June 18 (Bloomberg) -- While the world’s top cyclists prepare to race across the French countryside and charge up the Alps next month, disgraced former Tour de France champion Lance Armstrong may be watching from the offices of his law firm.
Armstrong, 42, faces litigation on multiple fronts stemming from a very public fall from grace, one which turned a heroic cancer survivor into an international sports pariah. Armstrong wound up in court after his seven Tour de France titles were stripped from him in August 2012. U.S. anti-doping authorities concluded he used banned substances during the bicycling world’s most prestigious race.
Last week, he 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 a separate case from that one in Texas, the U.S. government is pursuing his sworn testimony as part of a $120 million False Claims Act lawsuit, looking for details on just how badly he may have misled the U.S. Postal Service, his one-time sponsor.
In both cases, Armstrong is accused of lying by claiming he didn’t take performance-enhancing drugs. If he doesn’t win them, Armstrong could lose more than half of the $221 million he earned during his professional cycling career, according to a compilation of his earnings by Bloomberg News.
U.S. Circuit Judge Robert Wilkins in Washington may rule this week on whether the government suit may move forward, opening the door to a trial.
A refusal by the judge to dismiss the case “would be the equivalent of ‘game over’ on liability for Armstrong because he’s already admitted to the doping,” Greg Doll, a lawyer with Doll Amir & Eley LLP in Los Angeles who isn’t involved in the Armstrong cases, said in an interview. “The case would then be about damages and penalties.”
In the whistleblower case, Armstrong’s lawyers argue the allegations he lied about not cheating were brought too late, more than five years after his last Tour de France victory.
The government, which joined the whistleblower case initially filed by Armstrong’s ex-teammate Floyd Landis in 2010, may seek to use under-oath admissions to show that he defrauded the U.S. Postal Service, which paid him and his team in the belief his victories were untainted by doping.
“Even though Armstrong recently confessed to doping –- albeit in a self-serving manner, and without being under oath –- he failed to put his confession in context,” Justice Department lawyers said in a court filing. “Specifically, Armstrong still has not given a full account of who helped him dope, where the drugs came from, and how he managed to cover up his activities for so long.”
Armstrong’s lawyers, in an effort to avoid having him testify under oath in five separate cases, said “all signs point to a strong likelihood of harassment.”
“The government’s own brief emphasizes its desire to pursue salacious, irrelevant details,” they said in a filing in the whistleblower case in Washington.
This year’s Tour de France will start July 5 in Leeds, England. In 2012, Bradley Wiggins of Team Sky became the first British rider to win the race. Last year, the team’s Chris Froome became the second.
Kenyan-born Froome will be defending his title against contenders including Spain’s Alberto Contador, fourth in last year’s race, and American Andrew Talansky, who this week won the Criterium du Dauphine, a warm-up race for the Tour.
Armstrong dominated the sport after battling with disease. He was diagnosed in 1996 with testicular cancer that spread to his lungs and brain. He created Livestrong, a cancer-support charity the following year.
After his cancer receded, Armstrong made his professional comeback in 1998. The following year he recorded his first Tour de France victory, winning the prologue and three of the 20 stages of the race, which covers more than 2,000 miles of European countryside in a little more than three weeks.
Focusing his career on racing in the Tour, Armstrong and his team reigned supreme in the race in the following years, which saw him arriving in Paris in the yellow jersey of the leader a record seven times in a row.
After his 2005 Tour victory, Armstrong retired from professional cycling, only to return in 2009. He ended third and 23rd respectively in the 2009 and 2010 Tour, results that were voided by the International Cycling Union in in 2012.
Allegations of doping dogged Armstrong and his team over the years, as more professional cyclists were suspended for testing positive for drug use. In 2012, federal prosecutors in Los Angeles ended a criminal investigation of Armstrong without filing charges. The U.S. attorney, joined by the Food and Drug Administration, had looked into whether Armstrong defrauded the U.S. Postal Service by using performance-enhancing drugs.
In the False Claims Act lawsuit, the level of proof for showing that Armstrong defrauded the government isn’t as high as in a criminal case.
Much of Armstrong’s income came from product endorsements and speaking engagements, a figure estimated at $180 million by IEG, a Chicago-based sponsorship consultant. Armstrong pitched companies including Nike Inc., Luxottica Group SpA’s Oakley Inc., Anheuser-Busch InBev NV’s Michelob brand, Trek Bicycle Corp., and nutrition-product companies FRS Co. and Honey Stinger.
All of them dropped him following the U.S. Anti-Doping Agency’s 1,000-page report in 2012, which detailed his misdeeds.
Then the lawsuits began.
The promotional company in Dallas that paid Armstrong bonuses for wins wanted millions of dollars back. The Texas native fought all the way to that state’s Supreme Court to block SCA Promotions Inc. from reopening an arbitration case. That matter, filed in February 2013, dealt with bonuses Armstrong won for his Tour de France victories from 2002-2004.
The promoter claims he lied under oath in the arbitration about cheating and demands the return of $12 million.
Last week, SCA won its battle to get Armstrong in the witness chair, questioning him under oath for the first time since he admitted doping, according to Jeffrey Tillotson, a lawyer for SCA.
Tillotson declined to comment on details of the deposition.
The whistleblower case against Armstrong was first filed under seal in 2010 by Landis, who admitted using performance-enhancing drugs as a cyclist. The Justice Department joined the suit last year.
The Postal Service paid the cycling team $40 million under its sponsorship deal from 1996 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. The U.S. is seeking triple damages.
John Keker, a lawyer for Armstrong in the government case, didn’t respond to an e-mail seeking comment. Tim Herman, Armstrong’s lawyer in the Texas case, declined to comment on that case.
Last year, Armstrong settled a lawsuit by Acceptance Insurance Co. over $3 million in bonuses, just one day before he was scheduled to be deposed. In written answers Armstrong provided in that lawsuit, he admitted using performance enhancing drugs in races from 1995 to 2005. He denied cheating in the 2009 and 2010 Tour de France.
James George, a lawyer for Acceptance Insurance, declined to discuss the terms of the settlement, saying they’re confidential.
Armstrong has fared better defeating consumers’ claims that they were misled by him into buying energy drinks and his autobiographies.
A federal judge in Los Angeles in March threw out a lawsuit by buyers of FRS products, saying a reasonable consumer wouldn’t believe Armstrong’s success could be attributed to an energy drink. That ruling is being appealed.
Buyers of Armstrong’s books, who claimed they were misled into buying what were really works of fiction, last year dropped a lawsuit filed in Sacramento after the judge in that case dismissed the claims against the publishers.
Meanwhile, Armstrong’s best defense against the government’s case may be to show that the U.S. got what it paid for.
“He may have a number of arguments showing that his sponsors were not actually harmed by his conduct, but enjoyed a substantial benefit due to his many wins, even though we now know they were chemically enhanced,” Doll said. “That is, everyone made money on the deal at the time.”
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