wait.
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