Washing Up the Clippers' Punishment, with Henry Abbott

Welcome to Pablo Torre finds out I am Pablo Torre and today we're gonna find out what this sound is Does that not expose to Balmer as a liar right after this? I want to get to the whole like Sweep of this story, but through your brain Henry Abbott and thank you for coming back and of course vibrating with a similar level of excitement I want to have you here and have you ask me questions And I will do my best to also pose I think questions that have not been said otherwise and I don't want to call this a mailbag It's not what this is. This is not a mailbox. Yeah, despite it being shiny Not a mailbox your your skull. I do also want to say that this story is unfolding in the sort of Fun house mirror away in which I go to the news stand this morning because I support print journalism And I pick up a copy of the Wall Street Journal and I flip to my favorite section personally, which is the opinion section because I am a Fiscally conservative Famously for sure you are and this is the headline in one of the Oh, oh, I love that Pablo Torre one mark human zero I just want to know what got boxed out. Yeah of the op-ed page this morning's Wall Street Journal Bitcoin today. Yeah, somewhere Scott Besson is furious But this is the sort of Strange, I would say realignment that's happening now. It is well done This is actually wrong though because it's for sure Mark Cuban minus one I re-listen to it and with an uncharitable heart and feeling a little Pre-judge about Mark Cuban who I've found to be kind of overbearing and annoying and conversations with you. No, I There's a part where you said yeah, but they didn't advertise any of these deals and he just Lost himself with how much you don't understand about business and activations and business to business and direct to consumer and all this just Horses But then in the in the walk-tale report. They're just like oh, they never activated which makes no sense and now Mark Cuban's You know publicly like hey good job Pablo. It's like oh cuz walk tell said it now. It's real like it was obvious a year ago And that's the kernel of why we're talking. Yeah, what did we learn from the walk-tale report? What is yet to be discussed? How do we explain what is by any reasonable metric the largest punishment in NBA history and in contention for what is Depending on how you tally up the $30 million that Balmer has been fine plus the year Suspension that he has from his own building plus Gillian Zucker president of business a year suspension Lawrence Frank president of basketball six months five first round draft picks According to bombers letter to Adam Silverin which he is threatening litigation. There's a lot happening here That's a 50 million dollar legal fee to the aforementioned walk to a lift in rosin and cats which has helped save long form Writing as you have the stack in front of you so where should we start in the timeline here because people have been coming to me And I love that they are coming to me with questions On the back of the report, but as you say we've been at this and there's so much more and even walk-tale also says There's so much more. Oh you and I spoke recently on the phone and I was impressed by the howitzer of like unpublished information that resides within you and so I feel my job here is to Open some of those portals and just let it go, right as my former editor at ESPN. Yeah, this is a very Funny conversational dynamic that you've just described given the larger dynamic that we're about to get it. We're good We're gonna fill the hour no problem. This is what I'm very confident about So first thing let's talk about the ESPN article, right? So August 17th Don Van Nader backstreet homes remote shelter people you and I used to work with and know well and respect Published a story That began the MBAs found no evidence showing LA Clippers under Steve Palmer funneled money through team sponsors to pay Quiet Leonard in order to circumvent the salary cap According to three people with knowledge or discussions within the two sides and then there was a later paragraph that said Talking about boingo and dectronics. It said but like aspiration There's no evidence the balmer funneled money through these companies and How do I sit with you now the Question that I get asked most often is along these lines. How did we go from The public interpretation being Steve innocent no evidence to There were four companies that he was doing parallel schemes with the circumvent the salary cap and here is 35 pages of evidence in addition to our 14 then 15 now 16 part series on this thing and I think people need to understand that When we've been reporting the story on this show we have been Interviewing lots and lots of people human sources who've been extraordinarily clear from the start what this was Including in a federal whistleblower complaint filed in 2023 under penalty of perjury and so I remember where and when I read the ESPN story Because I this is embarrassing for me personally. I was in the shower That is a little weird. Yeah. I'm a guy who sometimes needs to glance at his phone for journalistic reasons while I am I guess Cleaning myself. I'm not gonna say I've never done that but I've never talked about it in such a public forum before I regret doing this already But I want to be very detailed and transparent about how this article ended up Cleaning the reputation it