Monday, January 9, 2012

Lance Armstrong Investigation: LiveStrong Brought to Light

Outdoor Magazine published an extensive article on Lance Armstrong's LiveStrong Foundation today. I know they have been working on this for a while since the author, Bill Gifford, first contacted me in May 2011. Interestingly, I received several phone calls from investigative reporters around the same time--undoubtedly because they found these posts of interest.

As far as I can tell, Gifford's article is the first one to hit the press. His article notes why this may be the case by saying:
At least two other major publications have done serious reporting on Livestrong—that is, they started to. In both cases, Livestrong lawyers succeeded in shutting down the stories before they were published. They applied the same pressures to Outside, blitzing my editors with pissed-off e-mails, phone calls, and, eventually, a five-page letter from general counsel Mona Patel complaining about “Mr. Gifford’s conduct, professionalism, and method of reporting.” One of my crimes was a failed attempt to get a source to talk off the record, an ordinary journalistic practice. All of which now makes me wonder if I missed something. 
I recommend reading the article if you're interested in LiveStrong and Lance. For those who want to get a flavor of the article, here are a few highlights that summarize the main conclusions:

The header summarizes it well as follows:
If Lance Armstrong went to jail and Livestrong went away, that would be a huge setback in our war against cancer, right? Not exactly, because the famous nonprofit donates almost nothing to scientific research. Bill Gifford looks at where the money goes and finds a mix of fine ideas, millions of dollars aimed at “awareness,” and a few very blurry lines.
Gifford begins by describing an angry, threatening phone call he got from Lance and, as Gifford notes, LiveStrong's "$320,000-a-year" CEO, Doug Ulman. Apparently, Lance and Ulman called to berate his work because Gifford tweeted about Lance in a way that they found offensive. (I have yet to receive any of these calls and some reporters who have called me have been surprised. I'll let you know if I do!) After reviewing the 60 Minutes expose' on Three Cups of Tea, Gifford turns to the crux of the issue with LiveStrong:
Others noticed an annoying tendency: whenever questions about doping arose, Armstrong and his supporters changed the subject to his cancer work, a tactic that the bicycling website NY Velocity called “raising the cancer shield.” After the 60 Minutes segment on Armstrong aired in May—complete with damning claims from ex-teammate Tyler Hamilton that Armstrong had cheated—Armstrong’s lawyers denied the allegations and quickly invoked Livestrong in his defense. In their one legal brief to date, they blasted the feds over alleged leaks to 60 Minutes that, they said, were intended to legitimize “the government’s investigation of a national hero, best known for his role in the fight against cancer.” 
But what did that fight amount to? Did Livestrong actually do much to eradicate cancer, or did it exist largely to promote Lance? If and when any indictments came down, would his good deeds help him escape conviction or jail time? It seemed likely that this theme could come up. Barry Bonds’s lawyers recently asked for probation instead of prison time as punishment for the baseball star’s 2011 Balco conviction, citing his “significant history of charitable, civic, and prior good works.”
Gifford ultimately admits that after visiting LiveStrong he could not find any hard evidence of serious wrongdoing. As noted earlier, he also wonders if he missed something because of the way he was threatened by Lance's forces. Even so, this paragraph summarizes his search for the possibility that Lance was using LiveStrong as a personal piggy bank:
The financial records appear to back up Armstrong’s assertion, and if there’s a more nefarious reality behind the curtain, it may take someone with subpoena power to bring it to light. In addition to Novitzky’s investigation, the IRS examined the foundation’s 2006 returns, although Livestrong officials say it was a routine review.
As alluded to in the summary quoted above, Gifford does find, however, that LiveStrong doesn't provide funding for cancer research. He notes that the erroneous belief that LiveStrong does support research is perpetuated by Lance and others. He provides many examples to support his claim that "Armstrong and his supporters help perpetuate the notion that they are, in fact, helping battle cancer in the lab." While it once did provide some, limited, research funding, it has now evolved into what Giffords calls a "hip marketing agency" when he says:
I found a curiously fuzzy mix of cancer-war goals like “survivorship” and “global awareness,” labels that seem to entail plastering the yellow Livestrong logo on everything from T-shirts to medical conferences to soccer stadiums. Much of the foundation’s work ends up buffing the image of one Lance Edward Armstrong, which seems fair—after all, Livestrong wouldn’t exist without him. But Livestrong spends massively on advertising, PR, and “branding,” all of which helps preserve Armstrong’s marketability at a time when he’s under fire. Meanwhile, Armstrong has used the goodwill of his foundation to cut business deals that have enriched him personally, an ethically questionable move. 
“It’s a win-win,” says Daniel Borochoff, head of the American Institute of Philanthropy, a watchdog group. “He builds up the foundation, and they build up him.” 
...(Lance's) comeback (in 2007) also saw Livestrong’s final evolution from a research nonprofit into something that looks more like a hip marketing agency. Rather than funding test-tube projects, it was deploying buzzwords like leverage, partnering, and message.
This is still a bit vague so you're probably wondering "if LiveStrong isn't using money to fund research, what exactly is it using the funds for?" Gifford goes on to analyze how LiveStrong funds have been spent in recent years. Here are some good quotes:
