Photography by Cor Vos

Armstrong loses court case, ordered to pay ten million dollars to SCA Promotions

By Shane Stokes - February 17, 2015

In the latest development in a long and bitterly-fought legal battle, Lance Armstrong has been ordered to pay ten million dollars to the SCA Promotions company by a Texas arbitration panel.

The company has confirmed to CyclingTips that the arbitrators’ written ruling has found that Armstrong engaged in “an unparalleled pageant of international perjury, fraud and conspiracy.”

That panel also found that he had “used perjury and other wrongful conduct to secure millions of dollars of benefits” from SCA Promotions, which was the insurance company contracted to cover bonus payments due to him for winning the Tour de France.

In addition to committing what they said was “perjury on every issue” in the case, the arbitrators also found that Armstrong “intimidated and pressured other witnesses to lie.”

They also concluded that he had “used a false personal and emotional appeal to perpetuate” his version of events.

Armstrong acknowledged during his hearing that he had been untruthful in the past but, according to the same arbitrators, he had expressed no remorse for his wrongful conduct.

“We are very pleased with this result,” said SCA’s president and founder, Bob Hamman. “It is hard to describe how much harm Lance Armstrong’s web of lies caused SCA but this is a good first start towards repairing that damage.”

In a statement, SCA Promotions said that said that the payout is believed to be the largest award of sanctions assessed against an individual in American judicial history.

It has filed a motion with a Dallas state district court to have the award confirmed into a judgment against Armstrong, noting in that application that he has thus far refused to comply with the ruling.

“This record breaking award was justified given Armstrong’s outrageous conduct,” said SCA lawyer Jeff Tillotson.

“The panel of arbitrators determined that Armstrong ‘continued to lie to the Panel throughout the final hearing even while admitting to prior falsehoods and other wrongful conduct.’”

Long running battle:

During the early 2000s the Texas company originally entered into a contract with the US Postal Service team owner Tailwind Sports. The latter took out a policy with SCA Promotions to cover the performance bonuses that would be due to the rider when he won the Tour.

It paid Armstrong $4.5 million for his victories in 2001/2002 and 2003 and was due to pay out an additional $5 million after he won his sixth Tour title in 2004.

However it disputed this on the basis of the doping claims made against Armstrong in the LA Confidentiel book, with SCA arguing that the Tour wins may not have been clean.

Armstrong and Tailwind Sports fought this in court and eventually won on the basis that the original contract between the two companies didn’t include stipulations about doping.

SCA Promotions ended up paying the sum in question as well as an additional $2.5 million in interest and legal fees.

Including the sums originally paid out, the contract with Armstrong cost the company $12 million.

Armstrong denied doping throughout his career but in January 2013 he finally admitted to have used banned substances during his time in the pro peloton.

SCA Promotions subsequently launched a new case against Armstrong, fighting to reclaim the money paid out. His lawyers argued that the original judgement couldn’t be overruled.

In November 2012 Roopstigo journalist Selena Roberts reported that his lawyers offered a sum believed to be one million dollars as settlement; this was rejected by SCA.

This is not surprising: on October 31 of that year SCA’s Jeff Dorough told VeloNation that a considerably larger sum had been demanded.

“I can confirm that the demand letter was sent to Mr. Armstrong yesterday,” he said then, “requesting a return of the $12 million in bonuses paid by SCA to him, as well as putting him on notice that we may seek legal sanctions and penalties against Mr. Armstrong in connection with the false testimony given by him in 2005-2006 arbitration proceeding.”

Over two years later, Armstrong has been ordered to pay ten million dollars by the original arbitration panel, which was reconvened again to hear the current version of the case.

As he has thus far refused to comply with the February 4 ruling, SCA Promotions lodged Monday an application to the 116th Judicial District Court in Texas seeking to have this ruling enforced.

In addition to that, SCA Promotions has confirmed that it has a currently pending lawsuit in that court where it is pursuing additional claims against Armstrong and his agent Bill Stapleton.

—

Also see: Armstrong lawyers respond to $10 million ruling against rider, more details emerge

Tags: doping, Lance Armstrong, SCA Promotions

Allez Rouleur

Wow, if he was also drinking and running into parked cars a few weeks ago…this will really send COTHO to hit the bottle!
Patrick Smith

Reading this and thinking about Sean Yates recent deluded comments about LA. http://www.bbc.co.uk/sport/0/cycling/31454928
Pete

I’m starting to feel sorry for Lance. Yes he was a cheat and a bully. But he was not alone,why are they just after him. Surely in a fair world all those who cheated should be treated the same. It’s becoming a witch hunt.
- Shane Stokes
  
  Pete, this case is about win bonuses paid out to him after he committed perjury in court. The other riders who cheated didn’t win the Tour and thus didn’t receive millions in bonuses from the SCA company. They also didn’t lie under oath in court.
  - monkey shit makes great muesli
    
    They likely benefited from a collective share, amongst the team - unless the policy that Bruyneel Armstrong took out, was exclusive, which is unlikely.
    
