NOULA INC.: The man who operated this South Florida storefront was convicted last year on 40 counts arising from fraudulent claims against the oil company’s $9.2 billion Deepwater Horizon fund. (C.M. Guerrero / Miami Herald / MCT via Getty Images)
After the Deepwater Horizon rig exploded four years ago in the Gulf of Mexico, hundreds of South Florida residents paid the nonprofit Noula Inc. $300 each, mostly to process claims for wages they said were lost to the oil spill.But a Miami jury last year agreed with federal prosecutors that the claims were scams. They convicted Noula’s president, Jean Mari Lindor, of 40 counts including identity theft and mail and wire fraud.
“These people would never ­actually see what was filed on their behalf,” Assistant U.S. Attorney Thomas Watts-Fitzgerald said of Lindor’s victims. “Some had no idea what he was doing.”
Lindor is one of dozens of individuals charged with or convicted of filing fraudulent claims for oil-spill damages. In his case, the government put on evidence that Lindor filed claims using fake tax and employment documents.
BP PLC, which has bankrolled payments to victims, has been more than vocal about what it considers massive fraud in the distribution of claims. In February, it launched a rolling “Fraud Tally” on its Web site, www.thestate­ofthegulf.com, which estimates the total dollar value of claims made by individuals criminally charged with, or convicted of, fraud. As of April 23, that tally totaled more than $9.3 million. (The settlement fund is $9.2 billion.) “While BP remains committed to paying all legitimate claims, the company did not agree to pay for fictitious losses, or for claims that are based on fraud or tainted by corruption,” BP says on its site.
According to BP’s latest numbers, which include both federal and state prosecutions, 136 individuals have been charged and 122 convicted of fraud associated with the spill. It’s unclear from BP’s records whether those numbers overlap.
Justice Department spokesman Peter Carr, in an email to The National Law Journal, said 202 individuals had been charged in an effort led by its Disaster Fraud Task Force, which handles fraud related to disasters. Those numbers include only federal cases. Many defendants have been restaurant and hotel workers who claimed lost wages. Most have pleaded guilty to mail or wire fraud. Their sentences have varied — often a few years of probation, but sometimes prison for more than a year. In nearly every case, judges ordered payment of restitution.
But a few cases stand out, and BP’s website appears to focus on them. For example, a Massachusetts man, Robert Zygarowski, pleaded guilty in 2012 to faking his own death and inventing a son to pursue a $130,000 claim. He was sentenced to two years in prison.
Duane Montgomery, a onetime mayoral and congressional candidate from Detroit, drew 15 years in prison after a federal jury convicted him of filing a bogus claim for hundreds of thousands of dollars that he maintained his pollution-monitoring business lost when tar balls destroyed his boat’s engines in the Gulf.
In Mississippi, Joseph Anthony Clements drew four years and five months in prison following his guilty plea to filing a $273,000 claim for lost profits from his commercial shrimp and fishing business. Clements, however, wasn’t a commercial shrimper.
Both Montgomery and Clements have filed notices of plans to appeal their ­convictions.
U.S. District Judge K. Michael Moore sentenced Lindor, Noula’s president, to spend nearly 24 years in prison and pay almost $1.9 million in restitution.
Lindor is appealing his conviction to the U.S. Court of Appeals for the Eleventh Circuit. His trial attorney, Ken Swartz of Swartz Law Firm in Miami, blamed the fictitious claims on certain employees and volunteers who worked at the center. He also questioned why the alleged victims who got claims money were never charged.
“One person is paying the price when there were others — either people who received money who made claims that never should have gotten the money, or other people who assisted in this whole thing,” he said. It is unclear how many, if any, criminal cases have involved claims against BP’s settlement fund, versus the Gulf Coast Claims Facility, the $20 billion fund set up by BP but administered independently by attorney Kenneth Feinberg. After BP reached its settlement in 2012, U.S. District Judge Carl Barbier in New Orleans appointed Patrick Juneau to administer the payouts, ­superseding Feinberg’s duties. BP has accused Juneau of awarding money to businesses that suffered no damages, and Barbier appointed a special master, former FBI director Louis Freeh, to investigate. Carr, the Justice Department spokesman, said fraud investigations are continuing, whether they involve the settlement fund or the claims facility.
Feinberg, founder of Washington’s Feinberg Rozen, defended his administration of his fund, noting that he sent only 4,000 of the 1.2 million claims received to the Justice Department for potential prosecution.
“Nothing can undercut the credibility of any claims program more than fraud,” he wrote in an email to the NLJ.
Contact Amanda Bronstad at email@example.com.