Louis Freeh Will Probe Oil Spill Fraud Claims

     NEW ORLEANS (CN) – The federal judge overseeing a multibillion-dollar settlement between BP and victims of the Gulf Coast oil spill appointed former FBI Director Louis Freeh to investigate BP’s allegations of fraud in the claims process.
     U.S. District Judge Carl Barbier appointed Freeh, of Freeh Group International Solutions, as a special master to look into BP’s allegations of kickbacks in the claims payment process for residents and businesses harmed by the April 20, 2010 oil spill.
     Barbier ruled in March that BP must pay according to a settlement agreement it crafted with plaintiff lawyers in 2012, despite BP’s complaints that more claims were being paid, and for higher amounts, which could cost it billions of dollars more than it expected.
     Barbier said during a June 27 status conference that he would consider appointing a special master to look into BP’s allegations that the firm administering settlement claims was involved in a kickback scheme with attorneys representing victims of the oil spill.
     Barbier’s July 2 order appointing Freeh as special master states that “certain recent events have arisen that led to the resignation of a staff attorney at the CSSP [Deepwater Horizon Court Supervised Settlement Program]. An internal investigation by the CSSP is under way. However, the Court has concluded that in order to ensure the integrity of the program for the benefit of the parties and the public, an independent, external investigation of this matter should be performed. This type of investigation cannot be effectively and timely addressed by an available district judge or magistrate judge of this district. Accordingly, the Court has decided to appoint Mr. Freeh as Special Master for this purpose.”
     Barbier’s order added: “Mr. Freeh has extensive experience which qualifies him for this appointment, including prior service as an FBI Special Agent, Assistant United States Attorney for the Southern District of New York, United States District Judge for the Southern District of New York, and Director of the FBI. His current firm, the Freeh Group, has extensive experience and expertise in conducting a wide range of both internal and external investigations and fact finding.
     “The duties of this appointment will not involve traditional special master roles involving mediation, discovery, fact finding, or substantive law. This appointment is limited to: a) performing the aforementioned independent external investigation; b) fact finding as to any other possible ethical violations or other misconduct within the
     CSSP; and c) examining and evaluating the internal compliance program and anti-corruption controls within the CSSP, and making any necessary recommendations to design and to implement additional such controls, policies, procedures, and practices to ensure the integrity of the CSSP.”
     BP responded with a statement: “We are very pleased that the Court has appointed Judge Louis Freeh as Special Master to lead an independent investigation of the Court Supervised Settlement Program. We believe that Judge Freeh’s experience on the federal bench and as director of the FBI make him ideally suited to conduct a thorough investigation into the recent allegations of unethical and potentially criminal behavior within the program. In addition, Judge Freeh has been granted wide latitude to look for ‘other possible ethical violations or misconduct within the CSSP.’ Judge Freeh’s investigation of the facility is an essential step in assuring public confidence in the integrity of the claims process.”
     Lead plaintiffs’ lawyers Stephen Herman and James Roy also issued a statement, saying: “We welcome Mr. Freeh’s appointment, and are confident that any impropriety, if confirmed, will prove to be an isolated incident.”
     On Monday, July 8, the 5th Circuit in New Orleans will hear arguments on whether the settlement administrator has followed settlement guidelines.
     Barbier is overseeing a two-part trial in which the Justice Department is seeking billions of dollars in civil penalties from BP, for environmental violations.
     The first part, to apportion blame for the Deepwater Horizon disaster, ended in April.
     The second phase, which will seek to determine how much oil spilled, is to begin Sept. 16.
     BP agreed last fall to pay $4.5 billion in a federal criminal plea bargain.
     (Sabrina Canfield can be reached at neworleans@courthousenews.com.)

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