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The U.S. government’s decision to join a fraud lawsuit against Lance Armstrong is terrible news for the disgraced cyclist.Armstrong’s teammate Floyd Landis originally sued the cyclist, the U.S. Postal Service Pro Cycling Team, and its associates under the False Claims Act, which lets whistleblowers file lawsuits on behalf of the federal government.
Landis’ lawsuit says Armstrong’s team defrauded the government by taking sponsorship money from the Postal Service while its cyclists openly doped.
False Claims Act suits don’t gain much traction unless the federal government “joins” the litigation as a plaintiff. Now that the government has joined Landis’ suit, Armstrong could be in a lot of trouble.
Armstrong’s estimated net worth is $125 million. It’s not clear exactly how much of that money he’s lost recently because of the doping scandal, but he’s in immediate danger of losing millions and millions from a number of lawsuits against him.
The New York Times’ “Wealth Matters” columnist Paul Sullivan has called the False Claims Act suit the “biggest threat to Mr. Armstrong’s wealth,” though.
Michael Sullivan, a lawyer who heads the whistleblower group at Finch McCranie, told Sullivan that the federal government wouldn’t have to show that the team actually used the feds’ money to buy performance-enhancing drugs.
“You could simply say they were making false statements to get the money from the U.S. government,” he said. “You could say they were doping, knew they were prohibited from doping and went ahead with it anyway.”
These cases often settle for twice the amount the government actually paid out, Sullivan told the Times. ESPN has reported that the Postal Service paid out nearly $32 million to the team between 2001 and 2004.
If the government actually wins in court, it could get triple that amount (known as treble damages) under the False Claims Act.
So, there are millions and millions of dollars at stake. Even if Armstrong ultimately prevails, he’ll still probably have to pay a lot of legal fees. Legal experts have speculated he may end up filing for bankruptcy.
Clarification: A previously published version of this article noted that banking legend Thomas Weisel, who funded Armstrong’s team, could be in big trouble now that the federal government has joined the whistleblower suit. While Weisel is a defendant in Landis’ suit, it appears from a DOJ press release that the government is not pursuing claims against Weisel.
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