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Thomas Weisel, the investment banker who provided financial support to Lance Armstrong during his seven Tour de France wins, denies that he knew that Mr. Armstrong was doping. According to an article in the NY Times, Mr. Weisel never “saw” Mr. Armstrong doping and never discussed the issue with Mr. Armstrong because he believed his denials and Mr. Armstrong never tested positive for doping.

Why does it matter what Mr. Weisel knew about Mr. Armstrong’s doping? Because the cycling team that Mr. Armstrong rode on was partially funded by the U.S. Postal Service, the doping and its cover up may be found to be a fraud on the U.S. government. Floyd Landis, a former teammate of Mr. Armstrong, has alleged as much in a false claims act complaint that was leaked this week. The suit names Mr. Weisel as a defendant, along with Mr. Armstrong and others.

Thus, what Mr. Weisel knew and when he knew it is key to determining his liability or lack thereof for the fraud allegedly committed against the U.S. Postal Service. Mr. Weisel’s “see no evil, hear no evil” is often referred to as the ostrich defense. It has been tried by many and is not often successful in the criminal context. Whether the defense will work in this case will be a function of the specific allegations of the complaint and the court’s determination of what Mr. Weisel should have known.

Thus, whether Mr. Weisel actually saw Mr. Armstrong doping may not be the relevant question.  The court may impose “constructive knowledge” on Mr. Weisel (i.e. he should have known and therefore is liable) if they determine that he should have conducted due diligence which would have led him to the truth. The questions will be, should Mr. Weisel have asked more questions, sought additional testing for the team, sat in during training sessions, or asked the other members of the team about the team culture? What due diligence was he required to do to ensure that the team was not doping and did he meet that standard? How the court answers these questions will determine Mr. Weisel’s legal liability.

**Note: Although there have been reports that the false claims act complaint has been leaked, I have been unable to retain a copy of it and have not read the specific allegations against Mr. Weisel.