08/10/2013 // Whistleblower Law Firm (Press Release) // Keller Grover, LLP // (press release)
Facing a potential $120 million penalty in a whistleblower lawsuit, Lance Armstrong has moved to dismiss the case, in which he is accused of defrauding the U.S. government by accepting sponsorship money while using banned performance-enhancing substances. The filing — made on July 23 — argues that the U.S. Postal Service, which sponsored Armstrong’s racing team from 1995 through 2004, should have known he was doping, and so no fraud occurred.
For years, Armstrong had denied claims that he used the banned substances, only to admit doing so in January. He has been stripped off his seven Tour de France titles and banned for life from competitive cycling.
The whistleblower suit had been initiated in 2010 by a former Armstrong teammate, Floyd Landis. It was brought under the federal False Claims Act, which allows private individuals to sue for alleged fraud against the government and receive a share in any ultimate recovery. Since it was substantially overhauled in the mid 1980s, the Civil War-era statute has been a remarkably potent weapon in the fight against fraud, resulting in some $30 billion in recoveries for taxpayers.
Landis’s lawsuit, which was joined earlier this year by the federal government, alleges that Armstrong and others — including Thomas Weisel, the team’s owner, and Johan Bruyneel, its manager — defrauded the government when they accepted $40 million in sponsorship fees from the Postal Service while breaching their obligation not to use performance enhancement drugs.
But in his motion to dismiss the whistleblower suit, Armstrong counters that the Postal Service should have known that he was doping, as allegations that he did so have long garnered media attention. Armstrong’s 25-page filing also contends that the Postal Service received substantial benefits from its sponsorship, including “favorable publicity,” and access to special perks and events during the Tour de France competitions.
If found to have violated the False Claims Act, Armstrong and the other defendants could be liable for up to three times the $40 million in sponsorship money paid to the team over the nearly 10-year life of the partnership. The notion of ‘benefits’ has been at the core of both sides’ arguments in the case — and an issue that may have important implications for future False Claims Act lawsuits, say whistleblower lawyers.
“Armstrong’s side is saying that the government knew about the doping and the Postal Service benefited more than it was harmed” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized whistleblower law firm, and a veteran whistleblower lawyer. “Those are factual questions that should be decided as the case goes forward. If Armstrong’s side can put together a defense to the claims, as it appears to be doing in this motion, it has enough notice of what the claims against him are. Let’s see what the facts bear out.”
While the whistleblower suit has regularly been making headlines, this issue of benefits — and the arguments each side is making — is the real news in this case, says Keller, whose firm has offices in Los Angeles and San Francisco.
“Over the years, we’ve seen whistleblower statutes like the False Claims Act make a significant dent in fraud committed against taxpayers,” says Keller. “Congress and the courts have repeatedly made clear that you have to turn square corners when you contract with the government and if you don’t you may have liability under the False Claims Act. How Armstrong’s defense of government benefit plays out in the case will have ripple effects in other cases that have nothing to do with doping or famous athletes.”
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