Alabama couple ordered to return $2.1 million Deepwater Horizon claims award says they no longer have money

NEW ORLEANS – An Alabama couple accused of defrauding the Deepwater Horizon claims program of $2.1 million are denying the charges and say they cannot pay back the claim because the award went to pay off a judgment against them.

In March, Barbara J. Stokes and Scott B. Stokes, of Huntsville, Ala., were ordered by special master Louis Freeh to return a multimillion dollar Deepwater Horizon claim he alleged was based on a complex scheme including the transfer of loan funds from one business owned by the Stokes to another to make it appear as if they had experienced a loss of income due to the 2010 Gulf oil spill.

In his report to the court, Freeh determined the Stokes had manipulated the Deepwater Horizon claims program by withholding the nature of $819,000 in bank deposits into a Vision Design account, a sham corporation based in Florida, that was derived from a loan the couple had received for a beach development to be named Summerplace. Freeh further found the Stokeses purposefully deceived the claims program to make it appear as if Vision Design’s income had drastically dropped all the way down to $5,700 due to the 2010 oil spill.

According to Freeh, the couple created IRS income tax documents solely for the purpose of filing a Deepwater Horizon claim allowing them to carry out the fraud. Similar to many other Deepwater Horizon claims later determined to be fraudulent, no evidence that the tax documents had actually been filed with the IRS could be found by investigators.

While the court mandated the couple return the $2.1 million, Barbara Stokes responded in a letter to the court blaming attorney Dennis Reich, of Houston-based Reich & Binstock, and an accounting firm he hired for the problems with their claim.

“Dennis Reich hired the account firm, I turned over all documents to Mr. Reich, BP paid the claim- Why can they ask for the money back? Why is Vision Design Management attorney Dennis Reich not wholly responsible for paying the entire claim back to BP? Dennis Reich filed the claim, he is an attorney and should have known better,” she said.

In addition to pinning the faulty claim on Reich, who has returned over $500,000 in legal fees he received for representing the couple, Barbara Stokes called the allegations of wrongdoing “outlandish” and added that the couple’s $1.6 million portion went to satisfy a judgment against them and that they are unable to return it.

“[We] never received a dime of the BP claim money,” she said.

This hardly is the Stokes’ first scrape in the federal court system. Prior to the Deepwater Horizon claim, a federal judge in Alabama ruled the couple used Vision Design to hide personal assets from plaintiffs involved in a loan default case. The couple also defaulted on the Summerplace loan, according to records filed by Freeh.