Subpoenas issued -- Armstrong's goose is cooked

[kurtinsc]

OK, so that being out of the way now...

Let's say they get testimony from various people that indicate he was directing activities and making decisions (legal ones, like who gets hired)?

What status does that confer upon him legally? is he now a de-facto manager?

No idea.

This is where my experience fails... I've never seen a situation where the person with the real power isn't tied into the legal management structure in some way.

It may not always be exactly the same... I've seen some scenarios where the chairman of the board acted as the CEO despite not having that position, and I've seen others where the CEO was largeley ceremonial while the Cheif Operations Officer had all the real power... but in all cases the person DID have some legal authority to fall back on.

While we hear about situations where an employee calls the shots (many times in sports franchises like the Lebron James scenario), I've never heard of a financial or legal liability case dealing with that sort of thing. If so... then you'd have to say that a sponsor/investor in the Cavs would have a viable court case against Lebron for leaving the team. They could claim Lebron made public statements indicating he was going to stay in Cleveland, so leaving was in effect fraud cauising the value of their investment to go down... allowing them to seek damages from him. Since he had the defacto power... dictating coaching changes and the hiring of players... he'd be liable.

That just feels like a tough stretch... but it's a logical continuation of the "defacto manager" arguments.

 

[Cerberus]

No idea.

This is where my experience fails... I've never seen a situation where the person with the real power isn't tied into the legal management structure in some way.

It may not always be exactly the same... I've seen some scenarios where the chairman of the board acted as the CEO despite not having that position, and I've seen others where the CEO was largeley ceremonial while the Cheif Operations Officer had all the real power... but in all cases the person DID have some legal authority to fall back on.

While we hear about situations where an employee calls the shots (many times in sports franchises like the Lebron James scenario), I've never heard of a financial or legal liability case dealing with that sort of thing. If so... then you'd have to say that a sponsor/investor in the Cavs would have a viable court case against Lebron for leaving the team. They could claim Lebron made public statements indicating he was going to stay in Cleveland, so leaving was in effect fraud cauising the value of their investment to go down... allowing them to seek damages from him. Since he had the defacto power... dictating coaching changes and the hiring of players... he'd be liable.

That just feels like a tough stretch... but it's a logical continuation of the "defacto manager" arguments.

How on Earth is that a logical continuation of anything? I assume Lebron has a legal right to leave the team. I very much doubt that lying about his intentions or even just changing his mind constitutes fraud by even the most lenient definition of the word. If however it did constitute fraud it's an action he personally took and would therefore be fraud (or more likely not be fraud) independently of whether he was de facto or de jura team leader.

 

[kurtinsc]

How on Earth is that a logical continuation of anything? I assume Lebron has a legal right to leave the team. I very much doubt that lying about his intentions or even just changing his mind constitutes fraud by even the most lenient definition of the word. If however it did constitute fraud it's an action he personally took and would therefore be fraud (or more likely not be fraud) independently of whether he was de facto or de jura team leader.

If someone has defacto power over an organization, and does something that harms the financial viability of that organization, then they are responsible to those who have a fiscal stake in the organization and they do have some legal rights to come after you.

There was an example of something like this happening a few years back in the film industry. I'm drawing a blank with exactly who it was... maybe it was Dreamworks related, I can't remember exactly. But anyway, the company was based on 2-3 guys who made the movies. They sold off their personal stock in the company for a huge profit... but then one of them wanted to start making movies under a new label they were creating. Their investors sued them to prevent it... stating that by purchasing that company, they were led to believe that they were investing in that FILMMAKER... and that him creating movies elsewhere was illegal (fraud I think).

I don't think it ever made it to court though.

The thing is... in that case I'm assuming the guy was also a legal manager/controller of the company... so he did have more responsibilities to the investors/sponsors then a regular employee who was just cutting film would... or a contracted worker like an actor would. They are liable to stockholders if their actions damage the company. And they're liable for the legality of actions of their subordinates that they should have been overseeing.

But if you start arguing "defacto" power... how much of that responsibility goes with it?

I honestly don't know the answer to that.


If Lance is in fact ouside of any formalized management structure for Tailwind during the Postal days (I have no idea if this is the case or not), I'm not sure how he'd get hit for fraudulent actions by the company if he's NOT directly involved. I can see how the various CEO's might be. I can see how Bruyneel might be. And Lance will be hit for anything he IS involved with directly (like if it's proven that he supplied drugs to riders, he'd be subject to drug trafficking charges).

But if a teamwide drug program that defrauded the post office is uncovered... I don't see how Lance gets hit harder then any other rider taking part in the program... unless there's significant evidence showing he called the shots in a more direct manner then say... Lebron James choosing who his basketball coach will be or dictating what players he wants hired.

