Lance Armstrong 2 photo

Lance Armstrong in 2011Brad Camembert/Shutterstock

Lance Armstrong’s “no-holds-barred” interview with Oprah Winfrey on Thursday, when he’s expected to confess to the use of performance-enhancing drugs during his professional cycling career, comes as a federal probe into his finances has widened to focus on the man who bankrolled his champion teams: legendary San Francisco financier Thomas Weisel.

Court documents unsealed last month show that government investigators pursuing possible fraud claims against Armstrong have subpoenaed Weisel, founder of the Montgomery Securities investment firm and co-chairman of Stifel Financial Corp., the Center for Investigative Reporting has found.

In the business world, Weisel, 71, is renowned for taking public such companies as Amgen and Yahoo. In sports, he is known as the founder, owner and chairman of San Francisco-based Tailwind Sports, the holding company for the U.S. Postal Service cycling team that Armstrong led to an unbroken string of seven victories in the Tour de France, from 1999 to 2005.

The relationship between the financier and the cycling champion began in 1990, when Armstrong was a teenager trying to break into professional cycling and Weisel was dreaming of building an American racing team that could dominate the Tour de France.

To Armstrong, Weisel was a kindred spirit who shared the cyclist’s own ultra-competitive spirit.

“This is a guy who likes to win all the time, at everything. Absolutely everything for him is a competition, in every part of his life,” Armstrong wrote in a preface to “Capital Instincts,” Weisel’s authorized 2003 biography. “To Thom, everything’s a deal. Everything’s a prizefight, a contest.”

Now, their business affairs are being probed by the Major Fraud Investigations Division of the Postal Service’s Office of Inspector General, according to documents unsealed Dec. 12 in a federal court in Washington.

At stake is the $40 million in federal funds the Postal Service paid Tailwind between 1996 and 2004 to sponsor the team. Team management – which hired and paid the riders – promised in its contracts not to tolerate doping. The Postal Service is investigating whether Armstrong and others defrauded the government by violating that no-doping clause, a federal prosecutor wrote in a filing last year.

Weisel declined to comment for this story. He has not publicly addressed the reports of doping on the team.

In legal sparring over whether Armstrong had to comply with a Postal Service subpoena for financial records, however, the cyclist’s lawyer, John Keker, revealed that the government also had subpoenaed “nearly identical” records from Weisel, according to the unsealed documents. (Keker is a donor to the nonprofit, nonpartisan Center for Investigative Reporting.)

It was the first indication that Weisel was facing scrutiny in connection with the Armstrong doping scandal and its aftermath.

The Postal Service inquiry also marks a turn from the sporting side of the Armstrong investigation. That ended in October, when the U.S. Anti-Doping Agency issued a devastating 1,000-page report that portrayed Armstrong as a serial drug cheat who became the dominant cyclist of his era by using an array of banned drugs. Armstrong was stripped of his seven Tour de France titles.

In addition to the Postal Service’s probe, two other legal cases have targeted Tailwind. Those cases also turn on whether Armstrong’s use of banned drugs constitutes financial fraud – and if so, whether the team’s owners can be held financially accountable.

In Texas, a sports insurance company wants to recoup $11 million it paid to Tailwind to cover multimillion-dollar performance bonuses triggered in Armstrong’s contract each time he won the Tour de France.

“Tailwind is in our sights because Armstrong’s doping activities were concealed from us,” said Bob Hamman of Dallas-based SCA Promotions. “More to the point, he’s no longer winner of the Tour de France.”

Of potentially greater impact is a whistle-blower lawsuit that records show was filed against Tailwind by former cycling star and confessed drug cheat Floyd Landis. In an affidavit, Landis told the anti-doping agency last year that he was introduced to blood doping by U.S. Postal Service team officials “acting on behalf of Tailwind and its principals.”

Landis’ suit seeks to recoup the $40 million in sponsorship fees paid to Tailwind by the Postal Service. If he succeeds, Landis and the government would share the award. The complaint is sealed under terms of the federal False Claims Act.

U.S. Justice Department lawyers are weighing whether the government itself should join Landis’ lawsuit, court records indicate. By law, companies that submit false claims to the government can be fined triple damages – as much as $120 million in the Tailwind case.

