Stapleton-Knaggs settlement rejected in Landis and Armstrong case

A judge has upheld the US government’s rejection of a proposed settlement for Bill Stapleton and Barton Knaggs in the Floyd Landis / Lance Armstrong “qui tam” lawsuit.

The suit, which was filed in 2010, accuses Armstrong of defrauding the US government when the former seven-time Tour de France winner was riding for the US Postal Service. The government later joined Landis' lawsuit, and under the False Claims Act, damages could be tripled to nearly $100 million. As the whistleblower who filed the case, Landis would be eligible for part of any damages awarded.

In December, Stapleton, Armstrong's longtime agent, and Knaggs, Armstrong's longtime business partner, offered to pay $600,000 to be released from the $100 million fraud case.

The US government joined the Landis case in 2013, but did not specifically name Stapleton and Knaggs. However, it still has veto power over any potential settlement by them, and has exercised that option, leading the two to appeal to the judge.

"Although the government has remained silent before this court, in discussions with (Stapleton's and Knaggs') counsel, the government has demanded that (they) agree to a nebulous `cooperation' requirement, which permits the government to unwind the settlement if it does not deem their `cooperation' `helpful,'" according to a filing by Stapleton and Knaggs’ attorneys, USA Today reported. That is the government's good right, a judge has now ruled.

"Until the United States, through the attorney general, provides its written consent, the court may not approve the settlement or order the voluntary dismissal" of the defendants."

"While it might seem counterintuitive that the government can effectively veto a settlement of claims it has chosen not to join, the False Claims Act itself and the majority of circuits that have addressed the question say otherwise,” the judge ruled.

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