 

[Barrus]

Johan told me to dope.
Lance never said anything... but I'm sure he knew.
Lance says he never knew.
Despite everyone suspecting it, there isn't enough evidence showing Lance doped for the fraud charge... it's all connected to other riders.
Johan is liable... but Johan decides to retire to Belgium.

As stated earlier, if the US is serious they might well get an extradition, or ensure that the Belgian prosecutors start proceedings against JB, which they are obliged, should the Belgian official choose not to extradite JB, based solely on his nationality

 

[Anonymous]

Sorry to burst everyone's bubble but you're never going to see anything happen to Armstrong. He'll get indicted as well but the lawyers will tie it up and drag it out over years and years to the point that everyone will be sick and tired of it or will just forget all about it.

He'll never see any jail time no matter who testifies against him. He has the $$$, legal team and political connections to make sure he never sees a jail cell.

Perfect example: What's the last you heard on the Barry Bonds' case? What's Barry doing now? Having a good time hanging out at his house or on vacation while his lawyers just gum up the works even more. And LA has even more money and influence then Barry does. So you can just imagine where this case will go. Yup, no where!

You may get the glorified indictments, testimony, evidence, etc. But just like the Bonds case, evidence will be thrown out or withheld and it'll fade away.

The only way you'll nab him is if he is caught doping NOW while he's a rider. And you know how effective the testing is currently. So that ain't gonna happen either.

Just turn the page on LA and let him fade on his own. If people show no interest the media will stop covering him.

 

[bigloco]

If someone has defacto power over an organization, and does something that harms the financial viability of that organization, then they are responsible to those who have a fiscal stake in the organization and they do have some legal rights to come after you.

There was an example of something like this happening a few years back in the film industry. I'm drawing a blank with exactly who it was... maybe it was Dreamworks related, I can't remember exactly. But anyway, the company was based on 2-3 guys who made the movies. They sold off their personal stock in the company for a huge profit... but then one of them wanted to start making movies under a new label they were creating. Their investors sued them to prevent it... stating that by purchasing that company, they were led to believe that they were investing in that FILMMAKER... and that him creating movies elsewhere was illegal (fraud I think).

I don't think it ever made it to court though.

The thing is... in that case I'm assuming the guy was also a legal manager/controller of the company... so he did have more responsibilities to the investors/sponsors then a regular employee who was just cutting film would... or a contracted worker like an actor would. They are liable to stockholders if their actions damage the company. And they're liable for the legality of actions of their subordinates that they should have been overseeing.

But if you start arguing "defacto" power... how much of that responsibility goes with it?

I honestly don't know the answer to that.


If Lance is in fact ouside of any formalized management structure for Tailwind during the Postal days (I have no idea if this is the case or not), I'm not sure how he'd get hit for fraudulent actions by the company if he's NOT directly involved. I can see how the various CEO's might be. I can see how Bruyneel might be. And Lance will be hit for anything he IS involved with directly (like if it's proven that he supplied drugs to riders, he'd be subject to drug trafficking charges).

But if a teamwide drug program that defrauded the post office is uncovered... I don't see how Lance gets hit harder then any other rider taking part in the program... unless there's significant evidence showing he called the shots in a more direct manner then say... Lebron James choosing who his basketball coach will be or dictating what players he wants hired.

Good information...

KurtinSC, can you explain the statute of limitations issues in this case? It seems to me that the majority of attention has been given to things that fall outside of 5 years, do circumstances exist that would extend the SoL beyond the 5 years the would open up prosecution on activities done during the time addressed in the Landis information?

 

[BroDeal]

Before assigning culpability to such and such management positions, it has to be determined where the fraud occurred. The people metioned as owners of Tailwind, like Wiesel, have other jobs and careers. These guys were not running the day to day operations of the team. It is unlikley that they were the ones who planned how to divert assets to pay for the team's doping program. Even if they did, it is hard to prove. Those with the biggest risk are the ones who sold the assets, bought the drugs, and distributed them the the rest of the team.

Bruyneel cannot credibly claim that he was unaware that half the team's bikes were disappearing each season. Five or ten percent would be believable but not fifty percent. We already know from FLandis that Armstrong was distributing drugs to his teammates. From Vaughters and Andreu we know that Armstrong was pressuring his teammates to dope.

Armstrong trying to portray himself as just one of the regular team members will not work. He is notorious for treating his teammates like employees, so much so that they nicknamed him "The Boss." He has also spent large amounts of PR effort portraying himself as a micromanager who controls everything and everyone around himself. If his defense tries to paint him as a low level peon who only did what he was told then it will damage the credibility of his defense because it will be laughably obvious that the defense is lying.

