For a brief period it appeared Armstrong’s expressions of regret were legit. He settled with The Sunday Times and Settled with Acceptance Insurance for over $3,000,000 but when it came to SCA he fought hard. Crazy hard. Irrationally hard. He validated the concept of paying back the insurance companies he defrauded with the Acceptance settlement but made little attempt to settle with SCA. As we saw today Lance’s fight had little to do with having a valid case, this was personal.
The case stems from an agreement SCA made to pay bonuses each time Armstrong won the Tour. It was a bad bet. With the benefit of hindsight most would have run away when Tailwind Sports, owner of Armstrong’s U.S. Postal Cycling Team, came to SCA for its services covering prize amounts if Armstrong won the 2001 through 2004 Tour de France. Today it is clear Armstrong was cheating in 2000 but the information available 15 years ago was limited. Against the wishes of his son Bob Hamman, CEO of SCA, took the bet.
When it became clear that Bob had played a bad hand the focus turned to the long game, finding a way out of the scam. Bob is one the greatest bridge players of all time but the contract offered limited strategic options. Doping was not expressly forbidden and Armstrong was a well funded adversary. The best plan was the simplest….get as much information about Armstrong’s doping under oath and hope in the long run the truth would win out and he would be stripped of his titles. Bob opted to play the long game.
The response from Armstrong was harsh. He not only wanted “his” money but he tried to kill SCA Promotions’ business by taking out an inflammatory full page advertisement in a leading industry publication, Sports Business Journal, which smeared SCA Promotions. Among other brand-damaging quotes, the advertisement read, “SCA’s failure to pay the final installment of its policy is a shameful and baseless breach of contract.”
When it became clear that Armstrong was willing to lie repeatedly under oath SCA and Armstrong settled. The settlement agreement included an NDA, which Lance quickly broke by bragging and lying about his “Victory” over SCA. This breaking of the Non-Disclosure agreement enabled SCA to go public with much of the testimony from the trial. Eventually some of the videos of Armstrong testimony made their way into the public domain. Of course the videos were dissected by a wide range of experts, from the slackers at NYVelocity to a body language expert who coined the legendary term “Monkey Mouth“. Bob’s long game was working. In early 2013 SCA started the process to attempt to recoup the millions Armstrong had defrauded them of
“Our position is simple,” Tillotson told USA Today on May 30. “No one should be able to relentlessly perjure themselves and get away with it.”
The Arbitration panel’s sanction is brutal when it comes to Armstrong. They make it clear that his “Deception demands real, meaningful sanctions.”
“Perjury must never be profitable. Justice in courts of law and arbitration tribunals is impossible when parties feel free to deliberately deceive judges or arbitrators. The case yet again before this Tribunal presents an unparalleled pageant of international perjury, fraud and conspiracy. It is almost certainly the most devious sustained deception ever perpetrated in world sporting history. Tailwind Sports Corp. and Lance Armstrong have justly earned wide public condemnation. That is an inadequate deterrent. Deception demands real, meaningful sanctions. This Arbitration Tribunal awards sanctions of Ten Million Dollars ($10,000,000.00) against Mr. Lance Armstrong and Tailwind Sports Corporation. “
The panel also targets Armstrong’s very questionable actions in a variety of cases, including his harassment of USADA.
“Claimants also intentionally prevented this arbitration Tribunal from properly discharging the contractual duties it was obligated to perform for the benefit of all of the parties by knowingly presenting perjury and fraudulent evidence”
They continued with
“Ample evidence was adduced at the hearing through documents and witnesses that Claimants commenced this proceeding knowing and intending to lie; committed perjury before the Panel with respect to every issue in the case; intimidated and pressured other witnesses to lie; or influenced others to help them lie and to hide the truth; used a false personal and emotional appeal to perpetuate their lies to the Panel; used perjury and other wrongful conduct to secure millions of dollars of benefits from Respondents; used lies and fraud to falsely claim that the Panel exonerated them, thereby further allowing them to profit further from additional endorsements and sponsorships; expressed no remorse to the Panel for their wrongful conduct; and continued to lie to the Panel throughout the final hearing”
Despite this harsh wording Armstrong refused to pay the award, which is what led SCA to file an application to the 116th Judicial District Court for enforcement.
What is next?
SCA points out in their press release the award
“is believed to be the largest award of sanctions assessed against an individual in American judicial history”
Even though his appeal options are limited I expect Armstrong to clog the courts with appeals and delays in an attempt to avoid paying SCA their money. Expect Lance to grasp hopefully at his arbitrator, Ted Lyon, dissenting opinion but in reality it does not give much hope. Lyon makes the incorrect claim that SCA was not a licensed to sell insurance in Texas. This is nonsense. In the original arbitration it was made clear that SCA contract with Armstrong was not insurance and Texas actually passed a law in 2008 specifying that what SCA does is not insurance but a Contingent Prize Contract. Lyon knows this but still pushed the myth in his dissent. Given Lyon is paid by Armstrong and has a long history of being wrong I would not put to much credence into his words.
Tim Herman claims Armstrong offered to pay SCA “the entire” $10 million “in order to resolve the matter, but SCA refused,” Tim Herman has offered some twisted logic in the past but this might take the prize. They are willing to pay SCA $10 million but now that a panel of arbitrators has ruled that they have to make good on that offer they are going to fight it?
As usual the truth was something different
SCA says Lance made "soft offer" to pay some over yrs. Adding "please send over a check for ten million dollars. I promise we will take it."
— Neal Karlinsky (@NealKarlinsky) February 16, 2015
“They didn’t make any offers until late Friday,” Tillotson said “They made an offer that required payments over a lengthy time period with no guarantee of payment. SCA felt it had to turn that offer down.”
“Mr. Armstrong is encouraged to send us a check for $10 million. I promise that we will accept it.”
Tillotson expects Armstrong will fight the award
“But since it’s an arbitration award, it’s a huge, huge uphill battle to try to set it aside,”
The $10 million is
“to punish him and compensate us. We’ll continue to fight them on other claims, but as a first step toward getting compensation for what Armstrong did to SCA, this is a great first step.”
“In my 27 years of litigation, I’ve never seen someone so difficult, who completely perverted the legal process.” “Mr. Armstrong was consistently agitated that he got caught. He did not appreciate the magnitude of what he’d done.”
SCA will continue on the offensive by going after some of Armstrong’s co-conspirators, Bill Stapleton being the most obvious…….all while Armstrong continues his faux global apology tour
Juliet Macur has one of the better reviews of the SCA chaos and the reality of redemption.
Forbes takes a looks at the large tax issues Armstrong faces. One point they have wrong is the possibility Lance could get a rebate from his 2006/07 taxes. The panel’s ruling is a sanction, not a modification of the award. so he will not get a rebate. Defrauding SCA has not been the smartest financial move. The contract with SCA cost almost $500,000. Lance paid Ferrari his cut first, $465,000, leaving him with about $6.5 million. He then paid taxes and agent fees, leaving him with $3 million. He also spent a lot in legal fees fighting this. Conservatively $500,000 but likely more. Lance may have pocketed $2,500,0000 8 years ago but he now owes $10,000,000 plus SCA has another lawsuit in the works asking for more.
Here is the complete award