Things may have just gotten much worse for Steve Ballmer, as the Clippers owner has been reportedly sued by 11 Aspiration investors (the company is now called Catona).
Earlier, only the NBA was investigating the salary cap circumvention allegations from the renowned sports investigator Pablo Torre. But now, the LA District Attorney’s Office will likely be looking into the matter as well, with the full force of federal powers.
According to a PDF document of the complaint obtained by Pablo Torre, the investors are alleging that Steve Ballmer is a co-conspirator in the fraud that Aspiration’s CEO Joe Sanberg pleaded guilty to.
“Ballmer was complicit in and aided and abetted [co-founder Joe] Sanberg’s fraud for his own self-serving purpose… Absent Ballmer’s support, [Aspiration] could not have sustained the frauds set forth herein,” read the complaint.
The investors believe, based on Torre’s investigations and their own claims, that Ballmer intentionally used the company to funnel over $50 million to the Clippers star Kawhi Leonard while circumventing the NBA’s salary cap rules.
They also believe that without Ballmer’s endorsement as an investor, they would not have invested in Aspiration. The investors are claiming that had Ballmer revealed the true nature of his business deal with Joe Sanberg, they would not have invested in the fraudulent company, thus making Ballmer complicit.
“Plaintiffs would not have invested and/or kept their investment in [Aspiration] if Ballmer and Sanberg had disclosed the true nature of Ballmer’s investment,” says an excerpt from the complaint.
“Plaintiffs allege that Ballmer transferred other funds to [Aspiration] to keep the company afloat and buy Sanberg’s support, cooperation, and silence about the secret deal with Leonard. The full extent of Ballmer’s transfers of funds to [Aspiration] and Sanberg will be ascertained in discovery.”
Of course, the standards of evidence remain equally high in the courts as they did for the NBA, but a conviction by the court could lead to a catastrophic sequence of events for Ballmer and the Clippers.
There were murmurs around the league that NBA commissioner Adam Silver would not be able to effectively administer justice in this situation, as he effectively works for the billionaire owners of the various franchises, and hence, his powers would be limited against them, leaving room for potential fiduciary pressure on him.
For example, Gilbert Arenas felt that he did not anticipate any punishment inflicted on the Clippers from the league office, especially in the absence of hard evidence, stating the aforementioned reasons.
Although it is unlikely since Silver is also facing pressure from other owners, executives, and teams around the league to crack down on the alleged circumvention. But hopefully, the involvement of ‘Uncle Sam’ in this matter should facilitate an unbiased and thorough investigation.
Ballmer has repeatedly insisted that he had no idea about Aspiration’s business operations back when they struck the deal. And he claims to be a victim of the fraud as well. But he will have a lot of explaining to do, especially in terms of certain alleged additional investments after the initial deal that made the investment total add up to a whopping $118 million.
Therefore, if the district attorney’s office finds credible evidence to find Ballmer guilty as a co-conspirator, then the league office will have no option but to inflict heavy penalties on the Clippers franchise as well. As the whole claim is based on the fact that Ballmer knew about Aspiration’s fraud and intentionally invested in the company to buy the CEO’s silence to help him circumvent the NBA’s salary cap.
It will be interesting to see if Ballmer and the Clippers avoid this bullet or an ugly version of the truth prevails.
