Kawhi Leonard Signed a Secret $28M Deal. Steve Ballmer Funded a Fraud. We Followed the Money. | PTFO

[EastonEddy]

Forfeit draft picks to Raptors sounds good to me

[Froob]

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[Godaddycurse]

Why should the team be the only ones punished? The player and their agent were in on it and should have that amount deducted from upcoming salary at the very least.

same joe smith punishment seems apt. void contract and get rid of bird rights. Kawhi forced to play for MLE or less this year would be a strong punishment

[GoldenAntlers]

This would be bigger story if Kawhis NBA contract wasn't actually enormous as is.

Rules are rules.
Size of the official contract so be of no consequence.

[eminence]

Punishing the team instead of the individuals involved is dumb.

Kawhi - meaningful suspension (as in 1 season minimum)
Ballmer - loss of ownership

Let the government figure out the legal stuff, but the league cannot tolerate players/owners just ignoring the CBA. Mostly owners.

[GoldenAntlers]

Punishing the team instead of the individuals involved is dumb.

Kawhi - meaningful suspension (as in 1 season minimum)
Ballmer - loss of ownership

Let the government figure out the legal stuff, but the league cannot tolerate players/owners just ignoring the CBA. Mostly owners.

Far from dumb. This needs to stop.

[eminence]

Punishing the team instead of the individuals involved is dumb.

Kawhi - meaningful suspension (as in 1 season minimum)
Ballmer - loss of ownership

Let the government figure out the legal stuff, but the league cannot tolerate players/owners just ignoring the CBA. Mostly owners.

Far from dumb. This needs to stop.

Punishing the team through things like draft picks won't stop it.

[zeebneeb]

With weak, spineless leadership, you get people playing fast and loose with the rules.

Silver is the definition of a jellyfish. What should happen(loss of draft picks. Forced sale of team. Anyone involved loss of contracts, banned from the NBA. Name stripped from all record books)VS what will happen, will probably be worlds apart.

If all of this is true.

[drekwins]

Im guessing Ballmer gets a slap on a wrist but this sounds like the Joe Smith deal but even more egregious and high profile.

Silver is at a crossroads with this, protect the big market/richest owner in the league or set an example

This may be bigger than the NBA. This could easily become a very serious DOJ/IRS issue. Although it is impossible for us to know exactly how perverse severe this is without access to the accounting, we KNOW that the business transactions was logged fraudulently in the ledger of Ballmer's Tree company... To explain, Ballmer's company had to list the Kawhi $28 mil payment as an "Endorsement Services Payable", or similar. At the end of the tax year, they then had to issue a 1099 to Kawhi/Kawhi's company, etc. for the endorsement services provided. If Kawhi provided no services, etc., this is straight-up fraud, and the accounting used does not accurately of the true nature of the transaction. It's, at a minimum, a falsifying business records charge. It could even potentially rise to much more serious crimes (money laundering, fraud, wire fraud, bank fraud, etc.).

This is a major issue... and, the IRS, SEC and DOJ may get involved.

Don’t disagree with anything you’ve said, but they would be exceedingly dumb to not have Kawhi do some minimal labor here, given the difficulty in valuing these services some amount of work may suffice. But definitely an interesting angle.

From my understanding, the shell company didn't earn much money, if any. Thus, even if Kawhi provided "some minor services", more analysis is needed (especially since Ballmer is the owner instead of an independent third-party).

The key questions would be:
1) Did Kawhi provide endorsement services?
2) What were the nature of the services provided?
3) How did these services benefit the company?
4) How many hours and at what rate?
5) How does this compensation compare to the "per hour market rate" of similar campaigns?
6) Is there proof of actually providing such services (pictures, videos, media campaigns, accounting records, witnesses, etc.)?

All in all - No matter what the Tree Company claimed in their accounting/tax records (or what Ballmer/Kawhi "try to" label it as publicly), the court would review the transactions from a "substance over form" perspective. They break it down and make sure that the entire transaction is in line with what would be expected on the open market. If not, the court would call BS and reclassify the transaction for what it truly is. If the mis-representation is both material and intentional (which this clearly was), consequences likely follow.