(T)he foundation’s financial reports from 2009 and 2010 show that Livestrong’s resources pay for a very large amount of marketing and PR. During those years, the foundation raised $84 million and spent just over $60 million. (The rest went into a reserve of cash and assets that now tops $100 million.) 
A surprising $4.2 million of that went straight to advertising, including large expenditures for banner ads and optimal search-engine placement. Outsourcing is the order of the day: $14 million of total spending, or more than 20 percent, went to outside consultants and professionals. That figure includes $2 million for construction, but much of the money went to independent organizations that actually run Livestrong programs. For example, Livestrong paid $1 million to a Boston–based public-health consulting firm to manage its campaigns in Mexico and South Africa against cancer stigma—the perception that cancer is contagious or invariably fatal. 
Livestrong touts its stigma programs, but it spent more than triple that, $3.5 million in 2010 alone, for merchandise giveaways and order fulfillment. Curiously, on Livestrong’s tax return most of those merchandise costs were categorized as “program” expenses. CFO Greg Lee says donating the wristbands counts as a program because “it raises awareness.” 
This kind of spending dwarfs Livestrong’s outlays for its direct services and patient-focused programs like Livestrong at the YMCA, an exercise routine tailored to cancer survivors available at YMCAs nationwide.
Gifford then describes other major expenditures such as legal fees and marketing costs.
Livestrong spends as much on legal bills as on these two programs combined: $1.8 million in 2009–10, mainly to protect its trademarks. In one memorable case, its lawyers shut down a man in Oklahoma who was selling Barkstrong dog collars. Meanwhile, “benefits to donors” (also merchandise, as well as travel expenses for Livestrong Challenge fundraisers) accounted for another $1.4 million in spending in 2010. 
There’s still a research department, but now it focuses on things like quality-of-life surveys of cancer survivors. During my visit, I was plied with glossy reports and brochures, which are cranked out by the truckload. The foundation’s 2010 copying-and-printing bill came to almost $1.5 million. 
But Livestrong’s largest single project in 2009—indeed, the main focus of Armstrong’s comeback—was the Livestrong Global Cancer Summit, held in Dublin in August. The summit ate up close to 20 percent of the foundation’s $30 million in program spending that year. 
To kick things off, Livestrong hired Ogilvy, the famous advertising firm, to create a global cancer-awareness campaign leading up to the summit. Cost: $3.8 million. It spent another $1.2 million to hire a New York City production company to stage the three-day event. Then it paid more than $1 million to fly 600 cancer survivors and advocates to Dublin from all over the world—the U.S., Russia, Bangladesh, and 60 other countries. The former president of Nigeria even showed up. 
 I think this quote summarizes what many people might be wondering when they read this:
“You wonder,” AIP’s Borochoff says. “If they just gave the money to cancer research, would it generate as much great publicity for Lance Armstrong?”
Gifford also explores Lance's claim that when he returned to cycling it was for cancer funding, not for personal gain. He notes:
Although Armstrong had told Vanity Fair he would be racing for free, he actually pocketed appearance fees in the high six figures from the organizers of both the Tour Down Under and the Giro d’Italia. An Australian government official told reporters that the money was a charitable donation, but Lance himself admitted to The New York Times that he was treating it as personal income.
Gifford discusses Lance's many business deals with Nike, Radio Shack and others and notes the role LiveStrong plays in those deals. He says:
In a sense, Livestrong and Lance are like conjoined twins, each depending on the other for survival. Separating them—or even figuring out where one ends and the other begins—is no small task. The foundation is a major reason why sponsors are attracted to Armstrong; as his agent Bill Stapleton put it in 2001, his survivor story “broadened and deepened the brand … and then everybody wanted him.” But the reverse is also true: Without Lance, Livestrong would be just another cancer charity scrapping for funds.  
In one particular case involving the Haiti earthquake victims, Gifford found the following disturbing account:
Not all the money goes where Livestrong says it goes, however. In January 2010, after the devastating earthquake in Haiti, Armstrong made a personal video statement: to help earthquake victims, Livestrong would give $125,000 each to the charitable organizations Doctors Without Borders and Partners in Health, which it subsequently did. RadioShack also hopped on board, soliciting $538,000 in customer donations for the Haitian cause. According to Livestrong, it gave $413,000 of the RadioShack money to Partners in Health. And the foundation’s 2010 tax form shows a $458,000 donation to the group. But $333,000 of that had been previously allocated to a separate hospital project in Haiti that “had nothing to do with the earthquake,” says a spokesperson for Partners in Health. That means Livestrong used the RadioShack earthquake donations to cover its prior hospital pledge. 
Another questionable action by Lance and Livestrong includes his sale of the Livestrong website. Gifford notes:
Most people are unaware that there are two Livestrong websites. Livestrong.org is the site for the nonprofit Lance Armstrong Foundation, while Livestrong.com is a somewhat similar-looking page that features the same Livestrong logo and design but is actually a for-profit content farm owned by Demand Media. 
We've discussed this before at this link so I won't review it again here. I will say that I believe it potentially reveals Lance's moral compass and how he views Livestrong. Donors should ask if the foundation is a way to build power and wealth or a way to fight cancer.

