Lance Armstrong Must Face U.S. Fraud Suit Over Drug Use

Photographer: Doug Pensinger/Getty Images

Lance Armstrong, seen here as he rides the Champs Elysees in Paris to win a sixth Tour de France on July 25, 2004, is accused of defrauding the government by using banned substances in violation of his team’s contract with the Postal Service. Close

Lance Armstrong, seen here as he rides the Champs Elysees in Paris to win a sixth Tour... Read More

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Photographer: Doug Pensinger/Getty Images

Lance Armstrong, seen here as he rides the Champs Elysees in Paris to win a sixth Tour de France on July 25, 2004, is accused of defrauding the government by using banned substances in violation of his team’s contract with the Postal Service.

Ex-champion cyclist Lance Armstrong, whose team was sponsored by the U.S. Postal Service, will have to face claims in a $120 million whistle-blower lawsuit that he defrauded the government by using performance-enhancing drugs.

U.S. Circuit Judge Robert Wilkins, rejecting Armstrong’s bid to have the case dismissed, said the claims made in a lawsuit by former teammate Floyd Landis were sufficient to let the lawsuit continue.

Landis’s complaint is “rife with allegations that Armstrong had knowledge of the doping, and that he made false statements to conceal the doping and the attendant obligation which would have resulted if the government had known of the doping,” Wilkins wrote in a decision issued yesterday in Washington.

Armstrong, 42, is accused of defrauding the government by using banned substances in violation of his team’s contract with the Postal Service. The U.S. is seeking triple damages in the case, and Landis, who also admitted to using performance enhancing drugs as a cyclist, could share in any award under U.S. whistle-blower law.

The U.S. paid about $40 million on the Postal Service contract from 1998 to 2004. Armstrong’s former team, Tailwind Sports Corp., used Postal Service sponsorship fees to pay his salary of $17.9 million during those years, according to the complaint.

Lead Rider

Armstrong, the team’s lead rider from 1999 to 2004, made at least $221 million since turning professional, according to a compilation of his earnings by Bloomberg News.

Paul Scott, Landis’s attorney, didn’t immediately respond to a phone message yesterday seeking comment on Wilkins’ ruling. John Keker, Armstrong’s lawyer, declined to comment.

In the whistle-blower suit, which the U.S. joined in February 2013, Landis sued, in addition to Armstrong, Tailwind and the team’s former manager, Johan Bruyneel. Other defendants including Tailwind’s founder, Thomas Weisel, the chairman of Thomas Weisel Capital Management LLC, were left out of the government’s action.

Wilkins’s ruling covered requests to throw out both the government’s and Landis’s portions of the case.

He turned down Bruyneel’s request to be excused from both parts of the complaint and he dismissed Weisel from Landis’s portion of the suit.

‘Entirely Out’

Weisel “is entirely out of the case,” said his attorney, Robert Sacks of Sullivan & Cromwell LLP.

Thomas Zeno of Squire Patton Boggs LLP, an attorney for Bruyneel, declined to comment on the decision

The Washington case is among a string of litigation Armstrong has had to defend in connection with his use of performance-enhancing drugs and blood transfusions.

Last week, in a Texas case, Armstrong was questioned under oath for the first time since he confessed to Oprah Winfrey in a January 2013 television interview that he used performance-enhancing drugs to cheat in all of his Tour victories from 1999 to 2005.

In that case, SCA Promotions, of Dallas, is seeking the return of $12 million in bonus payments to Armstrong.

Last year, Armstrong settled a lawsuit by Acceptance Insurance Co. (AICIQ) over $3 million in bonuses.

Armstrong has also faced suits by consumers claiming they were misled by him into buying energy drinks and his autobiographies.

Wilkins was assigned the case as a district judge and kept control of it when he was elevated to the appeals bench by President Barack Obama in January.

The whistle-blower case is U.S. v. Tailwind Sports Corp., 10-cv-00976, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser, Joe Schneider

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