 

[BroDeal]

Sorry to burst everyone's bubble but you're never going to see anything happen to Armstrong. He'll get indicted as well but the lawyers will tie it up and drag it out over years and years to the point that everyone will be sick and tired of it or will just forget all about it.

He'll never see any jail time no matter who testifies against him. He has the $$$, legal team and political connections to make sure he never sees a jail cell.

Perfect example: What's the last you heard on the Barry Bonds' case? What's Barry doing now? Having a good time hanging out at his house or on vacation while his lawyers just gum up the works even more. And LA has even more money and influence then Barry does. So you can just imagine where this case will go. Yup, no where!

Bonds does not care that everyone thinks that he is a douchebag. The public thought that before he was sucked into BALCO. For Armstrong it does not matter whether he is ever convicted or not. The real damage to be done is the damage to the fraudulent image that he has constructed to take advantage of people with cancer.

 

[Colm.Murphy]

Good information...

KurtinSC, can you explain the statute of limitations issues in this case? It seems to me that the majority of attention has been given to things that fall outside of 5 years, do circumstances exist that would extend the SoL beyond the 5 years the would open up prosecution on activities done during the time addressed in the Landis information?

I think there is one issue here that is being overlooked.

Within the context of defrauding a sponsor (or the US govt.), there is a portion of this that can and should be considered "conspiracy" to commit the fraud. For the riders, they are co-conspirators, whether they were directly or indirectly coerced to commit the fraud (doping) under the pretext of keeping their jobs.

If the chairman of the board (Weisel), or a de-facto manager (Armstrong) was part of it, their title and position are irrelevant as it related to a criminal charge. The way i see this breaking down is in how the charges are leveled, and what kind of cooperation will be obtained when someone turns evidence.

Who owned what, who had shares, corporation types, titles are all irrelevant, to a large extent.

From a civil liability standpoint, the recourse of a lower level employee (or rider) will be to file civil claims against those who architect and committed the planning and commissioning of the fraud.

I sense that the US Govt. is targeting not just those in stock positions, or are corporate board members, but those who commissioned and had the most to benefit from the fraud.

If you have a guy like Weisel who claims ignorance and points downward, and you have the riders who claim they were coerced and point upward, there is a very thin group of people to select for full prosecution.

If you have sponsors who will claim ignorance, and claim they were just being the supportive, good-faith provider of equipment, they will need to choose between cooperation or being charged as a co-conspirator, as they directly participated and benefited (plus, IIRC Armstrong has a small stake in Trek?).

Getting caught up in the technicalities of corporate structures and liabilities is fine, I just think it is missing the bigger picture.

All in all, it was a far reaching scheme, but now that the curtain is being lifted, its simplicity is probably what kept it perpetuating so long with nary a peep.

 

[Oldman]

Sorry to burst everyone's bubble but you're never going to see anything happen to Armstrong. He'll get indicted as well but the lawyers will tie it up and drag it out over years and years to the point that everyone will be sick and tired of it or will just forget all about it.

He'll never see any jail time no matter who testifies against him. He has the $$$, legal team and political connections to make sure he never sees a jail cell.

Perfect example: What's the last you heard on the Barry Bonds' case? What's Barry doing now? Having a good time hanging out at his house or on vacation while his lawyers just gum up the works even more. And LA has even more money and influence then Barry does. So you can just imagine where this case will go. Yup, no where!

You may get the glorified indictments, testimony, evidence, etc. But just like the Bonds case, evidence will be thrown out or withheld and it'll fade away.

The only way you'll nab him is if he is caught doping NOW while he's a rider. And you know how effective the testing is currently. So that ain't gonna happen either.

Just turn the page on LA and let him fade on his own. If people show no interest the media will stop covering him.

Sorry to burst your bubble but Sportstalk shows are now discussing the imminent indictment of Roger Clemens for fraud and perjury. The conjecture was that LA could be close behind. One particular show was on Vs and followed the Tour coverage this am.

 

[stephens]

Of course in the Clemens case, his former trainer has submitted physical evidence to back up his statements that Clemens used steroids. This can be used to show Clemens committed perjury when he denied it. (though Clemens passing polygraph tests might show that he really didn't know it was steroids he was being given: who knows?).

So far we have heard nothing about physical evidence in the Armstrong case. The closest thing would be the back testing of the '99 samples but because of the way that was done, no way would it be allowed as evidence in a US court.

 

[JimmyHoffa]

"Never tested positive" gets reinvented as "Never tranferred certificates during systematic doping period"

Does not seem to be as good of a sound byte, but hey, they have less to work with.

