The NBA was in a crisis in 2007. The FBI was investigating Tim Donaghy for allegedly betting on games he refereed and, potentially, influencing those games with his whistle.
The league needed to know how deep the rot went. Then-commissioner David Stern, for the first time, hired Wachtell, Lipton, Rosen & Katz, a prestigious white-shoe law firm a few blocks away from the league office in midtown Manhattan.
About a year after that first call to Wachtell Lipton, the firm authored the Lawrence Pedowitz report, a 133-page summary of its investigation into Donaghy that meticulously ferreted through allegations about the league’s now former referee and, more importantly, calmed nerves around NBA headquarters.
Two decades later, when the NBA has a big problem on its hands — like possible salary cap cheating in Los Angeles, or another illegal gambling scheme seeping through the cracks — it makes the same call, to the same law firm.
The NBA has investigators of its own. They typically look into minor violations of league rules, or a bench-clearing brawl, or a positive drug test for a banned substance. But if there is legal trouble, or if one of the league’s owners is accused of wrongdoing, the league turns to Wachtell Lipton for help.
All 30 teams are eagerly anticipating the results of Wachtell’s investigation into whether the Clippers arranged a no-show, multimillion-dollar endorsement deal for Kawhi Leonard with a former team sponsor to circumvent the salary cap. The NBA says it is counting on Wachtell Lipton to bore its way to the truth and will rely on Wachtell’s work to determine if it needs to punish the Clippers, owner Steve Ballmer and Leonard, the star player at the heart of the alleged scandal.
NBA Commissioner Adam Silver, himself a lawyer who once worked at another major New York law firm, will be the one to sift through the evidence and decide if punishment is warranted. He must not only weigh what Wachtell Lipton collects, but also consider public opinion and the beliefs of the other 29 teams, with the fastidious pleas of innocence from Ballmer, who is the league’s richest owner and world’s 10th-wealthiest man.
Wachtell’s investigation into the Clippers is ongoing, league sources said; the whole league is waiting to see what the firm uncovers and if punishment from Silver follows. This has been the kind of work the law firm has done for the league for two decades, and how it has operated in the past could be indicative of how Wachtell approaches the allegations against the Clippers.
The NBA called Wachtell when TMZ published a recording of Donald Sterling, then the Clippers’ owner, using racist language to discuss Magic Johnson in 2014. That same year, Wachtell led an investigation into then-Atlanta Hawks owner Bruce Levenson’s use of racially charged language in an email. In 2021, it was Wachtell that investigated alleged racist and misogynistic behavior by then-Phoenix Suns owner Robert Sarver. At the end of each investigation, the owner ultimately relinquished control of the team, albeit under different sets of circumstances.
The league did not force any of those owners to sell their franchises. The NBA can compel an owner to sell a team if the owner does not follow rules outlined in the league’s constitution around behavior, fiduciary duties and fair play and if at least 23 owners vote to force the sale.
The firm has worked directly for NBA teams as well: Wachtell represented Marc Lore and Alex Rodriguez in their legal wrangling for the Minnesota Timberwolves with former owner Glen Taylor, and Suns owner Mat Ishbia hired the firm in a dispute with two minority owners.
“The NBA engages a variety of outside firms to conduct league investigations,” NBA spokesman Mike Bass said to The Athletic. “Given the confidential nature of their work, it would not be appropriate to comment further.”
The NBA declined to answer questions beyond its statement. Wachtell Lipton declined to comment.
Wachtell investigated allegations that Terry Rozier took himself out of a game so gamblers could win bets on his performance, but the firm hit a wall. Federal prosecutors later charged Rozier. (Michael M. Santiago / Getty Images)
David Anders is almost always at the center of these investigations. A former assistant U.S. attorney for the Southern District of New York, with dark eyes, brown hair and a slender, athletic build, Anders, 56, is the Wachtell partner who serves as the league’s first call when something goes awry. Chances are, if you’re a person of import in any NBA investigation involving this particular law firm, you’re going to hear from Anders.
Anders has conducted investigations for the league since Wachtell’s first contract with the NBA. He assisted Pedowitz, a more senior partner at Wachtell Lipton, to investigate the Donaghy scandal and now runs them. People who have been interviewed by Anders say he is easy to speak with but serious about his job.
“It wasn’t a courtroom scene, but the guy was no joke,” said one person who offered a first-hand account of being in a room during an Anders-led investigation.
