The case was initiated by former cyclist and Armstrong teammate Floyd Landis under the False Claims Act. At issue is whether Armstrong and others defrauded the U.S. Postal Service of around $30 million when it sponsored his team.
The Wall Street Journal first reported the Justice Department's recommendation.
Armstrong has sought a reconciliation with Landis as part of his overall strategy in confessing to using performance-enhancing drugs, two people with knowledge of the situation told USA TODAY Sports. The people requested anonymity because they were not authorized to discuss the situation publicly.
So far, the reconciliation attempt has not been successful. Landis has been hostile to Armstrong because of his former teammate's previous attacks against him. Landis was among the first to accuse Armstrong of doping, prompting Armstrong and his attorneys to fire back and portray him as a fraud.
Armstrong, who was stripped of his seven Tour de France titles last year, confessed to Oprah Winfrey on Monday that he doped during his career, one of the people said.
Landis has previously admitted to doping and lost his 2006 Tour de France title.
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