Federal prosecutors open criminal probe into Clippers salary-cap dealings involving Kawhi Leonard

The U.S. attorney's office in Brooklyn has opened a criminal investigation into the Los Angeles Clippers, owner Steve Ballmer, and Kawhi Leonard for alleged salary-cap circumvention via third-party endorsement deals, according to CBS Sports. The investigation escalates what was already the NBA's harshest enforcement action, moving the matter from league penalties into potential federal criminal territory.

The investigation follows an NBA probe conducted by the law firm Wachtell, Lipton, Rosen & Katz, which found that the Clippers violated league salary-cap rules by "affirmatively initiating off-court income opportunities between Mr. Leonard and four different companies," per CBS Sports. Among the matters under scrutiny are a series of endorsement deals that Leonard signed and whether Ballmer and other executives facilitated them as a way of compensating him beyond the NBA's salary cap, according to CBS Sports.

The Brooklyn-based U.S. attorney's office, which brought a case against NBA referee Tim Donaghy in 2007 for gambling on games he officiated and currently oversees a gambling probe involving NBA player Chauncey Billups, is reportedly overseeing this investigation, per Yahoo NBA. Prosecutors have issued at least one subpoena as part of the probe, which is in its earliest stages, according to CBS Sports.

Daktronics, a company involved in one of the endorsement deals, disclosed the inquiry during an earnings call. Daktronics CFO Howard Atkins told investors that the company had received inquiries from the NBA regarding their endorsement deal with Leonard, and also from the Securities and Exchange Commission, per CBS Sports. Daktronics said it was cooperating fully in the federal probe.

The Clippers rejected the NBA's findings last week, stating that what the league told them privately differs from what it announced publicly. The team said they cooperated fully with the NBA investigation and "will now fight just as hard to demonstrate our innocence" and "intend to vigorously challenge these findings and penalties through every avenue available," per CBS Sports. The team said they look forward to an arbitration process.

Leonard was not suspended by the NBA and did not have his contract voided as part of the league's enforcement action, per CBS Sports. He remains on the Clippers roster. The Raptors agreed to a trade earlier this offseason to bring Leonard back to Toronto, but it has been on hold since late June; it is expected to be completed now that the NBA investigation is complete, per CBS Sports.

The scope of the criminal inquiry, the specific crimes being examined, and whether charges will ultimately be filed remain unclear.