February 10, 2013
by Sara Hoffman
Lance Armstrong has re-emerged into the spotlight over the past few weeks after appearing in a television interview with Oprah Winfrey for a self-evoked “confession” regarding doping throughout his acclaimed cycling career. In the interview, Armstrong admitted to use of performance-enhancing drugs and blood transfusions, which he has vigorously denied for years both publicly and in connection with several legal proceedings. In October 2012, the United States Anti-Doping Agency (“USADA”) stripped Armstrong of his seven Tour de France titles. In addition, the USADA banned Armstrong from professional cycling for life following his decision not to contest the USADA’s doping allegations, which cited Armstrong’s scheme as “the most sophisticated, professionalized and successful doping program that sport has ever seen.” However, Armstrong’s troubles may have only intensified following his interview confession as multiple legal issues lie ahead, including the possible reopening of criminal investigations, a whistleblower lawsuit, and numerous other civil lawsuits energized by Armstrong’s confession.
Not So Fast: Reopening of a Closed Criminal Case?
Armstrong was formerly under federal investigation for his possible role in establishment of a doping program utilized by his professional cycling team at the height of his career, including years when the team was sponsored by the United States Postal Service (“USPS”). The federal investigation focused on possible charges including federal conspiracy, drug trafficking, fraud, money laundering, and racketeering. The U.S. Attorney’s Office investigated Armstrong for approximately two years and even convened a grand jury to examine evidence and testimony from former team members and others privy to the suspected scandal. In February 2012, however, U.S. Attorney Andre Birotte Jr. announced that the Los Angeles office was shutting down its probe into federal criminal conduct allegations of Armstrong’s team. While the USADA continued to investigate Armstrong and doping in cycling in connection with its responsibility “to protect clean sport,” the federal investigation halted as a result of prosecutorial discretion. Although the office declined to address a specific reason for closing the investigation, many reports speculated that this discretion was tied to Armstrong’s public activeness, his Livestrong charity work, and the recent setbacks in professional athlete doping convictions in cases related to Barry Bonds and Roger Clemens.
Following Armstrong’s Oprah interview, rumors have circulated regarding possible reopening of the federal investigation. At an unrelated press conference this past Tuesday, however, Andre Birotte Jr. stated, “Obviously we’ve been well aware of the statements that have been made by Mr. Armstrong in other media reports. That does not change my view at this time.” On February 5th, ABC News also reported that a “high level source” speaking on conditions of anonymity responded to Birotte’s statements by asserting that “Birotte does not speak for the federal government as a whole.” Instead, the source claimed that the probe has been relocated from Los Angeles to another office, where “[a]gents are actively investigating Armstrong for obstruction, witness tampering and intimidation.” These possible charges would focus on Armstrong’s efforts toward concealing his prior doping scheme over the past few years, including allegedly threatening teammates or their wives as part of his cover-up. Either way, prosecutors will most likely be monitoring developments of the case, leaving room for re-opening of the case or new charges in the future. In Birotte’s words, the government will “continue to look at the situation, but that hasn’t changed our view as I stand here today.”
Armstrong during his interview with Oprah (Photo by George Burns, AP)
Interestingly, Armstrong admitted to doping through 2005 and denied substance use in 2009 and 2010, despite investigators’ claims that test results revealed transfusions in 2009. Armstrong’s denial of doping during later years may reflect an effort to deflect possible criminal charges for which the relevant statutes of limitations have not attached. This selective confession reflects Armstrong’s tacit acknowledgement of possible legal repercussions of a confession.
Floyd Landis’ Whistleblower Lawsuit
Whether or not the government eventually chooses to pursue federal criminal charges against Armstrong, the Justice Department could decide to join a civil lawsuit filed by Armstrong’s former teammate Floyd Landis. Landis won the 2006 Tour de France but was similarly stripped of his title for use of performance-enhancing drugs. In 2010, Landis filed suit against Armstrong and USPS cycling team officials under the False Claims Act, asserting that Armstrong defrauded the government by facilitating a doping system on the USPS sponsored team and subsequently denying the conduct.
The False Claims Act allows private citizens to act as whistleblowers by bringing civil suits on behalf of the federal government against parties based on knowledge that the parties defrauded the government.[i] The government may then choose to settle or proceed with the action and undertake primary prosecution authority, or it may elect not to proceed and allow the whistleblower to conduct the action. A defrauding party is liable for civil penalties between $5-10 thousand as well as treble damages, with varying limitations on the portion of proceeds the initiating whistleblower may receive.
