Kawhi Leonard, Clippers are now facing a federal investigation

The Kawhi Leonard situation is quickly going from bad to somehow even worse.

Federal prosecutors have opened a criminal investigation into the allegations that Leonard and the LA Clippers circumvented the NBA salary cap through secret sponsorship arrangements, according to a report on Thursday by The New York Times. The investigation is said to be it its earliest stages and is reportedly being conducted by the U.S. attorney’s office in Brooklyn, N.Y. (which has a long history of investigating both the NBA and professional sports at large).

The New York Times’ report notes that it is unclear if the investigation will actually lead to criminal charges or even lead to evidence being presented in front of a grand jury. However, federal prosecutors are reportedly expected to scrutinize the secret endorsement deals that Leonard allegedly signed and whether Clippers owner Steve Ballmer and other team executives facilitated such arrangements as a way of circumventing the cap.

You can read The New York Times’ full report here.

Earlier this month, the NBA stripped the Clippers of five future first-round draft picks after a lengthy investigation by the law firm Wachtell, Lipton, Rosen & Katz found that the team had used multiple phony endorsement deals to funnel money to Leonard in violation of league rules. The NBA also fined the Clippers $30 million, suspended Ballmer for one year (with team executives Gillian Zucker and Lawrence Frank also getting suspended), and ordered Leonard to pay back $700,000 in restitution for improper benefits.

Leonard later released a statement blaming “people within my inner circle” for the situation. Meanwhile, a proposed trade that would send Leonard from the Clippers to the Toronto Raptors remains on hold (under increasingly curious circumstances), and the Clippers have also said that they intend to challenge the NBA’s findings.