NEW ORLEANS – After investigators found that two high-profile claims in the BP oil spill case were based on fraudulent tax documents, the man tasked with paying settlements says he has no plans to routinely authenticate IRS filings of claimants prior to cutting a check.
Patrick Juneau, the court-appointed claims administrator in the massive Deepwater Horizon oil spill case, said he is under no obligation to verify IRS tax data and will not do so as a matter of course. Juneau said the settlement agreement struck by BP PLC and senior trial lawyers in the case does not require him to do it.
“Where we think there may be a flag in the case… [we] go verify that they have a filed tax return, but that is in addition to what the parties agreed to in the [settlement] declaration,” Juneau said. “The [claimant] asserts and verifies in a sworn declaration that what [they] are telling us is correct and the documents that [they] have given us are correct. So we take that information and process that information.”
In late July, BP and the senior trial lawyers in the case agreed to the implementation of Policy 70 v.2, which gives Juneau the right – but not the obligation – to verify Internal Revenue Service (IRS) tax documents that are submitted as proof of income with any claim.
BP has long complained that Juneau’s office does far too little to combat fraudulent claims and says that fraud has cost it some $500 million. BP’s website (thestateofthegulf.com) says that at least 192 claimants have been flagged in connection with fraudulent claims and many of these cases are alleged to involve phony tax documents.
Louis Freeh, who was appointed last year to investigate the operation Juneau oversees, has instituted "clawback" proceedings to require the return of claims by two Louisiana commercial fishermen who filed unrelated claims. In both cases, the fishermen, Casey Thonn and Jarrod Burrle, provided tax return documents that were never actually filed with the IRS. Thonn’s claim was for $357,000, while Burrle’s claim was for $53,000.
Freeh has asked that both men and their lawyers, the law firm Andry Lerner LLC of New Orleans, be required to pay back the settlement.
In both cases, Freeh expressed surprise that either claim made it through the process. In addition to allegedly filing false tax documents, Burrle also filed accompanying claims paperwork representing that each member of his family ate five pounds of crabs, three pounds of shrimp and two pounds of oysters every day in the year leading up to the 2010 Deepwater Horizon disaster.
In the case of Thon, Freeh said in a report to the court that it exhibited “fraudulent characteristics.”
“This finding clearly shows that [Juneau’s claims center] needs to apply closer scrutiny and sound anti-fraud and business practices review to such claims,’’ Freeh’s report said.
Daniel Becnel, a LaPlace-based trial lawyer who represents numerous claimants, said he routinely refuses to represent people who show up with suspicious paperwork.
“I turned down more of those cases than I can shake a stick at. People would come to me and say ‘I can create some books’ and I would say thank you, but no thank you. I can’t represent you – that is fraud,” he said.
Becnel said verifying the tax documents should be a basic part of Juneau’s job.
“That is what [his] job is, to verify,’’ Becnel said. “You’ve got to verify it.”
Juneau defended his office regarding the Thonn and Burrle claims and said his office didn’t err by paying them.
“They didn’t fall through the cracks,’’ Juneau said. “With me being at the head of the post, I don’t want any fraud claims. It is offensive to me to say ‘you are not concerned with fraud?’ Are you kidding me? What universe were you born in? Are we concerned with fraud? Yes we are.”
Juneau said a certain amount of fraud is to be expected in a case as big as Deepwater Horizon.
“But is the question: Is there rampant fraud or complete lack of attention to duty? I don’t believe that,’’ he said.
BP has filed a motion to have Juneau removed from the case, in part because the company says he has no interest in policing fraud in the program. Company spokesman Geoff Morrell said Juneau’s refusal to verify IRS data in all claims cases “is completely indefensible, particularly in the face of well-documented instances of fraudulent claims involving false or incomplete ones.”
“Unfortunately, it is entirely consistent with what we see as the claims administrator’s repeated failure to exercise basic due diligence,” Morrell said.