Bisceglia files suit

Former USA Cycling CEO names board and Ochowicz in wrongful dismissal suit

Former USA Cycling CEO Gerard Bisceglia has filed a wrongful-termination suit against the governing body and its board chairman, Jim Ochowicz.

In a complaint filed earlier this week in El Paso County District Courtin Colorado Springs, Bisceglia alleges that his dismissal in Aprilwas in violation of USA Cycling’s own rules and came as a resultof his efforts to investigate a conflict of interest involving direct paymentsto Ochowicz from professional teams and promoters.

USA Cycling officials declined comment when contacted by VeloNews on Friday.

“USA Cycling will not comment on the details of Mr. Bisceglia’s claims due to the pending legal action,” said Mark Abramson, vice president of USA Cycling’s board of directors and chairman of the organization’s CEO Review Committee. “We believe his claims are baseless and without merit. USA Cycling will vigorously defend itself against these claims; and we are confident that USA Cycling has more than fulfilled its obligations to him under the terms of his employment contract.”

In his suit, Bisceglia charges that Ochowicz took advantage of his position on theboard to charge a Swiss promotions firm for connecting it with a USA Cyclingsponsor seeking to branch out to international events.Bisceglia’s complaint alleges that Ochowicz negotiated an annual $20,000″finder’s fee” with Upsolut, the promoter of the Zürich World Cup,for putting the marketing director of U.S.-based BMC software in touchwith the race organization. BMC sponsored the event for three years, eachof which generated $20,000 in payments to Ochowicz from Upsolut. Details of the arrangement were kept from both USA Cycling and BMCSoftware, Bisceglia says.Bisceglia claims that the fees should not have been paid, since Ochowiczwas merely acting in his role as a member of the USAC board and not asa private consultant.“When Ochowicz’s advice was sought about BMC’s interest in sponsoringa race in Europe, and he referred Upsolut to USAC, he was acting on behalfof, and, presumably, for the benefit of USAC,” the complaint alleges. “Ina letter of August 9, 2004, the board admitted that Ochowicz had ‘facilitated’the ‘USAC/Upsolut agreement.’ By negotiating a finder’s fee from Upsolutfor that referral, he acquired a material benefit from a third party inconnection with transactions conducted or other actions taken on behalfof USAC or otherwise through the use of his position.”Bisceglia alleges that he discovered the arrangement only in the courseof a casual conversation with another member of USA Cycling staff. Oncehe did, he demanded that the chairman disclose the arrangement to the restof the board.“Ochowicz did not disclose his finder’s fee to the board until he wascompelled to in mid-2004, when Plaintiff and USAC’s general counsel toldhim that either he or one of them would inform the board about it immediately,”the complaint alleges.Bisceglia charged that Ochowicz was in apparent violation of USA Cycling’sown bylaws, which require all board members “to complete and sign a Conflictof Interest Disclosure Statement [set out in an Appendix]. Completion ofthis Statement is a prerequisite for participation with USA Cycling.”Ochowicz subsequently amended his disclosure statement to include thearrangement with Upsolut.The board did call for an independent investigation and then retroactivelyapproved the arrangement (see “USACycling retroactively absolves Ochowicz in conflict-of-interest case”– November 9, 2004).Bisceglia’s complaint further alleges that the decision to endorse theOchowicz/Upsolut arrangement and approve the amended disclosure statementdid not “reflect the judgment of a ‘disinterested’ board. According tothe letter, the board did not even find that the finder’s fee was fairto USAC. Ochowicz did not act in good faith with the board; he delayedfulfilling his disclosure obligations for 2 1/2 years, and then onlybegrudgingly.”Ochowicz also maintained an ongoing consulting relationship with the former Phonak cycling team, an arrangement Bisceglia said was in conflict with his duties as a the North American representative on the UCI’s Pro Council.Bisceglia declined to comment on the suit when contacted this week. In an interview with VeloNews last April, Bisceglia said he was required by law to raise the issue. Nonetheless, he said the decision toraise the issue permanently soured his relationship with Ochowicz and setthe stage for his firing this past April.“Ever since that day, he has not worked with me,” Bisceglia told VeloNews in April. “He has worked against me and, as far as I seeit, has been looking for revenge for what he saw as a slight against himby me. In that situation, by pointing out what I saw was a problem, I wasfulfilling my legal, ethical and fiduciary responsibilities to the organization.He saw it as an attack” see “ExitInterview: Bisceglia speaks – Part 1” – April 8, 2006 and Part2 – April 10, 2006).Bisceglia alleges that BMC Software, too, was unaware of the finder’s-fee arrangement and once that arrangement was disclosed, “BMC stopped contractingwith USAC for sponsorships.”Bisceglia’s suit is directed against both USA Cycling and Ochowicz.Bisceglia claims in approving the decision to fire him, the board violatedthe terms of a written employment contract and failed its implied responsibilityof “good faith and fair dealing.”The complaint further alleges that the board’s response to conflict-of-interestcharge, coupled with his subsequent firing, constituted a violation of the itspublic responsibilities and would serve only to discourage USA Cycling employeesfrom raising ethical concerns in the future.“By discharging Plaintiff for such conduct, USAC compromised and underminedthe efficacy and implementation of those public policies by chilling reasonableemployees from reporting violations of those laws to boards of directorsin the future,” the complaint alleges.Finally, Bisceglia has sued Ochowicz for his role in the firing on thegrounds of his “intentional interference with economic relations.”Bisceglia is seeking economic and consequential damages from USA Cyclingfor the loss of past and future income as well as attorney’s fees and litigationcosts. He also seeks damages for the emotional distress associated withhis dismissal and has asked the court to impose punitive damages againstOchowicz.Ochowicz was unavailable for comment following Bisceglia’s dismissal. VeloNews has again offered Ochowicz the opportunity to respond to charges outlined in the complaint.Bisceglia’s replacement, former chief operating officer Steve Johnson, declined to comment on pending litigation, although he did conduct an interview with VeloNews in April when he took the CEO’s post (see “Thenew boss: A conversation with USA Cycling CEO Steve Johnson” – April12, 2006).

A court date has yet to be set.

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