It was the Anders-led Wachtell team that determined former Toronto Raptors two-way player Jontay Porter placed illegal bets. Porter was ultimately expelled from the NBA. It was also Anders’ team that initially investigated allegations that Terry Rozier, now with the Miami Heat, removed himself on purpose from a game with the Charlotte Hornets so gamblers he was tied to could win prop bets. Wachtell did not find enough for the NBA to suspend Rozier, a bad look for the NBA in October when federal prosecutors charged Rozier with doing the very thing for which he was investigated by Anders’ team. Wachtell lawyers had access to Rozier and his phone and found that he texted someone that he would come out of a game, according to multiple people briefed on the investigations, but they could not compel others outside the NBA to participate in the investigation. Federal prosecutors had no such restrictions.
Wachtell has since, at the NBA’s request, re-opened its gambling probe.
Malik Beasley, the former Detroit Pistons and Milwaukee Bucks guard, is under federal investigation for possible illegal sports gambling, which means he is also subject to an ongoing Wachtell review. Neither federal prosecutors nor the NBA have, to date, accused Beasley of wrongdoing, but Beasley remains a free agent because of the active investigations into him.
“It’s a charade,” said Steve Haney, the attorney for Beasley. “It’s an utter joke that they’re acting as if they’re investigating with any possibility that they’re going to ‘clear’ Malik when they know that they already went through this process and failed with Rozier, and they don’t want to have that happen again with Malik. You can imagine how catastrophic that would be to that firm’s reputation if they got it wrong again.”
When federal gambling charges dropped on Oct. 23 against Rozier and Chauncey Billups, then the head coach of the Portland Trail Blazers, Wachtell litigators were already investigating accusations of cap circumvention by the LA Clippers, Ballmer, and Leonard, whose endorsement contract with the now-bankrupt environmental firm Aspiration is at the center of the probe.
Aspiration was a “green bank” that promised to supply carbon credits and plant trees to offset its clients’ carbon emissions. It received a $50 million investment from Ballmer weeks before a partnership was announced for Aspiration to be a title sponsor of the Clippers – a deal that was worth $300 million over 23 years. Aspiration filed for bankruptcy protection in March after its co-founder, Joe Sanberg, was arrested on charges of wire fraud. Sanberg pleaded guilty in October to defrauding investors of $248 million.
In publicly available bankruptcy filings reviewed by The Athletic, Aspiration’s three largest creditors listed are the Clippers, who say they are owed $30 million by the environmental firm; Forum Entertainment (also owned by Ballmer, claiming it is owed a debt of $11 million); and Leonard’s personal limited liability company, “KL2 Aspire,” claiming a debt of $7 million.
Leonard registered his limited liability company in November 2021 and his $28 million contract with Aspiration took effect in April 2022. In December 2022, Aspiration was running out of money. Clippers minority owner Dennis J. Wong made a $2 million investment in Aspiration, which turned around and paid Leonard $1.75 million – the value of the quarterly payments called for in his contract with Aspiration. Ballmer then put another $10 million into Aspiration months later, as first reported by The Athletic, as part of a fundraising round in which Wong was the only new investor.
The results of Wachtell’s probe of Leonard’s contract with Aspiration are not expected until after the NBA All-Star Game, which, coincidentally, Ballmer will host this weekend at the Intuit Dome in Los Angeles, the league’s newest arena, which cost Ballmer more than $2 billion to build.
Anders, and Wachtell, are familiar with high-stakes work. They have investigated gun-jumping and tampering in the NBA, but their work has also led to the ouster, directly or indirectly, of two NBA team owners in Sterling and Sarver. The inquiry into Sarver, and the culture he led in Phoenix, was an example of how Anders went to work.
ESPN published a report alleging years of racist and sexist behavior by then-Suns owner Sarver on Nov. 4, 2021. Before the month was out, phones belonging to anyone who may have witnessed Sarver’s alleged behavior began to buzz with texts, ding with emails and ring with calls from partners from Wachtell Lipton’s litigation department.
The firm held a videoconference for all current Suns employees, expressing a desire to speak with each of them. The employees received emails with options for dates and times for face-to-face interviews. Former employees still living in the greater Phoenix area were contacted by texts and calls, asking them if they would be willing to be interviewed in person. Former employees who left the region were texted to set up virtual interviews and calls.
