BP asks court to suspend seafood payments for fraud probe

BP Plc asked a U.S. judge to stop payments in the $2.3 billion seafood-industry portion of its settlement over the 2010 Gulf of Mexico oil spill, pending an investigation of a fraud claim against a plaintiffs’ attorney.

BP today also sued the lawyer, Mikal Watts, contending that he “fraudulently” claimed to represent more than 40,000 spill victims in the seafood industry, primarily crew members of fishing boats.

“Watts’s representations caused BP to offer $2.3 billion to establish the seafood compensation program,” the company said in its complaint filed in federal court in New Orleans. “But we now know that over half of Watts’s alleged clients were phantoms; individuals never represented by Watts, in a number of cases not even commercial fishermen, and in some instances individuals who are deceased.”

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BP agreed to pay $9.2 billion to settle most private party claims over the 2010 oil spill. U.S. District Judge Carl Barbier approved the settlement last December. The London-based company today asked Barbier to suspend further payments to seafood claimants.

Watts, of Watts Guerra LLP in San Antonio, didn’t immediately return calls for comment on BP’s lawsuit.

The new lawsuit is BP Exploration & Production Inc. v. Watts, 13-cv-06674, U.S. District Court, Eastern District of Louisiana (New Orleans). The settlement is part of In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).