Floyd Landis whistleblower suit targets more than Lance Armstrong

Travis Tygart, chief executive of the U.S. Anti Doping Agency, says he's not surprised Lance Armstrong may be moving closer to admitting performance enhancing drug use.
January 17, 2013

Former teammate Floyd Landis has targeted not only Lance Armstrong but also three of Armstrong’s closest associates — his longtime manager, his closest friend and his deep-pocketed benefactor — in the whistleblower lawsuit that has been under judicial seal for more than 21 / 2 years.

And Landis reserves the right to add others to the so-called qui tam suit, which claims that Armstrong and his associates defrauded the federal government by accepting roughly $30 million in sponsorship money to bankroll a U.S. Postal Service Pro Cycling team that was fueled by performance-enhancing drugs.

The 33-page lawsuit, which has been under seal since it was filed June 10, 2010, was leaked and posted on a blog Thursday, roughly nine hours before the first installment of Armstrong’s interview with Oprah Winfrey was to air. After more than a decade of vehement denials, Armstrong confesses in the interview to having doped during a career that included seven Tour de France championships and an Olympic bronze medal—all of them now stripped.

The U.S. Justice Department faced a Thursday deadline to decide whether to join Landis’s action but is believed to have requested an extension. Federal officials are reportedly divided on whether pursuing the case represents a prudent use of taxpayer dollars.

Landis was a member of the U.S. Postal Service team from 2002 through 2004, and his whistleblower suit details his own use of banned substances and blood-doping practices along with numerous instances of Armstrong and others doing the same in hotel rooms, on team buses, and in private apartments.

Landis was stripped of his 2006 Tour de France championship after a positive drug test. He now stands to collect millions if his case, filed under the federal False Claims Act, goes forward and succeeds.

False Claims Act whistleblower suits, which date from the Civil War era, are a mechanism for encouraging someone with information about fraud against the government — oftentimes an “insider” in a case of wrongdoing — to come forward, explains Peter Chatfield of Washington-based Phillips & Cohen, which specializes in such cases.

The plaintiff’s reward is a percentage of the money that’s recovered — 15-25 percent if the U.S. Department of Justice joins the action and takes the lead role in the case, or 25-30 percent if the private plaintiff pursues the case without the government’s help or resources, Chatfield said.

The insider can benefit financially, even if he was party to the fraud, as long as he wasn’t the mastermind.

Landis has aired many of the allegations in his suit in other forums — in interviews and leaks to journalists and in conversations with Travis Tygart, the U.S. Anti-Doping Agency’s CEO, and Jeff Novitzky of the U.S. Food and Drug Administration, who investigates steroids use in sports.

Much of the information Landis provided Tygart and Novitzky became part of USADA’s roughly 1,000-page document that led to Armstrong being stripped of his seven Tour de France titles and banned from competition for life in October.

While far more concise than USADA’s report, the Landis suit describes a scene in the entryway of Armstrong’s apartment in Gerona, Spain, in which Armstrong handed Landis a box of EPO (a banned substance that boosts the production of red blood cells) “in full view of his wife and three children.”

It also describes a contentious team meal at a restaurant in France in April 2004 during which Landis objected to the fact that the management of the U.S. Postal Service team was selling bikes provided by sponsors, leaving rank-and-file riders short on basic equipment while Armstrong traveled in his own jet. Landis claims he was told that “management needed to sell the bikes to finance the doping program, as they needed cash for the doping program, and the team could not just list doping as a cost item on standard expense reports.”

Landis is seeking repayment of the roughly $30 million in U.S. Postal Service sponsorship money, which would be tripled under the law, as well as a civil penalty worth several thousands and reimbursement of his legal fees.

In addition to Armstrong, also named in the suit are are Thomas W. Weisel, a California dot.com-era millionaire, cyclist enthusiast and former owner of the U.S. Post Service team; Johan Bruyneel, the team’s former manager; William Stapleton, Armstrong’s longtime agent; and Barton Knaggs, a longtime friend and business partner of Armstrong; and their respective corporate entities, including Weisel’s Tailwind Sports, which owned the U.S. Postal Service team.

All had knowledge of the team’s systematic doping program, Landis claims, and thus were complicit in the fraud perpetuated on the federal government.

According to Chatfield, the qui tam lawyer, any one of the defendants in a whistleblower suit can be held liable for the financial damages.

While Armstrong’s net worth has been estimated at $100 million, Weisel has the deepest pockets among the defendants. A former cyclist and San Francisco Bay area investment banker, Weisel staked the money to launch a U.S.-based cycling team capable of winning the Tour de France, secured the U.S. Postal Service sponsorship and hired Armstrong as its chief rider. Armstrong has described him as a “father figure” in the past.

Assuming the case goes forward, Armstrong and his fellow defendants might argue that the U.S. Postal Service benefitted from its relationship with a multiple-time Tour de France championship team rather than were defrauded by it.

They would likely argue that the value Postal Service realized as a result of its sponsorship should be deducted from any repayment of sponsorship funds. Under the False Claims Act, financial damages are tripled before any off-set is made against damages for financial benefits the government realized despite a fraud, which means the defendants’ final tab could still be costly.

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