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| FILE - In this July 25, 2004 file photo, U.S. Postal Service cycling team leader and 2004 Tour de France winner Lance Armstrong, wearing the overall leader's yellow jersey, and teammate George Hincapie, right, ride the victory lap on Champs Elysees boulevard in Paris, France. Lawyers for Armstrong say the Justice Department has joined a lawsuit against the cyclist. The lawsuit alleges the former Tour de France champion concealed his use of performance-enhancing drugs for over a decade and defrauded his long-time sponsor, the U.S. Postal Service. |
WASHINGTON (AP) -- The Justice Department joined a lawsuit Friday against disgraced cyclist Lance Armstrong that alleges the former seven-time Tour de France champion concealed his use of performance-enhancing drugs and defrauded his longtime sponsor, the U.S. Postal Service.
The
lawsuit alleges that riders on the postal service-sponsored team,
including Armstrong, knowingly violated their postal service agreements
by regularly employing banned substances and methods to enhance their
performance.
"Lance Armstrong and his cycling
team took more than $30 million from the U.S. Postal Service based on
their contractual promise to play fair and abide by the rules -
including the rules against doping," said U.S. Attorney Ronald Machen,
whose office is handling the case. "The Postal Service has now seen its
sponsorship unfairly associated with what has been described as `the
most sophisticated, professionalized and successful doping program that
sport has ever seen.'"
In recent weeks,
settlement discussions had been under way between the Justice Department
and Armstrong's lawyers. A person familiar with the negotiations said
Friday the two sides are tens of millions of dollars apart on how much
Armstrong should pay to settle the case. The person spoke on condition
of anonymity because the source was not authorized to speak on the
record about the private talks.
From 1996
through 2004, the postal service sponsored a professional cycling team
run by Tailwind Sports Corp., and Armstrong was the lead rider. From
1999 to 2004, he won six consecutive Tour de France titles. The suit
also said Johan Bruyneel, the team's manager, knew that team members
were using performance-enhancing substances and facilitated the
practice.
The Justice Department notified the
federal court that it is joining the lawsuit against Armstrong, Bruyneel
and Tailwind and will file its formal complaint within 60 days.
In
announcing it was joining the case, the Justice Department emphasized
Armstrong's concealment of his activities and said the cover-up went
back to at least 1998.
"The U.S. Postal
Service Cycling Team was run as a fraudulent enterprise and individuals
both inside and outside of sport aided and abetted this scheme and
profited greatly," said Travis Tygart, CEO of the U.S. Anti-Doping
Agency. "USADA applauds today's action by the U.S. Department of Justice
which holds promise for returning the many millions of federal dollars
in ill-gotten gains generated by this fraud." Last month, USADA lobbied
Attorney General Eric Holder for the Justice Department to join the
lawsuit against Armstrong.
An Armstrong
lawyer, Robert Luskin, said negotiations with the government failed
because "we disagree about whether the postal service was damaged."
"The
postal service's own studies show that the service benefited
tremendously from its sponsorship - benefits totaling more than $100
million," said Luskin.
Luskin said, "Lance and
his representatives worked constructively over these last weeks with
federal lawyers to resolve this case fairly."
The
suit the Justice Department is joining was filed in 2010 by former
teammate Floyd Landis, who was stripped of his 2006 Tour de France title
for doping. Under the False Claims Act, citizens can act as
whistle-blowers and sue to recover money they believe was obtained
through fraud against the federal government.
These suits remain under
seal until the Justice Department decides whether it thinks there is
enough merit in the case to take it over. The private whistle-blower
receives a percentage of any money ultimately recovered.
The
Landis lawsuit was filed under seal, but it will be unsealed with the
Justice Department decision to join or, in essence, take over the case.
Armstrong
was the subject of a two-year federal grand jury investigation that the
Justice Department dropped a year ago without an indictment.
Throughout his career, Armstrong always denied drug use, but he confessed to having done so in an interview last month.
In
October, USADA released a report that included affidavits from 11 of
Armstrong's former teammates. These affidavits detailed how the
teammates were supplied with EPO - a banned hormone that stimulates
oxygen-carrying red blood cells to boost endurance, particularly in thin
mountain air - by Armstrong and saw him inject, and how they were
pressured to dope and bullied by Armstrong and Bruyneel. The cycling
world's governing body then stripped Armstrong of the seven Tour de
France titles he won from 1999 to 2005.
Armstrong
and USADA officials talked on and off over a couple of months about the
terms under which the cyclist might sit down for a long interview to
tell all he knows about doping in cycling, but Armstrong said he would
not cooperate.
A person familiar with
discussions between Armstrong and USADA, who spoke on condition of
anonymity because the discussions were private, said among the topics
was how much protection USADA could provide Armstrong in the
whistle-blower case and against possible criminal action. The cyclist
and his attorneys ultimately were not satisfied with USADA's offer, the
person said.
In commenting Wednesday on
Armstrong's refusal to talk, Tygart said that, "over the last few weeks
he has led us to believe that he wanted to come in and assist USADA but
was worried of potential criminal and civil liability if he did so."
If
the Justice Department ends up taking the whistle-blower case all the
way to trial, a key issue is likely to be whether the U.S. Postal
Service - the Armstrong team's sponsor - suffered financial harm from
the drug scandal.
The government must prove not only that the postal service was defrauded, but that it was damaged in some way.
Studies conducted for the postal service point to huge financial benefits from the sponsorship.
The
government could argue that all of the recent controversy tarnishes the
whole sponsorship and has damaged the postal service.
But
the USPS sponsorship ended long ago and relatively few people reading
stories about the current controversy are associating Armstrong with the
post office. Armstrong's last sponsor for his final two Tours de France
was Radio Shack, in 2009 and 2010.
The
studies for the postal service state that the agency reaped at least
$139 million in worldwide brand exposure in four years - $35 million to
$40 million for sponsoring the Armstrong team in 2001; $38 million to
$42 million in 2002; $31 million in 2003; and $34.6 million in 2004.
Despite those numbers, Armstrong is fighting an uphill battle.
The
government has a potentially strong weapon on its side: An argument
could be made that until recent months there was an active, ongoing
conspiracy to cover up Armstrong's alleged fraud. If the case ever goes
to trial, that argument could persuade a judge to allow in a huge amount
of evidence on Armstrong's use of performance-enhancing drugs dating
back to the 1990s - evidence that would be barred from the government's
court case as too old if there were no extended conspiracy.
