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December 10, 2012

Feds Ponder Joining Suit Against Armstrong

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Lance Armstrong holds a glass of champagne after winning the 2004 Tour de France with the U.S. Postal Service team.

The U.S. Department of Justice may not be finished with Lance Armstrong.

While federal prosecutors dropped a criminal fraud investigation against Mr. Armstrong, DOJ officials in Washington are still considering whether to join a whistleblower lawsuit filed by his former teammate, Floyd Landis.

Court documents made public over the weekend show that Armstrong has been subpoenaed for documents in the case, and suggest he has been fighting vigorously to control the flow of information.

According to the court documents, Mr. Armstrong, who was stripped of his seven Tour de France titles earlier this year, was subpoenaed by the United States Postal Service's Office of the Inspector General in fall, 2010. The Postal Service was Mr. Armstrong's team sponsor during six of his seven Tour de France victories. Under the contract with the team, riders were prohibited from using performance-enhancing drugs.

When Mr. Armstrong did not comply initially with the subpoena, lawyers with the Justice Department's civil division asked the U.S. District Court in Washington, D.C., to step in and enforce it. These proceedings were kept under seal for more than a year. But on Thursday U.S. magistrate judge Deborah Robinson ordered that seal to be lifted and the legal battle became public Friday evening. Justice Department lawyers who attempted to enforce the subpoena are the same ones representing the government in its evaluation of whether to intervene in the whistleblower lawsuit.

Mr. Landis's whistleblower lawsuit accused Mr. Armstrong of defrauding the U.S. Postal Service because he allegedly used performance-enhancing drugs in violation of the team contract. Mr. Landis sued on behalf of the government under the Federal False Claims Act, which allows citizens to sue for alleged fraud against the government.

Under the whistleblower law, the government can intervene in Mr. Landis's suit, essentially pursuing the case on its own behalf. According to people with knowledge of the case, the Postal Service's Office of the Inspector General and the U.S. Department of Justice have been investigating Mr. Landis's allegations and continue to weigh whether to join the case. Though the case is technically convened on behalf of the government, Mr. Landis stands to collect up to 30% of any money the government recovers.

If found to have violated the False Claims Act, Mr. Armstrong and others named in the suit would be liable for triple the amount of the sponsorship.

Mr. Armstrong's team could argue that the Postal Service received outsize publicity from its association with Mr. Armstrong during his first six Tour de France wins. The organization paid $30.6 million to the team's management company to sponsor the team from 2001 through 2004, according to a contract reviewed by The Wall Street Journal.

But David Koenigsberg, a whistleblower attorney at Menz Bonner & Komar in New York, said that may not be a strong defense. "If you take money from the federal government, you have to abide by the terms by which that money was given to you," he said. But Mr. Koenigsberg said that there is some legal precedent that would allow Mr. Armstrong and others named in the suit to argue for a lower penalty because of the benefit the Postal Service received.

Rebecca Katz, a whistleblower attorney at Motley Rice's New York office says Mr. Armstrong might be better off arguing that the Postal Service had knowledge of doping on the team. After all, there were several accusations of doping during the time of the sponsorship.

A Justice Department spokesman and a spokeswoman for the Postal Service's Office of the Inspector General declined to comment.

The newly released court documents offer a rare glimpse into Mr. Armstrong's legal and public-relations strategy during a tumultuous year in which he faced a federal criminal investigation and accusations from the U.S. Anti-Doping Agency. (USADA's report on the use of performance-enhancing drugs by Mr. Armstrong and his teammates led cycling's governing body to strip him of his Tour de France titles. Mr. Armstrong has denied doping in the past.)

According to the documents, Mr. Armstrong at first attempted to quash the subpoena, then considered sidestepping it by asserting his Fifth Amendment rights. The Fifth Amendment offers protections against self-incrimination, barring the government from forcing any person to be a witness against himself. At the time, Mr. Armstrong was facing a criminal investigation into his alleged use of performance enhancing drugs. The case was eventually dropped, allowing Mr. Armstrong to comply with the subpoena.

Robert Luskin, an attorney for Mr. Armstrong, said the subpoena put Mr. Armstrong in an unfair and difficult position. "It put Lance in a trick box where he would assert his Fifth Amendment rights because of the criminal investigation and then they would leak it to embarrass him," he said. "We thought that was improper," he said.

Because the criminal investigation was dropped in February, there was no need for Mr. Armstrong to assert his Fifth Amendment rights. After Mr. Armstrong complied with the subpoena this fall, his lawyers fought vigorously to keep the court record sealed from public view. Mr. Armstrong's lawyer, John Keker, warned that if the public found out that Mr. Armstrong had "intended to assert his Fifth Amendment rights," that it would "further damage Mr. Armstrong's reputation."

The Justice Department, however, wanted the court records made public. "The sealing of judicial records is not appropriate," it wrote, "if it is done merely to protect parties from embarrassment."

None of the documents that Mr. Armstrong turned over, were made public in the court records. The whistleblower lawsuit remains under seal.

Write to Reed Albergotti at