Claims office chief testifies in Gulf oil spill fraud case
GULFPORT, Miss. (AP) - The head of the 2010 Gulf of Mexico oil spill claims office testified Wednesday that he was suspicious when a Texas lawyer told him he was handling claims from 41,000 fishermen.
Kenneth Feinberg was the first witness in the federal fraud case against San Antonio attorney Mikal Watts and six co-defendants accused of inflating Watts' client list.
He read a letter in which he had told Watts: "It's hard to believe there are even 41,000 fishermen in the Gulf who would even file a claim."
The claims office had paid $1 billion to 50,000 people at that point, and Feinberg was skeptical that Watts alone could nearly double the list, he wrote.
Assistant U.S. Attorney Jerry Rushing had Feinberg read the letter after he was cross-examined by Watts, who is representing himself, and attorneys for his co-defendants. Because it was part of a document admitted into evidence earlier, defense attorneys couldn't ask him questions about it. It ended his testimony.
During cross-examination, a lawyer representing Watts' brother, data analyst David Watts, asked Feinberg if he knew about other cases in which Watts had represented 25,000 to 80,000 people. Feinberg said no to each of Michael McCrum's questions.
"I don't know about those cases. I can't comment about those cases," he said.
Earlier, Feinberg testified that the claims office paid about $6.5 billion to 550,000 people and businesses over its 16-month existence.
Watts began the cross-examination by mentioning several other big cases he has handled, including cases against General Motors, a recent case against Volkswagen and those involving the drugs Zyprexa and Celebrex.
"Was I seen as a fraudster?" he asked. "Have you ever heard that I would submit fake or fraudulent claims?"
Feinberg answered "no" to both questions.
Rushing said in his opening statement that Watts' oil spill client list included people who died before the spill and people whose names and Social Security numbers were used without their permission.
He told jurors that one reason for inflating the list was so Watts could get a lucrative spot on the plaintiffs' steering committee, which he described as a group of 22 attorneys who were paid a total of $600 million.
McCrum and lawyers for two other defendants blamed contract field workers and contractor Gregory Warren, whose attorney blamed the field workers.
"Michael Watts and his investors and Michael Watts' law firm got scammed," McCrum said.
Warren's attorney, Luke Wilson, told jurors that Warren's only jobs were to cut checks and to make sure things moved smoothly.
He said Warren was told to find Vietnamese plaintiffs but didn't know the language or anyone in the Vietnamese community, while Kristy Le was in charge of the actual recruiting.
Le's attorney, John William Webster III, described her as a 28-year-old cosmetology student and mother overwhelmed by a job she'd never been trained for.
"She had no experience managing 100-plus employees," he said.
McCrum said correspondence will show that David Watts was continually trying to get more information about people named on the list.
He also took issue with Rushing's description of the payment for the plaintiffs' steering committee, saying the money was divided among hundreds of lawyers working for 95 firms.
The other co-defendants are Hector Eloy Guerra, whose attorney described him as the liaison between the law firm and Warren, and Le's sister-in-law, Abbie Nguyen.
The indictment alleged that the contractors were paid more than $10 million to get names and other information about clients for the BP litigation.
Banking information available only after an indictment showed that Warren and Le spent much of the law firm's money on themselves rather than on the work they were being paid for, McCrum said.
Attorneys for office manager Wynter Lee and Guerra also said their clients knew nothing about the fraud.
Mikal Watts and Nguyen's attorney plan to make their opening statements after prosecutors have presented all their evidence in the case.