Armstrong also is considering whether to cooperate with the government in the whistle-blower case by paying millions in damages and testifying about the role of Weisel and other Tailwind executives, according to a source with knowledge of the discussions. The source asked not to be quoted by name because the discussions between the cyclist and government lawyers are still ongoing.

Thomas Weisel photo

Thomas Weisel is the founder, owner and chairman of San Francisco-based Tailwind Sports, the holding company for the U.S. Postal Service cycling team that Lance Armstrong led.Kim Komenich/San Francisco Chronicle/Corbis

Competitive spirit

Born in Minnesota, Weisel was a champion speed skater who narrowly missed making the 1960 U.S. Olympic team. He earned a bachelor’s degree at Stanford University and an MBA at Harvard, then launched an investment banking career in San Francisco. He developed a reputation as a Type A personality with sales acumen and an intensely competitive spirit.

Among his competitive quirks: Weisel sought out and hired athletes, even ones inexperienced in finance, who could help the company dominate local corporate track competitions.

Weisel pushed out his partners at the firm Robertson, Coleman, Siebel & Weisel in the late 1970s, taking over as CEO. He changed the name of the firm to Montgomery Securities and became wealthy backing promising medical and technology companies.

In 1997, he cashed out through a $1.3 billion sale to NationsBank that he helped orchestrate, later hiring key executives to the newly formed Thomas Weisel Partners. He sold that firm in 2010 to Stifel Financial Corp., and became its co-chair.

For much of his business career, Weisel continued competing in sports. In 1982, at 41, he placed third in his age division at the U.S. national skiing championships. He took up cycling the next year. His training regimen, detailed in his biography, included weekly flights from his Marin County home to Southern California practice sessions with ex-U.S. Olympic cycling coach Eddie Borysewicz.

In 1989, Weisel won two cycling world championship gold medals in his 45-and-over age division. By then, he was dreaming of the Tour de France.

Questions of ownership

The professional cycling team Weisel assembled in 1998 originally was called Montgomery-Subaru – after its sponsors, Weisel’s investment bank and the Japanese auto company. Tailwind was set up as the team’s holding company, records show.

The federal whistle-blower lawsuit targets Tailwind as a defendant, so the question of who controlled Tailwind becomes key.

During the team’s earliest years, “Lance had no part of ownership of Tailwind, which was chaired by Thom Weisel for many years,” according to a memo produced as part of legalproceedings by an attorney for the Dallas insurer SCA.

By 2004, however, Armstrong had taken an 11.5 percent ownership stake in the firm, the cyclist’s business manager, Bill Stapleton, said during a 2005 deposition in the SCA litigation.

Yet six years later, after Landis had told federal investigators of widespread doping on the Postal Service team, Armstrong told The New York Times that “the most glaring thing is the misconception that I was the owner of the team. That’s completely untrue. No ownership. None at all.”

Armstrong’s link to Tailwind was two decades old by then. Weisel first hired the brash teenaged cyclist in 1990. After Armstrong quit to race for America’s top team, sponsored by Motorola, Weisel signed another promising star named Tyler Hamilton, a future Olympic gold medalist, who later confessed to using the blood-doping drug EPO and other banned drugs while riding with the Postal Service team.

In his recent book “The Secret Race,” Hamilton recalled Weisel in those years as “almost another coach” – hard driving, intense, deeply committed.

“For him, life was a race, and it was won by the toughest, the strongest, the guy who could do what it takes,” Hamilton wrote of the financier.

Weisel poured money into Tailwind Sports, hiring top riders from the U.S. and Europe. In 1996, Tailwind found a sponsor with deep pockets: the federal government. But even after that cash infusion, the team continued to lose as much as $1 million per year, Tailwind CEO Mark Gorski testified in an earlier financial dispute with the SCA insurance firm.

After that, Tailwind shook up team management. Gorski replaced team physician Dr. Prentice Steffen, an outspoken opponent of doping, with Spanish sports physician Dr. Pedro Celaya, according to the anti-doping agency’s report.

Years later, riders told U.S. anti-doping officials that Celaya had provided them with EPO, blood transfusions and infusions of saline to help them beat drug tests.

