Lance Armstrong loses $10M ruling

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Monday, February 16, 2015

AUSTIN, Texas -- An arbitration panel has ordered Lance Armstrong and former team owner Tailwind Sports Corp. to pay $10 million in a fraud dispute with a promotions company.

Dallas-based SCA Promotions announced the 2-1 ruling against the former cyclist on Monday when it asked a Texas state court to confirm the arbitration decision. The two arbitrators who decided on the award cited "an unparalleled pageant of international perjury, fraud and conspiracy" in determining the amount.

"Perjury must never be profitable," arbitrators Richard Faulkner and Richard Chernick wrote in their majority ruling. "Tailwind Sports Corp. and Lance Armstrong have justly earned wide public condemnation. That is an inadequate deterrent. Deception demands real, meaningful sanctions."

Jeffrey Tillotson, the lawyer representing SCA, said Armstrong indicated through his lawyers that he will not comply with the terms of the sanction. That prompted SCA to seek the court's confirmation, which gives the arbitration ruling the status of a legal judgment.

That judgment can be appealed to a higher court, but "what you can challenge is much narrower than if it had been a jury trial," Tillotson said, expressing confidence that SCA would prevail.

Ultimately, if Armstrong does not succeed on appeal, SCA could ask the court to go after Armstrong's assets. The $10 million sanction does not cover the full amount SCA has paid out of pocket in bonuses and legal fees since the company became enmeshed with Armstrong. Tillotson told that figure was closer to $15 million.

"We're very pleased, and this is a wonderful first step," the lawyer said.

He added that he expected the court would confirm the judgment within 30 to 60 days.

SCA has filed another civil lawsuit against Armstrong that is pending in Texas state court. Armstrong collected bonuses from SCA for Tour de France victories in 2002 and 2003 and was in line for a $5 million bonus when he won his then-record-breaking sixth Tour de France in 2004. He retired after winning his seventh title in 2005, then returned to professional cycling for the 2009 and 2010 seasons.

SCA disputed its obligation to pay bonuses in a 2005 arbitration after anecdotal evidence of Armstrong's doping began to surface. The case was settled for $7.5 million in Armstrong's favor before the panel ruled, and the phrase "fully and forever binding" in the settlement agreement seemed to preclude any reopening of the matter.

But testimony from that hearing eventually proved critical in building the U.S. Anti-Doping Agency's case against Armstrong. His results dating back to 1998 were stripped by international cycling officials after the USADA issued a voluminous, damning "reasoned decision" in October 2012 finding that Armstrong and many of his support riders used performance-enhancing drugs throughout his career.

Eleven of Armstrong's former teammates cooperated with the USADA and gave affidavits substantiating that conclusion. After Armstrong confessed to PED use in an interview with Oprah Winfrey in January 2013, SCA sued to get its money back. The same three-man arbitration panel that heard the case 10 years ago heard new evidence, including further testimony from Armstrong.

As is standard in many arbitration proceedings, each side appointed one arbitrator and those two selected a neutral chairman. The panel member who dissented in this month's ruling, Ted Lyon, was appointed by Armstrong's camp. Lyon called the majority ruling "far-fetched" in his written dissent.

"No arbitration panel in Texas or our nation has ever stretched back so far in time to issue such a sanction," he wrote.

In an email exchange with Neal Karlinsky of ABC News, Armstrong confirmed that he intended to fight the ruling and provided a brief statement from his legal team.

"This award is unprecedented," the statement said. "No court or arbitrator has ever reopened a matter which was fully and finally settled voluntarily. In this matter SCA repeatedly affirmed that it never relied upon anything Armstrong said or did in deciding to settle. The proper analysis of governing law is set forth in the opinion of arbitrator Ted Lyon, which is part of the award and which we believe will be adopted when the courts review the action of the arbitration panel. Despite the absence of any legal basis for the sanction, Armstrong offered to pay SCA the entire $10 (million) in order to resolve the matter, but SCA refused."

The SCA ruling is just one of several legal battles Armstrong has faced since his reputation unraveled. He settled a case with another Texas-based insurance company that had sued him to recover $3 million in bonus money for his early Tour victories, and yet another with the Sunday Times of London, which sought to recoup nearly half a million dollars it paid out in a libel settlement, plus damages. Terms of both 2013 settlements are confidential.

Armstrong is still fighting a drawn-out battle in a federal whistleblower case initially brought by his ex-teammate Floyd Landis and later joined by the U.S. Department of Justice. He and former business associates could face financial penalties of up to $100 million if they lose that case.

More recently, Armstrong has been summoned to court in Aspen, Colorado, next month for an incident in which he apparently hit two parked cars with his own vehicle and left the scene. He was cited for speeding and failing to report an accident, a misdemeanor. His partner Anna Hansen initially said she was driving, but later admitted to police that Armstrong was at the wheel.'s Bonnie D. Ford and The Associated Press contributed to this report.

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