seems of the richest owner in American sports And and when I look at what that headline was and what is implied I just want to say the framing of this That's the thing that's crazy to me What this was in retrospect according to my reporting as well as the walktale report was The clipper's legal case in response to these findings Presented as if these were the findings And so when they say no evidence Henry this whole thing has evidence in it. We have provided evidence from the first episode I just feel like how could anybody say there's no evidence the framing Didn't pass the smell test to me and I say that also because ESPN did not reach out for comment From me before they went with the story Afterwards I submitted a comment That said effectively we stand by a reporting we look forward to the MBAs ruling Our investigation continues That wasn't included for whatever reason But what I can tell you is that the clippers behind the scenes for a year have been mounting an aggressive PR campaign Through their head of public relations Chris Wallace Who is the comms guy across everything who reports directly to Steve Balmer And Gillian Zucker and Lawrence Frank He's a C-suite level guy with relationships throughout the league He is very active on the internet. He used to work at the league He's a guy that people know yeah, and then they also and this is important as well hired a crisis PR person Whose job was to shop around the most exculpatory version of events to reporters And I just would like to point out that this ESPN story was not the first time they got the framing of the story rock This was the through line of how they saw this from the start and they were not alone And I want to be generous in so far as I say I think According to my reporting and according to the clipper statement Henry Which was released within an hour of the ESPN story coming out And the clippers statement was again a recitation of what in retrospect seems to be their legal case This is about failure to supervise which is bullsh*t This is about no evidence which is now we can tell bullsh*t That was something that they fed to these reporters Our former colleagues at ESPN While the clippers themselves knew That this was not it There was more and I think according to the reporting that the ESPN story was a bit of information asymmetry And I would imagine that if I'm one of those reporters I would be furious That this is how we were sold a bill of goods and that ended up being in fact based on the evidence The opposite of the way it was right It's clever because I don't think these are reporters who would just write what they were told to write They're reporters And there is insideery stuff in that story right they had some real sourcing about these meeting between Rick Buchanan of the NBA and David Kelly David Kelly is his attorney at O'Melvaney Vomers personal attorney David Kelly also a different David Kelly head of the NBA players association And isn't one of them like a movie producer? Isn't there a movie producer David Kelly? We're the David Kelly universe I'm surprised how the NBA handled this too though You and I have both been part of many stories where you check in with NBA PR about something sensitive And there's a whole menu of ways they might respond Often it involves yelling and four letter words and belittling your personality and this kind of stuff But this was a new one for me where they You know with three top-known national writers. Yeah, and Shamsharanya also contributed reporting to this thing It was five - Yeah, really that. - Bobby Marks. - It's on there. - Another guy. - Bymanette's executive, yeah. - Who worked with Lawrence Frank. - Oh, good point. - When he was there. The Clippers web of connections through their front office, which by the way, their front office is massive. It's not just the comms guys, not just the crisis PR guy that I hired who I will get to at some point in this series. - Let's do it. - Because the crisis PR guy is so fascinating to me because these are the sort of dark arts dudes who spin behind the scenes that are called in for these campaigns. But the point is, even outside of that, they have lots of friendships and relationships and you listen to all of the other ESPN reporters and they tell you Brian Winhorse, who I also respect and have worked with for years. What he says is that Clippers officials looked him in the eye. - Oh, they got him in the eye. Now we're good. - Right in the wind hole. Yeah, that was inappropriate. (laughing) - Brian, I apologize for your former editor. - It's on me. - It's on me when you're in the wind. (laughing) - But they looked in the whites of these reporters eyes and said, "There's nothing here." In fact, this dumb podcast has it backwards. That's what the implication of that story was. And so, look, why did it happen? And what does it say? It happened because there was clearly what the article, this part of the article, I think, might have had the most important word in it. It was spirited. - Oh, Rick, you can't enter. - And David Kelly. Palmer's David Kelly. Spirited discussions, negotiations even, around what this was. And as soon as that article came out, what you discern was that the Clippers and the NBA are in fact fighting right now. And so why did they handle it this way? It's because for the first time in public view, Henry. As I calibrate my cynicism, the Clippers and Adam Silver's League Office