Louisiana Record

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Secret Service probe into Deepwater Horizon fraud scheme nets 27

By Louisiana Record reports | Nov 26, 2014

Focus on fraud

NEW ORLEANS – As BP’s petition asking the U.S. Supreme Court to overturn the Deepwater Horizon settlement is being considered, an investigation by the U.S. Secret Service has concluded with the arrest of 27 people who are accused of trying to defraud the settlement program by filing fraudulent claims.

Those arrested, most of whom are Jacksonville, Fla. residents ranging in age from 24 to 60, are accused of filing a combined $1,085,626.90 in claims. The Secret Service reports that the accused schemed to defraud the settlement fund by filing lost income claims with the Gulf Coast Claims Facility posing as employees of businesses that had been affected by the oil spill. Because 26 of them mailed in their claims to be processed by the claims center the claimants are being charged with mail fraud, a crime that can carry up to 20 years in prison.

“The indictment of these 27 individuals is yet another example of how the Secret Service continues to successfully identify and combat fraudulent schemes,” said Lee Fields, special agent in charge of the Secret Service Jacksonville Field Office.

The charges come as BP has heightened its efforts to have the Deepwater Horizon settlement, which it claims is beset by fraudulent claims, overturned by petitioning the U.S. Supreme Court to review the settlement and how it has been implemented.

While it is unclear how far the most recent round of schemers made it through the settlement program, other cases, some of which have been based on false tax documents, have made it all the way through payment before being later uncovered as fraudulent.

The Secret Service is also reportedly enmeshed in an investigation of a massive fraud believed to be perpetrated by San Antonio attorney Mikal Watts, a former member of the Plaintiffs Steering Committee (PSC) who helped broker the settlement agreement. Watts resigned from the PSC after BP alleged that he falsified up to 43,000 “phantom” claims based primarily on non-existent clients with fake Social Security numbers and even those belonging to the deceased.

According to BP, the cases of fraud that have been uncovered thus far are indicative of a irreparably broken settlement system that is in desperate need of being reworked. BP maintains that U.S. District Judge Carl Barbier, who is overseeing the case, has been unwilling to allow the court to revisit the settlement, citing that because it was agreed to by both parties, BP and the PSC, it should remain unchanged. Such an unyielding attitude on behalf of the court has resulted in a multitude of appeals filed on behalf of BP including attempts to change the way payments are calculated and a bid to oust Claims Administrator Patrick Juneau based partially on the assertion that he has allowed an atmosphere to exist within claims facility, such as not routinely verifying tax income information by claimants, that opens the process up to fraudulent activity on behalf of claimants.

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