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US sues disgraced cyclist Armstrong for sponsor money

Feb 23 2013, 10:19 IST
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The United States has accused cyclist Lance Armstrong of defrauding the US Postal Service. (Reuters) The United States has accused cyclist Lance Armstrong of defrauding the US Postal Service. (Reuters)
SummaryThe United States has accused cyclist Lance Armstrong of defrauding the US Postal Service.

a portion of the proceeds if the case is successful.

The government joins 20 to 25 percent of all False Claims Act suits filed, and the government almost always wins the cases it joins, said John Phillips, who represents whistleblowers at the Phillips & Cohen law firm.

"That's a very good sign for the case: that the government after its own investigation, after looking at all the facts and the law, has decided to join the case," said Phillips, who is not involved in the Armstrong case.

Since the law was revitalized in 1986, it has been used frequently against military contractors, pharmaceutical companies and hospitals.

PREPARED TO FIGHT

Armstrong is prepared to argue that claims over most of the sponsorship money are time-barred, a source close to his legal team said, speaking on condition of anonymity. The sponsorship agreement expired in 2004, and there is a six-year statute of limitations on recovery under a U.S. anti-fraud law, the source said.

The source raised two other arguments that could help Armstrong. First, the sponsorship contract did not contain specific language or promises related to doping.

Second, Armstrong was not in charge of Tailwind Sports, the racing team firm that signed the contract with the Postal Service and that existed before Armstrong joined it.

Luskin is among the most sought-after defense lawyers in Washington. He represented former White House adviser Karl Rove in a case about the leak of a CIA officer's name.

Statements from government lawyers appeared to dismiss the idea that Armstrong could use the lack of specific contract language as a defense.

Armstrong and his team "agreed to play by the rules and not use performance enhancing drugs. We now know that the defendants failed to live up to their agreement," said Postal Service General Counsel Mary Anne Gibbons.

In the most recent fiscal year, the government reached $5 billion worth of settlements and court judgments under the False Claims Act - a single-year record.

"If they intervene, that puts the force of the government behind the suit," said Matthew Orwig, a former Justice Department lawyer now at the Jones Day law firm. He is not involved in the Armstrong case.

"There's the FBI, other investigative resources, Justice Department lawyers - in effect, the richest client in the world," he said.

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