and Wachtel Lipton were on opposite sides of this dynamic. And their incentives were not aligned. And that spilled out into the public view. And so then the next question is, so what does this say about where this punishment is headed? - Mm-hmm. - And that's where what I'm able to report now is that, yeah, see, Palmer was fundamentally uninterested in settling. - This is the non-settlement settlement. This is what you get when you don't bargain. - The NBA was looking forward to settling for this to not be five first round picks and 30 million dollars and all these suspensions. This is what you get when you don't settle and also in some former fashion, when you actively try to tell a version of events that is not what is reflected in the reality of this report, which I am told, Steve Balmer and team Balmer, legal team and the Clippers. They were not told a punishment, but they were told, here's what we got. And if you don't go forward to negotiate, given that, you end up getting the biggest punishment in the history of the NBA, within a scope, that is so relatively narrow. - You mean that there's more? - There's more and by the way, so people have also asked like what changed? As a result of the ESPN story, were they waiting on the public to react so that they could decide what to do? I am not going to yet wait into that. What I will simply say is that before this report came out, I was fully confident based on my reporting that we were not going to get 35 pages. We would just get a cover sheet, a summary of findings, a ruling, they don't have to release the report, they just don't. And that would come on the backs of a settlement. The whole point was to settle. And after that ESPN story in which Mike Bass comes out, chief comms guy for the NBA, and he says numerous and significant inaccuracies, the question was raised by the league itself, what was significant and what was inaccurate. And now we got a 35 page document. And that is why I am grateful that this played out exactly the way it did, 'cause we got to see some of what the NBA knew. - It's a real story of power in that one of the biggest executions of power you can have in sports is getting top reporters to write your narrative, right? And so card played and it totally backfired. As you're describing it, this was contributory to this massive punishment. - It was part of how the clippers were defending themselves. And it was desperate in a way that the NBA ultimately rebuked with a clarity that I can't recall. I don't recall a fight like this happening that leads to consequences like this. Everybody prefer that this not get out there. It's sort of like mommy and daddy you're fighting, you don't want the kids to know. It's like bad job guys now everybody knows. - And I can tell you as well, according to my reporting that the NBA has been mystified by Steve Balmer's refusal to come to the table and negotiate. And what I will say to that is, imagine now that there is in fact more. Imagine now that this report, and I loved reading this report. I just got to say I found it well written. I found it well reasoned. I found it fascinating. I didn't agree with everything, but I noticed what decisions were being made and why and the context to understand all of this is, if there is more and this annoying podcast continues to report, it's gonna, how do we make it so that we can limit the blast radius? Well also getting enough to get the story in our rear view mirror. And now if you're Steve Balmer, just remember, according to this report and ours, you know that there's more. And you also are facing a civil suit in Los Angeles by 11 aspiration investors, Henry. The centerpiece of which is you did not disclose publicly your real interests in this company, which you propped up to support your NBA deception. This caps are convention fraud. And therefore, these 11 investors are suing Steve Balmer for fraud in civil court that is proceeding right now. And I should also point out that Balmer's same attorney, his personal attorney who sent that very scary letter to Adam Silver, David N. Kelly. He has called the allegations about his client in the civil suit, quote, "based on sensational and patently false assertions made in a sports podcast." End quote. - It does sound shady, yeah. - That was into those guys. There is an SEC probe into aspiration, which is part of the original sin of this whole series as we've laid it out. There is an SEC probe into Dectronics. Given that Dectronics in an earnings call their CFO said last week, hours before the NBA release this report and this punishment that they are getting, Dectronics is getting inquiries from the SEC requesting information and they are cooperating and taking it seriously. - And they said they provided documents that the partner of justice too. The Clippers did, I believe, one point. So there's something's going on there. - Yeah. - That's never good. - The DOJ had probe aspiration. Joe Samber, the co-founders already convicted and sentenced 14 years in federal prison for wire fraud. So there is a lot of stuff in real life. Let's separate sports life and quote unquote real life although I think that we're seeing how important they are to each other. There's other stuff, man. That Steve Balmer might even be more worried about in terms of his liability. And so what I have to offer everybody in the league who is wondering why is Steve Balmer behaving this way? Why is he