NEW ORLEANS – The investigation into fraudulent claims stemming from the Deepwater Horizon Court Supervised Settlement Program appears to be heating up.
Within the span of one week Special Master Louis Freeh asked the court to require three more claimants to return hundreds of thousands of dollars worth of award monies they received from the program, which were based on false tax information. This is in addition to four other cases Freeh previously addressed in court filings.
Last week Freeh, a former FBI director who was appointed by the court to root out fraud, asked the court to mandate that Jimmy Shoemaker Jr. of Pass Christian, Miss. to return $168,692 he received, saying the fisherman falsified IRS forms specifically designed to defraud the settlement trust fund.
Freeh’s investigation also targeted purported oysterman Bobby Lambert Sr., of Mobile, Ala., who is similarly accused of using fraudulent tax returns to receive a $172,596.85 claim.
And there is Wardell Parker, of Port Sulphur, La., who allegedly made false statements that his 2009 income came from shrimping revenue rather than his job as a mechanic. Based on these false claims, Parker collected $238,84.32 from the program.
Lambert’s claim was filed by Gerard Nolting, with the Minneapolis-based law firm Faegre Baker Daniels, the same attorney who filed Shoemaker’s claim. Nolting died in 2012 shortly after filing both claims. Faegre Baker Daniels returned a $43,149.21 fee they received for handling the Lambert claim as well as a $42,173 fee they received in the Shoemaker claim.
Freeh found Lambert did not file tax returns with the IRS in 2007 or 2009, and he fraudulently altered a 2008 tax return that he submitted to the Deepwater Horizon Economic Claims Center (DHECC).
Although Lambert made claims that he had made $70,108 in 2007, $67,041 in 2008 and $57,340 in 2009 from oyster sales, Freeh could only find that he had sold $3,106 worth of oyster to Pass Purchasing in 2009, and no records were found for the years prior.
“While he submitted documentation to show that he earned some oyster income, those records do not show that he earned anywhere near the oyster revenue he claimed to the DHECC. Lambert also submitted forged trip tickets from Pass Purchasing, further evidencing his intent to defraud the DHECC. Taken together, these factors indicate that Lambert’s claims were fraudulent,” Freeh’s filing states.
Parker’s claim was filed by accountant Kyle Frazee of Houston, Texas-based law firm Danziger & De Llano LLP who have also been requested to return their part of the claim amounting to $59,671.08.
In his motion to compel claimants to return damage awards which were fraudulently collected, Freeh mentions comments made to the DHECC by an unnamed staff accountant that were figured into how Parker’s claim was handled.
“A staff accountant working at the law firm representing Parker submitted a letter to the DHECC supporting Parker’s claims, stating that ‘because of the amount of shrimp sold stated in the sworn written statements submitted with this claim, we believe it can be determined that all income claimed on the tax return came from shrimping revenue,” the filing states.
In fact, Parker maintained that he netted 45,000 pounds of shrimp from his 22-foot vessel that he sold between May and December 2009. However, Freeh found that Parker could in fact not produce any evidence regarding trip tickets relating to shrimp sales from 2009 that would have amounted to, according to Freeh’s investigation, between $135,000 and $225,000 in sales. In addition, those who signed statements regarding personal shrimp sales later refuted that they had made weekly shrimp purchases from Parker. In the end, Freeh found that Parker should not have been eligible for any claims funds.
Freeh said the submission of Parker’s claim by Danziger & De Llano LLP came as a result of a complete disregard for professional standards.
“This representation was made without regard to supporting documents for Parker’s return and plain inconsistencies in Parker’s claim. Professional standards require a reasonable inquiry into facts submitted to the DHECC, which did not appear to happen here,” Freeh’s filing states.
Earlier this year Plaintiffs’ Steering Committee member Steve Herman filed a memo with the court asking that fishermen who file fraudulent claims not be treated as criminals.
“The purpose is not to ‘catch’ people, but to validate legitimate settlement program claims,” Herman’s memo said.
In previous court filings BP has suggested that the Seafood Fund, where these fraudulent claims have been uncovered, is rife with false claims. Despite those concerns and mounting evidence of fraud, U.S. District Judge Carl Barbier, who is overseeing the Deepwater Horizon case, last month approved a new $500 million disbursement into the Seafood Fund.
BP did not comment on the latest clawback requests.