Lance Armstrong must pay $10 million in perjury battle

Brent Schrotenboer | USA TODAY Sports

To protect his mythic status as an American sports hero, Lance Armstrong lied under oath in 2005, saying he never used performance-enhancing drugs. An arbitration panel in Texas ruled it's time for him to pay for it, handing down a $10 million penalty believed to be the largest such sanction against an individual in American judicial history.

In a 2-1 decision, the panel ordered the disgraced cyclist to pay the money to SCA Promotions, a Dallas sports insurance company that paid Armstrong's bonuses for winning the Tour de France and then helped cause his epic fall from grace in 2012.

"Perjury must never be profitable," the panel wrote in its ruling.

The panel said Armstrong and Tailwind Sports, the company that managed Armstrong's cycling team, "used perjury and other wrongful conduct to secure millions of dollars of benefits." The panel also found Armstrong and Tailwind "expressed no remorse to the panel for their wrongful conduct and continued to lie to the panel throughout the final hearing even while admitting to prior falsehoods and other wrongful conduct."

Armstrong's attorney, Tim Herman, indicated his client would fight in court to have the decision nullified on the basis that the parties reached a final and binding settlement in the case in 2006.

"This award is unprecedented," Herman said in a statement to USA TODAY Sports. "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 (in 2006)."

The company, which announced the decision Monday, said it believes the amount of the sanction is unprecedented. The sanction differs from a civil judgment in part because it's defined as a sanction against Armstrong for lying under oath during a previous dispute between the parties in front of the same arbitration panel.

SCA also filed court papers asking a Texas judge to declare the arbitration panel's award a final judgment so the company can collect payment.

Long battle

The dispute started in 2004, when Armstrong sued the company for breach of contract after it withheld his bonus for winning the Tour de France.

To make his point, Armstrong's backers took out a full-page advertisement in SportsBusiness Journal, trashing SCA Promotions, which had paid him bonuses for winning the Tour de France in 2002 and 2003.

"SCA's failure to pay the final installment of its policy is a shameful and baseless breach of contract," the 2004 ad said.

The company put its reputation at risk for its stance but wouldn't back down. It suspected Armstrong had cheated to win the race and didn't want to pay him if he did. When the case went to arbitration in 2005, SCA Promotions attorney Jeffrey Tillotson asked Armstrong about banned drug use.

Armstrong said under oath he had never doped.

"I race the bike straight up fair and square," he testified during the same proceedings.

Because of his denial — and lacking convincing evidence at the time — SCA Promotions was forced to settle the case and paid $7.5 million in 2006.

But SCA's efforts weren't in vain. During its legal battle, the company compiled evidence and testimony that was used against Armstrong in 2012, when the U.S. Anti-Doping Agency banned the cyclist for life and stripped him of the seven Tour de France titles he won from 1999 to 2005.

Backed into a corner by USADA's evidence, Armstrong confessed to doping during a televised interview with Oprah Winfrey in January 2013. SCA filed a lawsuit against Armstrong about a month later, and the case later went back to the same arbitration panel, leading to the $10 million award.

"We are very pleased with this result," SCA President and founder Bob Hamman said in a statement. "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."

Panel lacks authority?

Arbitrator Ted Lyon wrote a dissenting opinion that Herman believes will be adopted by the court.

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

The SCA case proved to be one of the first big cracks to threaten Armstrong's inspiring story line — a cancer survivor who played by the rules to dominate cycling through sheer hard work and willpower.

To build its case against him, USADA compiled statements from other riders as witnesses, along with evidence from the SCA case of 2005-06. The SCA Promotions dossier included the testimony of former Armstrong teammate Frankie Andreu and his wife, Betsy, who testified that during a hospital stay in Indiana in 1996 they had heard Armstrong admit to using banned drugs. In 2005, Tillotson asked him about this alleged incident — also under oath.

"How could that have taken place if I've never taken performance-enhancing drugs?" Armstrong said.

PHOTOS: Lance Armstrong through the years

The ruling is the latest setback for Armstrong, who also is defending himself against the federal government in another fraud lawsuit that could cost him nearly $100 million.

In 2013, he reached an undisclosed settlement with Acceptance Insurance, which sued him for fraud and sought to recover $3 million in bonuses it paid him for winning the Tour de France from 1999 to 2001.

In January, he was given two traffic tickets after allegedly hitting two parked cars with his vehicle and then letting his girlfriend take the blame for it to avoid making news.

Follow sports writer Brent Schrotenboer on Twitter @Schrotenboer. E-mail: bschrotenb@usatoday.com