“I think probably within a week or two of the article running, I got a call from David Anders and he said, ‘Hey, do you have a chance to chat?’” one Suns employees who participated in Wachtell Lipton’s investigation told The Athletic on the condition of anonymity for fear of retribution. “I obviously kind of knew what it was about. So you know, we chatted just briefly. He asked if I’d be willing to help.’”
Wachtell Lipton’s investigation into former Phoenix Suns owner Robert Sarver found that Sarver “clearly violated common workplace standards. (Christian Petersen / Getty Images)
The interviews were voluntary; Wachtell Lipton can’t coerce any NBA team employees to participate in an investigation, but players are required to sit for interviews with investigators by their collective bargaining agreement with the league. The Suns agreed to waive any confidentiality agreements in employment contracts, and former Suns officials were given assurances by Wachtell Lipton lawyers that their answers would be kept confidential. According to the firm, 124 people declined to participate, while 320 current and former employees agreed to an interview.
“I would say that there was a compulsion — like people felt compelled to participate, otherwise why would so many people have been walking in and out (of the in-person interviews) if they didn’t have to be there?” recalled another former Suns official who participated in the investigation and was among the six who spoke with The Athletic.
Shortly after launching its investigation, Wachtell Lipton rented a room at the sprawling, luxurious Arizona Biltmore resort nestled at the foot of the Phoenix Mountains Preserve, on the outskirts of the city and near “Old Town” Scottsdale.
A steady stream of current and former Suns employees, who worked on both the basketball and business sides of the organization, passed each other on the long walks to and from the resort’s parking garage on the western side of the property. Across the grounds, lawyers set up shop in a hotel room that was turned into a satellite boardroom for depositions.
Upon entering the room, the Suns employees saw four chairs on each side of a rectangular table in the middle of the room. The employees who spoke with The Athletic remembered two or three attorneys at the table, including Anders and Sarah Eddy, another partner at the firm. There were younger staff members from the firm in the room, taking notes.
Off to one side of the room was a buffet-style set up for snacks, drinks and lunch. Coffee, juice, tea, turkey sandwiches, potato chips.
“I imagine all of that was there to loosen people up,” one of the former Suns officials said.
The interviews were largely led by Anders, who, along with Eddy and any other attorneys in the room, was seated directly across from the Suns employees they were interviewing.
Interviews lasted as little as a half hour and as long as two hours, depending on the access each employee sitting in the chair had to Sarver and what he or she remembered. The first questions were mostly tied to the instances spelled out in ESPN’s report – asking if they were able to corroborate the accusations in the story that Sarver made racist comments and treated women in a discriminatory manner. If their answers were some version of “yes,” then lawyers asked for personal stories they may have had that were not included in the ESPN story.
The Suns employees with the most to say were asked back for a second interview toward the end of the investigation. The second round of interviews were to drill down on specific points made either during the initial deposition, or to follow up on points made by other current and former employees.
Suns employees who spoke with The Athletic described Anders and Eddy as courteous and professional and said the tone of the interviews was cordial. But there was still plenty of tension in the room, at least on the part of the Suns employees.
For those who hadn’t witnessed the allegations against Sarver — and therefore didn’t have much to offer the Wachtell Lipton crew — when they did describe any interaction they may have had with the Suns owner, they were startled by how eager the attorneys seemed to hear about it.
One former Suns business executive said the investigation’s very existence alone created an atmosphere of fear in the organization and mistrust of one another. A former Suns coach called his participation “traumatic” and said he has been in therapy since.
“The level of fear and suspicion was intensified,” the former business executive said. “It is the understanding that this is the league coming in and people have a heightened fear of retaliation. A fear for their job, for their career. I think it added to all of that.”
Allies of Sarver who interviewed with Wachtell Lipton said they felt the attorneys were searching for a specific outcome, based on pointed questions. The Sarver employees who felt he was guilty of what the ESPN story alleged were stunned not by the questions they were asked, but by the result of Wachtell Lipton’s work.
The firm’s written report, summarizing and then explaining in great detail its findings, was published in September 2022, nine months after the Wachtell investigation began. Anders’ team corroborated most of what the ESPN story found, saying in the report: “Sarver has engaged in conduct that clearly violated common workplace standards … this conduct included the use of racially insensitive language; unequal treatment of female employees; sex-related statements and conduct; and harsh treatment of employees that on occasion constituted bullying.”
But in the same executive summary, the Wachtell report also said that from the “totality of the evidence reviewed by investigators, the investigation makes no finding that Sarver’s conduct was motivated by racial or gender-based animus.”