 

[Oldman]

Of course in the Clemens case, his former trainer has submitted physical evidence to back up his statements that Clemens used steroids. This can be used to show Clemens committed perjury when he denied it. (though Clemens passing polygraph tests might show that he really didn't know it was steroids he was being given: who knows?).

So far we have heard nothing about physical evidence in the Armstrong case. The closest thing would be the back testing of the '99 samples but because of the way that was done, no way would it be allowed as evidence in a US court.

There was no suggestion of evidence type and I'd agree with you. Again, charges are likely to revolve around a transactional fraud or illegal activity similar to what Novitsky and DEA emphasis seems to be: transport or sale of controlled substances. Evidence of involvment in a conspiracy to distribute could be something as simple as a wire-tapped conversation. Little details may be the undoing of LA's operation.

 

[JimmyHoffa]

They might not even have to prove Lance ever doped.

His inferior team however were encouraged to dope.
Maybe they had to "get with the program" to stay with the team.

A few testimonies to that effect would make things very difficult.

 

[_yngve_]

Clarifications

Okay, I'm not a lawyer but I am a Financial Analyst who researches stocks as part of my job so I'm fairly well edumacated on how these here Corporation thingies work.

A few clarifications (I hope these haven't been addressed later in the thred)

For the record, I am an attorney - one of those geeky transactional types who does contracts, sets up corps & LLCs, etc.

"Tailwind was registered as an LLC so that definitely does strip shareholders of liability"

Technically, LLCs do not have "shareholders" - they have individuals or entities ("members") who possess "membership interest". While both corporations and LLCs were created to shield their ownership from liability, this shielding is... wait for it... limited. Specifically, a court can "pierce the veil" if it determines that the ownership knowingly performed certain acts (note that this legal theory was developed for corporations, but has evolved in a manner that makes it applicable to LLCs as well).

The liability for whatever alleged criminal activity Tailwind may have been involved in is therefore going to fall on whoever is defined as the management of this company

Except to the extent that the veil may be pierced, this is largely accurate. Often, tho not always, management roles in LLCs and closely held corps are filled by the shareholders/members. Moreover, as mentioned below, individuals within the company structure may be accused of conspiracy, even if they were not in a position of ultimate legal authority within the company structure.

...all of us who have been following cycling since at least 1999 know that LA and JB were pretty much completely in charge of this team

The extent to which this provides a dodge for the named management of the team will depend upon a determination of what the named management *should* have known - ie, if Wiesel was writing company checks totaling hundreds of thousands of dollars to Ferrari for "coaching services", he would likely be held accountable, in addition to LA and JB. If, however, the company were set up such that JB was granted an annual budget and carte blanch to spend it as he saw fit, ultimate liability would likely rest with him. In any case, to the extent that criminal charges are sought, JB and LA will almost certainly be looking at conspiracy charges, as opposed to actual fraud charges (as a means of avoiding these potential loopholes).

And therefore I do think the courts will find those two liable for the actions of it regardless of whoever has official titles. I also think Weisel will not escape liability being the owner who put up the majority of the cash to fund the company.

See above.

 

[Dr. Maserati]

If Lance was not an owner then they didn't inform Dan Osipow, who was General Manager of Tailwind in 2005 as he said the below to the Dallas News in July 2005

Armstrong has two years left on his contract with Discovery. Dan Osipow of Tailwind Sports, a co-owner of the channel's cycling team, said he expects Armstrong to continue working with the team in an advisory role along with team director Johan Bruyneel.

"I could see Lance helping to bring along the young talent on the team," Osipow said. "Lance is a part-owner, and he's perfectly suited to advise our riders on how to prepare and compete. I could see him riding in the team car during next year's Tour with Johan."

 

[MacRoadie]

If Lance was not an owner then they didn't inform Dan Osipow, who was General Manager of Tailwind in 2005 as he said the below to the Dallas News in July 2005

They didn't actually make Osipow General Manager until 2007...

 

[kurtinsc]

If Lance was not an owner then they didn't inform Dan Osipow, who was General Manager of Tailwind in 2005 as he said the below to the Dallas News in July 2005

I don't think Lance being an owner from 2005-2007 matters for the investigation.

What matters is 1996-2004... the years the post office was the sponsor.

Edit: Not saying he was or wasn't... just that I think the interest in the fraud charges is only for the time the team was US Postal.

 

[Dr. Maserati]

They didn't actually make Osipow General Manager until 2007...

Well he was definitley 'Managing Director in 2005 - as he 'resigned from this position in November of that year.