We will see if a DA/prosecutor are interested in investigating this. If tax fraud/evasion was committed to cover this up, the DOJ/IRS better pursue it. For instance, Kawhi could have tried to claim fraudulent endorsement costs to offset the endorsement income received, and pay less taxes... This is essentially stealing from the taxpayer. Meanwhile, Balmer potentially has even more liability cuz there are 1,000 things they could have done. We would need to open up the books to begin the process.

[Buckeye-NBAFan]

Im guessing Ballmer gets a slap on a wrist but this sounds like the Joe Smith deal but even more egregious and high profile.

Silver is at a crossroads with this, protect the big market/richest owner in the league or set an example

This may be bigger than the NBA. This could easily become a very serious DOJ/IRS issue. Although it is impossible for us to know exactly how severe this is without access to the accounting, we KNOW that the business transactions was logged fraudulently in the ledger of Ballmer's Tree company... To explain, Ballmer's company had to list the Kawhi $28 mil payment as an "Endorsement Services Payable", or similar. At the end of the tax year, they then had to issue a 1099 to Kawhi/Kawhi's company, etc. for the endorsement services provided. If Kawhi provided no services, etc., this is straight-up fraud, and the accounting used do not accurately represent the true nature of the transaction. It's, at a minimum, a falsifying business records charge. It could even potentially rise to much more serious crimes (money laundering, fraud, wire fraud, bank fraud, etc.).

This is a major issue... and, the IRS, SEC and DOJ may get involved.

The IRS has lost 50% of the staff assigned to high net worth audits since the beginning of the year

The DOJ is dropping white collar criminal investigations left and right, in addition to layoffs in those departments, to pivot to immigration enforcement

Even if there was a crime, there isn't anyone to investigate it

[-Luke-]

If Silver has anything resembling a spine, Kawhi and Balmer are both banned from the league. Kawhi for at least one season, Balmer for the rest of his life.

[lambchop]

Kawhi - meaningful suspension (as in 1 season minimum)

Dude was gonna load manage either way.

Anyway, if I'm Dubai, I'd try to get Kawhi to come over for the year and maybe try to win the Euroleague title.

[ReggiesKnicks]

If Silver has anything resembling a spine, Kawhi and Balmer are both banned from the league. Kawhi for at least one season, Balmer for the rest of his life.

Ballmer has been one of the best owners. I don't think he gets a ban.

[G R E Y]

This may be bigger than the NBA. This could easily become a very serious DOJ/IRS issue. Although it is impossible for us to know exactly how perverse severe this is without access to the accounting, we KNOW that the business transactions was logged fraudulently in the ledger of Ballmer's Tree company... To explain, Ballmer's company had to list the Kawhi $28 mil payment as an "Endorsement Services Payable", or similar. At the end of the tax year, they then had to issue a 1099 to Kawhi/Kawhi's company, etc. for the endorsement services provided. If Kawhi provided no services, etc., this is straight-up fraud, and the accounting used does not accurately of the true nature of the transaction. It's, at a minimum, a falsifying business records charge. It could even potentially rise to much more serious crimes (money laundering, fraud, wire fraud, bank fraud, etc.).

This is a major issue... and, the IRS, SEC and DOJ may get involved.

Don’t disagree with anything you’ve said, but they would be exceedingly dumb to not have Kawhi do some minimal labor here, given the difficulty in valuing these services some amount of work may suffice. But definitely an interesting angle.

From my understanding, the shell company didn't earn much money, if any. Thus, even if Kawhi provided "some minor services", more analysis is needed (especially since Ballmer is the owner instead of an independent third-party).

The key questions would be:
1) Did Kawhi provide endorsement services?
2) What were the nature of the services provided?
3) How did these services benefit the company?
4) How many hours and at what rate?
5) How does this compensation compare to the "per hour market rate" of similar campaigns?
6) Is there proof of actually providing such services (pictures, videos, media campaigns, accounting records, witnesses, etc.)?

