Lance Armstrong once took great pride in his ability to avoid getting caught for all the sins that could bring him down.
He kept getting away with it, always "winning" in the end.
And now he's arguably done so again, this time against the federal government.
After battling lawsuits for years, the former cyclist agreed on Thursday to end the case that threatened his fortune the most – a $100 million civil fraud action filed against him by the U.S. Justice Department.
To make it go away, he accepted an offer to
pay a $6.65 million settlement.
But that’s not even the biggest settlement he’s paid since his doping confession in 2013. It’s also not clear his payment to the government will cover its cost in pursuing this case over the past five years.
“It seems to be the American way to profit off your crime as Armstrong did here,” said Betsy Andreu, a longtime critic of Armstrong and wife of Armstrong’s former teammate, Frankie Andreu. “However, the world knows he's a remorseless pathological liar whose entire career is tainted.
"He admitted his guilt by throwing in the towel and paying millions to the plaintiffs. There's justice in that he has a lifetime ban from sanctioned competition. That's a good thing for clean athletes and advocates of clean sport.”
Armstrong, 46, was scheduled to go to trial May 7 in Washington, D.C. A jury there would have decided his fate and could have put him on the hook for $100 million in damages. Instead,
he avoided trial by agreeing to pay off less than 7% of his potential risk.
The settlement breaks down like this:
– $1.65 million will go toward the legal expenses of Floyd Landis, Armstrong’s legal enemy and former teammate.
– $5 million will go to the federal government, which was trying to recoup $32.3 million paid by the U.S. Postal Service to sponsor Armstrong’s cycling team from 2000 to 2004.
– Of that $5 million recovery for the government, Landis will get a cut of $1.1 million
as the whistleblower who brought the case to the government’s attention.
That means the government’s net recovery is $3.9 million after pursuing this case since 2013 with countless efforts, including staff hours for the Justice Department, searches for evidence, court arguments, depositions and trial preparation.
Over five years, that’s $780,000 per year for the government’s work.
Yet it could have been much worse for the government, even if it appears that Armstrong evaded yet another reckoning, much like all those drug tests that failed to catch him during his cycling career.
Risk calculation
The Justice Department could have gone to trial for several weeks and got nothing – a prospect that looked more likely after
a key ruling by the judge in 2016.
The risk of defeat then crept closer as jury selection loomed on May 1.
“One might surmise that the government may have had doubts about the strength of its damages case,” said Tony Anikeeff, an attorney who was not involved in the case but specializes in similar government contracts cases for the firm Williams Mullen.
A Justice Department spokesman said he didn’t have an estimate on what it cost to pursue the case. A message seeking additional comment from the Justice Department wasn’t returned Friday.
In a statement Thursday, Justice Department attorney Chad Readler said “no one is above the law,” and “this settlement demonstrates that those who cheat the government will be held accountable.”
The government filed the case in 2013, shortly after Armstrong confessed to doping in a televised interview with talk-show host Oprah Winfrey. It accused Armstrong of unjust enrichment and said Armstrong’s cycling team violated its sponsorship contract with the Postal Service by using performance-enhancing drugs and blood transfusions to cheat in races. Under the False Claims Act, the Postal Service’s damages could have been tripled to $100 million.
Armstrong, who was banned for cycling for life in 2012, denied doping for more than a decade before his confession. Other civil fraud lawsuits against him since then have been dismissed or paid by Armstrong to go away, including a settlement of around $10 million for SCA Promotions, a Dallas company that had covered his bonus money for winning the Tour de France.
MORE:
Did Landis get the last laugh against Armstrong?
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How the Oprah confession has weighed on Armstrong
Elliot Peters, Armstrong’s attorney, noted that Armstrong settled for a fraction of the risk he faced after "several significant court rulings rejecting and limiting the plaintiffs’ damages theories.”
He had previous offers to settle this case for larger amounts but wasn’t willing to pay it, believing the government’s case was weak and that a jury wouldn’t buy the notion that the Postal Service suffered damages and should be paid back.
His attorneys also had assembled evidence and experts to show the Postal Service greatly benefited from the sponsorship, including internal evidence from the Postal Service. The Postal Service even had commissioned reports that showed it received approximately $103 million in earned media value from the sponsorship from 2001 to 2004, court records show.
Then came a ruling in 2016 by Judge Christopher Cooper that disallowed an easier way for the government to make Armstrong pay.
Escape artist?
The government previously had put considerable effort into the argument that the cycling team was obligated to return the sponsorship money because it breached its sponsorship contract. But in March 2016,
Cooper shut down this argument and said this notion of “reverse false claims” didn’t fit the case.
The government "contends – again – that long-established principles of contract and restitution law obligated (the cycling team) to repay any funds attributable to a breach of the Sponsorship Agreement,” Cooper wrote. “The Court rejected this view after considerable briefing.”
That essentially left the government challenged to show how the Postal Service was damaged by Armstrong’s conduct through negative publicity associated with the doping revelations. Cooper noted last year the government had an expert who indicated that there were some 1.5 billion negative media impressions connecting Armstrong’s doping scandal to the Postal Service between 2010 and 2014.
A big question was how to put a dollar figure on such negative evidence and measure it against all of Armstrong's positive evidence of the sponsorship's benefits. If a jury found Armstrong liable, Cooper ruled last year “it will then be up to the jury to weigh the evidence on both sides of the scale and decide whether the government can prove it sustained actual damages and, if so, the corresponding amount.”
The Justice Department knew it could have been zero. Armstrong also knew juries are impossible to predict, and that he could have been rung up for a much bigger number.
Another $6.65 million to end it all seemed like a deal. Last month, he put his Austin home up for sale at $7.5 million. He also had built up wealth from his racing days and could be in the market for a book deal.
In January, he indicated to USA TODAY Sports that his legal expenses over the years totaled more than $100 million, though he didn’t specify how he arrived at that number. He also paid for lawyers to help defend him in a criminal fraud investigation that the government dropped without filing a case against him in 2012.
Armstrong recently has been hosting a popular podcast with celebrities and owns an endurance events company called WeDu.
“I am glad to resolve this case and move forward with my life,” Armstrong said in a statement.
He gets a year to pay off the settlement in installments, according to the terms of the deal.
