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New Sterling Audio Released; Complications Surrounding Shelly and Donald Sterling; Tax Issues for Donald Sterling and V. Stiviano

Aired May 9, 2014 - 12:00   ET


MICHAELA PEREIRA, CNN ANCHOR: Best of luck. Much luck to all of you. Kelly Wallace, thanks for bringing such a terrific story to us. Thank you.


PEREIRA: That's it for us at this hour. What a great way to go into the weekend.

JOHN BERMAN, CNN ANCHOR: Have a great weekend. Have a great Mother's Day. LEGAL VIEW with Ashleigh Banfield starts right now.

ASHLEIGH BANFIELD, HOST: Donald Sterling does it again. Another jaw- dropping recording. And in it, the embattled NBA owner says it was sexual desire that drove him to make racist remarks. 'Cause that's attractive. So who's buying this excuse, anybody? Buehler (ph)?

Speaking of buying, Sterling's estranged wife Shelly says she wants to keep a 50 percent ownership in the Clippers and bring in investors to buy out her husband's half of the team. So coaches, players, fans, how's that going to work out for y'all?

And then later this hour, murder mystery in Georgia. An 88-year-old man's mutilated body found in his home in a posh lakeside resort. No sign of an 87-year-old wife. Also no sign of the man's head. So far, not a clue to go on.

Hello, everyone, I'm Ashleigh Banfield. It is Friday, May the 9th, and welcome to LEGAL VIEW.

You may have heard the L.A. Clippers are home tonight for game three against the Thunder, but how can the NBA keep the focus on basketball, when we, instead, have this? More explosive and sometimes salacious audio recordings released by Radar Online.

And in the recordings, the Clippers owner, Donald Sterling, is now explaining that now-infamous racist rant. His excuse? He was just trying to have sex with the woman, V. Stiviano, and that could make a man say just about anything. I'm not kidding. Take a listen.


DONALD STERLING, CLIPPERS OWNER: But I'm talking to a girl. I'm trying to have sex with her. I'm trying to play with her. What can -- you know, if you have sex with a girl and you're talking to her privately, you don't think anybody's there. You may say anything in the world. What difference does it make?

Then if the girl tapes it and releases it, then my God, it's awful. Who thinks anybody's going to tape something? What the hell? I'm talking to a girl.

The girl's black. I like her. I'm jealous that she's with other black guys. I want her. So what the hell -- can you in private, tell her, you know, I don't want you to be with anybody. I mean, do I have -- am I a person? Do I have personal freedom of speech?

I wish Magic Johnson was talking to a girl. And you're trying to play with her. And you might say anything. I would have said I could fly over, over a high-rise building if I had to. And you're talking to her. And then you go away.

And the next thing, three months later, what you said when you were hot trying to get her, is released.

I have a girl here who has black kids, and is partly black, I think, myself. I love the girl. And so she's telling me, "You're wrong." I know I'm wrong. What I said was wrong. But I never thought the private conversation would go anywhere. Out to the public.

I didn't want her to bring anybody to my games because I was jealous. I mean, I'm being honest. And -- doesn't matter. No one's going to hear it but you and me so...


BANFIELD: And you and me. We heard it, too. I want to bring in my panel. CNN legal analyst Danny Cevallos; former prosecutor and defense attorney Paul Callan; and also sports journalist Terrence Moore.

Terrence, I want to start with you on this. I don't know about you, but I've now heard that tape about three times since 6 a.m. this morning. And each time I hear it, my jaw still drops. It's just more of the same evidence. Whether it's actually evidence or not. But will this have any impact? Will this make any difference?

TERRENCE MOORE, SPORTS JOURNALIST: Well, I mean, first of all, Ashleigh, let's forget the racial part for a moment here. Donald Sterling has got to do a better job of picking girlfriends and "friends," quote/unquote. You know, people who are...

BANFIELD: Terrence, I was there -- I was there when I saw the picture with the visor, my friend.

MOORE: Yes, I mean, it is unbelievable. But that's bad. But I'll tell you what's worse is what you alluded to. What's going on with the Clippers right now.

These are the good old days literally for the Clippers. "USA Today" yesterday pointed out that they are now the fourth most likable team in the NBA because of all this mess. You know, by the different metrics that they use.

