Clippers Scandal: Investigation into Possible Irregularity in Kawhi Leonard Deal
A Los Angeles Clippers limited partner could be at the center of an NBA investigation for alleged financial irregularities related to a sponsorship deal with Kawhi Leonard. According to reports, this partner would have sent almost 2 million dollars to a company now in bankruptcy, which allegedly offered Leonard a sponsorship contract for “ghost work”. The company in question, Aspiration, allegedly agreed to a $28 million sponsorship deal with Leonard in 2021. Clippers owner Steve Ballmer invested $50 million through his personal LLC in September 2021, and the Clippers announced a $300 million partnership with Aspiration two weeks later. It was reported that Leonard agreed to a four-year, $28 million sponsorship deal in April 2022, nine months after renewing his contract with the Clippers. The situation is further complicated by the fact that Dennis J. Wong, a limited partner of the Clippers, invested $1.99 million in Aspiration nine days before the company made a $1.75 million payment to Leonard. This payment, according to the schedule, was made late, and the company was facing financial problems before declaring bankruptcy. The NBA is investigating whether Ballmer and the Clippers violated league rules due to this agreement with Leonard.The accusations arose last week when an unidentified person, allegedly employed by Aspiration, stated that the agreement with Leonard aimed to circumvent the salary cap. The Clippers have denied any wrongdoing, and Ballmer stated that they have always acted correctly. The Clippers issued a statement saying they will cooperate with the NBA’s investigation and provide all necessary information. The investigation is being handled by the New York-based law firm Wachtell, Lipton, Rosen & Katz. There is no set deadline for reaching a conclusion. According to reports, Leonard agreed to the sponsorship deal through his LLC, KL2 Aspire. A clause in the documents indicated that the agreement between Aspiration and KL2 Aspire would be void if Leonard left the Clippers. Furthermore, Leonard could “refuse to proceed with any action desired” by Aspiration and still receive payments. Aspiration declared bankruptcy in March and is under federal investigation for fraud. Aspiration co-founder Joe Sanberg pleaded guilty to two counts of wire fraud, admitting to defrauding investors and lenders of more than $248 million. Under NBA rules, teams can be penalized for circumventing the salary cap. Penalties can include fines of up to $7.5 million, loss of draft picks, voiding of player contracts, and suspension of up to one year for any team member involved in such violation. The Clippers have categorically denied any attempt to divert funds to Leonard. The organization assures that it complies with NBA rules and welcomes the investigation.I believe that, as with any process that requires a fundamental sense of justice, the burden should fall on the party that, in essence, presents those charges.
Adam Silver, NBA Commissioner
