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United States v. Lance Armstrong

April 26th, 2013 · No Comments

Well it was only a matter of time… The Federal government has joined Floyd Landis’ case against Lance Armstrong which also interestingly includes Tailwind Sports (which owned and operated the U.S. Postal Service cycling team) and Johan Bruyneel.

US Postal was sponsored for a total of US$40 million between 1998 and 2004 and the case seeks to recover triple this in damages leaving the defendants facing a potential US$120 million in damages plus costs in the event that they lose.  Armstrong’s legal team have dismissed the case as “opportunistic and insincere” according to the Associated Press (published by Outside Online).  See the opening part of the action below -

The United States brings this action to recover treble damages and civil penalties pursuant to the False Claims Act, 3l U.S.C. $$ 3729-33 (the “FCA”), and to recover damages, restitution, and other monetary relief under the federal common law theories of fraud, breach of contract, payment by mistake and unjust enrichment.

I. NATURE OF ACTION

l. The causes of action asserted by the United States arise from false or fraudulent claims that Defendants Tailwind Sports Corp., Tailwind Sports LLC (collectively, “Tailwind”), Lance Armstrong and Johan Bruyneel submitted or caused to be submitted to the United States

Postal Service (the “USPS” or “Postal Service”).

2. From 1996 through 2004, the USPS sponsored a professional cycling team owned by Tailwind and its predecessors (the “USPS cycling team”). Lance Armstrong was the lead rider on the team, and Johan Bruyneel was its directeur sportif, or manager.

3. The sponsorship agreements between the USPS and Tailwind gave the USPS certain promotional rights, including the right to prominent placement of the USPS logo on the cycling team’s uniform. Each of the agreements required the team to follow the rules of cycling’s governing bodies, which prohibited the use of certain performance enhancing substances and methods.

4. Riders on the USPS-sponsored team, including Armstrong, knowingly caused material violations of the sponsorship agreements by regularly and systematically employing banned substances and methods to enhance their performance. Moreover, Bruyneel knew that team members were using performance enhancing substances and facilitated the practice. As a result, the Defendants submitted or caused to be submitted to the United States false or fraudulent invoices for payment. The Defendants also made false statements, both publicly and directly to the USPS, that were intended to hide the team’s misconduct so that those invoices would be paid.

5. The USPS paid approximately $40 million to sponsor the USPS cycling team from 1998 through 2004. Because the Defendants’ misconduct undermined the value of the sponsorship to the USPS, the United States suffered damage in that it did not receive the value of the services for which it bargained. Moreover, because they knowingly provided services that materially failed to comply with the USPS sponsorship agreement, the Defendants were unjustly enriched to the extent of the payments and other benefits they received from the USPS, either directly or indirectly.

Interestingly Bruyneel is listed as living in the UK.  The court document lists examples of where it sees the defendants breached their agreement with the US Postal Service and the destination of the monies the US Postal squad received.  Armstrong is listed as receiving a salary of US$17.9 million between 200 and 2004 (not including bonuses).  That is from the entire US$40 million budget.  The court document runs to 28 pages.

There are six pages detailing the squad taking banned substances or “Particular instances of fraudulent conduct by Armstrong and Bruyneel which list time periods, the substances and the rider concerned along with Bruyneel’s and the doctors involvement.  A jury trial has been requested and it will certainly make for interesting reading.  One thing is for sure, the Armstrong story has a while yet to run!

Tags: Racing · Road cycling · Tour de France