Armstrong’s Confession Looms, And Court Cases Await
Thursday, January 17, 2013
If disgraced cyclist Lance Armstrong's confession to doping is as complete as many believe, the admission could increase his legal troubles after Oprah Winfrey's OWN TV airs the interview Thursday night.
Armstrong has already lost his battle with the U.S. Anti-Doping Agency, which detailed "the most sophisticated, professionalized and successful doping program" in sports when it announced a lifetime ban of the cyclist last October.
The doping charges, corroborated by Armstrong's former teammates, led to his being stripped of seven Tour de France titles. The USADA's findings also gave new momentum to lawsuits against Armstrong, who aggressively defended himself against charges of doping during his career. At least one suit accuses him of fraud.
The lawsuits could take a chunk out of Armstrong's net worth, often estimated at between $100 million and $125 million. And they could unravel part of the web of holding companies, corporations, and investments the former racer and his partners have assembled over the years -- a web that's too complicated to describe here, but is laid out in a flowchart by Dimspace.
Here's a look at the legal and financial fallout an admission by Armstrong could bring:
A 'whistleblower' lawsuit was reportedly created in 2010 by former Armstrong teammate Floyd Landis against Armstrong and U.S. Postal Service cycling team officials. Landis was himself stripped of the 2006 Tour title for doping, something he has said was part of the team's culture.
The suit reportedly accuses Armstrong and his cycling team of defrauding the U.S. government. Most estimates of the money paid to Armstrong's team range between $30 million and $40 million. In such cases, it's not uncommon for fines and punitive damages to double the amount of money that was initially involved. That could raise the potential total to between $60 million and $80 million.
Landis filed the suit, which remains sealed, under the U.S. False Claims Act, which allows a citizen to sue on behalf of the government. The law would also allow Landis to collect a portion of the money paid in the case. The Department of Justice is expected to join the suit.
A central question is whether the lawsuit should focus more on Armstrong or Tailwind Sports, the corporation that owned his racing team and signed the sponsorship agreements with the U.S. Postal Service.
According to USADA documents, the Postal Service sponsorship contracts name situations that would bring an "event of default." The list includes "any material misrepresentation" as well as "negative publicity associated with an individual rider or team support personnel." It specifically names "failed drug or medical tests, alleged possession, use or sale of banned substances."
SCA Promotions, a Dallas-based company that resisted paying Armstrong millions of dollars in bonuses when his Tour de France wins fell under doping's cloud in 2004, wants its money back.
"SCA will be seeking a return of all performance bonuses paid, including the interest and costs SCA paid to Armstrong at the time, which totals $12 million," Jeff Dorough says. "That does not include other fees and costs SCA may seek."
As for any other possible defendants, Dorough says that SCA is "exploring all options."
Britain's The Sunday Times paid $500,000 to Armstrong in 2006 to settle a libel lawsuit stemming from its publication of excerpts from the book L.A. Confidential. The newspaper is likely to seek the money's return.
This week, the Timestook out an ad in The Chicago Tribune, in which it laid out questions it would like Winfrey to ask of Armstrong. It ended with a "p.s." note, in which it said it is pursuing "about $1.5 million" from Armstrong.
South Australian Premier Jay Weatherill said this week that the state is "more than willing" to ask Armstrong to repay what is believed to be as much as several million dollars in appearance fees he earned by riding in the state's Tour Down Under in 2009, 2010, and 2011.
Prize money that Armstrong won for titles may be required to be returned. When it stripped him of the Tour de France wins, the International Cycling Union also urged Armstrong to return the nearly $4 million in prize money that came with the victories.
A federal criminal investigation of Armstrong, which was shut down last February, but could be reopened, if U.S. Attorneys find enough cause. The potential charges in that case range from drug trafficking and supplying illegal drugs to money laundering.
In its expansive "reasoned decision" that laid out its case against Armstrong last October, USADA said that none of the evidence in its report had come from the federal investigation of the cyclist.
USADA head Travis Tygart clarified that he "formally requested copies of non-grand jury evidence from the case," but that "no documents have been received to date."
Tygart wrote that the explanation he received was that the evidence should remain untainted by a public release, in case the Department of Justice chooses to resume the case.
Other legal troubles for Armstrong include potential charges of perjury, as he has previously testified under oath that he did not use performance-enhancing drugs.
For instance, when the SCA Promotions case went to arbitration, Armstrong testified that he had "suspended" ties with Dr. Michele Ferrari after his conviction for sporting fraud and illegally acting as a pharmacist. USADA found his claim to be false. Armstrong also testified under oath in the Sunday Times lawsuit.
There is also a chance that Armstrong could face fraud charges levied by the U.S. Postal Service's major fraud investigations division, as Bloomberg reported Wednesday. Those potential charges could also name Tailwind Sports and its owner, financier and longtime Armstrong partner Thomas Weisel, Bloomberg says.
In addition, groups that paid Armstrong to speak at functions might seek to have their money returned. The former cyclist's standard personal appearance fees is listed at $200,000, on the Total Speakers website.
Armstrong's admission of guilt -- at first tacit, and now explicit -- led his corporate sponsors to cut ties, as well. As Forbes noted last October, the departures of Nike, Michelob, Trek, and others, along with a drop in appearance requests, will likely cost Armstrong around $15 million annually.
So, why might Armstrong be willing to open up about cheating -- and what can he offer to make USADA consider easing his lifetime ban? The answers will come in the coming days and weeks, but many believe that the former cyclist wants to compete again someday, and that he also wants to repair his devastated public image.
Armstrong could offer doping officials an insider's view of what they called a sophisticated and professional system of cheating. The list of people Armstrong could possibly implicate includes doctors and team officials who are also accused of doping.
Former USPS team director Johan Bruyneel, team doctor Dr. Pedro Celaya, and team trainer Jose "Pepe" Marti have ongoing cases stemming from the same investigation that brought Armstrong down. Reports have speculated that the tarnished star might be willing to trade a full and open confession -- and details of how they beat the system -- for a reduction in his lifetime ban.
But a statement from USADA's Tygart implies that ship has sailed. In October, Tygart wrote that he believed cyclists who confessed "have a chance to leave a legacy far greater for the good of the sport than anything they ever did on a bike."
He added, "Lance Armstrong was given the same opportunity to come forward and be part of the solution. He rejected it."
Still, Armstrong could offer to help an investigation of the International Cycling Union. The sport's governing body has been accused of colluding with athletes who doped -- including Armstrong.
The first part of Armstrong's conversation with Oprah Winfrey airs Thursday night at 9 p.m. ET. You can also watch it online.
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