But you've got this going on with Donald Sterling, who is, you know, very similar to Watergate. Forty years ago, you had the Nixon tapes. We're still getting revelations. This is never going to stop.

And then you've got Shelly Sterling, the wife who wants to hold onto the ball club. And we've already heard from Doc Rivers, the head coach, saying that this is not good.

So this is a very bad situation for this team that's trying to beat a very good Oklahoma City team in the midst of all of this mess.

BANFIELD: So, ironically, you're -- I'm just curious as to whether the worst it gets for Donald Sterling. Can't a case be made that the better it gets for these players, who ultimately, if the NBA is trying to oust him, need to say that his behavior is having a negative effect on the business of the team? And I'm starting to wonder if maybe he could spin that the other way.

MOORE: Well, I hear what you're saying, but I think not. Let's look at what just happened in the last game between Oklahoma City and the Clippers. They got blown out, OK.

Now a lot of that had to do with Kevin Durant and Russell Westbrook, you know, coming back from the dead. But it also had to do with all the stuff that's swirling in the wind. You know, you got to realize something about professional athletes.

Outside of the extremes of perhaps a Durant or a LeBron James, all of these guys are within seven or eight degrees of each other talent- wise, so any kind of distraction could be very, very bad. So here we've got this -- this soap opera going on that could be on the Oprah network. This cannot help you.



BANFIELD: Intangible -- look it, my Rangers just lost two home games so the intangible in this, you can't measure what it is that makes the team lose.

But let's throw it to the legal guys. Because there's so much about this that can be made legal. And there's so much about this that can be brushed off as not fair, not legal.

But Paul, let me start with you. The bylaws are clear. If you do things in the conduct -- and this is my wording -- if you do things in the context of your business that has an adverse effect on the members, the teams, the players, the league, you're out. That can be very broadly defined.

PAUL CALLAN, DEFENSE ATTORNEY: Well, you know, we've got a missing element in all of this. Because we don't have all of the documents. And I have to tell you, the document you're referring to, and I know you know it very well, section 13-D of the NBA constitution... BANFIELD: Look up, look up, I never let it leave my side these days. It's very clear.

CALLAN: No, it's very vague.

BANFIELD: You lawyers.

CALLAN: Because 13-D says that, if you violate a contractual obligation that causes a detriment to your fellow owners, players, and so on, so forth, that you can be terminated. Now, where in that contract...

BANFIELD: Is the contractual obligation?

CALLAN: ... does it say you can't make racist statements in your private life. It doesn't say that any place...

BANFIELD: Because the way he talked, and I'll get to the business of where he did the talking, private or public, is a violation of the constitutional requirements to conduct business in a reasonable and ethical way.

Danny, you and I have talked about this a lot. When you're a public figure, and I'm sorry, that man has made his bed. He takes out ads. He makes himself public. He is part of the widget. So if he does that stuff in private, it's still the widget that takes the hit. Correct or not?

DANNY CEVALLOS, CNN LEGAL ANALYST: You know, that's contract law for you. That's your interpretation. You can make the argument. And it is a cogent argument that, if you affect the business, then you can be disciplined.

But on the other hand, there's a really strong argument for -- these bylaws were designed to deal with teams that are in financial trouble. And it seems to me that you can -- when you get into the world of arguably, arguably, arguably. That this is something that damaged the business. Well, then, anything potentially damages the business.

And I think the way the constitution was written, this provision for ousting an owner has to do with when teams are in economic trouble. When they're having trouble making their payroll.

BANFIELD: I've got news for you. A bunch of sponsors flew the coop, albeit temporarily.

CALLAN: Let me add something...

BANFIELD: Quickly, because I...

CALLAN: The missing piece, OK, morals clause. The press reports THAT there are other documents.

BANFIELD: Yes, that's...

CALLAN: I'm betting that morals clause... BANFIELD: Quickly. I've got to get Terrence -- I've got to get Terrence in, last word here. Terrence, you heard it along with the rest of us on that tape. "I'm wrong. I know I'm wrong."

MOORE: Exactly.

BANFIELD: So I suppose that the issue is, look, I work for CNN, and they rely on me being kind of squeaky clean. So even if I do something private that's naughty but not illegal, I risk losing my job. It's the bed I make. Isn't it the same bed that all of these privileged owners make? It is a privilege to own a team; it is not a right.

