It was supposed to be one of the most amazing feats in sporting history; after recovering from cancer, Lance Armstrong got back on his bike and won the 1999 Tour de France. At the time, Armstrong rode on a team sponsored by the U.S. Postal Service. The deal was great advertising then: A spokesman claimed, “Lance is about perseverance, and so is the Postal Service.” But now that Armstrong has admitted to doping, the government wants its money back. The Department of Justice has teamed up with Floyd Landis, Armstrong’s onetime rival, in a lawsuit filed under the False Claims Act for $120 million. The government says the suit will rectify the “years of broken promises” during which Armstrong told his sponsors that he was dope-free.
According to the suit, those years go back to 1998—two years earlier than the normal period allowed for such a case. To do that, DOJ and Landis have invoked a little-known law, the Wartime Suspension of Limitations Act, which stops the clock on the statute of limitations for fraud committed against the government during war. The idea is that because the United States has been at war in Afghanistan since 2001, the clock on Armstrong’s fraud never began ticking. This aggressive interpretation may cost Armstrong an extra $27 million and force him to give back every penny the Postal Service paid him—but only by pushing the law far beyond its original purpose.
What is this wartime law, exactly? Congress enacted it in the midst of World War II, when fraud against the government was rampant, in an effort to deter contractors from overcharging or delivering faulty goods. The idea was to suspend the regular five-year statute of limitations for fraud relating to government contracts at U.S. military outposts around the globe when the nation is at war. This allowed the government to focus on fighting the war without losing the opportunity to investigate.
Mostly, though, the law gathered dust on the shelves, unused. Then in 2008, a federal judge gave it new life by saying it could be used to stop the statute of limitations and prosecute a fraudulent contractor on the Big Dig project in Boston. In a massive infrastructure project with $10 billion in cost overruns, Robert Prosperi and Gregory Stevenson were accused of supplying unsuitable concrete and then swapping in other batches for review to hide the switch they had made. When Prosperi and Stevenson tried to argue they could only be held responsible for fraud back to 1999, Judge Richard Stearns found that the statute of limitations had never gone into effect because the nation went to war in 2001. “It makes no difference that the fraud in this case involved a construction project unrelated to the Iraqi or Afghani conflicts,” he wrote. Prosperi and Stevenson were sentenced to house arrest for six months.
That result encouraged the Department of Justice to start using the wartime law more aggressively. The government went after Wells Fargo for allegedly taking millions of dollars from the Federal Housing Administration by making up loans and then concealing them from investigators. The expiration date had passed for the statute of limitations—but not if the wartime act applied. Wells Fargo has protested that the allegations have “nothing to do with wartime contracting.” However, the court has upheld the government’s argument and allowed the suit to go forward for fraud going back 11 years. BNP Paribas, a French bank, has similarly failed to block the government’s suit against it for fraud committed in 2005 because, as the Justice Department argued, the nation was at war.
These cases make the government look tough, and open the door for it to collect big damages. But they also push a 70-year-old law beyond its original meaning as a guarantee against fraud in wartime contracting. While the wartime act should allow the government to go after fraudulent military contractors, it is absurd to try to connect the war on terrorism to Lance Armstrong’s lies.
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