In the end, I think the following quote sums up what many unbiased and informed donors to Livestrong ought to be thinking about Livestrong:
“It’s going to have a huge impact,” says Michael Birdsong, a former Livestrong supporter, now disillusioned, who estimates that he has given $50,000 to Livestrong over the years. “Who wants to support a foundation that was founded by a cheater? Not only a cheater, but a person who lied about it.”
Unfortunately, fraud leaves a wake of pain and suffering, even when the fraud perpetrator tries to do something good so as to either salve his conscience or to hide his true character.

23 comments:

  1. The Outside article is a good example of the morphing of print media (media; not journalism) into the paper version of reality TV and the proliferation of entertainment profiting from drama and conflict in our society. The article does this with very little facts.

    How does this article do this?

    Let’s count the ways. The author:

    (1) inserts references to Greg Mortenson and Barry Bonds very early on in the article to imply similarly bad behavior by Lance and essentially skew the reader’s perspective toward the conclusion that Lance engaged in ethically questionable and perhaps criminal behavior;

    (2) uses the presence of government investigations as a basis to imply or even conclude guilt;

    (3) uses references to Lance’s wealth in negative terms (off to the Aspen house, etc.), seemingly to instigate jealousy or perhaps suggest that his level of income could not have been obtained legitimately and/or that Lance’s priorities are misguided;

    (4) tries to appear objective by agreeing that the foundation’s financial records support Lance’s and the company’s assertions; perhaps the reader then would be more likely to agree with the more specious aspects of the article;

    (5) uses the public’s misperception about the organization’s mission and activities against the organization, even when the organization itself fought to dispel those misperceptions;

    (6) downplays the positive aspects of the organization’s mission and accepts as a universal truth that the money its raise could be better spent on research, without fully establishing the basis for that conclusion;

    (7) implies that because the foundation’s money could be better used, Lance is a bad man;

    (8) implies that Lance has to engage in bad acts now because the foundation’s influence is waning along with Lance’s pro bike career;

    (9) concludes that because the foundation is hip in terms of its facilities in Austin its operation as a whole must be shallow or of questionable nature;

    (10) minimizes the conclusions of the organizations that rate foundations like Livestrong, who certainly are in a better position to make the very conclusions that this article presents;

    (11) implies that Lance should work for free or donate all of his income to the foundation, and because he does not he’s a bad man; and

    (12) concludes or wants the reader to conclude that because Lance benefits from the foundation there must be foul play, even when almost everyone who starts such an organization benefits from it, including reputation, influence, community standing etc.

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  2. mjohnburns, I noticed your profile was just created this month and that it doesn't say who you are. I'm curious to know what connection you have to Lance, Livestrong or Lance's legal/defense team.

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  3. I have no connection whatsoever with Lance, any of his organizations or any organization associated or connected with him. I am just an objective reader, who reads closely. I find it curious (that you're curious) that you first question my affiliation before seeking to refute any of my points.

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  4. I never had the idea that the LAF was actually funding Cancer research; to the extent that it claims to, perhaps there's a valid criticism. But what the LAF has done, for many of my customers who have battled and continue to battle with cancer, is provide them with an advocate that's a phone call away. You want to know who the cancer specialists are in your area? Call the LAF. You want to get connected to programs for cancer patients? Call the LAF. You want someone to talk to about your treatment other than your doctor or friends or relatives? Call the LAF.