refusing to compromise and admit anything? I would say that everyone should think about what happens when you admit anything in the sports context. What happens to the SEC probes, what happens to the civil suit in which by the way, discovery, absentee settlement there will yield even more documents relevant to all of these things. So is Balmer fighting because he can't concede ground in the other stuff? (upbeat music) You're reading this report. What stuck out to you in terms of the scheme? So I first read it, my first take was, ooh, there's a lot of juice in here. This is more, more sauce than you usually get in a sports investigation report that's released to the public. And then I read it a second time. I think I'm now up to like four or five times. But the second time I was like, man, there's a lot that's not here, which struck me as maybe along the lines of what you were just saying, which is the league doesn't want Balmer in trouble with SEC or whatever the other real life things are. And it's not their interest, not their interest. They don't get paid to get owners in trouble with the federal government. To be honest, the first thing that struck out to me that was late in the game, walked up and found one credible source who might be able to establish that this money was paid to these firms for the purposes of giving it to Kauai. Like, that was in your first-- episode. I think you had nine. Including by the end of it. Yeah. Nine sources at aspiration who attested with their voice modulated. And not to mention, did you mention maybe before earlier the whistleblower report, which is also what the f*** not mentioned in this thing? What? So that means to me, they met and they negotiated. This is what to me, most likely, Rick Buchanan and our guy from O'Melvany were negotiating was, "What can we put in there? What has to come out?" And this whistleblower report didn't make it. I have a bullet list of other things that didn't make it, but those are the big ones to me. The notion that maybe this money went from point A to point B to point C for the purposes of going from point A to point C, come on. The maybe is a generous maybe. So generous. And they didn't need to go beyond to levy the punishment, which is what I keep on thinking, which is how could you have a scope? We've been saying the whole time an independent investigation is not truly independent. This is outside counsel, hired by a league by any corporation. They obey the scope given to them. They are working for their client. And that scope was narrow. The scope did not go beyond 2022. The scope did not assess according to the command effing that I keep on doing. They did not address Bomber's personal investment of $50 million. And what that meant for this company, they did not mention Dennis Wang. Which was unbelievable. To me, for me personally, I was in the gym. That was episode two. And look, I found episode one very, very convincing. I was predisposed to believe you as a journalist. And I knew that there was tons of work behind the scenes that made me believe you as more, etc. So I was trying to listen through the ears of a regular listener who didn't know you and believe in your process. Yes. Yes. Yes. And the moment that I was like, who could possibly disagree was the Dennis Wang moment in episode two. And the fact that I mean, and you had a guy who worked desperation saying, how crazy the company was going down. They're firing people. They're in full crisis. This guy invests. And then the like nine days later, whatever it was, transferred the money to Kauai. That was just no one could possibly explain that to me in a way that makes sense. Or they should try. But the fact that they didn't try. I'm like, wow, this isn't the trueest version of events. So by the way, this is relevant because Steve Balmer has used a couple of alternate governors when he's not available to go to the big board of governors meeting. And that's happening, by the way, next week here in New York City. And I can't wait. Give me so fun. So the question is, okay, Balmer is banned for a year. Guess who else is banned for a year? His alternate governor, that he sometimes uses, Gillian Zucker. Other alternate governor because he is the one percent holder of the team, the only limited partner in a stranger arrangement that is not replicated anywhere else in the NBA because no guy typically owns 99% of the team except for the richest guy in American sports. Who happens to have, by the way, at last check, I miscalculate this all the time. I'm like $145 billion per Microsoft stock. Dude has $174 billion. Thanks to Microsoft stock right now. That guy can't make it. Gillian can't make it. Is Dennis Wong going to be there? Great. Is one question I have. And Dennis Wong, by the way, you say, thankfully, because I typically have the only one who has to yell about Dennis Wong episode two of our series. But when he puts in the 1.99 and Kawaii gets paid the 175 nine days later after he's been months late. And now we know in the report, by the way, what it's like when Kawaii doesn't get his money. It's a little salty. You hear from his reps. You do. You hear from Dennis Robertson. You get without any ambiguity, a sense of how important this is to team Kawaii. And if business office won't go get it, then they go to Lawrence Frank, right? And they go, we've produced texts, Mitch Frankel, who's, by the way, I'm just going to command F