Bisceglia fires back at USA Cycling

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News feature, November 28, 2006

Did he walk or was he pushed? Whatever really happened to Gerard Bisceglia, the former CEO of USA Cycling and his 'wrongful termination' law suit against his former employers, which has the potential to bust open the inner network of American cycling's powerbrokers. Cyclingnews' Mark Zalewski reports on a case that has ramifications for the sport in its biggest growth market.

The former CEO of USA Cycling, Gerard Bisceglia, filed a wrongful termination civil suit in Colorado earlier this month against USA Cycling and the president of its board, Jim Ochowicz. Bisceglia alleges he was "terminated without cause" - in direct opposition to USA Cycling's announcement that Bisceglia had resigned voluntarily.

Cyclingnews obtained a copy of his suit, and in it, Bisceglia alleges Ochowicz is responsible for removing him from his position, specifically citing an alleged conflict of interest incident involving the president. This is where Ochowicz received $20,000 consecutively for three years as a paid consultant for BMC Software in acquiring the company sponsorship contracts - in this case for the Zurich World Cup from promoter Upsolut Event, GmBH.

The suit also contains exhibits in the form of signed disclosure letters showing an alleged attempt to conceal these facts. The suit alleges that Ochowicz was acting in a conflict of interest since BMC had contracted with USA Cycling to acquire sponsorships, and Ochowicz introduced Upsolut to USA Cycling for the purpose of putting BMC with Upsolut and earning the "finders fee".

Bisceglia claims in his suit he was unaware of these actions until 2003, three years after Ochowicz had arranged the fee. Upon learning of the payments, Bisceglia took actions which he states were required of him by his position - including informing Ochowicz that he would not allow the fee to continue or allow future arrangements with fees to occur. The suit states that, "In response, Ochowicz said something to the effect of, 'After all I have given to this sport I am entitled to the money. You work for me, I don't work for you. You'll see who the boss is'."

The suit goes on to allege that the board of USA Cycling was aware of Ochowicz's actions. Ochowicz signed a disclosure statement and the board apparently retrospectively approved his actions, against the recommendation of Bisceglia. It also states that the board "could have required Ochowicz to turn over the his finder's fee to USAC to help promote the sport of cycling, but was not asked to by the board." The suit finally alleges that Bisceglia's claimed termination was in retaliation for his "objection to Ochowicz's conflict of interest".

Larger issues

This lawsuit - if it does actually go to court - has the potential to uncover what many people believe has existed for years: a network of powerbrokers who weild undue influence over the sport's direction in the USA, and not always seemingly in the best interests of its constituency, ie, American racing cyclists who hold a USAC licence.

While the suit only specifies that Ochowicz is employed by "an investment banking firm in San Francisco", it is widely reported that he is a broker at Thomas Weisel's highly successful investment firm, Thomas Weisel Partners. Weisel is also behind Tailwind Sports, owners of the then US Postal Service and now Discovery Channel Pro Cycling teams, which supported Lance Armstrong to his seven Tour de France wins.

Concern has been raised in the past regarding the make-up of USA Cycling's board of directors, as more positions became occupied by persons with ties to Weisel. This consolidation of power within USA Cycling began when Weisel negotiated three seats on the board of USA Cycling under terms of a 'bailout' agreement with the almost defunct US Cycling Federation in 2000. It continued with the appointment of Steve Johnson as executive director of the USA Cycling Development Foundation (of which Weisel is the president). The foundation raises money to support USA Cycling, providing a significant portion of its operating budget.

A result of Bisceglia's departure was the elevation of Johnson, who was serving as USA Cycling chief operating officer, to become the interim and eventual full-time CEO of USA Cycling.

