The federal government is going after Lance Armstrong’s money. As much as it can get.
The Justice Department unveiled its formal complaint against Armstrong on Tuesday, saying the cyclist violated his contract with the U.S. Postal Service and was “unjustly enriched” while cheating to win the Tour de France.
The government had previously announced it would join a whistle-blower lawsuit brought by former Armstrong teammate Floyd Landis under the federal False Claims Act. Tuesday was the deadline to file its formal complaint.
The Postal Service paid about $40 million to be the title sponsor of Armstrong’s teams for six of his seven Tour de France victories. The filing in U.S. district court in Washington, D.C., says the USPS paid Armstrong $17 million from 1998-2004.
The lawsuit also names former team Armstrong team director Johan Bruyneel and team management company Tailwind Sports as defendants.
“Defendants were unjustly enriched to the extent of the payments and other benefits they received from the USPS, either directly or indirectly,” the complaint said.
The financial costs for Armstrong and Bruyneel could be high. The government said it would seek triple damages assessed by the jury. Armstrong has been dropped by his personal sponsors and left the cancer-fighting foundation he started in 1997.
Armstrong had previously tried to negotiate a settlement, but those talks fell through before the government announced it would join the Landis lawsuit. Settlement talks could resume as the case proceeds to trial.
Armstrong, who in January admitted using performance-enhancing drugs after years of denials, has argued that the Postal Service’s endorsement of his team earned the government agency far more than it paid him.
Armstrong attorney Elliot Peters called the government’s complaint “opportunistic” and “insincere.”
“The U.S. Postal Service benefited tremendously from its sponsorship of the cycling team. Its own studies repeatedly and conclusively prove this,” Peters said. “The USPS was never the victim of fraud. Lance Armstrong rode his heart out for the USPS team, and gave the brand tremendous exposure during the sponsorship years.”
The government must prove not only that the Postal Service was defrauded, but that it was damaged somehow.
Previous studies done for the Postal Service concluded 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.
Landis attorney Paul Scott dismissed the idea that money gained by the Postal Service should negate the claims of fraud. Scott the Postal Service is tainted by the drug scandal.
“Even if the USPS received some ephemeral media exposure in connection with Mr. Armstrong’s false victories, any illusory benefit from those times will be swamped over time immemorial by the USPS forever being tied to the largest doping scandal in the history of sports,” Scott said.
The formal complaint against Armstrong appears to rely heavily on evidence and statements supplied by Landis and gathered by the U.S. Anti-Doping Agency for its 2012 investigation that exposed a doping program on the USPS team. Armstrong has been banned from sports for life and stripped of his seven Tour de France victories.
As Armstrong’s teammate, Landis participated in the doping program. He was later stripped of his 2006 Tour de France title won with another team because of his own doping violations.
Bruyneel, who lives in London, also has been charged by USADA with doping violations but is fighting that case in arbitration.
The government notes the contract with the Postal Service required riders to follow the rules of cycling, which included bans on performance-enhancing drugs and methods. Armstrong now admits using steroids, blood boosters and other illegal performance-enhancing drugs and measures to win.
By breaking the rules and covering it up, Armstrong and Bruyneel committed fraud against the U.S. government, the complaint said.
The complaint said that for years, team officials assured the Postal Service that the team wasn’t doping.
Armstrong had been the target of a federal criminal grand jury, but that case was closed without charges in February 2012. Armstrong has previously tried to settle the Landis whistleblower lawsuit, but those talks broke down before the government announced its intention to join the case.
Armstrong also is fighting a lawsuit from Dallas-based promotions company SCA to recover about $12 million it paid him in bonuses, and a lawsuit from the London-based Sunday Times, which wants to get back $500,000 it paid him to settle a libel case.
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