here. Yeah, he comes up a couple of times, but no punishment for Mitch Frankel. Let's put a pin in that for now. What do you mean the guy who owns the Rhode Island football club? RIFC part owner, Mitch Frankel, to you. Kawaii's actual licensed agent, who is no longer representing him, incidentally, even though he is not being punished in the text of his report, also interesting. We have communications, but I think the communication that Wachtel gives us, which I am deeply grateful for, is something that I had heard about. So Henry, if you could turn to page 30, oh, I see where we are here. Yeah. So we're in March of 2022, Henry, here on page 30. And Mr. Sandberg texted the following to the business agent, who, at Ms. Zucker's suggestion, had worked on the Leonard aspiration endorsement agreement. If the form agreement isn't fixed, I will tear up the Clippers contract. We will do nothing with Kawaii, and we will go into litigation. Should I call Dennis and Kawaii and tell them the deal is off because we got f*cked? If the agreement isn't signed tomorrow, that's happening next. And I swear to God, I'll be totally honest with Dennis and Kawaii about why we aren't doing a deal with them. And quotes, later in the text chain though, Joe Sandberg makes clear that he had communicated this message, additionally, to Clippers executive personnel, not just the agent that they mutually shared, which was quite convenient for purposes of information sharing, but he goes on. I told Scott Sonnenberg they'll need to break the deal with Kawaii and explain why, which is that we got f*cked by the Clippers. Scott asked me not to do that. But if this isn't signed by tomorrow, that'll be no choice but to do that. Kawaii deal is not happening without this forum deal. Spoke again just now with Alex, as Alex Winsburg, then Clippers General Counsel, and Eric Chan, who's the CFO, and they have no solution. If this isn't fixed, we are burning this whole relationship to the ground. Do you understand how serious this is? This is the ballgame. If this isn't fixed, the Clippers, Balmer, Sandberg, Asperation relationship is being burned to the ground, and so is the Clippers' Kawaii relationship. Zero chance there was a Kawaii deal if this isn't fixed. You know that, right? End quote. Wachtell goes on to say right after internal communications among Clippers executives confirm that they were aware of the linkage between the forum agreement. This is the LA forum. This is Murphy's Bowl, LLC, which is-- Another thing that's not in the document. The LLC Steve Balmer personally started to mask his identity according to the District Attorney's Office in LA when he acquired all of the land needed for Intuitum, and the LA forum was part of that deal. I digress. Clippers executives confirmed that they were aware of the linkage between the forum agreement and the Leonard Asperation endorsement agreement being asserted by Asperation. And then it goes on to say, in a March 30, 2022 message sent to Brent Vaughn, then Chief Investment Officer of Mr. Balmer's Personal Business Office, who has come up in our series before. Mr. Chan, the CFO, stated, Henry, quote. Sandberg's last comment was if we don't sign this deal, he will sue Steve, the Clippers, and burn everything down. But let's chat when you can. He will also call Kauai and tell them how the Clippers screwed everything. That is the CFO, two Steve Balmer's Chief Investment Officer personally. It goes on and in a March 31, 2022 email exchange between these same parties, Mr. Chan stated. Steve knows that when this deal blows up, Joe is calling Kauai and telling him his $12 million deal is no longer because of Clippers Management, right? I think so, but just double checking. Me too. I am just double checking. So why do I bring this up now after you mentioned Dennis Wong? That was March 30, 2022. Most generously, the Clippers are learning that they have partnered with a guy who is going to exhibit scammer-like behaviors. Remember, Balmer puts in the 50 million personally in 2021, aspiration has a $300 million Jersey patch sponsor, founding sponsor deal with the Clippers in 2021, right? March of 2022, this all happens. Kauai signs his contract with aspiration, which we publish in episode one in April of 2022. They go forward with that contract days later. And guess what happens as the months proceed and aspiration enters default is being pro by the SEC and FINRA, as it's firing its employees left and right, all of which my two sources put on tape under voice modulation. Dennis Wong says I will be the only outside investor to donate $1.99 million, nine days before Kauai Leonard gets paid $1.75 by this broke ass company that is being probed by the SEC and FINRA is in default. And I know these things because it's disclosed in the purge agreement, which we published on the show with his signature on it. He knew it. And he knew the background of this because he was the limited partner of the Clippers. According to our reporting, he knew this. And then Henry, in March of '23, while you know this is how Joe Sandberg operates, what else happens? Steve Ballmer puts in $10 million more with those same disclosures, with the same knowledge that this company is an enormous cluster f***. And when they put that in, they don't put it in as if, you know what, this is a good opportunity for a discount. We're going to negotiate a good rate for ourselves because we know all of