Can the (federal) government take everything Armstrong owns?
February 22, 2013 9:15 PM   Subscribe

Re the Justice Department joining the lawsuit against Lance Armstrong--can the federal government force the sale of assets to pay off a judgment?. That is, hypothetically, if Armstrong has $8 million in non-cash assets (houses, land, cars, etc), and he's being sued for $15 million and loses, can the government liquidate all of his assets to at least pay off a part of that amount? Armstrong is a disgrace and a jerk, but could he also become a pauper?
posted by BadgerDoctor to Law & Government (7 answers total)
Armstrong's net worth has been reported at around $100 million in various media, so if the government is trying to take $15 million, he'll survive.
posted by dfriedman at 9:17 PM on February 22, 2013

"Armstrong's net worth has been reported at around $100 million in various media, so if the government is trying to take $15 million, he'll survive"

Sorry to thread sit, but let me rephrase my question--if a judgment exceeds a person's net worth, can that person lose everything he or she owns? Armstrong is worth $100 million. A judgment for $150 million is entered against him. What then?
posted by BadgerDoctor at 9:24 PM on February 22, 2013

IANAL, but I'm pretty sure most places have homestead laws that prevent your residence being taken from you, even if you earned the funds to buy it through unsavory means.
posted by charlemangy at 9:24 PM on February 22, 2013 [1 favorite]

You can declare bankruptcy to get out of the debt, but you'll have to give up *most* of what you own first before the rest of the debt is forgiven. You are allowed to keep, for instance, your own home.
posted by tylerkaraszewski at 9:37 PM on February 22, 2013

Sorry, I misunderstood your question.

To answer your question more generally--take a look at someone like Bernie Madoff. His net worth was believed to have been somewhat less than $1 billion, but the penalties assessed exceeded $10 billion.

So, to answer your question, yes, you can have a situation where a defendant is worth, say, $100 million, yet the government prosecutes a claim worth a multiple of that.

I don't know whether that kind of situation is one that Armstrong will find himself in, however.
posted by dfriedman at 9:37 PM on February 22, 2013

IANAL. You can't lose everything, but the fact that the judgement is greater than your net worth doesn't cancel the excess part of the judgement. You pay as much as you can immediately, and the rest in installments as you make more money. Depending on the state, the amount that can be shielded varies, and there's usually a lot of hankypanky trying to hide assets. If you want to learn more about this, take a look at the history of Fred Goldman's lawsuit against OJ Simpson.

The fact that it's the government as plaintiff instead of a private party doesn't intrinsically change the situation.
posted by Chocolate Pickle at 9:38 PM on February 22, 2013

Its actually a crazily complex question. When the judgement is for a criminal conviction, the government has very broad powers to seize assets and very few of the state law exemptions apply. However, the government turns out to be surprisingly lax in their pursuit of those assets against most ordinary criminals (this is probably because most convicted criminals don't have significant assets). In some cases the government pursues restitution extremely aggressively, even going after money that was already spent (called clawback). When the judgment is the result of a civil case, there are many limitations on the recovery in both state and federal law -- for instance, pensions are exempt and most states exempt at least part of your primary residence (various states have more or less generous homestead exemptions). By and large, civil judgments can be discharged in bankruptcy however. The good news for Armstrong is that his charge is a civil court one, but the bad news is that the claim is based on fraud, which is one of the numerous exemptions in the bankruptcy code -- so he couldn't escape the debt in bankruptcy if it exceeded his net worth.

However, the damages side of the Armstrong case is the weak link in the case against him. Even though he has confessed to the fraud, it is going to be difficult to prove that the postal service didn't get fair value for their endorsement. Armstrong generated more exposure for his sponsor than probably every other cyclist combined for decades. The odds of them showing more damages than Armstrong has assets are essentially nil.

There are also a million tactics, some perfectly legal, some dubious and some blatantly illegal but extremely difficult to detect and prove that permit folks to shield assets from potential collection efforts. It is possible that a guy like Armstrong, who has had both legal issues and top level attorneys for ages, has structured his earnings and assets into trusts, ERISA-protected and offshore accounts for a decade or more, potentially shielding much of his net worth. The problem of collecting on judgments is so well-known that it is reasonably common for successful plaintiffs to settle for significant reductions to the judgment in exchange for immediate cash. In a case with such a high-visibility public figure, the government will almost certainly demand full compensation and Armstrong would likely pay even if he could protect assets in order to avoid the bad publicity and to protect his future revenue streams.
posted by Lame_username at 1:08 AM on February 23, 2013

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