An article last year in the SF Weekly and another this year in Outside Magazine, both pointed to the potential conflicts of interest and other issues surrounding the leadership of USA Cycling. The SF Weekly article resulted from the USAC's unprecedented response to allegations published in the French sports newspaper, L'Equipe, last August. It reported that lab results showed that urine samples provided by Lance Armstrong during the 1999 Tour de France had allegedly showed traces of EPO (a claim vigorously denied by Armstrong). The French newspaper went further and claimed that the financial and personal links between Weisel, Armstrong, and USA Cycling were a conflict of interest, supposedly demonstrated by USAC's very public criticism of the L'Equipe allegations.

At the time, the USAC issued an official statement about the allegations, with the then CEO Biseglia describing them as "preposterous" (see report). The then COO, Johnson, went further, and told Reuters, "To me, this is an issue for the French people. They seemed very concerned about it, and frankly I don't care what they think. And I don't think Lance does either. This is just a publication in a French tabloid newspaper. That's our perspective."

The inference was that by defending Armstrong, the USAC executives had spoken out of turn; it was considered inappropriate for USAC - it should leave comments about an ongoing doping controversy to the rider, the rider’s spokespeople, and the US Anti-Doping Agency. At the time, Johnson said: "Why would that be a conflict of interest? Explain it to me."

A result of the USAC's public condemnation of the L'Equipe allegations was that the French newspaper was seen as taking an anti-American stance; it was not about Armstrong, but rather, it was the French playing politics and attacking an American hero who'd conquered France's sporting monument seven times.

Speaking of connections, the French newspaper is owned by the same company, Amaury Sport Organisation, that also owns the Tour de France, the race that gave Armstrong his platform to legendary status. It could be said that a business operation of a major French media conglomerate setting out to attack the credibility of a related business defies normal business logic; or, it could demonstrate a separation of the editorial from commercial within ASO.

Waiting until court

In August of last year, it seems that Bisceglia was prepared to toe the party line; speak out in defense of Armstrong and attack the French newspaper for being unethical and unfair. When reached by Cyclingnews after he filed suit, Bisceglia would only say, "Under advice of counsel, I cannot speak about it at this time." Neither Ochowicz or Weisel could be reached or would comment on the record. USA Cycling's spokesman Andy Lee said only, "Since it's an ongoing legal matter we cannot comment on it." And Bisceglia's lawyer was no different: "I really don't want to comment on anything related to this case."

It was only USA Cycling board of directors vice president, Mark Abramson, who returned Cyclingnews' calls that were made to Ochowicz. While he would not comment directly on allegations raised in the suit, he did state generically, "We feel we have more than satisfied the requirements of Gerard Bisceglia's employment contract." When asked generally about the issue of conflicts of interest by the board, Abramson replied, "We have a quite comprehensive governance policy and procedures to deal with conflicts of interest. In the larger sense, USA Cycling is aligning itself due to the Sarbanes-Oxley Act in terms of conflicts of interest issues."

In terms of the broader concerns about the board and its members, Abramson said, "Inherently, people who volunteer at many different levels of cycling love the sport and want to see it go. In my work with the board of directors that comes across loud and clear. I don't get the sense that people are wanting to get on the board of directors to influence it for themselves."

It seems that shedding light on these issues might be part of the suit's intention, with the public backlash to these proceedings already beginning in the form of an online petition calling for the resignations of Ochowicz, Johnson and Weisel along with the reinstatement of Bisceglia. However, the general racing public has seemingly been registering its dissatisfaction with the ways USA Cycling has been run for years, with other competitor-based racing organizations forming on their own, acquiring members and holding their own events outside the control of the USAC. It was not until recently, during Bisceglia's tenure, that USA Cycling's membership began to rebound - even with the success of Armstrong - with the organization posting a six percent increase over 2005 numbers.

The next steps in this process will involve lawyers and motions, and there is also the potential for an out-of-court resolution that could keep the public out of the loop entirely. The Colorado parties have 21 days to respond to the suit, while Ochowicz has 30 days - with motions for dismissal and continuances likely to be the first moves.

Cyclingnews staff contributed to this report.