Original Story: thestateofthegulf.com
The Special Master tasked with investigating the Deepwater Horizon settlement process filed a motion this week urging the District Court to order the return of fraudulent payments made to Gill Johnson, Sr., who received over $440,000 from the Deepwater Horizon Economic Claims Center (“DHECC”). The motion alleges that Johnson’s claims were based on falsified tax returns that were never even filed with the IRS.
In his motion, the Special Master informed the Court that in January 2013, Johnson filed claims seeking compensation for losses associated with his commercial fishing business based on his 2008 and 2009 tax records. The rub? Johnson didn’t file or pay taxes with the IRS in either of those years.
The 2008 tax return Johnson provided to the claims facility was undated and unsigned – and false, according to the Special Master’s motion. The claims facility accepted his return despite the fact that the Settlement Agreement specifically requires claimants to file signed tax returns with their claims. And the motion also stated that the 2009 tax record he provided to support his claims was prepared in July of 2010 for the sole purpose of allowing Johnson to file his Deepwater Horizon claim. Johnson, the motion explains, allegedly based his 2009 return not on any source documents, but rather on a verbal summary given by Johnson’s girlfriend to the tax preparer Johnson had hired.
The claims facility accepted Johnson’s misrepresentations and his falsified forms, and awarded him over $440,000. For their efforts in helping Johnson prepare his claim, his attorneys received over $109,000 – fees that the law firm returned the very same day that the Special Master filed his motion.
This motion, like others filed by the Special Master, underscores a simple fact: settlement funds paid for improper claims should be repaid. Restitution is important in cases like this, not only so that fraudsters don’t benefit from their fraudulent acts, but also “to safeguard the integrity of an important public institution administering a fund for the benefit of an injured segment of society.” In addition, the Special Master also urges the Court to enforce a one strike, you’re out policy with regards to Johnson, arguing that allowing claimants who have filed fraudulent claims the opportunity to resubmit their claims using different documentation would only encourage them to take a chance on fraud – knowing that they could submit different data if they got caught.
Of course, this is exactly what the PSC's lead lawyer appears to want: in a recent letter to Judge Freeh and the Court, Steve Herman argues that when fraud is alleged or suspected, the claimant should be notified that the "claim might be fraudulent" and given a chance to withdraw the Claim or otherwise attempt to explain it. Unfortunately, this process would have the effect of giving unscrupulous claimants a risk-free chance to get their fraudulent claims paid. In the world he appears to be urging, there's no apparent downside to taking your best shot at free money. Such attempts at fraud would not be treated so leniently anywhere else in the world - not by employers, not by merchants, and definitely not by the IRS. The policy at a court-supervised claims facility should reflect that attempts to commit fraud will not be tolerated.
Fraudsters should take note: BP certainly did not agree to pay for claims tainted by fraud or corruption. The Special Master’s latest motion sends a clear message that attempts to take advantage of the settlement process are being investigated, and that those caught red-handed should expect to answer for their fraud.