    I think LAF's primary benefit to the cancer community is to make patients more comfortable dealing with their situation. In a sense, and this is where things get looked at in a bad way, they have popularized, almost commercialized cancer. Just as Bob Dole may have broken the ground for ED discussions, the LAF has made many people more active in looking at their alternatives and dealing with their situation in general. None of that falls under "research" but definitely improves living with cancer and possibly even cure rates (as people deal more effectively with their disease, using existing options).

    Does the LAF benefit Lance's image? Absolutely. Are decisions made to maximize that benefit? For good and bad, yes. The "bad" would be intentional use of the LAF as a shield against the various doping charges being made. The "good" would be that having a popular icon and cancer survivor as your namesake improves message deliverability.

    It sucks to be in the middle of a brewing doping scandal and media frenzy, but it probably sucks worse to be a cancer patient without a friendly voice at the other end of a call to the LAF.

    Thanks-
    Mike Jacoubowsky, Partner, Chain Reaction Bicycles
    (disclosure: Trek bicycle dealer, so yes, we did benefit from the Lance effect when he won his first several tours. That effect arguably wore off somewhat and became more generic to cycling in general as the years went on)

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  5. mjohnburns, your comments really don't leave anything for anyone to refute since your claims are generally what the author was trying to imply. It's like me saying that your comments are trying to imply that you think Gifford's article is completely biased and that Lance is completely innocent, a saint and should be worshipped as a hero. I can't really support that assertion and nobody can really refute it.

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  6. @MZ: So I guess you agree with my conclusions about what was implied in the article? In other words, that the article was a hack job masquerading as journalism.

    By the way, I never said that Lance is a saint or that he was innocent. I have no idea. This article certainly did not shine any light on those issues. Some regulatory body or jury may determine that Lance doped or is guilty of misdeeds. My real concern, and why I posted, is the integrity of what passes as journalism today, as it is one the principle parts of the foundation of our democracy in this country. Every time pieces like this pass as journalism, the foundation of our democracy suffers.

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  7. @ mjohnburns

    Or is it bernardo chamois?

    In any case, your post(s) sure make use of transitive verbs -- Imply, suggest, conclude, downplay, tries -- to the point that you come off in the same manner that you are criticizing of the Outside article. You're post is *implying* as much about the article as the article is about LA and his organizations.

    For good or for bad, I have known LA and have been involved w/ cycling since the mid-80's and know first hand and through close cycling industry acquaintances the sorted character and actions LA has exhibited over the years. For the average person, these insights are not in their public purview. (Yes, how could they possibly know of his philandering, bullying, and ways?) Instead, it's articles like Mr. Bill Gifford's that bring some questions to light. In short, as the old saying goes, where there is smoke there is fire.

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  8. @bicimucho: Where I live those actions (philandering, etc.) are not criminal. Next time you trip up ethically, but not criminally, I hope you don't get charged criminally and if so have a good attorney. Also, I hope you never serve on a jury. I am not a journalist. Nor do I pass myself off as one. My comments go to the journalistic quality of the piece as a reader.

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  9. @mjohnburns: How do you interpret Mark’s comment as agreement? Despite your claims otherwise, you sure appear to have an agenda. Despite my feelings that this is a colossal waste of my time, I have addressed each of your arguments below. In sum, I find no basis for your claim that the article is a, “hack job masquerading as journalism.”

    (1) Lance is being accused of similar behavior. These accusations are not some pipe dream of the author, instead, they are sufficient to warrant a federal investigation.

    (2) I don’t get the sense of implied or concluded guilt. There may be an implied possibility of guilt, but isn’t that why you have an investigation? Also, just because we have a legal standard the emphasizes innocence until guilt is proven does not mean we should assume innocence despite a significant amount of evidence that implies guilt. If I am deciding whether or not I want to look up to someone as a role model or offer financial support to a charity, I am generally going to assume that fire accompanies smoke. To give a more extreme (but relevant) example, if a daycare is accused of child abuse by multiple parties who have very little to no incentives to make those accusations, I’m sure not going to wait until the trial is over before I take my kids elsewhere.

    (3) You seem to be the one going out on a limb in making assumptions about the intentions of the author. I don’t see intentions to “instigate jealousy” or otherwise inappropriately sway the reader, and I don’t find references to Lance’s financial position inappropriate in an article that considers how Lance may have benefitted (financially and otherwise) from LiveStrong.

    (4) Apparently the author just can’t win. The author includes facts and agrees that some of those facts support a view opposite of the bias you accuse the author of having and to you this is clearly an attempt to fool the reader into a false sense of objectivity? You claim to be motivated by a desire for journalistic integrity, but you sound like someone working for a Lance-sponsored PR firm. The nature of your arguments is increasingly contradictory with the premise supposedly behind your criticisms.

