US joins fraud lawsuit against Lance Armstrong

Saturday - 2/23/2013, 11:56pm EST

PETE YOST
Associated Press

WASHINGTON (AP) -- The Justice Department joined a lawsuit Friday against disgraced cyclist Lance Armstrong that alleges the former seven-time Tour de France champion concealed his use of performance-enhancing drugs and defrauded his longtime sponsor, the U.S. Postal Service.

The lawsuit alleges that riders on the postal service-sponsored team, including Armstrong, knowingly violated their postal service agreements by regularly using banned substances and methods to enhance their performance.

"Lance Armstrong and his cycling team took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules -- including the rules against doping," said U.S. Attorney Ronald Machen, whose office is handling the case. "The Postal Service has now seen its sponsorship unfairly associated with what has been described as 'the most sophisticated, professionalized and successful doping program that sport has ever seen.'"

In recent weeks, settlement discussions had been under way between the Justice Department and Armstrong's lawyers. A person familiar with the negotiations said Friday the two sides are tens of millions of dollars apart on how much Armstrong should pay to settle the case. The person spoke on condition of anonymity because the source was not authorized to speak on the record about the private talks.

From 1996 through 2004, the postal service sponsored a professional cycling team run by Tailwind Sports Corp., and Armstrong was the lead rider. From 1999 to 2004, he won six consecutive Tour de France titles. The suit also said Johan Bruyneel, the team's manager, knew that team members were using performance-enhancing substances and facilitated the practice.

The Justice Department notified the federal court that it is joining the lawsuit against Armstrong, Bruyneel and Tailwind and will file its formal complaint within 60 days.

In announcing it was joining the case, the Justice Department emphasized Armstrong's concealment of his activities and said the cover-up went back to at least 1998.

"The U.S. Postal Service Cycling Team was run as a fraudulent enterprise and individuals both inside and outside of sport aided and abetted this scheme and profited greatly," said Travis Tygart, CEO of the U.S. Anti-Doping Agency. "USADA applauds today's action by the U.S. Department of Justice which holds promise for returning the many millions of federal dollars in ill-gotten gains generated by this fraud."

Last month, USADA lobbied Attorney General Eric Holder for the Justice Department to join the lawsuit against Armstrong. It was USADA's investigative report in October that led to Armstrong being stripped of his medals.

An Armstrong lawyer, Robert Luskin, said negotiations with the government failed because "we disagree about whether the postal service was damaged."

"The postal service's own studies show that the service benefited tremendously from its sponsorship -- benefits totaling more than $100 million," said Luskin.

Luskin said that "Lance and his representatives worked constructively over these last weeks with federal lawyers to resolve this case fairly."

The suit the Justice Department is joining was filed under seal in 2010 by former teammate Floyd Landis, who was stripped of his 2006 Tour de France title for doping. Under the False Claims Act, private citizens can act as whistle-blowers and sue to recover money they believe was obtained through fraud against the federal government. These suits remain under seal until the Justice Department decides whether it thinks there is enough merit in the case to take it over. The private whistle-blower receives a percentage of any money ultimately recovered.

In his 2010 complaint, which was made public Friday, Landis gave a detailed account of what he alleged had been widespread use of performance-enhancing drugs by Armstrong and assistance from Bruyneel and others to carry out the drug use.

During the 2002 Tour de France, Landis and Armstrong lay on opposite sides of a bed to receive re-infusions of a half-liter of blood each, Landis' complaint said. During the banned procedure, Bruyneel sat in a chair watching and commented on how well the two were going to do in a time trial the following day, according to Landis.

In Spain, Landis went to Armstrong's apartment, where Landis met Italian physician Michele Ferrari, who drew half a liter of blood and placed it in a refrigerator. Armstrong then asked Landis to stay in the apartment to check the temperature of the blood each day while Armstrong went away for a few weeks to train.

In 2003, the withdrawal of two units of blood had left Landis in need of EPO to stimulate the production of red blood cells. Landis went to Armstrong's apartment, where Armstrong handed him a box of EPO, which Landis then used intravenously for several weeks during training for the Vuelta, a road race in Spain.