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Cyclist’s federal fraud trial a Tour de Lance

This is a reprint of Jamie Moorhead's Chicago Daily Law Bulletin article:

The federal trial against Lance Armstrong is scheduled to begin in Washington, D.C., on May 7. The government is claiming Armstrong defrauded the U.S. Postal Service during its sponsorship of Armstrong’s professional cycling team.

The U.S. claims Armstrong hid performance-enhancing drug doping by himself and his teammates to cause the U.S. Postal Service to continue the sponsorship, including its $32.3 million in funding.

The doping was a violation of the sponsorship contract Armstrong’s team had with the Postal Service.

The U.S. also claims that, as part of Armstrong’s hiding these doping violations, Armstrong made false claims under the False Claims Act. Armstrong is potentially liable for up to $100 million in damages.

The trial has been delayed for a series of reasons. When the trial actually begins on May 7, it will have been almost 19 years since Armstrong’s first Tour de France win and five years since the government initially joined the lawsuit against Armstrong.

The issue for the trial is not whether or not Armstrong actually used performance-enhancing drugs. Armstrong already admitted that, including during his interview about such use during a televised confession to Oprah Winfrey in 2013.

Lance Armstrong had been the winningest American professional cyclist in history. Among other victories, Armstrong won the 1993 professional world championships and the Tour de France a record seven times from 1999 through 2005.

Armstrong was handed a lifetime ban from Olympic sports in 2012, and the ban remains in effect. All of Armstrong’s results after August 1998 were voided as well, including all seven Tour de France victories.

Armstrong’s former teammate, Floyd Landis, originally filed the lawsuit against Armstrong in 2010 under the False Claims Act. That act allows U.S. citizens to bring an action on behalf of the U.S. government if the citizen has knowledge of fraud against the government. If the lawsuit is successful, the citizen can receive a percentage of the amount of damages awarded.

After Armstrong confessed to doping in 2013, the U.S. government joined the lawsuit. The government position is that the Postal Service would not have continued the sponsorship contract if it had been aware of the use of performance-enhancing drugs and blood transfusions by the athletes. This activity was a specific violation of the Postal Service sponsorship contract.

Armstrong’s defense appears to be twofold. The first is that he did not make false claims to the federal government. The second is that the Postal Service did not suffer any damages as a result of the doping or Armstrong’s admission to it.

The essential legal issue tied to Armstrong’s second defense point is whether the amount of positive global brand awareness the Postal Service received from the sponsorship exceeded any negative publicity subsequently suffered.

Armstrong’s attorneys assert the Postal Service gained more value from the sponsorship than any damages suffered from the admitted cheating.

As part of the pre-trial motions, U.S. District Judge Christopher Cooper granted Armstrong’s request that the government’s witnesses could not testify during the trial that the Postal Service received no benefit under the sponsorship deal.

The judge also will allow Armstrong to ask witnesses if doping by blood and performance-enhancing drugs was so endemic within professional cycling during the years of the Postal Service’s sponsorship that the Postal Service either knew or should have known that Armstrong and the USPS team also were doping. If the Postal Service knew or should have known this, but continued to sponsor regardless, the U.S. Government’s argument would be weakened considerably.

It appears that Armstrong is going to assert that the Postal Service failed to do any due diligence on the rumors of widespread use of performance enhancing drugs in the professional cycling peloton.

Elliot Peters, Armstrong’s attorney, told The Associated Press in late November these rulings by the court are great. “The court says very clearly the government cannot pursue that the sponsorship had no value because of team doping. They have to prove damages to Postal Service after 2013 and Lance’s confession,” Peters said.

Not all of the judge’s rulings were in favor of Armstrong. The court will allow the U.S. government to examine other sponsorships of Armstrong, including his Nike and Trek Bicycles sponsorships. Both of those sponsorships, along with others, were quickly terminated after Armstrong admitted doping in 2013. By raising these other sponsor contracts, the government could show the Postal Service was not the only sponsor deceived by Armstrong.

The judge also placed restrictions on potential evidence key to the Armstrong defense. The Postal Service had reports prepared that stated its sponsorship provided more than $100 million in global exposure value to the Postal Service. The judge ruled most of those reports were inadmissible. Armstrong, however, will be permitted to show the Postal Service officials believed the reports.

It is expected that more than 50 witnesses will provide testimony during the entirety of the case. Both Armstrong and Floyd Landis are expected to testify. Also expected are Greg LeMond and Betsy Andreu, two former friends of Armstrong that have been vocal advocates against doping and Armstrong in the past several years. The United States Anti-Doping Agency’s CEO Travis Tygart and general counsel Bill Bock also are on the government’s list of potential witnesses.

With $100 million potentially at stake, there is speculation the government and Armstrong will settle in advance of the trial. For a settlement to occur, the parties would have to agree to a financial settlement before May 7.

Regardless of whether the case goes to trial or is settled, the matter of Lance Armstrong’s legacy and the unending saga of the rampant doping in cycling during the 1990s both likely will come to a conclusion soon, just short of the 20th anniversary of Armstrong’s first Tour de France win that made him a household name.


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