A lawyer at the center of allegations of corruption within BP’s multibillion-dollar oil spill settlement testified Friday that he lied to the program’s administrator about having collected referral fees because he was worried his wife would find out he was hiding money from her.
U.S. District Judge Carl Barbier, who is overseeing the sprawling Deepwater Horizon litigation, held a hearing Friday seeking to determine whether Lionel Sutton III, a former attorney with the settlement program, was paid in exchange for fast-tracking claims filed by a law firm to which he had referred business after joining the settlement program, or if he simply did the same thing for it as he did for other people who contacted him.
Barbier last year appointed former FBI Director Louis Freeh to investigate the claims program after Sutton resigned because of the allegations. Freeh’s report, filed in September 2013, found that key executives and senior lawyers on the program’s staff had engaged in improper, unethical and possibly criminal behavior, although it absolved administrator Patrick Juneau of wrongdoing.
Sutton and his wife, Christine Reitano, both worked for the claims program. Freeh recommended that the couple, as well as local lawyers Glen Lerner and Jon Andry, be banned from representing claimants and that a nearly $8 million claim submitted by Andry’s law firm be rejected.
Freeh’s report said Lerner and Andry relied on Sutton to “facilitate and expedite” their claims. Sutton had received more than $40,000 in referral fees from the firm for referring to it oil-spill claims he had been handling before he took a job at the program.
When Juneau questioned Sutton about the arrangement in May 2013, Sutton denied any financial arrangement, according to Freeh’s findings.
Freeh’s report ultimately did not find that Sutton or Reitano manipulated the value of claims during their time at the settlement program.
In his testimony Friday, Sutton conceded that he was not forthcoming when confronted by Juneau more than a year ago. He said the money he received from the Andry Lerner firm was intentionally routed to a bank account his wife could not access because he “didn’t want her to know that I had that extra money, so I could spend it on what I wanted.”
By the time Juneau asked him about the allegations, Reitano had been suspended from the claims center, Sutton testified. He said she did not know about the money, nor was she aware that it was his fault she lost her job.
“I didn’t want her to realize that the reason she had gotten in all this trouble was because of me trying to hide money from her,” Sutton testified.
Freeh’s report found that the referral fees added up to about $40,640 and that Sutton received the money after he had started working as an attorney at the settlement program.
At one point Friday, Sutton was presented with evidence of a 2012 email he sent Lerner saying that his wife had been hired by Juneau to “run (Juneau’s) office for the BP settlement.”
Sutton testified that he was unsure at the time whether his wife was hired by Juneau personally or by the claims program. In the email exchange, Lerner asked if her appointment presented a conflict of interest for his and Andry’s cases, given their business relationship, and Sutton repled, “No conflict.”
That remark drew a testy exchange with Barbier.
“You think that she was working for (Juneau) personally?” a seemingly incredulous Barbier asked Sutton from the bench. “So you didn’t understand that it was a conflict of interest to have your wife working there while you’re in business with Mr. Lerner? You didn’t think that was a conflict of interest?”
He asked rhetorically: “What year did you graduate law school? What law school?”
Throughout his testimony, Sutton maintained that he didn’t have the authority to expedite claims and that he simply checked on the status of stalled or pending payments.
“Everything I did for the Andry Lerner claims or Andry Law Firm claim, I did for everybody that asked, more so for other people,” he said. “That was my job.”
Reitano, in earlier court filings, has denied wrongdoing and blasted the Freeh report’s alleged bias.
The settlement, which Barbier preliminarily approved in May 2012, sought to resolve hundreds of thousands of claims for economic damages from what is widely considered the worst environmental disaster in U.S. history.
Follow Richard Thompson on Twitter, @rthompsonMSY.