The Justice Department on Friday joined a federal whistle-blower lawsuit claiming that Lance Armstrong, his former team manager and the company that owned his cycling team defrauded the government because cyclists on the team, sponsored by the United States Postal Service, were engaged in a systematic, covert doping scheme.
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The Department of Justice joined the whistle-blower suit against Lance Armstrong on Friday.
The lawsuit, initially filed in 2010 by Floyd Landis, one of Armstrong's former teammates, asserts that the defendants concealed the doping from their sponsors because the sponsorship contract expressly prohibited the use of performance-enhancing drugs. The contract, from 2001 to 2004, was worth about $31 million.
Ronald C. Machen Jr., United States attorney for the District of Columbia, said the government joined Landis as a plaintiff because Armstrong and his associates "took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules." It is also unfair, he said, that the Postal Service is now associated with the cycling team that ran what the United States Anti-Doping Agency has called the most sophisticated doping program in history.
"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," Machen said in a statement.
Armstrong, who is serving a lifetime ban from Olympic sports for being the leader of a doping program on his seven Tour de France-winning teams, vehemently denied for years that he had doped. Last month, however, he admitted to using performance-enhancing drugs during his Tour victories.
Since then, he has been confronted with civil lawsuits that are threatening to drain him of millions of dollars. In one recent suit, an insurance company in Dallas is trying to recoup the $12.1 million it paid him for several of his Tour victories.
But the whistle-blower case has the potential to cause the most damage to Armstrong's bank accounts. His estimated worth is about $125 million, but in federal whistle-blower lawsuits, a court or jury can award triple damages, which in this case could add up to an award of more than $90 million.
Each defendant would be liable for that amount, whistle-blower lawsuit experts say, though the government could not recoup more than the $90 million. A judge or jury would decide how much each defendant would pay.
Landis, who was stripped of his 2006 Tour title for doping, also stands to benefit if the government wins the case. As the whistle-blower, he could be given a percentage of the award.
With the government on his side, Landis's chances of winning the case have risen steeply. The Justice Department joins only about 20 percent of cases filed under the False Claims Act, said Gordon Schnell, a lawyer at the firm Constantine Cannon and a specialist in whistle-blower lawsuits. Of the cases it joins, it wins or settles 80 percent of them, he said.
"It only picks the low-hanging fruit, the cases it thinks it will settle," Schnell said. "But this may just be a game of cat and mouse at this point. They could have brought the case to try to increase their leverage in working out a deal."
Armstrong and his lawyers have been negotiating with the government to settle the case, with Armstrong offering a payment of $5 million, according to one person briefed on the talks. That person did not want to be identified because the case is ongoing. The government wanted more than double that offer, the person said.
Armstrong also wanted immunity from criminal prosecution, the person said, but the government was not able to offer him a deal, though the United States Anti-Doping Agency — the entity that last fall published a 202-page report about Armstrong's doping — tried to persuade the government to do so.
"Those talks failed because we disagree about whether the Postal Service was damaged," Robert Luskin, a lawyer for Armstrong, said in a statement. "The Postal Service's own studies show that the service benefited tremendously from its sponsorship — benefits totaling more than $100 million."
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