The NBA has hired law firm Wachtell, Lipton, Rosen & Katz to investigate the allegations that the Clippers and Kawhi Leonard used an endorsement deal with fintech company Aspiration to circumvent the salary cap, a source tells Joe Vardon, Sam Amick and Mike Vorkunov of The Athletic.
While the New York-based firm will lead the investigation, the NBA also has its own investigator who will serve as a consultant, according to The Athletic.
The NBA previously used Wachtell Lipton in a pair of high-profile investigations of ownership misconduct, per The Athletic’s trio, and both resulted in the owners selling the teams. The first case was back in 2014 with former Clippers owner Donald Sterling, and the second occurred in 2022 with ex-Suns owner Robert Sarver.
Wachtell Lipton was also recently employed by the Celtics as part of the team’s sale, Vardon, Amick and Vorkunov add.
On Wednesday, Pablo Torre reported that Leonard signed a $28MM endorsement deal with now-bankrupt Aspiration but performed no work for the company. A follow-up report from Boston Sports Journal stated that Leonard also made a side deal with Aspiration to receive an additional $20MM in company stock.
Clippers owner Steve Ballmer had previously made a $50MM investment in Aspiration — allegedly with “light-to-no diligence” — and at a higher share price than other investors.
Ballmer and the Clippers have denied any wrongdoing and have said they will fully cooperate with the investigation.
Aspiration co-founder Joseph Sanberg pled guilty last month to two counts of wire fraud for a $248MM scheme to defraud lenders and investors.
If the investigation proves the salary cap was circumvented, the NBA has a wide range of possible sanctions it could impose on the Clippers, Ballmer and/or Leonard, the authors note.
In that scenario, Jason Lloyd of The Athletic argues that commissioner Adam Silver should levy severe penalties on the involved parties. However, Lloyd points out that there’s no specific burden of proof that needs to be reached, so there’s no guarantee the investigation will lead to said penalties.