Freeh Report Clears BP Claims Process, but Sees Some Problems
NEW ORLEANS (CN) - Former FBI Director Louis Freeh's investigation found that BP's oil spill claims process is not corrupt, but that a handful of attorneys, within and outside of the program, worked together to expedite a nearly $8 million claim in exchange for a referral fee.
Freeh's 93-page report, issued last Friday, clears claims administrator Patrick Juneau of alleged wrongdoing.
The report says Freeh "has not found evidence that Mr. Patrick Juneau engaged in any conflict of interest, or unethical or improper conduct."
The report states that while "certain conduct" of claims administration employees and Deepwater Horizon Economic Claims Center vendors "is problematic," this should not prevent the process from "fairly and efficiently processing and paying honest and legitimate claims in a timely manner."
The claims center was established to pay victims of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Juneau was selected jointly by BP and plaintiff attorneys to oversee BP's fund to compensate oil spill victims.
BP sued Juneau in March, claiming he allowed the claims center to pay "hundreds of millions of dollars" in false business claims that bear no "rational connection to the oil spill," and could cost BP "billions of dollars" in "fictitious losses."
U.S. District Judge Carl Barbier, who is overseeing the oil spill litigation, appointed Freeh to investigate BP's allegations.
After Freeh released his report, Barbier issued an order setting a timeline for response from the four attorneys who the report says expedited the multimillion-dollar claim. The attorneys are Lionel Sutton, his wife Christine Reitano, Jon Andry and Glen Lerner.
According to Freeh's report, Andry and Reitano had an agreement that Reitano, who worked at the claims center, would refer one claim in particular and possibly others to Andry "and the two lawyers would evenly split any resulting attorney fees."
Freeh's investigation established that Andry paid Reitano's husband Sutton, also a claims center attorney, a $40,000 referral fee for the client with the nearly $8 million claim in three installments from his law partner Glen Lerner's Nevada bank account.
Freeh found no evidence that Sutton, Reitano or any other claims officials directly manipulated the claims payments, but also that "a comprehensive examination of this issue was not part of the Special Master's mandate."
Freeh recommends that the court disqualify Sutton, Reitano, Andry, Lerner and any firms associated with them from representing any claimant in connection with the oil spill.
Judge Barbier's order gives the attorneys 14 days to respond.
BP has twice asked Barbier to suspend compensation payments , citing corruption in the claims process. Barbier has refused to do so.
BP said through a spokesman Tuesday afternoon: "Judge Freeh's initial investigation report confirms what BP has suspected for some time: There has been fraud and unethical conduct within the facility itself and among various claimants and their lawyers - and immediate steps need to be taken to prevent it in the future. Judge Freeh has confirmed that 'many' of the CSSP's 'key executives and senior attorneys' engaged in 'pervasive' improper and unethical conduct, some of which may have been criminal. He also found that at least one outside law firm sought to exert undue influence on claims determinations on behalf of itself and its clients. What's more, the report revealed that, contrary to repeated assurances to BP and the public that the CSSP's ability to detect fraud was 'robust,' in fact the CSSP's key vendor responsible for, among other things, in-house fraud detection was ineffective and had conflicts of interest. The evidence of conflicts of interest and misconduct assembled in Judge Freeh's report is shocking, but it simply underscores that neither BP nor the public has had any idea of what's really going on within the CSSP. Judge Freeh's continued investigation is essential to assuring public confidence in the integrity of the claims process."