Investors sue Steve Ballmer, Joseph Sanberg, and Baker Hostetler over alleged carbon-offset fraud

A group of investors sued Los Angeles Clippers owner Steve Ballmer, fintech entrepreneur Joseph Sanberg, and Baker Hostetler LLP, alleging they orchestrated a fraudulent carbon-offset investment scheme that doubled as a vehicle to skirt NBA salary-cap restrictions.

Ballmer funneled tens of millions through Sanberg's now-collapsed startup, Catona, to finance a covert $48 million endorsement deal for Clippers star Kawhi Leonard, the lawsuit claims.

The complaint, filed in Los Angeles County Superior Court, names Ballmer, Sanberg, Baker Hostetler, and its Los Angeles partner David Aronoff as defendants. Karr et al. v. Sanberg et al., 25STCV20376 (L.A. Super. Ct., filed July 9, 2025).

Plaintiffs allege Ballmer invested over $50 million in Catona, owned by Sanberg, as part of a concealed compensation scheme violating the NBA's collective bargaining agreement.

"This lawsuit is to recoup their losses and obtain justice," said Skip Miller, counsel for the plaintiffs and a founding partner at Miller Barondess LLP, who is also a plaintiff. "Our clients have been hurt badly by what happened here."

The alleged fraud unraveled in March 2025, when federal prosecutors charged Sanberg and Catona director Ibrahim AlHusseini with wire fraud and securities violations; both later pleaded guilty. Catona declared bankruptcy soon after. U.S.A. v. Joseph Neal Sanberg, 2:25-cr-00200(A)-SVW (C.D. Cal., filed March 25, 2025).

According to the filing, Catona was already hemorrhaging money by 2021 when Sanberg allegedly turned to Ballmer for rescue financing. Plaintiffs claim Ballmer agreed to invest publicly in Catona--promoting it as a green-finance venture--while privately channeling endorsement payments to Leonard, whose Clippers contract was expiring. Leonard had previously sought impermissible compensation in the form of ownership stakes and guaranteed endorsements.

Leonard signed with the Clippers in August 2021. The following month, Ballmer invested nearly $50 million in Catona, nearly matching Leonard's $48 million endorsement deal. Leonard's company, KL2 Aspire LLC, was set to receive $28 million in cash over four years and $20 million in Catona stock.

The suit also accuses Baker Hostetler and Aronoff of concealing the alleged fraud and suppressing whistleblowers. The firm, represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP, has filed both a demurrer and a special motion to strike. The motion contends plaintiffs' claims arise from protected legal communications and are barred under California's anti-SLAPP statute. The demurrer separately argues that the claims are legally deficient and should be dismissed regardless of the anti-SLAPP protections.

According to the demurrer, the plaintiffs fail to allege specific facts showing Investigative Counsel's knowledge of or participation in any fraud by Sanberg and cannot establish that the firm knowingly concealed or received "stolen" funds.

It further asserts that Investigative Counsel were not securities sellers and cannot be secondarily liable under the cited statutes, incorporating litigation privilege and protected-activity defenses from the special motion.

"Our firm's position regarding the plaintiffs' allegations are set forth in the demurrer and motion to strike that have been filed with the court," a firm spokesperson said.

The amended complaint asserts that the Catona-Leonard deal "cannot be plausibly explained as anything other than a means for Ballmer and the Clippers to evade the NBA salary cap." Leonard, it alleges, never promoted Catona, appeared at its events, or publicly referenced the company. The endorsement "made no business sense" for a carbon-offset broker marketing through a low-profile athlete, the complaint says.

"The typical athlete endorsement deal with a company outside the athletic industry ranges from $500,000 to $1,000,000," the complaint notes. "The Leonard deal was over fifty times that value."

When Catona missed a 2022 payment to Leonard, Ballmer's college roommate and Clippers co-owner Dennis Wong allegedly invested $2 million in the company. Days later, Catona paid Leonard $1.75 million. Plaintiffs further allege that in 2024, as federal probes intensified, Ballmer's charitable foundation donated $1.875 million to a Sanberg nonprofit--matching Leonard's next quarterly payment.

Ballmer's public support for Catona, the filing claims, lent legitimacy to the enterprise. At a 2021 Clippers press conference announcing Catona as a "Founding Partner" for the team's new arena, Ballmer praised its environmental mission:

"[W]e had a chance to really sit down and meet the folks from [Catona]... to have your first Founding Partner be a company that focuses on providing services to consumers and businesses to reduce or even go negative on their own carbon footprints was a great thing," Ballmer said.

Plaintiffs contend Ballmer's reputation as Microsoft's former CEO and his $150 billion net worth were material to their investment decisions. None, they allege, would have invested had they known of his alleged role in the scheme.

Beyond the Leonard arrangement, the complaint accuses Sanberg of multiple fraudulent acts, including falsifying bank statements to obtain $145 million in loans, inflating 2021 revenue by $44 million through sham customers, and issuing false financials to support a planned SPAC merger. Accounting firms KPMG and BDO USA allegedly validated Catona's statements before KPMG resigned, citing "indicia of fraud."