this. They go in as if this company is exactly as real and exactly as normal as everyone presumed when they were the anchor investors in the headlines on CNBC back in the fall of '21 when Steve Ballmer became the most famous investor in aspiration in the first place. Right. Because there's no doubt what this was. Yeah. And so, by the way, does this seem like evidence that reflects knowledge by Steve Balmer of a capture convention scheme. If you read on, and I credit all of the effort that went in, all the $50 million of billable hours that went into this, 'cause I gotta renegotiate with love of tarred. - You didn't get that kind of money for this? - Unfortunately not, unfortunately not. However, where this goes now, right? Because the investment stuff, that flow, wasn't even in here. I thought I didn't even need that. And so then, at this point in the story, you're saying, all right, hey man, but that's a scam company, right? That was the Clippers main public defense, but that was a scam company doing scam things. We got scammed, everyone got scammed. And I say as well, of course, yes, there was a scam, but you trusted the scammer on a different scam. And we know that also because there were three other schemes. And so how do we get to this report, 35-page tonnage? One entity that did participate with the NBA is Dactronics, which has lots of NBA clients. They build the jumbo trunks. They need to rely on the NBA's good graces to let them operate presumably in their buildings. And so what we get from them brings to life what we'd reported on the show about Dactronics and how this multi-million dollar hidden thing, it's the parallel version of this, but with this caveat, which I did not fully appreciate as it recurs. This wasn't just a story about paying Kawaii Leonard. This was a story about businesses. The Clippers were negotiating with to become partners in the Intuito. Yeah. And hanging in the balance, Henry, was the actual jumbo tron Halo board contract itself. You learned this, a reported $100 million contract that saves Dactronics according to earlier episodes we did, was contingent. They didn't think they would get the deal if they didn't sign up for this. First a deal with Kawaii, and then a renegotiated deal with Kawaii, right? And that's how you kinda know what's going on. That would be a little bad, yeah, we're going to come back. For more, I'm going to need you to pay Kawaii more, but we're going to up the Mount that we pay you. And what does a phrase for it, like a spendback? Spendback, is that what it is? I was like, oh my God, you know the industry's in a bad position when it has a handy little term for this. Like, hey, we're going to spend back the money that you give us. We'll spend it on you, yeah. One thing that really happened here that liked you to wait on is Balmer spent most of the year saying that he was scammed by Joe Sandberg. And Cuban took this line too. Meaning, like, you give your money to a guy like that. Who knows what happens to it, everyone else is innocent. And that was the rationale for a long time. That's Steve Balmer, on ESPN TV, talking to Ramon Shelburn. And that's all gone now. They're no longer saying that, why? Because there were four companies, not one. But to me, like, does that not expose Steve Balmer as a liar? I think it's even more effective, actually, on the did he lie question to just cite the report? This is page 26, Henry, based on the four going evidence. Investigators find these statements to be inaccurate at best with respect to Mr. Balmer, end quote. So just to give us the spectrum of best to worst here, inaccurate is the best version. I think you can now imagine what the worst might resemble. Let me read this. Our friend, John Hollinger, I know the most boring and stupid part of this is this argument about introductions. And what does the CBA allow? And can it be blah, blah, blah? I don't care about any of that to be totally honest. I will only say that John Hollinger worked for the Grizzlies for seven years. And as a C-suite guy. He was a VP, yeah. And he wrote recently on the athletic. I can't vouch for anyone else's experience. But in seven years with the Memphis Grizzlies, the quote, ordinary practice happened with me, zero times. Probably because, as the report notes, it's illegal. And everyone knows this. Teams are periodically reminded about that by the leaking case they forgot. There was one time in my tenure that the topic even came up. And it was immediately communicated to the person who asked it. Would be blatant capture convention that would put us at risk of getting Joe Smith by the league office. Yeah. This is what the NBA's position was. It turns out early. It was, this is a novel interpretation of what the rule is. 2015, you're punished for capture convention. You're fine, Deandre Jordan, Lexus, team sponsor. This is all now a familiar kind of attempt. 