 

[alberto.legstrong]

Bonds does not care that everyone thinks that he is a douchebag. The public thought that before he was sucked into BALCO. For Armstrong it does not matter whether he is ever convicted or not. The real damage to be done is the damage to the fraudulent image that he has constructed to take advantage of people with cancer.

BINGO!

People wrongly assume that most of us give a damn about a prison sentence or a conviction. I just want people to know he was a liar and a fraud. Not a legend.

He is truly greedy, and not in the monetary sense. Money wasn't enough. Celebrity wasn't enough. He wanted this mythical story and built it on lies.

The lesson is the same one we teach all of our kids, one lie leads to another lie leads to another lie and just like any political scandal, it's not the act that gets you, it's all the stuff that's done in the wake of the act.

 

[Dr. Maserati]

I don't think Lance being an owner from 2005-2007 matters for the investigation.

What matters is 1996-2004... the years the post office was the sponsor.

Edit: Not saying he was or wasn't... just that I think the interest in the fraud charges is only for the time the team was US Postal.

Ok - but Tim Herman (LA's lawyer) said:

“Although the Board of Directors told the intended recipients in 2004 that the stock would be issued, the stock was not actually awarded to Lance and the others until December 2007"

..... so if its not 2007, then its 2004.

 

[alberto.legstrong]

Before assigning culpability to such and such management positions, it has to be determined where the fraud occurred. The people metioned as owners of Tailwind, like Wiesel, have other jobs and careers. These guys were not running the day to day operations of the team. It is unlikley that they were the ones who planned how to divert assets to pay for the team's doping program. Even if they did, it is hard to prove. Those with the biggest risk are the ones who sold the assets, bought the drugs, and distributed them the the rest of the team.

Bruyneel cannot credibly claim that he was unaware that half the team's bikes were disappearing each season. Five or ten percent would be believable but not fifty percent. We already know from FLandis that Armstrong was distributing drugs to his teammates. From Vaughters and Andreu we know that Armstrong was pressuring his teammates to dope.

Armstrong trying to portray himself as just one of the regular team members will not work. He is notorious for treating his teammates like employees, so much so that they nicknamed him "The Boss." He has also spent large amounts of PR effort portraying himself as a micromanager who controls everything and everyone around himself. If his defense tries to paint him as a low level peon who only did what he was told then it will damage the credibility of his defense because it will be laughably obvious that the defense is lying.

You and I are very much on the same page. (for once )

How does a domineering bossy control freak suddenly turn into just another working stiff?

My example yesterday makes my point pretty well. Who has ever heard of a guy that the entire operation revolves around from top to bottom who is just a guy collecting a check? try telling that to a jury and saying he had no responsibility other than as an employee. The burden may be on the prosecution, but I get the sense that that burden is not going to be very heavy at least with respect to saying he was much more than just an employee.

 

[Dr. Maserati]

You and I are very much on the same page. (for once )

How does a domineering bossy control freak suddenly turn into just another working stiff?

My example yesterday makes my point pretty well. Who has ever heard of a guy that the entire operation revolves around from top to bottom who is just a guy collecting a check? try telling that to a jury and saying he had no responsibility other than as an employee. The burden may be on the prosecution, but I get the sense that that burden is not going to be very heavy at least with respect to saying he was much more than just an employee.

Dont forget that when Tailwind said in August 2007 they were pulling out of the sport - Lance was front and center saying:

"I think we had a firm commitment for three years," said Armstrong. "Based on my impression I think we were 90% there. We are walking away from that today. We are not comfortable managing and running a team right now. Johan is retiring on top of that, and I am going to go and focus on my foundation, so we are not your guys right now."

And guess who was first to confirm Discoverys signing of Ivan Basso in 2006?

"It's done. We have found an agreement".

 

[goober]

You and I are very much on the same page. (for once )

How does a domineering bossy control freak suddenly turn into just another working stiff?

My example yesterday makes my point pretty well. Who has ever heard of a guy that the entire operation revolves around from top to bottom who is just a guy collecting a check? try telling that to a jury and saying he had no responsibility other than as an employee. The burden may be on the prosecution, but I get the sense that that burden is not going to be very heavy at least with respect to saying he was much more than just an employee.

In corporate america it happens all the time. You live in and igloo in Alaska? Employees have lots of responsiblity; hence why they are paid. Either way, we'll hopefully see just what his responsibility is when the true non-speculative facts come out. Gonna be a fun ride...

 

[alberto.legstrong]

In corporate america it happens all the time. You live in and igloo in Alaska? Employees have lots of responsiblity; hence why they are paid. Either way, we'll hopefully see just what his responsibility is when the true non-speculative facts come out. Gonna be a fun ride...

You keep telling yourself that.