A ship floats amongst a sea of spilled oil in the Gulf of Mexico after the BP Deepwater Horizon oil spill disaster.
A ship floats amongst a sea of spilled oil in the Gulf of Mexico after the BP Deepwater Horizon oil spill disaster. (Photo: Kris Krüg via Wikimedia Commons)

A New Orleans law firm at the center of an investigation into misconduct surrounding the processing of payments from BP PLC’s Deepwater Horizon oil spill settlement must return $357,000 paid to a client based on allegedly fraudulent claims.

U.S. District Judge Carl Barbier ordered that shrimper Casey Thonn return the payments within 30 days. Barbier also found that the AndryLerner firm, which received $35,700 in fees, and principals Jonathan Andry and Glen Lerner were responsible for the restitution.

The judgment also applied to Lionel “Tiger” Sutton, an attorney who received fees for referring Thonn to AndryLerner, as well as Thonn’s accounting firm.

Attorneys for Andry, Lerner and Sutton did not respond to requests for comment.

BP, which continues to assert in court filings that fraud has tainted its estimated $9.2 billion settlement, praised the judgment—the first to order the return of an oil spill claim payment.

“The court’s final judgment shows that the law is beginning to catch up with the fraudsters—and that the plaintiffs’ lawyers and other advisers who assist them will also not be permitted to benefit from that deceit,” BP spokesman Geoff Morrell wrote in an emailed statement.

The judgment, handed down on July 16, affirmed findings by former FBI director Louis Freeh, appointed by Barbier as special master to investigate the claims process. On Sept. 6, Freeh concluded that Andry, Lerner and Sutton, who later worked at the claims office, had been involved in fraudulently filing the Thonn claim. He recommended sanctions against all three lawyers, plus Sutton’s wife, Christine Reitano, who also worked at the claims office.

All four have denied allegations of fraud. AndryLerner also has sought to lift a freeze that Freeh put on payments to hundreds of its other clients.

Freeh moved for restitution of the Thonn claim on Jan. 8. In court papers, Andry, Lerner and AndryLerner sought dismissal of that action, claiming they had no knowledge of any fraud. Sutton also moved to dismiss, saying that he didn’t represent Thonn when the claim was made.

On April 29, Barbier found that restitution was proper. He concluded that Thonn’s claims, which AndryLerner filed on his behalf in 2012, were based on unfiled tax returns.

“Here, Thonn’s fraud undermines the integrity of the entire settlement program; therefore, while it is unfortunate that his misrepresentations were not detected earlier, such an oversight does not allow the court to give Thonn a free pass now,” he wrote.

He extended his findings to include Thonn’s professionals, including his lawyers, all of whom were paid on a contingent fee basis.

Since then, BP has sought restitution from additional claimants who received allegedly excessive payments. BP bases such requests on revised calculations set forth in a U.S. Court of Appeals for the Fifth Circuit’s ruling last year.

Last month, Freeh moved to return a $50,000 payment to another AndryLerner client, Jarrod Burrle, based on an allegedly fraudulent claim for lost blue crab revenue. In a filing Monday, Freeh noted that $12,500 of the payment went to AndryLerner and two other firms, the Palazzo Law Firm in Gretna, La., and David Bravo of the Bravo Law Firm in New Orleans, who allegedly received referral fees. Responses to Freeh’s request are due on Friday. Neither Bravo nor Leo Palazzo of the Palazzo Law Firm responded to requests for comment.

Contact Amanda Bronstad at abronstad@alm.com.