Consumer Fraud

Federal Judge Partially Rejects Whistleblower’s Fraud Suit Against Lance Armstrong

Lance Armstrong Tour de France 2009   Stage 171 Federal Judge Partially Rejects Whistleblower’s Fraud Suit Against Lance ArmstrongCyclist Lance Armstrong will not have to pay back sponsorship money he received from the U.S Postal Service (USPS), a federal judge said Monday in a summary judgement that gave the disgraced Tour de France champion a partial victory in his ongoing legal battle with the U.S. government.

Former teammate Floyd Landis sued Mr. Armstrong on behalf of the U.S. government in 2010, alleging the seven-time Tour de France champion defrauded the U.S. government by taking sponsorship money from the U.S. Postal Service while he was doping.

Mr. Armstrong had for years denied rumors and allegations by others in the cycling word that he was doping before finally admitting it on the Oprah Winfrey Show in 2013. Mr. Armstrong’s admission prompted the U.S. government to intervene and actively participate in Mr. Landis’ False Claims Act lawsuit.

Mr. Landis and the U.S. government argued that the law of “reverse” false claims applied to the case and that Mr. Armstrong was required to return the money he received from the USPS because he breached his sponsorship contract by enhancing his athletic performance with blood fusions and steroidal drugs, commonly referred to as “doping” in the world of professional sports.

Mr. Armstrong’s lawyers argued that the government’s claims were meaningless because the USPS was not harmed by its sponsorship of Mr. Armstrong and his team. On the contrary, they argued, the USPS received far more in value from the sponsorship than the millions it paid to Mr. Armstrong and his team.

“USPS-commissioned studies conservatively valued the global exposure the USPS received from 2001 to 2004 at $138-147 million – more than four times the amount the government paid to sponsor the USPS team,” Armstrong’s attorneys noted last year.

The USPS invested about $40 million in Mr. Armstrong over its nearly decade-long relationship with him. Under the False Claims Act, the recovery amount automatically triples, meaning that the U.S. government could have recovered up to $120 million from Mr. Armstrong had that portion of the case moved ahead.

The decision now leaves Mr. Landis and the U.S. government in the position of arguing and substantiating that the USPS was damaged by its sponsorship of Mr. Armstrong and suffered financial damages as a result.

While the reverse false claims portion of the civil fraud lawsuit was tossed, Mr. Armstrong remains on the hook for up to $100 million for other alleged damages stemming from violations of his contract with the USPS.

Sources:
USA Today
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