Los Angeles Clippers Under Federal Investigation for Salary Cap Violations

Federal prosecutors have opened a criminal investigation into the Los Angeles Clippers over alleged efforts to dodge the NBA’s salary cap in compensating Kawhi Leonard, according to a report from The New York Times.

The inquiry, led by the U.S. Attorney's Office in Brooklyn, is described as being in its earliest stages. At least one subpoena has already gone out, The Times reported, signaling that federal authorities are now digging into a case that has already rocked the franchise inside league offices.

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 probe lands on top of the NBA’s own near yearlong investigation, conducted by the law firm Wachtell, Lipton, Rosen & Katz. That report concluded the Clippers engaged in “a pattern of misconduct and multiple significant rules violations,” and labeled the franchise a repeat offender of the league’s salary-cap circumvention rules.

The league’s response was brutal. The Clippers were stripped of five future first-round draft picks, fined $30 million and saw owner Steve Ballmer hit with a yearlong suspension. Leonard, whose financial arrangements are at the heart of the scandal, was ordered to pay the NBA $700,000.

Now the scrutiny has moved beyond the commissioner’s office and into the realm of federal law.

The financial web stretches well past the locker room. On Sept. 2, the same day the NBA released its findings and punishments for the Clippers and Leonard, an executive from Daktronics, a major scoreboard manufacturer, told investors on a quarterly earnings call that the company had been contacted by the Securities and Exchange Commission regarding its dealings with Leonard. The executive said Daktronics was cooperating with the SEC and declined to elaborate.

The Wachtell Lipton report detailed how, according to league investigators, the Clippers steered a kickback from a massive scoreboard contract for Intuit Dome toward Leonard. The money, investigators said, was routed in the form of an endorsement deal, with the team allegedly helping to set the terms of a multiyear agreement worth millions of dollars.

What began as a cap-circumvention case inside the NBA has now drawn the attention of both the SEC and federal prosecutors. For a franchise already stripped of draft capital and led by an owner barred from day-to-day control, the stakes have shifted from competitive damage to potential criminal exposure—raising a stark question: how deep does this go for the Clippers and their marquee star?