The final report was written by Wachtell lawyers but, like its other public reports, was released with NBA approval and input. In that report, authors named numerous initiatives, including hiring practices, Sarver had engaged in to strengthen minority communities as evidence that his racist commentary did not make him a racist. That was then relied on as part of the reason the league didn’t strip the team from him.
“If anybody’s worried that Wachtell Lipton slanted this thing to get Sarver out of the NBA, I don’t feel that they did,” one former Suns official who was interviewed by Wachtell Lipton said. “But I think if you look at it objectively, if it was slanted in any way, it protected him a lot more than any normal person would have been protected by their employer if they had done just a fraction of what (Sarver) did, of what (Wachtell Lipton) had proven and confirmed he did.”
Silver was talking about the “context” in Wachtell Lipton’s report, upon which he said “I have to make a determination.” Silver had previously banned Sterling from the NBA for life, and then sold the Clippers, after Wachtell’s investigation proved he made racist comments on a tape published by TMZ, but Sarver was only suspended and fined after making racist and misogynistic remarks.
“It’s not really about the factual dispute here,” Silver said back then. “What is lost though is the context. … Indefensible (behavior) is not strong enough – it’s beyond the pale in every possible way – but it was a whole different context than what we saw in that earlier case.”
Sarver didn’t relinquish control of the Suns until after then-Suns star player Chris Paul and LeBron James said Silver’s punishment was not severe enough. James, perhaps the most dominant voice of all NBA players at the time, said on social media, “our league definitely got this wrong,” and Paul said Silver’s sanctions “fell short of addressing … truly atrocious behavior.” Suns jersey sponsor PayPal went further, threatening to end its partnership with the team if Sarver was the team owner in 2023-24. Facing enormous pressure, Sarver agreed to sell.
Regardless of which way the Wachtell investigation of the Clippers breaks, a similar player protest is unlikely. But the aftermath is bound to be messy anyway.
Signing Kawhi Leonard in free agency was a coup for the LA Clippers in 2019. (Sarah Stier / Getty Images)
A splashy, salacious media report. Anonymous whistle blowers. A team owner stands accused of behavior that, if found to be true, would be unacceptable in the NBA, albeit for a different reason.
These are the similarities between the Sarver investigation from five years ago and the Clippers probe now.
The two began in similar fashion. The “Pablo Torre Finds Out” podcast aired an episode Sept. 3 detailing a contract Leonard received from Aspiration, worth millions, that did not require him to do any work. Unnamed employees from Aspiration told Torre that the contract was salary cap circumvention. The NBA, in response to the podcast episode, announced an investigation two days later, and hired Wachtell.
In the initial days and weeks of the investigation, Anders and his team asked for volumes of records from the Clippers. The group sought Aspiration employee lists and attempted to arrange interviews. A few former employees initially said yes; many balked over fears of potential retribution. Wachtell lawyers had more success reaching sources for interviews beginning in January.
Some interviewed by Wachtell during its investigations have questioned what the firm’s parameters are and if the NBA set them. One former Aspiration employee interviewed by Wachtell and granted anonymity by The Athletic to protect their privacy, said the questions in the interview were too pointed (echoing a similar criticism raised from the Sarver investigation). The former Aspiration employee said that they were asked about Leonard; his uncle and business manager Dennis Robertson; Aspiration and its internal dynamics; and the Clippers organization. The employee, however, said he was not asked about Ballmer.
Ballmer carries enormous influence in the NBA. His net worth is estimated at $134 billion, whereas the entire league has a valuation of $160 billion. He sits on one of the most important committees for the league’s Board of Governors. That’s serious firepower at Ballmer’s disposal to fight any ruling from the league. Ballmer is not only hosting the All-Star Game this month, but also Intuit is the site for the 2028 Olympic basketball tournament.
What Wachtell investigators find in their look into the Clippers will determine the future of the franchise, with the possibility that Silver could kneecap it for years to come or that the team and Ballmer could come out untouched. If the NBA determines that Leonard’s deal with Aspiration was a form of cap circumvention, it could punish the Clippers by fining them up to $7.5 million, stripping future draft picks, even voiding Leonard’s deal, or suspending members of the front office or Ballmer.
The stakes for the NBA are high. Opposing team executives are watching closely to not only see if the Clippers will be punished but also for an indication of how closely the league could prosecute allegations of cap circumvention in the future. No matter the decision, Silver is facing one of the most high-profile moments of his tenure.
Much is riding on that next Wachtell report.