SE Texas Record

Wednesday, October 16, 2019

Judge asks accused to defend actions in alleged BP 'money laundering' scheme

By Kyle Barnett | Sep 24, 2014

NEW ORLEANS – Four attorneys accused of corruption in the massive Deepwater Horizon oil spill settlement were called before a federal judge this week to explain why they shouldn’t be sanctioned or barred from representing claimants in the case.

U.S. Federal District Judge Carl Barbier held the hearing to determine whether the accused lawyers should be allowed to introduce new evidence and review materials related to an investigation that concluded they acted improperly in connection with claims that were filed in the multi-billion dollar case that resulted from BP PLC’s 2010 oil spill in the Gulf of Mexico.

The investigation, conducted by former FBI Director Louis Freeh, at Barbier’s behest, accused two lawyers, Jonathan Andry and partner Glen Lerner of conspiring to have their own and their client’s claims expedited.

Freeh said that two other lawyers, Lionel “Tiger” Sutton and his wife Christine Reitano, abused their positions within the claims office by requesting or accepting kickbacks in exchange for expediting claims.

Sutton has since resigned and his wife, Reitano, was fired and is pursuing a separate wrongful termination suit against Claims Administrator Patrick Juneau.

The stakes are high – hanging in the balance is a $7.8 million claim Jonathan Andry filed with his brother Gilbert “Gibby” Andry on behalf of their law partnership The Andry Law Firm, as well hundreds of claims filed by clients of the Andry Lerner law firm.

All four lawyers as well as Gibby Andry have vehemently denied wrongdoing and some outside observers have said that Freeh’s charges appear at least in some instances to be based on shoddy investigative work and flimsy evidence.

Though Freeh’s report recommended pursuing criminal charges against some of the accused lawyers, Barbier himself appeared skeptical that anyone had engaged in a grand fraud conspiracy.

“There’s no doubt that there were a lot of emails and phone calls and so forth, and some meetings, a couple lunches, whatever, where there were efforts made to move these claims along and get them paid,” Barbier said.

Even so, Barbier observed that even Freeh noted in his report that actions undertaken by the lawyers “did not result in any improper influence on the valuation of the claim.”

Barbier also singled out Reitano in the case, saying she was clearly the least culpable, even if Freeh’s allegations proved to have merit.

Freeh accused Reitano of soliciting a kickback from a claim while working as a lawyer for the claims center – an allegation that she and the alleged target of the kickback demand have hotly disputed in court filings.

At the heart of the allegations is a $350,000 settlement received by Slidell-based shrimper Casey Thonn, who Freeh accused of using fraudulent tax filings to advance his loss claim. Sutton initially represented Thonn. When Sutton was hired by the claims center on a part-time basis, the Thonn case fell to the Andry Lerner firm.

In what Freeh described as a money laundering scheme, Sutton is alleged to have received a portion of Thonn’s settlement through his partnership with Lerner in Crown LLC, a third party company.

In his report, Freeh characterized Sutton’s $40,000 payment through the Crown LLC bank account in the Thonn case as a kickback and recommended the case to the Department of Justice for criminal sanctions. Sutton, however, maintains that the fee he received was for the initial work he performed on the Thonn case and was not a referral fee or a bribe.

Barbier has since demanded that Thonn and his lawyers return the money to the settlement fund.

In a separate proceeding this week, the federal government charged Thonn with two counts of felony wire fraud in connection with the filing of his allegedly fictitious claim. The charge was submitted as a bill of information – a sign that the defendant may have agreed to a plea deal with prosecutors.

The complex nature of the proceedings against the four lawyers mirrors the settlement at large, which has bogged down over the last year by a series of arcane legal disputes, internal disagreements between trial and defense lawyers and allegations from BP that the entire settlement has been beset by corruption and mismanagement. In fact, BP recently filed a motion demanding that Claims Administrator Juneau be removed as special master for allegedly not disclosing a conflict of interest, wasting money and mismanaging the claims operation.

With regard to the Freeh corruption allegations, Barbier said the central question is whether any of the attorneys should be allowed to continue representing claimants after potentially running afoul of the “clean hands doctrine’’ mainly as a result of their association with the Thonn claim.

An adverse ruling under this doctrine could be devastating to the Andry Lerner firm, who may subjected to legal malpractice claims  from the hundreds as of yet unpaid claimants the law firm represents.

Barbier took the proceedings under advisement, saying he would rule “as soon as I can’’ on whether to stage an evidentiary hearing on the matter.


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