Lawyers Face Fraud Probe Over Roles in BP Spill Claims
A federal judge overseeing the Deepwater Horizon litigation has found no evidence that conflicts of interest tainted the claims process in the $9.6 billion settlement, but ordered four lawyers to explain why they should not be disqualified from representing oil spill victims.
Additionally, a special master has referred those attorneys to federal authorities for potential criminal investigation.
U.S. District Judge Carl Barbier in New Orleans, citing the special master’s report, concluded on Friday that the settlement distribution process was fair, despite some "problematic" behavior by former employees and vendors working for claims administrator Patrick Juneau. The 93-page report, conducted by former FBI director Louis Freeh, was made public on Friday.
"The Court notes that the Special Master has not found any evidence that the Claims Administrator, Patrick Juneau, engaged in any conflict of interest, or unethical or improper conduct," Barbier wrote. "The Special Master also did not find any evidence that Claims Administrator Office officials or employees manipulated the valuation of claims, although a comprehensive examination of this issue was not part of the Special Master’s mandate."
But Barbier ordered Lionel "Tiger" Sutton III and his wife, Christine Reitano, both former senior attorneys for Juneau, to demonstrate within 14 days why they should not be disqualified from representing oil spill claimants because they accepted fees for a client that they referred to The Andry Law Firm in New Orleans.
He issued the same order against The Andry Law Firm regarding a $7.6 million claim for its own losses, and against Jonathan Andry, part owner of The Andry Law Firm and principal at another law firm, Andry Lerner, whose 489 oil spill clients had their claims payments frozen pending the investigation, as well as Glen Lerner, the other principal of Andry Lerner.
The judge did not expand on his order, but Freeh found that Sutton, Reitano, Lerner and Andry may "have violated the federal criminal statutes regarding fraud, money laundering, conspiracy or perjury." The report recommended that the findings pertaining to the four attorneys—all graduates of Tulane Law School—be referred to the U.S. Justice Department and the U.S. attorney’s office for the Eastern District of Louisiana for further investigation and to "the responsible professional bar committees in their licensing jurisdictions."
"In this matter, the conduct of The Andry Law Firm is particularly egregious," Freeh wrote. "In effect, Mr. Jon Andry’s Andry Lerner firm was making secret, improper payments to Mr. Sutton at the precise time Mr. Sutton was a senior … [claims administration] attorney, working in concert with Mr. Jon Andry to expedite payment of The Andry Law Firm claim. The undisclosed financial interest between Mr. Sutton and Mr. Jon Andry tainted and corrupted the integrity of the…[claims] process and payment of The Andry Law Firm claim should therefore be prohibited under the Unclean Hands Doctrine and well settled principles of equity, fairness and justice."
Such disqualification also should apply to Sutton, who helped expedite the payment to The Andry Law Firm while receiving referral fees from Andry Lerner, Andry and Lerner, Freeh said, and to Reitano, who denied any involvement despite helping arrange those payments.
Juneau praised the report’s findings in a written statement. "I found the Freeh report to validate the work that our team of 2,700 hard working professionals has been doing since June 4, 2012," he said. He called the actions of Reitano and Sutton isolated events.