Lance Armstrong’s latest race: Outrunning a $100M fraud claim

Thumbnail

The Texan who rode to worldwide glory in seven Tour de France wins, mostly sporting US Postal Service logos, is trying to stop the government from collecting $100 million in damages it says he owes taxpayers for lost promotional value after he admitted to doping.

Armstrong argues that the Postal Service got more than its money's worth as his sponsor from 2000 to 2004 and was at court as his four attorneys pressed the point, sunglasses folded on the table in front of him, jotting notes and leafing through case exhibits.

The long-running and complicated federal fraud suit involving Armstrong dates to 2000 and has gone through more twists and turns than the Alpine climbs and switchbacks that once established his reputation.

But the point of Wednesday's two-hour hearing was simple, as the team shielding Armstrong, 45, tried to have most of the lawsuit tossed.

Whatever Armstrong's moral failings, his attorneys insisted, the government has not shown that those flaws offset tens of millions of dollars in media exposure, new market share and customer revenue that the Postal Service gained by backing him.

The high stakes in play was evident at the courtroom door where the schedule for the case listed 20 lawyers for the various sides present, including Joyce Branda, the deputy assistant attorney general in charge of the commercial litigation branch.

Armstrong conceded in 2013 that he had used performance enhancing drugs despite years of strenuous denials in the face of persistent rumours. He was stripped by cycling authorities of the seven Tour de France championships he had won from 1999 through 2005.

The government has asked for triple damages for its $32.3 million sponsorship of Armstrong's US Postal Service Pro Cycling Team. The government entered the legal fray when it joined a 2010 whistleblower lawsuit brought by Armstrong's former teammate Floyd Landis.

“Bottom line: USPS got more than it paid for and is not a victim of fraud,” lead defense lawyer Elliot Peters argued in court, quoting a 2012 email sent by a Postal Service advertising executive to William Henderson, the US postmaster general from 1998 to 2001.

Peters said a Postal Service presentation drafted in November 2003 estimated that the service reaped $109 million in media exposure and $4 million to $6 million in other benefits from its support of Armstrong through what was then Tailwind Sports.

US District Judge Christopher “Casey” Cooper of Washington pushed the issue, asking lawyers for the Justice Department and for Landis “is there any evidence from which a juror can infer the Postal Service lost revenue as a result?” he said. Or were lawyers who want the suit to move forward counting on appealing to potential jurors' “common sense,” Cooper continued dryly.

The Postal Service had not done a study of the financial hit or other impacts after Armstrong said he cheated, said David Finkelstein, a lawyer in the Justice Department's civil fraud section.

But Finkelstein noted that plenty of people had read about the damaging news.

Finkelstein cited 1.5 billion views of negative media reports and 154 billion social media impressions of Armstrong's admissions, along with testimony by two experts that the sponsorship has been rendered valueless.

He also called attention to the swift dumping of Armstrong by other sponsors in 2012 after they determined his endorsement had no “commercial value.”

Landis did not attend the hearing, but his lead lawyer, Paul Scott of San Francisco, urged the court to view Armstrong's conduct through the broader lens of the “moral taint” cast by his years-long deception of doping authorities and the public, and his role as what Landis asserts was chief conspirator and enforcer of a massive fraud that enriched Armstrong and his sports ventures and turned him into a celebrity.

“This was the greatest doping conspiracy in the history of sport. It included lies, intimidation and the use of illegal drugs,” Scott argued.

Armstrong benefited from taxpayer backing, Scott said, likening the onetime global star to a government contractor who uses child labor to produce uniforms for the US military, or a contractor who shares sensitive technology with a banned country.

Not punishing Armstrong's operations would “reward them for concealing fraud,” Scott said, sending the message that “if you keep it quiet for long enough, then you don't have to pay it back. That is not good public policy.”

US prosecutors pursued criminal doping allegations against Armstrong from 2010 until dropping the investigation case in February 2012. The US Anti-Doping Agency that October accusing Armstrong of leading “the most sophisticated, professionalised and successful doping program that sport has ever seen” and banned him from the sport.

Armstrong declined to comment outside the courthouse after the hearing, including about why he attended a proceeding where his presence was not required.

Cooper did not say when he would rule on several motions by both sides that would narrow the case.

However, if Cooper allows the case to proceed but agrees with Armstrong's lawyers' request to dismiss the government's demand for triple damages, it could cut potential penalties from $100 million to civil fines of less than $500 000.

A trial is not expected until next year at the earliest.

The Washington Post

Original source: Lance Armstrong's latest race: Outrunning a $100M fraud claim

by