The source says someone in Sterling's camp went to the District Attorney's Office and reported that Stiviano was demanding money in exchange for keeping more recordings between the pair private.
An audio recording captured the longtime Clippers owner urging Stiviano, his archivist, not to bring black people to Clippers games or to post photos of herself with black friends on her Instagram account.
Sterling spoke out about the rant for the first time last week.
"I wish I had just paid her off," he told Jason Binn in a brief interview for DuJour Magazine. His comments immediately raised questions about whether Stiviano was blackmailing the billionaire.
A source also says Sterling's estranged wife, Rochelle, was contacted by the District Attorney's Office, as part of the investigation since she could potentially be a witness.
Stiviano sat down with ABC's Barbara Walters Friday in an exclusive interview. Walters asked Stiviano if she had a financial arrangement with the billionaire, and she said yes, calling herself his "right-hand man," and elaborating on her role in his life.
"I'm his confidant, his best friend, his silly rabbit," she responded.
In the interview, Stiviano also alluded to more recordings.
"Part of the audio in which the world heard was only 15 minutes, there's a number of other hours that the world doesn't know," Stiviano told Walters.
According to court documents from a lawsuit involving Shelly and Stiviano, Donald Sterling has given Stiviano two Bentleys, a Ferrari and $1.8 million to buy a home. Stiviano told Walters she began as an employee, but was later paid "off the books."
"What's the biggest misconception of you?" Walters asked Stiviano. "That I'm a mistress or a whore or a woman of the night. I became part of Mr. Sterling's team. I became someone who protected him, someone who took care of home, someone who watched everything he said and did," she responded.
The L.A. District Attorney's Office refused to comment on the alleged extortion investigation.
Stiviano has had legal issues of her own
Stiviano is no stranger to court cases. In 2013, she pleaded no contest to DUI charges. In 2010, she was arrested for possession of a controlled substance. In 2004, Stiviano pleaded no contest to misdemeanor petty theft. In 2002, she was arrested on a separate petty theft charge.
Stiviano in process of adopting two boys
Meantime, Eyewitness News has learned Stiviano took a major step toward legally adopting two boys with special needs. Both have been living in the foster system for seven years. Her attorney, Mac Nehoray, says Stiviano had been in the process of adopting them for several years.
Nehoray released the following statement to Eyewitness News confirming the adoption Tuesday: "The boys are 12 and 13 years old and are of Hispanic, Asian, Native American and Cambodian heritage. Last Friday, Department of Children and Family Services approved her home as being suitable for the 2 boys. Ms. Stiviano requests that all news media respect the privacy of the two children who deserve nothing less."
Eyewitness News has learned that, in 2002, Stiviano applied for a license to operate a day care center, under the name Maria Valdez.
Stiviano has gone by six different aliases
The 31-year-old self-described confidant of Sterling has a list of aliases as long as her rap sheet, going by the following names: Monica Gallegos, Vanessa Maria Perez, Maria Vanessa Perez, Mariamonica Perez Gallagos, Maria Valdez and V. Stiviano.
She was known as Vanessa Perez when she attended Roosevelt High School - the same school where Sterling, then known as Don Tokowitz, met his wife, the former Rochelle Stein. All three of them are now involved in the scandal that has changed the NBA and disgraced an empire.
LA Dodgers Tommy Lasorda comments on Stiviano
Los Angeles Dodgers legend Tommy Lasorda said he's not surprised by Sterling's comments, but noted his disdain for Stiviano.
"I don't wish that girl any bad luck, but I hope she gets hit with a car," he said.
LA Clippers President Andy Roeser taking leave of absence
On Tuesday, L.A. Clippers President Andy Roeser announced that he is taking an indefinite leave of absence while the NBA restructures the team's franchise. NBA spokesman Mike Bass made the announcement Tuesday in a statement, saying Roeser's leave of absence "will provide an opportunity for a new CEO to begin on a clean slate and for the team to stabilize under difficult circumstances."
The news comes just days after the NBA announced it would appoint a new CEO to run the Clippers.