Case Highlights Fraudulent BP Oil Spill Claims

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BP has been complaining for a long time that many claims filed after its April 2010 oil spill in the Gulf of Mexico were phony. Now there’s more evidence to back that up.

BP has admitted fault in connection with the huge spill and is in the process of paying out tens of billions of dollars in government and individual claims, some civil and some criminal. At the same time, however, the British oil giant says that many of the demands made against its various claim funds have had scant, if any, connection to the catastrophe that killed 11 rig workers and spewed oil off the shore of Louisiana and other gulf states.

In the single most egregious case of alleged fraud, BP sued Mikal Watts in December 2013, alleging that the powerful San Antonio plaintiffs’ attorney falsely claimed to represent tens of thousands of “phantom” victims of the spill. A federal judge put that suit on hold while federal criminal investigators looked into the matter, and now U.S. prosecutors in Mississippi have unsealed an indictment of Watts, his brother, and five others on 95 counts of conspiracy, mail fraud, and identity theft for allegedly submitting more than 40,000 false claims against BP.

Among the phony claims was this one, according to the indictment:

“On or about January 16, 2013 defendant MIKAL C. WATTS submitted or caused to be submitted a ‘Presentment Form’ to BP claiming ‘costs and damages’ in the amount of $45,930.00 in the name of ‘Lucy Lu’ and claiming ‘Lucy Lu’ was a deckhand on a commercial seafood vessel. ‘Lucy Lu’ was a dog.”

At least four other claimants seeking a total of $183,720 had actually died before the 2010 oil spill, the indictment added. In the end, according to the indictment, only four Watts clients were found eligible for payments.

Watts’s claims prompted BP to agree to pay $2.3 billion to shrimpers and other marine workers who lost money in the seafood business and “fraudulently increased the settlement amount and inflated the amount of compensation” due to legitimate plaintiffs, the indictment alleged.

Watts has denied wrongdoing. His attorney, Robert McDuff, said the indictment merely “recycles” BP civil fraud claims. But prosecutors said they began investigating in 2011, long before BP sued.