The Justice Department has joined a lawsuit against disgraced cyclist Lance Armstrong that alleges the former seven-time Tour de France champion concealed his use of performance-enhancing drugs and defrauded his long-time sponsor, the U.S. Postal Service, Armstrong’s lawyers said Friday, Feb. 22.

The lawsuit alleges that riders on the postal service-sponsored team, including Armstrong, knowingly violated their agreements with the postal service by regularly using banned substances and methods to enhance their performance.

U.S. Attorney Ronald Machen, whose office is handling the case, said Armstrong and his cycling team took more than $30 million from the postal service based on their contractual promise to play fair and abide by the rules — including rules against doping. Machen said the postal service has now been unfairly associated with a doping program. The suit the Justice Department is joining was filed in 2010 by former teammate Floyd Landis, who was stripped of his 2006 Tour de France title for doping.

Settlement discussions had been under way between the Justice Department and Armstrong’s lawyers. A person familiar with the negotiations says the two sides are tens of millions of dollars apart on how much Armstrong should pay to settle the case. The person spoke on condition of anonymity because the source was not authorized to speak on the record about the private talks.

An Armstrong lawyer, Robert Luskin, said negotiations with the government failed because “we disagree about whether the postal service was damaged.”

“The postal service’s own studies show that the service benefited tremendously from its sponsorship — benefits totaling more than $100 million,” said Luskin.

The Landis lawsuit was filed under seal, but it will be unsealed with the Justice Department decision to join, or in essence, take over the case.

Armstrong was the subject of a two-year federal grand jury investigation that the Justice Department dropped a year ago without an indictment.

Throughout his career, Armstrong always denied drug use, but he confessed to having done so in an interview last month.

In October, the U.S. Anti-Doping Agency released a report that included affidavits from 11 of Armstrong’s former teammates. These affidavits detailed how the teammates were supplied with EPO by Armstrong and saw him inject, and how they were pressured to dope and bullied by Armstrong and Johan Bruyneel, the team manager. The cycling world’s governing body then stripped Armstrong of the seven Tour de France titles he won from 1999 to 2005.

Last month, the head of USADA lobbied Attorney General Eric Holder for the Justice Department to join the lawsuit against Armstrong. USADA chief executive Travis Tygart has called the doping by Armstrong and the postal service teams a “massive economic fraud.”