MOORE: Well, one other quick thing that nobody's mentioning. Even though Adam Silver, the NBA commissioner, says that this suspension and removal of the team has only to do with the racist comments, don't believe that. This has to do with the totality of thirty-something years of him being a bad guy.

And if you start taking the totality of everything involved here, then you start going through the different clauses, and they all apply.

BANFIELD: And by the way, I don't do anything bad in my private life. I just want everyone to know that, including my boss, who's 30 feet away...

MOORE: Just watch who you talk to.

BANFIELD: You're right. And I always assume everything's bugged. That's just the way I live my life. I prosecute my life with extreme caution.

Terrence Moore, thank you. Good to talk to you, as always. I love your perspective on this story. You're just one of those great voices of reason, as are my terrific, brilliant attorneys, who are not going anywhere. They have a lot more for you.

The conversation shifts to the lady. Not the lady friend, the lady wife. Mrs. Sterling. Because she also has a stake in the Clippers. And she says she's got no plans to let her talons off that team. Nope, our panel's going to weigh in on this. The potential legal fallout. Whether she's got the right to this or whether she needs to sit on the sidelines and watch the whole thing slip away. That's coming up next.


BANFIELD: Donald Sterling may never be a big shot in the NBA ever again. But a Sterling may still be in charge of the Los Angeles Clippers. Because lawyers for Shelly Sterling, his wife, they call her a, quote, "passive owner." Watching from the bleachers in absolutely no say with what does what happens on the basketball court. Some people say the wife and the husband might as well be the same person. Why?

Here's Stephanie Elam to explain. (BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): As the Los Angeles Clippers continue in the playoffs, Shelly Sterling has been at many of the games. She owns the team 50/50 with her husband, Donald Sterling, the man whose racist rant has led to him being banned from the NBA for life.

PIERCE O'DONNELL, ROCHELLE STERLING'S ATTORNEY: Mrs. Sterling has denounced in his strongest term possible her husband's racist comments.

ELAM: Since Donald Sterling's rant went viral, Shelly Sterling is the only Sterling we've heard from on the record. Her lawyers have released statements regarding the Clippers on her behalf, and her lawyer says she's running the team without Donald.

And now we know Shelly Sterling has no plans to sell her stake in the team. Her lawyer says she's running without Donald.

PIERCE O'DONNELL, ROCHELLE STERLING'S ATTORNEY: They've been estranged and not living together for over a year, OK? And while they share business, you know, business properties, he's out of the team, has nothing to do with it, and she's the owner in charge.

ELAM: NBA Commissioner Adam Silver's version, deliberately or not, did make it open for Shelly to own the team. Complicating the matter, the Sterlings own the Clippers through a family trust. Her lawyer says they are in talks with the NBA.

ADAM SILVER, NBA COMMISSIONER: This ruling applies specifically to Donald Sterling and Donald Sterling's conduct only.

ELAM: She sees her role as an owner but less involved in the day to day?

O'DONNELL: A passive owner, not involved in management, not involved in deciding what the trades are, we're just retaining for now a 50 percent interest that she spent three decades nurturing.

BRIAN CLAYPOOL, ATTORNEY: Fact of the matter is, you cannot separate Donald Sterling from Shelly Sterling. Anything Shelly Sterling still makes from the Clippers will go to Donald Sterling.

UNIDENTIFIED MALE: Are you Ms. Shelby from the health department?

STERLING: Yes, sir.

ELAM: Her behavior may also be a factor. In this video from a former tenant, Shelly Sterling is caught on video posing as a health inspector. And in a 2009 deposition, a former tenant of the Sterlings testified Shelly Sterling called him a "black m.f."

O'DONNELL: Those were depositions. They're one-sided. Nobody's asked for her position. I will state it categorically. She has never, ever engaged in discrimination on the basis of race, sex, orientation, anything like that. Mrs. Sterling and her husband were sued. They've never been found by a court to have engaged in discriminatory housing practices. Some cases were settled by the insurance companies.

ELAM: But even though those cases were settled, the court of public opinion may still find her guilty by association and make her fight for the team even harder.

Stephanie Elam, CNN, Los Angeles.


