Texas attorney accused of fraud in representing fake and deceased clients in BP oil spill

NEW ORLEANS – A Texas attorney is being accused of fraud in a lawsuit filed against him by BP who alleges he filed documents on behalf of non-existent and even deceased claimants in the Seafood Compensation Program that provides payments over damage related to the 2010 Deepwater Horizon oil spill.

Of the nearly 43,000 social security numbers attorney Mikal Watts of San Antonio–based Watts Guera LLP provided to the Seafood Fund, supposedly belonging to deckhands impacted by the spill, half are alleged by BP to belong to "phantom" clients.

Following the oil spill, Watts petitioned to get a place on the Plaintiffs’ Steering Committee for litigation against BP. He produced records showing a large volume of clients he already had, which helped him get the appointment to the PSC.

BP claims the $2.3 billion seafood fund was inflated by Watts’ purported clients, which they say comprised of 76 percent of all the claims against the fund.

“The Watts Defendants knew that their representations regarding the number of individual clients claiming seafood-industry losses were false, as over half of their alleged seafood claimants are phantoms or are the victims of identity theft, and as more than 95 percent never filed a claim with the Program,” the filing states.

Of the social security numbers Watts provided to the BP Claims Program, BP alleges that only 42 percent could have their identities confirmed and, 13 percent were incomplete or dummy social security numbers and five percent belonged to a dead person other than the claimant.

BP called Watts’ actions "brazen fraud" and asserts that had the company known when it was setting up the fund that Watts’ client list was tainted it would have set aside much less money for those claimants.

The filing states that of the claimants Watts presented in the settlement he has only filed 648 individual crew claims – less than two percent of the total claimants he alleged to represent – of which only eight have been found eligible for payment.

Through the lawsuit BP is seeking to reduce the size of the seafood fund and suspend further distributions.

The filing also states that there appears to be an ongoing criminal investigation by U.S. Department of Justice over Watts’ handling of BP cases. In March, his law offices were raided by the U.S. Secret Service, who were searching for records related to BP clients.

Watts was accused of discrepancies on the list of clients he submitted to get on the steering committee. Some Vietnamese people claimed they never hired Watts or any lawyer, but found out that claims had been filed on their behalf while others said they believed they were signing up for medical or financial assistance but were actually hiring an attorney.

Shortly after the investigation began, Watts stepped down from the Plaintiffs’ Steering Committee.

No indictments or criminal charges have been filed.

Watts first gained national attention for product liability litigation against Bridgestone/Firestone and Ford Motor Co. In 2005, he obtained a $31 million verdict against Ford for a rollover death.

He was also involved in suits against Merck & Co. pharmaceuticals over the drug Vioxx and one report has estimated Watts has obtained settlements worth more than $2 billion.

Watts is known as a major donor to Democratic candidates. In 2012, he hosted a private $35,800-a-plate fundraiser for President Barack Obama at his home in The Dominion. The 75 guests included Mayor Julian Castro, U.S. Rep. Charlie Gonzalez, former mayor and HUD Secretary Henry Cisneros and actress Eva Longoria, the Express-News reported.

In 2008, Watts briefly made an attempt to run against John Cornyn for U.S. Senate, but pulled out of the race reportedly to spend more time with his family.

Marilyn Tennissen with the Southeast Texas Record contributed to this report.