In interviews, former U.S. Postal Service riders Darren Baker and Scott Mercier told the Center for Investigative Reporting that road manager Johnny Weltz, hired at the same time as Ceyala, pressured them to use banned drugs.

Baker said Weltz told him, “You can’t ride the Tour without help.” Baker said “help” meant banned drugs. Mercier said, “I hated Johnny Weltz for making team selection based on what you would take and what you wouldn’t.”

Both riders said they opted to quit rather than dope. Baker and Mercier said they had no reason to believe Weisel knew about the doping program. Weltz didn’t respond to emails requesting comment.

Winning streak

An enticing opportunity arose for Tailwind in 1997, after Armstrong was felled by testicular cancer and diminished by chemotherapy. Other teams didn’t want him. Weisel offered to bring him back to the Postal Service team at a rock-bottom salary with performance bonuses. In 1998, Armstrong earned $1 million in bonus payments, according to the financier’s biography.

With Armstrong aboard, the team achieved unprecedented success, winning the first of seven straight Tour de France races in 1999. In the years that followed, Weisel often followed along behind Armstrong in the team car. He partied with him, celebrated with him and displayed Armstrong’s photographs and yellow jerseys in his Montgomery Street offices. After one tour victory, Weisel rented the top floor of the storied Musée d’Orsay in Paris for a lavish victory dinner, Hamilton wrote in his book.

In cycling, Weisel won by leaving as little as possible to chance. In 1999, he devised a plan to take control of USA Cycling, the sports governing body that picks Olympic teams and hands down doping sanctions, Weisel’s biography said. By the time Armstrong was midway through his Tour de France winning streak – in 2001 – Weisel controlled not just cycling’s strongest team, but the sport’s U.S. regulator.

Meanwhile, Weisel recruited friends from his financial world to buy shares of Tailwind. Instead of earning investment returns, Tailwind funders bought into a cycling fan’s fantasy camp, accompanying riders during training sessions, mingling with cyclists at parties in Weisel’s Marin County home and gaining exclusive access to Armstrong’s team during the Tour de France.

Investors reportedly included Richard Cashin Jr., chairman of a private equity unit of JPMorgan Chase & Co.; David “Tiger” Williams, founder of Williams Trading LLC; and Ward Woods, former CEO of Bessemer Securities LLC, according to the Wall Street Journal.

Weisel also recruited wealthy friends to donate to the Weisel-led USA Cycling Development Foundation, set up to support USA Cycling. Top donors and investors called themselves the Champions Club.

The team’s run ended when Armstrong won his final Tour de France in 2005 and retired. The team – by then sponsored by television’s Discovery Channel instead of the Postal Service – disbanded two years later.

In its investigative report released in October, the U.S. Anti-Doping  Agency attributed the team’s great success to systematic doping.

Floyd Landis photo

Former cyclist Floyd Landis, shown during a 2009 race, has filed a whistle-blower lawsuit that seeks to recoup millions in U.S. Postal Service sponsorship fees paid to Tailwind Sports.Michael Maloney/San Francisco Chronicle/Corbis

Armstrong benefited from “an army of enablers” who helped him obtain EPO and other blood medications, human growth hormone, steroids and clandestine blood transfusions, and then covered up his drug use, the agency said. Eleven former team members – Hamilton and Landis among them – confessed they had doped to gain the strength to help Armstrong win. 

Alleged enablers named in the report included team manager Johan Bruyneel, who replaced Weltz in 1999; Celaya, the team doctor; and Dr. Michele Ferrari, an Italian physician with a reputation for keeping ahead of cutting-edge doping tests.

In the final years of his cycling career, Armstrong paid a company controlled by Ferrari more than $1 million, the U.S. Anti-Doping Agency said in its report. In exchange, Ferrari devised a doping regimen for the entire team, the report said.

Bruyneel and Celaya are contesting the agency’s findings. Ferrari and Armstrong did not contest the matter and have been banned from cycling for life. According to published reports, Armstrong may have agreed to the Winfrey interview in hopes of easing the terms of the ban, perhaps with an eye toward competing in triathlons. The interview will air Thursday.

How that tactic might play out for Weisel – personally or financially – remains an open question.