Prior to Armstrong’s televised confession, an anonymous attorney told the Huffington Post that the Justice Department has discussed possible damages with Armstrong’s lawyers. According to NPR, the Justice Department will likely join the whistleblower suit as USPS payments to the cycling team were estimated between $30-40 million. NPR pointed out that the lawsuit could focus on Armstrong or racing team owner Tailwind Sports as signatory of the USPS sponsorship agreements. The agreements list possible contract default situations including material misrepresentation, negative rider or personnel publicity, and drug use, possession, or sale. This sets total possible civil penalties and damages owed by Armstrong and/or Tailwind as high as approximately $130 million.
Actions Seeking Return of Lawsuit Settlements, Prizes, Bonuses, and Appearance Fees
In addition to concerns of the government following Armstrong’s televised confession, many other parties have an interest in pursuing action against Armstrong to regain monies paid to him throughout his fraudulent career and subsequent years of adamant denial. South Australia will seek repayment of appearance fees paid to Armstrong to for his participation in the 2009-2011 Tour Down Under races in Adelaide, Australia. Although Premier Jay Weatherill would not disclose the amounts paid to Armstrong, it is anticipated to total several million dollars.
The Sunday Times, a leading newspaper in Great Britain, will reportedly seek repayment of damages it paid to Armstrong to settle a prior libel action. Armstrong sued the newspaper for libel in 2004 after it published excerpts from the book L.A. Confidential: The Secrets of Lance Armstrong. He also sued the book’s authors, publisher, and another magazine that published excerpts. The Sunday Times settled the lawsuit for 300,000 pounds in 2006, but announced in December that it was suing Armstrong for the fraudulent libel action to recover the settlement payment, interest, and costs totaling around $1.5 million. Armstrong’s admissions during his interview with Oprah have given the newspaper greater confidence on its possible recovery success.
Dallas-based insurance company SCA Promotions recently sued Armstrong for recovery of millions in prize money paid for 2002- 2004 Tour de France victories. SCA announced that it would seek recovery of the bonuses following the October 2012 USADA report and stripping of Armstrong’s titles; however, on February 7th, the company officially filed suit against Armstrong, his agent, and his former management company seeking repayment of approximately $12 million in prize money. Of the $12 million, $7.5 million was paid to Armstrong as part of an arbitration settlement following SCA’s contestation of the 2004 race bonus amid doping allegations. During this arbitration, Armstrong gave sworn testimony denying doping, so SCA’s lawsuit further alleges that Armstrong committed fraud against the company by lying about his drug use while under oath. According to the New York Times, SCA’s lawsuit asserts that Armstrong’s attorney agreed to repayment of the prize money won in arbitration back in 2005 if Armstrong was stripped of his Tour de France titles. The lawsuit is especially significant as it could force Armstrong to testify under oath regarding doping.
Over the past few weeks, it has become evident that big corporations and private parties alike are seeking financial payments from Armstrong. Two California purchasers of Armstrong’s books It’s Not About the Bike: My Journey Back to Life and Every Second Counts have filed a class action suit in a Sacramento federal court following Armstrong’s Oprah confession. The lawsuit against Armstrong and the book publishers alleges various claims including false advertising and consumer fraud, seeking repayment for the purchase price, litigations costs, and possible damages. Additionally many more claims for repayment of appearance fees will likely surface following Armstrong’s admission.
The Finish Line
With all of these implications, why did Armstrong agree to a televised interview confessing the charges he has spent years—and large sums of money—disclaiming? The confession likely represents a step toward appeasing the USADA in hopes of having his lifetime ban from professional cycling lifted. Following Armstrong’s Oprah interview, USADA CEO Travis Tygart asserted that Armstrong lied about doping after returning to cycling in 2009 and the extent of his substance use. Tygart called for Armstrong to cooperate with the USADA and come clean under oath by February 6th to have any chance of lifting the ban, but this deadline has come and gone with no such cooperation by the disgraced cyclist. Further, exposing the truth under oath now would contradict former testimony and could expose Armstrong to perjury charges, albeit it subject to a possible statute of limitations issue. Armstrong never testified during grand jury proceedings for the L.A. federal criminal investigation, and the statute of limitations has expired for his statements made under oath in connection with the SCA arbitration. However, the government may be able to get around the statute if they pursue conspiracy charges. Although Armstrong did not cooperate prior to February 6th, AOL Sporting News reported that an Armstrong attorney informed the USADA that Armstrong would not be able to fulfill the deadline but would cooperate to “clean up cycling.”
With the possibility of criminal charges, multiple pending civil lawsuits, and millions in cancelled sponsorships down the drain, Armstrong’s net worth and reputation continue to take blows following his televised confession. It’s hard to imagine that Forbes’ “Most Disliked Athlete in America” will ever recover.
[i] 31 U.S.C. §§ 3729-3733 (1986).