The NBA has launched an investigation into LA Clippers owner Steve Ballmer and his team following allegations that player Kawhi Leonard received a $28 million endorsement from a company named Aspiration. This deal is suspected of being a maneuver to bypass the league`s strict salary cap rules.
Ballmer, who had previously invested $50 million in Aspiration, has vehemently denied any prior knowledge of the endorsement deal or issuing any directives for its execution.
Below, we delve into what is known about Aspiration, the now-defunct entity currently under scrutiny.
What was Aspiration, and who founded it?
Aspiration Partners was co-founded in 2013 by Harvard alumni Joe Sanberg, an entrepreneur, and Andrei Cherny, a lawyer who served as a speechwriter for the Clinton administration. Their stated mission, according to an archived 2019 website, was to offer “socially-conscious and sustainable banking services and investment products.” The company`s motto was: “Do Well. Do Good.”
Court documents from September 2021 indicate that Sanberg held approximately 30% of Aspiration`s shares and served on its board. He was also an early investor in various startups, including Blue Apron. Cherny served as Aspiration`s Chief Executive Officer for nearly a decade.
What was Aspiration`s business model?
Aspiration operated as a digital bank with a strong environmental focus. It differentiated itself by promising that customer deposits would “never fund fossil fuel projects like pipelines, oil rigs and coalmines.”
Its product offerings included savings accounts, debit cards providing cashback from a curated selection of “ethical” businesses, and a unique option to plant a tree with every purchase rounded up. The company also provided access to investment funds explicitly designated as “100% fossil fuel free.”
Who were the prominent investors in Aspiration?
Filings with the U.S. Securities and Exchange Commission reveal a list of notable backers, including celebrities like Robert Downey Jr., Orlando Bloom, Leonardo DiCaprio, as well as Milwaukee Bucks coach Doc Rivers, Cindy Crawford, and her daughter, Kaia Gerber.
Corporately, Aspiration partnered with major entities such as Meta, Microsoft, and eventually, the LA Clippers.
How are Ballmer, Leonard, and the LA Clippers connected to Aspiration?
Last week, journalist Pablo Torre, citing internal documents, reported that Steve Ballmer invested $50 million in Aspiration through his personal LLC on September 14, 2021. Ballmer, known for his vast wealth and philanthropic efforts, particularly in climate initiatives, was already a significant figure.
Concurrently, in September 2021, the LA Clippers entered into a substantial $300 million agreement with Aspiration, designating it as the “first founding partner” of the Intuit Dome. This multiyear collaboration featured a “Planet Protection Fund,” designed to enable fans to “offset their own carbon impact” with each ticket purchase, as announced at the time.
“Aspiration becoming our first Founding Partner supports the stake we are planting in the ground to make Intuit Dome the most sustainable arena in the world,” Ballmer stated regarding the partnership.
In a recent interview with ESPN`s Ramona Shelburne, Ballmer recounted that Aspiration requested him to facilitate an introduction to Leonard, which occurred in November 2021.
Torre`s report further detailed that Leonard, through his LLC KL2 Aspire, agreed to a four-year, $28 million endorsement deal with Aspiration in April 2022, nine months after re-signing with the Clippers. An alleged former Aspiration employee informed Torre that this payment to Leonard was intended “to circumvent the salary cap.”
Additional documents cited by Torre this week indicated that Clippers minority owner Dennis Wong also invested nearly $2 million in Aspiration via a personal LLC in 2022, just nine days before Leonard received a $1.75 million payment from the company.
A report by The Athletic on Friday, based on legal documents, revealed that Ballmer made another $10 million investment in Aspiration in March 2023, participating in a funding round that included other existing company investors.
How is the NBA responding?
The NBA is actively investigating whether Ballmer and the Clippers have breached league regulations. During his annual news conference following the board of governors meetings in New York, Commissioner Adam Silver emphasized that the “burden is on the league” to establish wrongdoing. He stated that the league must consider “the totality of the evidence” rather than relying solely on “mere appearance.”
“Just by the way those words read, I think as a matter of fundamental fairness, I would be reluctant to act if there was sort of a mere appearance of impropriety. … I think that the goal of a full investigation is to find out if there really was impropriety. Also, in a public-facing sport, the public at times reaches conclusions that later turn out to be completely false. I`d want anybody else in the situation Mr. Ballmer is in now, or Kawhi Leonard for that matter, to be treated the same way I would want to be treated if people were making allegations against me,” Silver remarked.
ESPN sources confirm that a comprehensive investigation will be conducted by the New York-based law firm Wachtell, Lipton, Rosen & Katz, though no specific timeline for its conclusion has been announced.
What became of Aspiration?
Andrei Cherny, co-founder and CEO, left Aspiration in 2022. In a statement posted on his X account, Cherny asserted that Leonard`s contract was not a “no-show” deal, but rather contained “three pages of extensive obligations.” He clarified that he signed the contract in 2022 after numerous internal discussions regarding Aspiration`s planned collaborations with Leonard.
“I can`t speak to what was done or not done after I left — or why,” Cherny added in his statement, declining further comment when contacted by ESPN.
Aspiration filed for bankruptcy in March, reporting debts of $170 million. At the time of its filing, the company owed the Clippers $30 million, making them its largest creditor. Aspiration also indicated an outstanding debt of $7 million to Leonard`s LLC.
Last month, Aspiration co-founder Joe Sanberg pleaded guilty to two counts of wire fraud. Federal prosecutors alleged that Sanberg defrauded investors and lenders of $248 million through deceptive loan acquisition, falsified bank and brokerage statements, and by concealing his role as the source of some reported company revenue.
Each of these charges carries a maximum potential sentence of 20 years in prison.
Ballmer expressed his embarrassment to ESPN, admitting he failed to detect issues while reviewing Aspiration`s financial statements and business plans.
“These were guys who committed fraud. Look, they conned me. They conned me,” he stated. “I made an investment in these guys thinking it was on the up-and-up, and they conned me at this stage. I have no ability to predict why they might have done anything they did, let alone the specific contract with Kawhi.”