    Be interesting to see, what impact, if at all, the esteemed cancer specialist, who verified Lance’s assertion, in that room…..
    - Dave
      
      This is not the prizemoney awarded by the TdF organisers for his win (which would traditionally be shared among the other riders and the team staff) but the performance bonus in his contract which enabled the USPS team to get him at a low wage.
  - jakub
    
    The whole case also has the other side. On a merit of the contract, did Armstrong win those Tours which SCA agreed to pay him? Yes, he did. (I consider argument about cheating as irrelevant, since 95% of peloton was on the gear. Competition was skewed, but still it was a race.) I don’t know if SCA are that naive, but this is professional sports where doping is so rife, and not only in bike racing. I bet they have plethora of clients from NFL/MBL or other american sports, where the situation is the same - with only difference that it is not exposed, as officials do not want to lose the business that these shows generate. If Armstrong wouldn’t won these Tours, what then? Nothing would have happened, income++ for SCA. I doubt that they would give away the money from Armstrong’s contract to a charity or so, just because the whole race was doped. If they are concerned about doping, they should then probably re-consider such contracts at all, otherwise it seems bit alibistic - we engage in dirty business, but if someone pops out as doped (and wins), we want money back.
- Daniel
  
  This isn’t a governing or disciplinary body coming after him in order to bolster the image of the sport; this is a private entity suing to reclaim money paid to him in very specific circumstances. I don’t think SCA give a damn about the reputation. If they have paid money to other riders that they think that they have legal grounds to recover, then I have no doubt they will go after them.
  
  For it to be a witch hunt, it needs to be groundless. There are no doubt legal nuances that we don’t know about, but the thrust of all of this is that Armstrong perjured himself in order to make a multi-million dollar profit. This is hardly a witch hunt..
- Nitro
  
  Pete - I think I know where you’re coming from…. In this specific case, it is absolutely all about Lance, and he deserves everything he’s getting.
  He 100% lied under oath (and on video), for pure financial gain, so its entirely appropriate that he’s hit with the full force of the law… If it was my company, I’d be going after him for full repayment, interest and millions for unrepairable reputational damage…
  I think you’re also partially right though (in that the larger issue of Lance / drugs in that era) has absolutely become a witch hunt. Yes he cheated, he was “ring leader”, and he deserves the kicking he’s getting….
  … but on the other hand, it continues to somewhat surprise me how “easily” many other confessed cheaters seem to be treated. They retire, they write a book, they say “Yep, I took drugs, but so was everyone”, People shake their heads… and then everyone moves on…
  The world seems to have forgiven / forgotten Hincapie in a heartbeat for example…
  - Abdu
    
    This.
    It’s all about how nice a bloke you are. If you are Mr Nice Guy no one in cycling questions your years of racing with EPO doused peloton, winning yellow jerseys, racing until you are 53, etc. But if you are a nasty Ruski type, beware.
    Vino, boo hiss…
    Jens, what a great guy!
Dave

For the people who are not in the know, SCA Promotions is a company which offers prize indemnity insurance. This isn’t something you’d do where there’s a prize which WILL be awarded (e.g. prizemoney at a bike race will be awarded because somebody will finish first, there’s no probability involved) but something you do if you’re offering a prize which MIGHT be awarded.

A disproportionately large performance bonus in an athlete’s contract is one sort of prize that might be awarded but also might not be, but the conventional purpose for prize insurance is for promotional competitions where the prize might not be won.

Another example of a promotion that was insured was the exceedingly annoying Million Dollar Six competition run by Network Ten during the BBL Twenty20 last season, where a selected viewer could win money if a celebrity sitting on a platform in the stands took a catch when a six was hit. To reduce the probability of prizes being won (and therefore also bring down the premium charged to Ten) the insurer required that the planned location of the celebrity platform at each venue be located in a spot that would make it quite unlikely for a six to be hit there and caught. At Adelaide Oval this was 15 rows back and down the ground beyond the world’s longest straight boundary - a fluky hit for even the world’s best batsmen.