BANFIELD: So you just heard that attorney, Brian Claypool, saying a Sterling is a Sterling is a Sterling, kind of like a rose by any other name.

So Shelly or Donald, is there a difference? Danny Cevallos is here, as well as Paul Callan, back with me again.

And joining us now is LZ Granderson, as well, from ESPN. LZ Granderson, question to you, how does the league, how do the other owners, how do journalists like yourselves in the business of sports view Mrs. Sterling?

Are they one and the same, the whole kit and caboodle including all the racism and ugliness?

LZ GRANDERSON, CNN COMMENTATOR: Absolutely. You know, ever since, I would say 2005, maybe 2006, is when journalists really started to pay attention to what was going on with the Department of Justice and the Sterlings, looked at the allegations, looked at the settlements.

And, so, specifically NBA beat writers who were aware of this development, they view that couple, that family, as one and the same, so any kind of shell game that Shelly would like to play in trying to distance herself from her husband really isn't going to fly with the people who have been paying attention.

And now because of social media, now because of these audiotapes, the general public is starting to pay attention, so that's going to make the task more difficult.

BANFIELD: If this has been going on at the extent it's been going on since -- what did you say -- 2006, where we've had affidavits and allegations against that woman suggesting that she is just racist. And, again, affidavits aren't proof. They're just someone's opinion down on paper and on the record, so let's be clear about that.

Why then hasn't it had an adverse effect on, say, the franchise? Is it just one big fat tape that got a lot of cable news play that started to have the adverse effect?

GRANDERSON: Well, you know, there are a couple of factors that kind of deflected our attention from the Clippers. Number one, they were a horrible franchise. They were horribly run. They weren't winning. We weren't paying attention.

The Lakers, particularly during that time that the Department of Justice were investigating the Sterlings, were winning Championships and were in the Finals. So the general public's attention when it came to NBA and L.A. was the Lakers and not the Clippers.

And then also you have to remember we were in the heart of, you know, dealing with the Iraq War. And so any attention left after talking about, you know, the L.A. Lakers should have been, rightly so, focused in on the war on terrorism and the Iraq war.

BANFIELD: Let me get to the heart of the marriage matter, and, Danny and Paul, this is where you guys have to get in on this.

Here we are, all surprised at the complexities of the fact that Donald Sterling has a wife and that the wife is estranged and that there's a mistress and, oh, dear god, what happens if you need to extricate one of the marriage party from this very fancy private agreement from the NBA?

It is not the first time rich men with rich wives have been to this rodeo. It's not the first time these people who drew up this contract have been to this rodeo.

Look at a few of the power couples who bought into teams that we researched just this morning. Will Smith and Jada Pinkett-Smith, they brought a minority stake in the Sixers. Marc Anthony and Jennifer Lopez, they bought a small stake in the Dolphins. Gloria and Emilio Estefan also bought a minority stake in the Dolphins.

Those are just the famous faces, but if you're buying a team, you're very rich, and there's a potential for ugly McCourt-like separation. They have to factor that in. We can't assume for a moment they haven't done something to factor in the fact that the wife could cause a problem.

DANNY CEVALLOS, CNN LEGAL ANALYST: Yeah, you're exactly right. We could talk about the default rules of property distribution, but those apply to the rest of us. Those don't apply to the titans of industry like Donald Sterling and NBA owners and the McCourts, because what they do is they bypass those default rules by entering into premarital agreements, other documents, trusts, all these different vehicles, to protect their assets.

So, for us to guess at what the true ownership is based on the default rules is really an exercise in futility. It's going to be governed by the documents and the actual contracts they entered into it.

BANFIELD: So, Paul, that's exactly it. Danny just said it. He hit the nail on the head, the guesswork that's going on right now, because, look, I'm an idiot here. And I would know not to allow two people to have a say in one membership on a special board like that.

PAUL CALLAN, CNN LEGAL ANALYST: Don't be so sure. I got to disagree with what Danny -- and maybe even you, Ashleigh, on this, because her lawyer says that she is listed as the 50-percent owner of this team in the document that specifies who are the members and owners.

Now, if that is the case, she will make a compelling argument that they don't have her making racist statements, which is why I think in the end they're going to look at the big picture here.