    (5) The author gives examples about how actions taken by Lance have perpetuated misperceptions about LiveStrong…

    (6) I’m getting confused. In your fourth point, you claimed that the author was agreeing with Lance and LiveStrong about positive aspects of the organization’s mission. Now those positive aspects are being downplayed?

    continued below...

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  10. (7) Where is this coming from? You seem to be making a hyperbolic leap here. Also, if the foundation’s funds and/or image is being misused (as opposed to poorly managed), doesn’t that say something about Lance?

    (8) I’m not even sure what you are talking about here…

    (9) Where does the author make that conclusion?

    (10) I find this criticism especially laughable. In financial markets, it would be absurd to attack an investigative journalist for writing a critical piece about a company simply because the debt ratings agencies rated that company AAA or the auditors signed off on the financial statements. Journalists actually expose a fair amount of financial statement fraud because ratings agencies, auditors, regulators, etc. can’t reasonably investigate everything in every company. Why would we expect the rating of charitable organizations to be different?

    (11) If people are going to defend Lance by citing his work with LiveStrong, they should understand the true nature of his role at LiveStrong. The public generally tends to treat Lance’s association with LiveStrong as a purely charitable action on Lance’s part. The author highlights that Lance’s involvement is not purely charitable. I don’t see how that is inappropriate, or how it implies that Lance is a bad man (again with the hyperbole!).

    (12) Right, like all the fame and influence that went to the founders of organizations like United Way, the American Cancer Society, YMCA, etc.… Further, once again, you seem to be drawing conclusions that don’t appear to be intended by the author.

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  11. The main thing I noticed about the article is that the author seems to have an assumption that a cancer foundation should raise money for research and that using the money for other purposes is basically a waste. With a background in research, I can certainly understand putting fundation money towards other purposes that benefit cancer patients since NSF and NIH pour a lot of money into research. Also, I think Lance feels that "alternative" treatments (diet, vitamins, attitude) helped his battle against cancer in addition to chemo and various "western" treatments.

    Another thing about the article was that it seemed to me that the author was trying to make the case that 1. Lanced doped, 2. Bad people dope, 3. Bad people do bad things. So it seemed the author viewed everything through the lens of "Lance does bad things." While it seems 1 is true, 2 and 3 are certainly up for debate.

    Finally, I agree with mjohnburns on just about everything he? wrote. The article was poorly written from the viewpoint of traditional journalism. I think Gifford would have a better article if he just stated his opinions as opinions and presented facts separately rather than trying to color the facts to sway the reader to think Lance is a bad person.

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  12. The article may have its flaws, but there is ever-growing evidence to support its basic premise: that Lance Armstrong doped, that his competitive successes were a fraud, and that he has lied about this endlessly. These are hardly the right qualifications for someone who leads a charitable organization. Please, don't tell me that he never failed a drug test (which is incorrect anyway); even if it were true, this is more a testament to the inadequacy/incompetence of testing, not his innocence. Besides, passing doping tests only means that you may continue to compete -- not that you are entitled to an inexhaustible supply of the benefit of the doubt, or are free and immune from any sort of suspicion or accusation.

    Regarding the livestrong.org/livestrong.com aspect, consider:

    http://www.livestrongfitness.com

    This is apparently a commercial, for-profit enterprise, and its sales do not benefit livestrong solely. This is a deceptive and higly questionable use of the livestrong trademark, which was established as a non-profit organization.

    Charles Howe

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  13. Investigation dropped. No charges against Lance Armstrong. You may want to rethink your conclusions.

    http://hosted.ap.org/dynamic/stories/C/CYC_DOPING_ARMSTRONG?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

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    Replies
    1. Hum, NEW charges against Lance. You may wish to rethink YOUR conclusions.

      http://online.wsj.com/public/resources/documents/armstrongcharging0613.pdf

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  15. Here are my conclusions:

    http://fraudbytes.blogspot.com/2012/02/lance-armstrong-investigation-what-did.html

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  17. “I think Livestrong did some good through the years but I also agree it was basically a smoke screen for the fraud that is Lance Armstrong. He used the power of Livestrong and its legal resources to squash anyone who thought to expose or confront him.”

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  18. Great that the myth of the sociopathic fraud Armstrong went up in flames for all to see.

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  19. mjohnburns...mjohnburns...mjohnburns...you still alive. Waiting for an update.

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  20. It's obvious, that he has his minions, some might be paid, some are cult followers. He created a monster, now he's starving it and it turned against him.

    Great article!

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