The Justice Department on Friday joined a whistleblower lawsuit against disgraced cyclist Lance Armstrong, increasing the odds Armstrong may have to forfeit millions of dollars paid out by his team sponsor, the U.S. Postal Service.
The lawsuit, filed in 2010 by former teammate Floyd Landis on behalf of the Postal Service, alleges Armstrong and his team defrauded the government and violated their contract with USPS by using performance-enhancing drugs.
Former team manager Johan Bruyneel and team owner, Tailwind Sports, based in San Francisco, are named as co-defendants.
“This lawsuit is designed to help the Postal Service recoup the tens of millions of dollars it paid out to the Tailwind cycling team based on years of broken promises,” Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, said in a statement. “In today’s economic climate, the U.S. Postal Service is simply not in a position to allow Lance Armstrong or any of the other defendants to walk away with the tens of millions of dollars they illegitimately procured.”
Armstrong and his teammates won six Tour de France titles while USPS was their sponsor. (Armstrong won a seventh title with a different sponsor.) After denying doping allegations for years, Armstrong admitted last month to using banned substances such as EPO and testosterone, and bullying his teammates into doing the same.
Until now, Armstrong’s admission has not resulted in serious financial consequences for the cancer survivor-turned-celebrity. His estimated net worth is $125 million.
The Landis lawsuit, filed under the federal False Claims Act, poses a bigger threat to Armstrong’s wealth because it allows the government to recover three times the monetary damages, in addition to civil penalties.
Part of the case was unsealed Friday, but part continues to be kept under wraps while the Justice Department investigates. The complaint, however, was posted on a blog just before Armstrong’s January sit-down with Oprah Winfrey.
The government chose to step in against Armstrong after settlement negotiations with him stalled over the extent of damages the Postal Service suffered as a result of the doping, an Armstrong spokesman said. Those negotiations could resume.
Armstrong’s camp has argued that the Postal Service sustained little or no damage because it got a 300 percent return for its sponsorship of the pro cycling team. Any financial benefit to the government could help reduce final monetary damages, said Erika Kelton, a whistleblower attorney. The Postal Service spent at least $31 million over four years to support the team.
“Lance and his representatives worked constructively over these last weeks with federal lawyers to resolve this case fairly, but those talks failed because we disagree about whether the Postal Service was damaged,” Armstrong attorney Robert Luskin said in a statement. The Postal’s Service’s own studies show that it reaped big rewards from its sponsorship — with benefits totaling more than $100 million.
One of those studies, completed in 2002, concluded, “Without the support of USPS, this team would not have been able to accomplish the unprecedented Le Tour ‘hat trick’ and be in position to become possibly the greatest team of all-time.”
The government chose to hold off on pursuing team co-owners William Stapleton, Barton Knaggs and Thomas Wiesel, who, along with Armstrong and Bruyneel, were named in Landis’s original complaint. But prosecutors could still go after them in the future.
The United States Anti-Doping Agency (USADA), which released a 202-page report in October on Armstrong’s use of banned substances, had lobbied the Justice Department to join the whistleblower lawsuit.
In recent weeks, USADA officials had also been in talks with Armstrong to get him to reveal more details about his doping in exchange for a possible reduction in his lifetime ban from Olympic competition.
But on Wednesday, Armstrong refused for a second time to testify under oath before the USADA.
His use of performance-enhancing drugs has now cost him every cycling achievement since 1998, including his Tour de France titles and an Olympic bronze medal, and lucrative contracts with Nike and other sponsors.
Landis, by contrast, stands to collect millions if the whistleblower case succeeds. He was stripped of his 2006 Tour de France win after being caught with banned drugs in his system.
In his interview with Winfrey, Armstrong said he and his teammates could not have won the Tour without relying on a mix of EPO, transfusions, human growth hormone and testosterone.
He told Winfrey that, at the time, he didn’t see it as cheating because doping was so widespread in cycling. “I viewed it as a level playing field,” he said.
Ann Marimow and Peter Finn contributed to this report.