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Watts' fraud and identity theft indictment unsealed; Dog was among plaintiffs in BP oil spill litigation

By The Louisiana Record | Nov 4, 2015

Mikal Watts

GULFPORT, Miss. – David Watts smelled fraud in 41,000 oil spill claims that brother Mikal Watts filed against BP, and so did BP’s claims director and Louisiana attorney regulators, but Mikal Watts turned those claims into $2.3 billion.

He might not have worked so hard to preserve the illusion of representation if he had known it would result in indictments for him, brother David, and five others.

Grand jurors in federal court at Gulfport charged them with fraud and identity theft on Sept. 15, through indictments that remained under seal until Oct. 29.

The indictment follows a familiar movie plot, with the star and his team pulling off the grandest theft only to face justice at the end.

Prior to September, justice had treated Mikal Watts generously.

In a system that rewards aggregation of claims, no one aggregated like the lawyer from San Antonio, Texas.

Adversaries and associates accorded him high status in negotiations, and judges routinely appointed him to committees leading mass actions.

U.S. District Judge Carl Barbier picked him for the plaintiff steering committee against BP, and would keep him there until a criminal investigation started.

The indictment shows that after the Deepwater Horizon rig exploded in the Gulf of Mexico, he immediately started planning litigation on behalf of seafood crews.

Two attorneys offered to buy pieces of his litigation, one for himself and one for a Texas businessman.

They would provide more than $10 million over the next few months.

The indictment doesn’t identify the attorneys or the Texan.

Watts apparently figured he could safely claim to represent 41,000 clients because he had raised enough money to find that many.

He hired Greg Warren of Lafayette, La., to lead the hunt for clients.

Warren, now a defendant with Watts, hurried out and bought a BMW 328i and a BMW X3 sport utility vehicle, according to the indictment.

The next day, he signed a lease for two years on an office in Biloxi, Miss.

The indictment charges Wynter Lee, mass torts coordinator for Watts, as a party to the fraud, along with business owner Hector Guerra of Weslaco, Texas.

It also charges Thi Houng Le of Pascagoula, Miss., also known as Kristy Le, and her sister in law, Thi Hoang Nguyen, also known as Abbie Nguyen.

It paints David Watts as a brother sensing danger but going along with the plan.

He worked for Mikal as director of mass torts, though not a lawyer.

The indictment alleges that on Aug. 24, 2010, David sent email to his brother and Guerra stating that 2,477 dates of birth had changed in 2,510 records.

“This does not pass the smell test,” David Watts wrote, with 11 question marks.

Mikal Watts applied for the plaintiff steering committee three days later, stating that he currently represented over 40,000 plaintiffs.

On Oct. 8, 2010, Barbier appointed him to the committee.

On Oct. 11, David notified Guerra and Kristy Le that he found five dead plaintiffs among the names they provided.

On Nov. 10, according to the indictment, “KF” of the Gulf Coast Claims Commission asked Mikal to confirm his representation of each client.

The initials fit Kenneth Feinberg, who ran the claims process for BP as he had previously done for the World Trade Center attack.

According to the indictment, KF wrote, “We have received notification from claimants, and from the Department of Justice hotline, concerning complaints of unauthorized use of their social security numbers.”

On Nov. 18, according to the indictment, Lee sent 22,533 plaintiff fact sheets to a law firm in Chicago.

The indictment doesn’t identify the firm or explain its connection.

One fact sheet identified Lucy Lu as a deckhand on a fishing boat, but grand jurors found Lucy Lu was a dog.

Lee allegedly filed fact sheets for the five dead plaintiffs that David Watts found.

On New Year’s Eve, according to the indictment, Warren bought an Audi Q7 sport utility vehicle for $69,212.

On Jan. 6, 2011, according to the indictment, David Watts warned the group and the lawyers who bought into the action that he didn’t trust the social security numbers or the birth dates.

He wrote that there was a problem with the process and lots of duplicates.

On that date, according to the indictment, Lee sent 17,469 fact sheets to the Chicago firm.

On Jan. 21, 2011, according to the indictment, one of the lawyers with a piece of the action wrote that, “40k clients are ghosts in the wind.”

He allegedly wrote, “No amount of $$ will bring them back and time is an enemy.”

He allegedly wrote, “Mikal, you know I say this with love in my heart so hear me on this, this is either a super plan for a billion dollar success that I just don’t see, even when I try to read between the lines of JC’s emails, or if I just read what is written in JC’s emails, and add my own gut feeling, it is a ‘king has no clothes’ cluster f--- that needs to be dealt with openly, quickly, and effectively.”

The indictment doesn’t identify JC.

On the same date the other lawyer allegedly wrote that they had bad phone numbers and street addresses, names from phone books, duplicates, and plaintiffs claiming they were duped into signing fees.

On Jan. 31, 2011, Warren bought another Audi Q7.

On March 8, 2011, Lee replied to email about dead clients by writing, “Another fine example of the sh—we paid for; dead 5 years ago.”

On July 29, 2011, according to the indictment, Watts falsely told the Louisiana Attorneys Disciplinary Board that letters he sent were status letters to clients with written engagement agreements.

On Sept. 2, 2011, according to the indictment, he falsely told the board a lawyer referred two individuals to him when Warren and the others had done it.

On March 2, 2012, he announced a settlement to David Watts, the two attorneys, and the Texas businessman.

According to the indictment, he wrote, “Importantly, BP pays the $2.3 whether the proof supports it or not.”

He allegedly wrote, “Hope this makes everyone feel better about our eggshell plaintiff docket. To quote Monty Python, ‘it’s merely a flesh wound; I’m not dead yet.’ Mikal.”

In 2013, after federal agents seized his computers, BP sued him.

Barbier stayed the suit pending resolution of the criminal investigation. The stay remains in force.

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