2019, of course, is when the Lakers and the Raptors accuse Dennis Robertson of asking for these things that have now been born out in this report, as well as in my reporting. So when all of this starts happening during the pandemic, it's not just that the rules are obvious to everyone. They are particularly obvious to the people who broke capture convention rules in 2015. And we're investigated and worn in 2019. And we're apparently per the NBA's version of events here. We're shown what I can only imagine are the equivalent of what we got to click through as like webinars. (laughs) Is this capture convention? The effect of those webinars was Gillian Zucker wrote these, like easily disprovable emails that were phrased as if they had just the firm had asked for an introduction, even though there was nine days of communications with an unnamed business agent. And by the way, let's talk about that for one second. - Yeah. - Why not name the business agent? - Yeah. - What a weird move. Why protect that person? - What Wachtel offers for their explanation is, quote, "certain cooperating individuals and entities "requested confidentiality or non-disclosure commitments "as a precondition to providing information. "Those are decisions that I don't share. "We will continue to investigate and report "who all of these characters are." - But if you're protecting a source, you know, presumably from like Retribution from Balmer, Balmer knows that agent is already. That person was hired by Gillian Zucker, right? So like to me, I'm like, it seems to me like, ah, this feels like the league just saying like, let's not air all of our dirty laundry. - Let's not air all of our dirty laundry is a really important way to view this. And it takes us by the way to Kauai. - That's what I was about to bring up, yeah. Yeah, so he got $700,000 fine, which feels dissatisfying. Are you dissatisfied by that? - The guy is the, in some ways, we did not have him centered in the story weirdly. We had, of course, Balmer and the Clipper centered because of the investment flows and the federal investigation stuff, which we always ranked is like, that seems the most interesting. A Kauai is the reason why the Clippers were doing all of this. He and his representative Uncle Dennis Robertson and his agent, Mitch Frankel and his whole like squad, they extracted an unprecedented amount. So $48 million guaranteed by aspiration, 28 in salary, 20 in equity, plus according to Wachtel's accounting, with Boingo, with Dectronics, with Locked in Insurance, he got at least 18 million. - It's a lot. - 66 million off the books, before we get to the unacknowledged expenses, right, that were not specifically called out as a cap circumvention that they gave them all these stuff that they said was worth a lot. And I'm wondering like, did he pay that back? - Well, when I read all of that, again, my brain went right back to the companies and I was like, wait a minute. So he got fake no-showge. And that's by the way, the other part of this. These are all fake jobs, obviously. We can now say that clearly. Wachtel confirms he did almost nothing except for one autograph signing and even to one military base. - But maybe he signed some autographs for like some memorabilia at some point. - Yeah. - And in exchange, you got 66. - What were you thinking? I don't have to work. - If that's something like that, that's a great rate. - So you're at $66 million, plus the expenses, plus whatever else, 'cause this timeline ends in 2022. - Right. - Right, the football club, that's January 2024. He makes those LLCs then, ahead of his next extension, a sub-max extension with the Clippers, right? Point being that what Kauai got is vast when it comes to precedent for how caps or convention schemes have revealed themselves to the public. So yeah, this is a slap on the wrist. Just in terms of the financial, like accounting of it, $700,000 against the 66 that you were pledged via these fake jobs. And by the way, I should say, where does my attention go when I hear about the fake jobs? They go actually to the fake consulting services that the companies that were the funnels got. It wasn't as fake jobs for Kauai. It was fake jobs for the literal companies that were giving him the fake jobs. That was how A to B to C tracked. And so anyhow, Kauai personally, $700,000 fine, no voiding of the contract. And he, according to a statement, is off to Toronto, peace out. - He's sorry that people in his circle had bad judgment though. - I gotta find this quote because it's just, I want it on a t-shirt. Here we go. Quote, "I accept full responsibility for lapses and judgment by people within my inner circle." - I'm so sorry I was trying to buy idiots, yeah. Notably to his credit though, not something that Steve Walmert has said. - That's true. - But that's not that much credit. I can't give a quiet like, (laughs) but to me, like at least, so. In the scope of how the NBA Constitution works and how the rules works. Yes. You know, quite supposed to try to get everything you can, and the place it's supposed to stop is what John Hollinser's describing, right? The people who have to click through the webinars. The people who click through the webinars have to honor the webinar, or at least pretend to honor the webinar. Please pretend to honor the webinar. That's the last webinar slide. Will you pretend to honor this webinar? You have to get at least three out of five on the multiple choice, you know? But Kauai doesn't have that job. Now, the Dunkle Dennis and Kauai engage in very schemey stuff. Did they ask stuff that made everyone uncomfortable? Was this a grigis? Yes. Am I worried about a flood of that moving forward because of Kauai's illicit income? No, because I think players have always wanted money. Exactly right. You have in this league, and you cover this all the time on TrueHoop. You have these incentives that conflict, but maybe if they're all being investigated for accounted for, they can