Clippers Owner Steve Ballmer Defends Aspiration Investment Amid NBA Probe
Los Angeles Clippers owner Steve Ballmer has vehemently denied accusations that he invested in Aspiration (now known as Catona) as part of a scheme to funnel additional money to star player Kawhi Leonard through a no-show endorsement deal. Ballmer's legal team, led by Daniel Petrocelli of O'Melveny & Myers, filed a demurrer this week, asserting that the claims are 'salacious' and 'false'.
While the NBA commissioner, Adam Silver, is not the primary audience for the filing, the NBA will undoubtedly consider the brief as it investigates Ballmer and the Clippers for alleged salary cap circumvention. The motion is a response to a lawsuit filed by Aspiration investors, who sued Ballmer alongside Catona's board members for fraud and related misdeeds. This lawsuit stems from the company's co-founder, Joseph Sandberg, pleading guilty to wire fraud and the subsequent bankruptcy of Aspiration.
Petrocelli argues that the lawsuit's reliance on podcaster and journalist Pablo Torre's September commentary is problematic. Torre accused Ballmer of conspiring with Aspiration to circumvent the NBA salary cap, with Aspiration (a former Clippers sponsor) signing Leonard (through his KL2 Aspire LLC) to a four-year, $28 million endorsement deal. The deal was ridiculed as deceptive, with Leonard not having to perform services to earn the money.
Petrocelli highlights that the complaint against Ballmer mirrors Torre's podcast without additional specifics, insights, or context. He argues that the complaint fails to provide alleged facts that Ballmer was aware of Sandberg's fraud, including the use of doctored financial statements and phony customers and revenue. Proving fraud, Petrocelli insists, is uniquely challenging under California law, requiring specific details and not generalizations or inferences.
The timing of the lawsuit is another issue, as most plaintiffs had already invested in Aspiration before Ballmer's involvement in late 2021. Petrocelli contends that the plaintiffs cannot credibly argue influence by Ballmer when their association predated his and was based on Sandberg's assurances.
Despite the denial of fraud, Ballmer might still be implicated in salary-cap circumvention. Petrocelli points out the suspicious absence of the entire Aspiration-Leonard endorsement contract in the lawsuit, despite both plaintiffs and Torre describing it as a sham. He argues that it's impossible to determine which terms were withheld and if they undermine the allegations.
Petrocelli also criticizes Torre for not sharing the entire contract, emphasizing that Torre is not an officer of the court but a journalist reporting a story. The Clippers' association with Aspiration was justified by Aspiration's environmental sustainability claims, which Ballmer supported. The Intuit Dome, where the Clippers play, is also described as a 'climate-friendly arena'.
The investors in the case will have the opportunity to rebut the motion, with Judge Richardson set to consider it on March 9 in Los Angeles. The NBA's investigation has no required timetable, and the outcome could have significant legal implications for team-sponsor relationships and endorsement deals.
