Federal prosecutors in Brooklyn have opened a criminal investigation into the Los Angeles Clippers over alleged salary cap circumvention involving forward Kawhi Leonard, according to a report published Thursday by The New York Times citing people briefed on the matter. Attorney’s Office for the Eastern District of New York, is currently in its earliest stages, according to the same reporting.
Federal Prosecutors Target Clippers Finances in Brooklyn Inquiry
The federal probe represents the second time a government entity has examined the financial dealings between the franchise and Leonard, who must pay the NBA $700,000 as part of his league-mandated punishment. At least one subpoena has already been issued by federal prosecutors, The New York Times reported. Attorney’s Office, the Clippers, and the NBA did not immediately respond to requests for comment from ESPN regarding the investigation.
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Wachtell Lipton Probe Uncovers Rules Violations and Scoreboard Kickbacks
The criminal investigation follows a nearly yearlong probe of the Clippers conducted by the law firm Wachtell, Lipton, Rosen & Katz. According to league investigators, the independent probe found a pattern of misconduct and multiple significant rules violations by the organization, which is a prior offender of salary cap circumvention rules.
The Wachtell Lipton report alleged that the Clippers directed a kickback from a massive scoreboard contract for the Intuit Dome to Leonard through an endorsement deal. Investigators stated that the team even set the terms of a multiyear agreement worth millions of dollars. In response to these findings, the NBA issued severe penalties, including a $30 million fine, the forfeiture of five future first-round draft picks, and a yearlong suspension for owner Steve Ballmer.
SEC Inquiry Adds Financial Scrutiny for Daktronics
The financial scrutiny extends beyond federal prosecutors and the league office. On Sept. 2—the exact day the NBA announced its findings and penalties—an executive for scoreboard company Daktronics revealed during a quarterly earnings call that the company had been contacted by the U.S. Securities and Exchange Commission regarding its dealings with Leonard. The executive noted that Daktronics was cooperating with the SEC but declined to offer further comments.
Eastern District History With NBA Investigations
The U.S. In 2007, working alongside the FBI, the office prosecuted former referee Tim Donaghy, who admitted to betting on games he officiated and pleaded guilty to conspiracy to commit wire fraud and conspiracy to transmit gambling information. More recently, in 2025, the office indicted former Portland Trail Blazers coach Chauncey Billups, former Miami Heat guard Terry Rozier, and former guard and assistant coach Damon Jones amid investigations into illegal sports betting and rigged poker games. The office also indicted former players Malik Beasley and Ed Davis this year in connection to an alleged sports betting scheme.
Frequently Asked Questions
Who is leading the federal investigation into the Los Angeles Clippers?
Attorney’s Office for the Eastern District of New York in Brooklyn, according to The New York Times.
What penalties did the NBA impose on the Clippers?
The NBA issued a $30 million fine, suspended owner Steve Ballmer for one year, and stripped the franchise of five future first-round draft picks. Kawhi Leonard was also ordered to pay the league $700,000.
What role did Daktronics play in the financial inquiry?
An executive for scoreboard manufacturer Daktronics announced on a quarterly earnings call that the company had been contacted by the U.S. Securities and Exchange Commission regarding its business dealings with Kawhi Leonard.
Has anyone responded to the federal subpoenas?
Attorney’s Office, the Clippers, and the NBA did not immediately respond to requests for comment from ESPN regarding the reported subpoenas and ongoing investigation.
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