Mark Walter’s sports empire offers a glimpse of the money machine behind private credit—and the plumbing keeping it together

Mark Walter’s sports empire made him one of the most recognizable owners in American sports.

His financial empire was considerably less visible, even though it was hiding in plain sight.

But recent developments now have the business mogul facing scrutiny over the financial machinery behind his sports empire, raising much bigger questions about the entire private credit sector.

Walter, the controlling owner of the Dodgers and until recently the majority owner of the Lakers, is at the center of a Securities and Exchange Commission investigation, according to regulatory filings first reported on by Bloomberg in July .

The probe is looking into whether companies tied to his financial empire improperly handled billions of dollars in loans from insurance companies that he separately controls.

No criminal charges have been filed against Walter, and the investigation does not allege that the Dodgers or Lakers committed wrongdoing.

However, more than $1.2 billion of the financing for Walter’s purchase of the LA Dodgers came from insurance companies controlled by Walter through Guggenheim, according to a breakdown of the transaction by the Los Angeles Times .

Walter did not respond to a request for comment from Fortune .

Guggenheim Partners declined to comment.

Federal prosecutors and the SEC are examining whether Walter’s insurance companies improperly lent money to businesses connected to him without adequately disclosing the relationships.

Delaware Life Insurance Co. and Clear Spring Life and Annuity Co. conducted internal reviews after receiving federal grand-jury subpoenas and significantly restated what they described as errors in prior financial reporting.

Transactions between “related parties,” or life insurance money essentially being routed elsewhere within Guggenheim, were not $1.4 billion, or 3% of investments, but were actually over $17 billion, or at least 39% of total invested assets.

Related-party transactions are not inherently illegal, but they can create conflicts of interest and are subject to disclosure and regulatory scrutiny, particularly when insurance companies are involved because they hold money intended to pay policyholders’ future claims.

A week after the Lakers sold in a headspinning bombshell, Walter is reported in English newspapers to be considering exiting another trophy asset, Chelsea Football Club.