The major prizes in those Monopoly promotions at McDonalds are prizes which would be insured rather than simply paid. Those major prizes are hard to win because they deliberately restrict the number of important stickers (e.g. just one Park Lane sticker in the whole of Australia) and further rely on the chance that those important stickers will get chucked in the bin.

SCA Promotions were involved in the Pepsi Billion Dollar Sweepstakes competition in 2003, where they brokered the deal which saw Pepsi pay Berkshire Hathaway (the company Warren Buffett heads up) US$10 million to pay out the $1 billion prize if it was won - which it wasn’t.

The way the prize insurance worked for the Armstrong bonus was that Tailwind Sports Corp (the Bill Stapleton company running the team sponsored by USPS and later Discovery Networks) signed Armstrong on a fairly low wage but with a huge performance bonus if he won the Tour de France. Instead of keeping US$5 million of cash on hand, they paid a premium to purchase prize insurance from SCA Promotions who would pay out the full amount if Armstrong won and keep the premium if he didn’t.

SCA originally withheld the US$5M bonus because they had reason to believe that there was an outside (i.e. pharmaceutical) factor which influenced the result and voided the policy. They got sued by Armstrong and Tailwind in 2006 and settled the suit for $7.5M to cover both the bonus and legal expenses. They have now sued Armstrong back and got $10M from him (or from his insurers?) to cover the previous $7.5M settlement
Stompin

And the circus continues…
- Dave
  
  And it will continue for quite some time still - not just the circus in general but also this specific legal case and the other SCA legal actions involving Armstrong and Stapleton.
  
  An arbitration panel won’t be enough to sort out the big legal issue involved here, which is the question of when a settlement is or is not a settlement. It will have to get argued in a proper court.
Katani

Give the man a break. Was LeMond clean? Pantani? Mercx? its a joke just to whack LA with all of this. I dont mind the money being taken back, but lifetime ban of the sport still? really? the man can’t even race a local crit.
- Nath
  
  Or you could read the article and the other posts….. This isn’t about Armstrong doping nor is it even about cycling….this is about Armstrong profiting from lying. Yes, there may be other instances where this has happened with other riders but this case is just about Armstrong. Not particular difficult to understand.
  - Katani
    
    My comment is over the Armstrong circus in general. I wrote that I dont mind the money being taken back if you read my post properly. Also saying that he’s the only doped tdf winner to be copping this much heat. Untie your knickers.
Abdu

$10 large is a drop in the ocean, when estimates put his earnings at around $130m.
Anyway, the issue no one seems to notice were the leeches and jock sniffers surrounding Armstrong, all those corporates who have not faced any investigation or one judge.
The accusations that the top guys at Oakley knew about the doping from the start. Did anyone fine or charge the company?
Same for Nike, and for the individuals like Weisel, Stapleton, etc. All those guys made a fortune, seen one of them giving any back?
Now we have the sheer gall of guys like Chris Carmichael and Strava running a training competition. Like we have been asleep for all those years you trained with Lance, sold all those books on the back of your connection to him, ey Chris?
- The Tashkent Terror
  
  this
- Dave
  
  Who would fine Nike, Oakley, Weisel etc, and on what basis?
  
  This $10M judgement is not a fine handed down by a criminal court, it is about SCA Promotions getting back their money in a civil suit.
  - Abdu
    
    Clearly prosecuting the swarm of jock sniffers and Yes Men around Lance would be impossible.
    I am not suggesting this in the case by SCA, obviously.
    The point I am merely making is that there was a multitude of people who all knew about, assisted, covered up, and financially benefitted from, Lance Armstrong’s doping.
    Many are still in the sport. These all just lost their golden goose, with no repercussions. They are now unaffected, carrying on without anyone questioning their role. Just following orders, as it were.
    Jonathon Vaughters for one, doped alongside him, covered up for him (until he was financially secure and had a team up and running), then jumped sides to find a conscience.
    Oakley boss Jim Jannard and Stephanie McIlvbain are others, hell she was in the hospital room then later on the message machine abusing Betsy. Betsy also gave evidence that McIlvain told her Jannard knew all about the doping.
    
    As it stands, Oakley could do anything it wanted in the sport right now and the UCI would happily let them. It still is a major supplier benefitting off riders buying their (expensive) glasses.
    I fully endorse Lance being prosecuted.
    My question is why is he seen as the only one guilty in this fraud?
    - jules
      
      what about SCA themselves? does anyone really believe they insured Lance’s victories for that much money, with no suspicion he was doping? in no way does this justify Lance’s actions, but portraying SCA as the victims… i’m unsure.