Alleged ties to doping scandal

Weisel is not named in the redacted public version of the doping agency report. Over the years, as investigators zeroed in on Armstrong and his team, the financier has avoided commenting on the topic of drugs in sports. When his name has come up in legal proceedings pertaining to Armstrong and doping, he has been portrayed as indifferent to doping and eager to deflect allegations that could hurt Armstrong and his team.

Legal records involving Tailwind portray a different scenario. In documents prepared for a 2005 arbitration case in which the SCA insurance firm made an earlier attempt to recoup its $11 million, the Center for Investigative Reporting found reports of three incidents in which Weisel was allegedly confronted with the doping allegations swirling around the Postal Service team:

  • In the 1996 team shake-up, team physician Steffen complained in faxes to Weisel that he was losing his job because he refused to allow drugs on the team. “What could a Spanish doctor, completely unknown to the organization, offer that I can’t or won’t,” he wrote, referring to his replacement, Ceyala. “Doping is the fairly obvious answer,” he said. He also warned that Weltz, the newly hired road manager, was a reputed drug cheat.
  • While Armstrong was en route to his first Tour de France win in 1999, the team was roiled by a report that the cycling star had tested positive for cortisone, a banned substance. Team masseuse Emma O’Reilly claimed she had witnessed Weisel huddling with Armstrong in the cyclist’s massage room, “frantic about what to do about the positive test.” O’Reilly later told anti-doping officials that the team obtained a backdated prescription for a steroid cream to explain Armstrong’s positive test.
  • Retired U.S. cycling champion Greg LeMond publicly criticized Armstrong in 2001 for training with Ferrari, the reputed doping master. Soon, LeMond said, he got a threatening call from Weisel. “What you’re saying about Lance isn’t good for you,” LeMond claimed Weisel told him.

Ultimately, each of the crises subsided. Weisel didn’t give Steffen his job back, and 16 years passed before his replacement, Celaya, was charged with administering performance-enhancing drugs. Cycling officials accepted the backdated 1999 prescription, the masseuse and team members told the anti-doping agency, and they let Armstrong continue to his first Tour de France win.

And after Armstrong dismissed LeMond in public statements as a jealous, unstable malcontent, the media and fans largely ignored the former champion’s criticism.

Instead, Armstrong was portrayed on magazine covers, in biographies and in television specials as a uniquely heroic champion, defeating his rivals and giving hope to cancer survivors – all while competing drug-free.

And Weisel, already revered in American finance, rose alongside him, becoming known as the driving force behind America’s rise to dominance in a quintessentially European sport. 

This story was edited by Amy Pyle. It was copy edited by Nikki Frick and Christine Lee.

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Matt Smith is a reporter for Reveal, covering religion. Smith's two-decade career in journalism began at The Sacramento Union in California. He went on to positions at newspapers in Albuquerque, New Mexico; Twin Falls, Idaho; Fairfield, California; and Newport News, Virginia. Between 1994 and 1997, Smith covered Latin America as a reporter in Dow Jones & Co.'s Mexico City bureau. For 14 years, he was a lead columnist at Village Voice Media in San Francisco. He came to Reveal from The Bay Citizen. Smith holds a master's degree from the Columbia University Graduate School of Journalism and a bachelor’s degree in political science from Reed College in Portland, Oregon. Before his career in journalism, Smith was a professional bicycle racer. He is based in Reveal's Emeryville, California, office.

Lance Williams is a former senior reporter for Reveal, focusing on money and politics. He has twice won journalism’s George Polk Award – for medical reporting while at The Center for Investigative Reporting, and for coverage of the BALCO sports steroid scandal while at the San Francisco Chronicle. With partner Mark Fainaru-Wada, Williams wrote the national bestseller “Game of Shadows: Barry Bonds, BALCO, and the Steroids Scandal that Rocked Professional Sports.” In 2006, the reporting duo was held in contempt of court and threatened with 18 months in federal prison for refusing to testify about their confidential sources on the BALCO investigation. The subpoenas were later withdrawn. Williams’ reporting also has been honored with the White House Correspondents’ Association’s Edgar A. Poe Award; the Gerald Loeb Award for financial reporting; and the Scripps Howard Foundation’s Award for Distinguished Service to the First Amendment. He graduated from Brown University and UC Berkeley. He also worked at the San Francisco Examiner, the Oakland Tribune and the Daily Review in Hayward, California.