Lawyers Plotted to Corrupt BP Oil Spill Settlement Program, Probe Finds

Fire boats battle an explosion at the off shore oil rig Deepwater Horizon
Alamy
By CHEVEL JOHNSON and MICHAEL KUNZELMAN

NEW ORLEANS -- An independent probe led by former FBI Director Louis Freeh found evidence of a plot by lawyers to "corrupt" the BP (BP) settlement program but nothing that warranted shutting down payments to victims of the company's 2010 oil spill in the Gulf of Mexico, according to a report issued Friday.

Freeh, who was appointed by a federal judge to investigate alleged misconduct by a staff attorney who worked on the settlement program, cleared court-appointed claims administrator Patrick Juneau of engaging in any "conflict of interest, or unethical or improper conduct."

But the former FBI director concluded that top members of Juneau's staff engaged in conduct that was improper, unethical and possibly criminal. He recommended that his report be forwarded to the Justice Department.

"The nature and seriousness of this type conduct varied in degree but was pervasive and, at its extreme, may have constituted criminal conduct," the report said.

Juneau said Freeh's report validates his team's work, and he played down the alleged misconduct by two former members of his staff as an "isolated situation."

"We will continue the job of processing claims," he said in a statement. "We welcome the recommendations from the Freeh report and we look forward to working with him to help improve all aspects of the claims process."

BP spokesman Geoff Morrell said the report "confirms what BP has suspected for some time: there has been fraud and unethical conduct within the facility itself and among various claimants and their lawyers -- and immediate steps need to be taken to prevent it in the future."

"The evidence of conflicts of interest and misconduct assembled in Judge Freeh's report is shocking, but it simply underscores that neither BP nor the public has had any idea of what's really going on within the [settlement program]," Morrell said. "Judge Freeh's continued investigation is essential to assuring public confidence in the integrity of the claims process."

Two of the lead plaintiffs' lawyers who brokered the settlement with BP last year said Freeh's report "confirmed what we knew to be true all along: that Patrick Juneau has, for more than a year, led the Court-Supervised Settlement Program with integrity, transparency and objectivity."

"It is a testament to Mr. Juneau's running of the program that Judge Freeh's recommended that the Settlement Program continue paying claims unabated, with Juneau at the helm," the attorneys, Stephen Herman and Jim Roy, said in a statement.

While the report points to certain conduct within the program as problematic, Freeh said, "this should not prevent the [settlement program] from fairly and efficiently processing and paying honest and legitimate claims in a timely manner."

It also found that two private attorneys -- Glen Lerner and Jon Andry -- used Lionel Sutton, a lawyer on Juneau's staff, to expedite a claim by their firm for nearly $8 million. In return, Sutton received more than $40,000 in fees from payments on claims he had referred to their law firm before joining Juneau's staff, the report says.

Freeh recommended turning over his report to the Justice Department and the U.S. Attorney's Office for the Eastern District of Louisiana to determine whether Sutton, Lerner, Andry or Sutton's wife Christine Reitano, who also worked as a lawyer on Juneau's staff, violated any federal laws "regarding fraud, money laundering and conspiracy."

Freeh also recommended that the court consider disallowing the $7.9 million payment of The Andry Law Firm claim based on "long-held principles of equity which prohibit a party before the court to benefit and enrich itself after having engaged in dishonest, unethical and improper conduct."

"In this matter, the conduct of The Andry Law Firm is particularly egregious," the report said. "In effect, Mr. Jon Andry's AndryLerner firm was making secret, improper payments to Mr. Sutton at the precise time Mr. Sutton was a senior CAO attorney, working in concert with Mr. Jon Andry to expedite payment of The Andry Law Firm claim."

Michael Walsh, an attorney for Lionel Sutton, said Freeh's allegations about his client's conduct possibly warranting a criminal probe are "absolutely unfounded."

"There was no criminal activity on Mr. Sutton's part," Walsh said. "If Mr. Sutton had done anything criminally wrong, he would not have cooperated with Mr. Freeh."

James Cobb, a lawyer for Andry, said his client hasn't done anything wrong and doesn't deserve to be smeared by Freeh.

"It appears to me that Mr. Freeh reached a conclusion first and then worked his way backwards, citing facts which are unsupported in the record," Cobb said.

Lawyers for Lerner and Reitano didn't immediately respond to emails seeking comment.

Sutton resigned from his job at the settlement program in June. Reitano was fired later the same month. She has demanded to be reinstated, saying she didn't do anything wrong.

BP had asked U.S. District Judge Carl Barbier to suspend all settlement payments to businesses and residents pending the outcome of Freeh's investigation, but the judge denied that request on two separate occasions.