All in all - No matter what the Tree Company claimed in their accounting/tax records (or what Ballmer/Kawhi "try to" label it as publicly), the court would review the transactions from a "substance over form" perspective. They break it down and make sure that the entire transaction is in line with what would be expected on the open market. If not, the court would call BS and reclassify the transaction for what it truly is. If the mis-representation is both material and intentional (which this clearly was), consequences likely follow.

We will see if a DA/prosecutor are interested in investigating this. If tax fraud/evasion was committed to cover this up, the DOJ/IRS better pursue it. For instance, Kawhi could have tried to claim fraudulent endorsement costs to offset the endorsement income received, and pay less taxes... This is essentially stealing from the taxpayer. Meanwhile, Balmer potentially has even more liability cuz there are 1,000 things they could have done. We would need to open up the books to begin the process.

Zero.

Never mentioned, showed up to, tweeted about the company.

One of the founders of the company was arrested.

Gov looking into company.

Company filed for bankrupcy.

Go to around 33min mark (the contract terms highlighted start at around 31min mark). Cap circumvention purposes - that was known in the company.

The devil's in the details. This podcast is wild.

[sikma42]

If Silver has anything resembling a spine, Kawhi and Balmer are both banned from the league. Kawhi for at least one season, Balmer for the rest of his life.

There’s almost no chance that happens with Balmer. He’ll just say he had no knowledge and unless he’s an idiot, it will be hard to find any.

Other owners will not push too hard bc they don’t want the same scrutiny.

Still watching the video from Pablo tho.

Sent from my iPhone using RealGM Forums

[-Luke-]

If Silver has anything resembling a spine, Kawhi and Balmer are both banned from the league. Kawhi for at least one season, Balmer for the rest of his life.

Ballmer has been one of the best owners. I don't think he gets a ban.

Who defines good and bad owner? Are 'good' owners allowed to circumvent to cap and 'bad' owners are not?

[the_process]

Punishing the team instead of the individuals involved is dumb.

Kawhi - meaningful suspension (as in 1 season minimum)
Ballmer - loss of ownership

Let the government figure out the legal stuff, but the league cannot tolerate players/owners just ignoring the CBA. Mostly owners.

My guess is that the league ignores this and lets it blow over.

[AleksandarN]

They should make the Clippers cut and stretch Kawhi. Make him count against their cap forever. On top of the 28 million that also should count against their cap forever cap

[drekwins]

Im guessing Ballmer gets a slap on a wrist but this sounds like the Joe Smith deal but even more egregious and high profile.

Silver is at a crossroads with this, protect the big market/richest owner in the league or set an example

This may be bigger than the NBA. This could easily become a very serious DOJ/IRS issue. Although it is impossible for us to know exactly how severe this is without access to the accounting, we KNOW that the business transactions was logged fraudulently in the ledger of Ballmer's Tree company... To explain, Ballmer's company had to list the Kawhi $28 mil payment as an "Endorsement Services Payable", or similar. At the end of the tax year, they then had to issue a 1099 to Kawhi/Kawhi's company, etc. for the endorsement services provided. If Kawhi provided no services, etc., this is straight-up fraud, and the accounting used do not accurately represent the true nature of the transaction. It's, at a minimum, a falsifying business records charge. It could even potentially rise to much more serious crimes (money laundering, fraud, wire fraud, bank fraud, etc.).

This is a major issue... and, the IRS, SEC and DOJ may get involved.

The IRS has lost 50% of the staff assigned to high net worth audits since the beginning of the year

The DOJ is dropping white collar criminal investigations left and right, in addition to layoffs in those departments, to pivot to immigration enforcement

Even if there was a crime, there isn't anyone to investigate it

When it's such a blatant fraud and it's all laid out on a silver platter for a young ADA/investigator/prosecutor, I could easily see them motivated to pursue this matter for multiple reasons: 1) To make a name for their-self to propel their career, 2) Tax fraud is extremely unethical and not viewed lightly, 3) restitution could be very large, and 4) it would be high-profile and serve as a warning to others.

[ball_takes23]

Adam Silver is a spineless coward so the chances that anything actually happens are basically zero