balance into something resembling competitive balance. That's what we like to watch. Yeah. Players want money, teams must abide by the rules, let's throw the ball up. Yeah. And in this case, Kauai got what feels like a slap on the wrist because not merely that philosophical framework that I personally also enjoy. This is where it becomes very clear why the Walktale report is not the same thing as reporting as journalism. This report, in all the ways, it's left out stuff, but introduced new things. This report, in all the ways in which it was very careful around Kauai and issued him a punishment, according to the NBA's discretion, that seems disproportionate to his centrality to the story. What this reflects is the sort of negotiated settlement that might be available to you if you say things like, quote, I accept full responsibility for lapses and judgment by people within my inner circle. Yeah. You got like a 5,000% discount on the fine if you play along in this manner is what you're saying. Well, what happens because of the settlement, as we've talked about, is the union, which had previously saber rattled, almost as loudly as the Clippers in ESPN's own reporting, by the way, which is so interesting. The union threatened, we're not, I believe that David Kelly, we quoted him on a previous show. He even said something to the extent of, we don't think there's a there there when it comes to what this investigation was finding in terms of the Clipper's liabilities. They identified themselves on the same side as the Clippers, but then when presented with these findings, the union, which represents Kauai, they say, discretion is the better part of valor, let's settle, let's accept that, let's get what we want. And in the process, guess what's off the table, arbitration, right? Which was the thing that Steve Balmer was threatening from the start through all of these media proxies. We're going to go to arbitration on this. And this was a confusing part of the story because it turns out you can only go to arbitration for the player's dispute, right? Like Balmer can't go to arbitration, is that correct? Yes, because collective bargaining and the CBA document, 500 pages and all of it's glory indicates that yes, this must be activated by the player and his union. And so once they agree that there were, it's a pretty good deal for, I mean, all you gotta do is tell the truth enough. Yeah. And so one question as a result would be, so what did Kauai really know and what has he done? He's seen this theory proffered by Sean Shirani on ESPN, for instance, saying, you didn't know anything about this Capsick invention scheme. And I just got to keep on pointing out that, in fact, his signature is on the documents. Either Uncle Dennis stole $66 million, in which case he'd probably Kauai be suing him. Or this guy got the money. All of this rule-breaking was for the purposes of the money going to one place. And he got it. It's very unusual that people have a secret backroom deal and that the person who gets the proceeds of that isn't in the backroom. Very unusual. I dare say that one of the things that I really like to do in the course of reporting this story is hold everybody to the standards of being an adult. Steve Balmer, you're not a little baby with $174 billion, you're a guy overseeing the thing that you care about more than any other in which you've measured the distance between toilets in the building. And here, of course, we have knowledge of your knowledge now. With Kauai, same standard, you're 35 years old. And I'm not saying that you will not make it past the pearly gates because you did Capsick invention. Let's leave that aside. Let's leave all the real world implications aside. I just think it's insane for you to be signing documents over and over again and then claim. Well, about this, especially when you were also in meetings alongside your uncle in which you were asking for this. And by the way, in Wachtell's report, they do have this one point that I thought was really interesting talking about what did they include, what did they not include? They did include this part. And I want you to quote this Henry for me. If you may turn to page 25 over the course of the negotiations for the Leonard aspiration endorsement agreement, the amounts of the cash and equity components were swapped at Mr. Leonard's request. So the final agreement required aspiration to pay Mr. Leonard 7 million in cash and 5 million in equity per year for four years, a total of 48 million. Yes. So what is this saying originally, according to Wachtell, aspiration said, "Hey, how about 7 million in equity per year, but 5 million in cash over those four?" And this is saying Mr. Leonard requested the opposite. You need the cash. I want that more. It does say Mr. Leonard's request, specifically. That sounds like Mr. Leonard. And you'll notice that Wachtell Lipton is very attentive to my new detail. They are. This is kind of what you get paid the big bucks for. And so they had him on this and was there more, let's just say that our inquiry also continues. Henry Abbott, thank you for, hopefully, clarifying some things for our audience through your curiosity. And I got to hit the shower, I think. I knew it was going to get weird at the end. I just knew it. Yeah. It was my pleasure to thank you for having me. This has been Pablo Torres Finds out, a metal-lark media production, and I'll talk to you next time.