The suit could require Armstrong to return substantial sponsorship fees and pay a hefty fine.
Justice Department officials were likely to join the suit, an attorney who works outside the government told The Associated Press earlier this week. The person requested anonymity because he was not authorized to speak on the record about the matter.
Levine, the former federal prosecutor, said Armstrong's lawyers would likely push for a "non-prosecution" agreement in settlement talks, one that essentially promises the government won't ever charge the cyclist in connection with the doping probe.
A potential deal also may require Armstrong to provide details about those who were running the doping program, but any revelation might not go very far, Levine said.
"Even if they do get him to cooperate, he's damaged goods," Levine said. "Who is going to believe this guy?"