Freeh's probe isn't over. His report said his work is "ongoing" and will result in recommendations for strengthening the settlement program's operations and anti-fraud measures.

In April 2010, the oil drilling rig Deepwater Horizon exploded off the Louisiana coast, killing 11 workers and leading to millions of gallons of oil being spewed into the water. Marshes, fisheries and beaches from Louisiana to Florida were fouled by the oil before the well was sealed.

BP set up a compensation fund for individuals and businesses hurt by the spill and committed $20 billion. Juneau took over the processing of claims after the settlement was reached last year.

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45 Comments

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sfbarsky

\"I seen my opportunities and I took \'em.\" George Washington Plunkitt.

September 08 2013 at 11:35 AM Report abuse rate up rate down Reply
Welcome Bobbie

Greedy and Corrupt lawyers ? I can't believe that any one of them would ever stoop so low to do things like that. What is this world coming to and can we trust anyone?

September 08 2013 at 11:21 AM Report abuse rate up rate down Reply
mily469

the corruption and rot is so pervasive in all levels of society today it will take generations to change. greedy sociopaths for some reason seem to be calling all the shots today. why do we allow this?

September 08 2013 at 9:06 AM Report abuse -1 rate up rate down Reply
toosmart4u

If you are on social security and medicare thank a democrat. If you want to end these two fine programs vote republican.

September 08 2013 at 3:22 AM Report abuse rate up rate down Reply
toosmart4u

We must remember the oil companies enjoy a 5 billion tax deductions. Exxon-Mobile received 187 million dollar IRS check last year, we should also know they paid zero income taxes. They will claim the taxes paid out of employees payroll taxes as taxes they paid.

September 08 2013 at 3:21 AM Report abuse -2 rate up rate down Reply
2 replies to toosmart4u's comment
Mark Boknecht

I don't know where you get your "facts" from. Exxon tops the lists of corporations paying the most in income taxes -- $31 billion. That's billion with a B. Oh and don't forget all of those high quality jobs -- scientists, geologists, engineers, accountants etc. And, like most oil companies, provide a high dividend yield for the pensions of retired teachers and fireman. And, if you or a family member are on govt. assistance, you might want to show a little gratitude. These companies that you so vilify, help pay for that govt. assistance.
Too smart? I think not.

September 08 2013 at 6:21 AM Report abuse +2 rate up rate down Reply
mily469

very true.

September 08 2013 at 9:08 AM Report abuse -1 rate up rate down Reply
1 reply to mily469's comment
mily469

o man you did not just quote me a usa today article for real?

September 08 2013 at 9:19 AM Report abuse rate up rate down
snmfx

Let me guess...the lawyers are JEWS...one of the many evil PEACEFUL religions on Earth.

September 08 2013 at 1:34 AM Report abuse -3 rate up rate down Reply
1 reply to snmfx's comment
mikeradbks2

my grandad's is in the schmatta business--need a new Klan uniform?

September 08 2013 at 8:23 AM Report abuse +1 rate up rate down Reply
dquandle

It couldn't be corrupted more than it is already, with BP getting away with mass murder

September 07 2013 at 11:02 PM Report abuse -2 rate up rate down Reply
rtpconstruction

my father , RTP, was the person responsible for submitting his design and specs, to BP & the white house to cap the well. There was a news conference the night my fathers idea was reviewed, stating they had a possible way to stop the well. They made it, used it, it worked. The cap save countless $$, jobs,and wild life. He received no recognition or compensation. He was told he should have asked for that before he submitted his idea. He is now 80 years old failing health
and very bitter. He is a person very well deserving of compensation.

September 07 2013 at 8:42 PM Report abuse +1 rate up rate down Reply
1 reply to rtpconstruction's comment
DENNIS

from who????

September 07 2013 at 10:09 PM Report abuse +1 rate up rate down Reply
doug

Holy smoke, who wudda thought that lawers could be dishonest, greedy and sneeky and lie! Surprise surprise! I still wonder what th slimy ones tell their children as the kids are growing up, about honor, honesty, fairness and responsibility?

September 07 2013 at 7:03 PM Report abuse +1 rate up rate down Reply
1 reply to doug's comment
Larry Lang

Nuthin

September 07 2013 at 8:17 PM Report abuse rate up rate down Reply
pdbliz

First of the month,,,,,,go to your local grocery store parking lot.!!!!!
EBT CARDS,,,,,,WITH PIN NUMBERS.......If you do not want a card.....just tell them,,how much you want and how much....
Buy anything you want from the welfare person,,,,,,,uncle sam is the supplier.!!!

September 07 2013 at 6:17 PM Report abuse -3 rate up rate down Reply