What's been the conduct of the Sterlings as joint owners through the years, and if she's a 50/50 owner, she knew exactly what was going on with her husband, and she tolerated it, so she shares the guilt. Lawyers call it joint and several liability. And when you're an equal owner and the other guy's causing problem, you've got an obligation to step in. So I think they even have a theory to deny the team to her.

But in the end, this is a $675 million asset. They're not going to let it go very easily.


CEVALLOS: Is this really the business the NBA wants to get into, though?


CEVALLOS: Background checks and morality police?

BANFIELD: That's why I said they probably --

CEVALLOS: That's not what they signed up for.

BANFIELD: They have a lot of prophylactic measures in there to stop this before we get to that. That's my assumption anyway, because if I were running the show, I'd know full well people got divorced. I don't know. Call me crazy. 50/50 shot.

Danny Cevallos and Paul -- I'm just try to figure out who his coming up next.

LZ, I'm going to let you go. Thank you for your time, my friend.

Danny and Paul are going to stick around for the next block, because V. Stiviano is still an issue here. We don't know whether she really did that recording secretly or whether she says it was on the up and up with him.

But guess what? That may not be the only problem for her. The IRS may be what's next on her plate. Remember that whole bit about "he was paying me under the table?" Word to the wise, girlfriend, don't say that when you're on recordings.


BANFIELD: She was on the payroll, but apparently, quote, off the books. That's what V. Stiviano told the world about her business relationship with Donald Sterling. It wasn't a secret recording either. It was actually something she knew would last, would have posterity and it may have drawn the attention of the IRS. Uh-oh.

Rosa Flores has more.


UNIDENTIFIED MALE: Can we talk to you?

ROSA FLORES, CNN CORRESPONDENT: V. Stiviano, Sterling's enigmatic gal pal, made headlines for being on the receiving end of the racist rant. She told Barbara Walters it was just an innocent chat between friends.

V. STIVIANO, DONALD STERLING'S COMPANION: I'm Mr. Sterling's right hand arm, man. I'm Mr. Sterling's everything. I'm his confidante, his best friend, his silly rabbit.

FLORES: But while Stiviano may not have broken the law by taping her best friend, she may have run afoul of the IRS.



WALTERS: He pays you as an employee?

STIVIANO: He does not -- he at first started paying me as an employee and then he started paying me off the books.

FLORES: Off the books? How could the owner of the Clippers, a man worth $1.9 billion, pay someone off the books? Is this a red flag, possible red flag for the IRS?

UNIDENTIFIED MALE: The connotation is that this is income being paid to someone, and it's not being reported anywhere.

FLORES: There are allegations that Donald Sterling was even more generous with his silly rabbit. His wife, Shelly Sterling, sued Stiviano, claiming her husband transferred at least $1.8 million to Donald Sterling's everything.

UNIDENTIFIED MALE: If you have an employer-employee relationship and compensation is paid and not reported to the IRS, and, more importantly, if the payroll withholdings are not remitted to the IRS, it's a very serious situation.

FLORES: Sterling also alleges her husband gave Stiviano fancy cars, Ferrari, and two Bentleys.

UNIDENTIFIED MALE: An employer can pay an employee with property or cash or many types of remuneration, but they would still be subject to, you know, the income tax withholding rules and reporting on a W-2 as compensation.

(END VIDEOTAPE) BANFIELD: Boy, I wish CNN paid in Ferraris. Wouldn't that be something?

FLORES: That would be nice.

BANFIELD: It's great that you cleared that up, that gifts like that are considered income. They are considered reportable assets, et cetera. But is this the kind of potato that the IRS is interested in, the small potato, or is $2 million-ish worth of gifts a big potato?

FLORES: When you talk about saying something like, "I got paid off the books" on national television, you can't get away with someone not paying attention.

The CPA that I talked to said, Oh, goodness, I was watching, and I though, who says that on national TV? Of course it's going to catch the attention of them. Is the IRS going to do something? We don't know that, of course.

BANFIELD: And, by the way, I should also mention, Rosa Flores is a great journalist. She also happens to have been a CPA, as well, and a masters in accounting, so you know what you're talking about. It is not just the implication of V. Stiviano and what she said to Barbara Walters. It's implicating Sterling, as well.

FLORES: You're absolutely right, because what you would have, if she was indeed an employee and then was paid off the books, is an employee-employer relationship.