Texas Lawyers Sued for Allegedly Bankrolling BP Oil-Spill Scam

Two high-profile Texas attorneys were sued by a fishing boat captain who said they were involved in a scam to cheat BP Plc out of millions of dollars with false compensation claims for the Gulf of Mexico oil spill.

She’s one of thousands of Vietnamese American fishermen and women who had their identities faked or stolen in the fraud which was bankrolled by Bob Hilliard and John Cracken, Houston lawyer Tammy Tran said in a complaint Thursday. They blame the lawyers in part for obstructing their efforts to pursue their own claims for Payments under BP’s restitution program.

Tran is seeking more than $100 million in punitive damages from Hilliard and Cracken to compensate the immigrants. Many of them claim to have suffered mental anguish from “nightmarish memories” of Vietnam’s communist regime, revived by federal agents knocking on doors to investigate the identity thefts. Compensation is also sought for homes and businesses lost while waiting for BP to pay under its seafood accord.

Houston attorney Richard Mithoff said he was hired to represent Hilliard and Cracken.

“I’ve not yet seen a copy of what’s being filed,” Mithoff said Thursday. “We will respond immediately and in due course in an appropriate filing.” He declined to comment further on the allegations. Hilliard referred queries to Mithoff.

Lawyer Indicted

Tran, who represents about 1,000 Vietnamese American fishermen and women against BP, said in an interview she learned of Hilliard’s and Cracken’s connection to the scam from a criminal-defense attorney with knowledge of the indictment of a third lawyer. Mikal Watts, who allegedly orchestrated the fraud, was indicted for identity theft and making false claims in connection with the BP spill. Watts, a San Antonio attorney, denied any wrongdoing.

Watts’s indictment, unsealed in a Mississippi court in October, refers to the involvement of two other lawyers without naming them. They’re referred to as Attorneys 1 and 2.

Hilliard’s national prominence surged with the implosion of the first trial over General Motors Co.’s faulty ignition systems. The case was dropped in the middle of the trial over claims that Hilliard’s clients lied on the stand. Cracken is a Dallas-based lawyer and restaurant entrepreneur.

Claim Runners

The two attorneys allegedly paid more than $10 million to Watts to cover the cost of claim runners who were used to sign up Southeast Asian immigrant shrimpers, boat captains and deck hands – an insular coastal community where English is sparse and the destruction of boats and livelihoods was widespread, according to the complaint. Hilliard and Cracken in return would share in the millions of legal fees that would be generated, the plaintiff claimed.

“These two were deeply involved in this deal with Mikal Watts,” Tran said in an interview. “They knew everything, and they knew it was wrong from the beginning.”

Hilliard and Cracken did nothing to stop the fraud, Tran said.

Watts helped negotiate a $2.3 billion spill-damages Settlement for Gulf seafood interests in 2012, after the U.S. says he leveraged his more than 40,000 fishing-industry clients into a lucrative seat on the litigation steering committee. Federal prosecutors claim many of Watts’s so-called clients never signed with him, and he used their identities and social security numbers without their consent. BP has claimed bogus victims likely inflated the cost of its accord.

Watts Sued

Tran’s fishing clients sued Watts in San Antonio state court two years ago. The lawsuit has stalled because of Watt’s criminal trial, Tran said.

E-mails between the attorneys, cited in the indictment, describe internal investigations into a client list that uncovered people who were “duped” by the case runners into signing up with Watts, or those whose files contained inaccurate or misappropriated addresses, phone numbers and Social Security numbers. One client turned out to be a dog; another died long before the spill happened.

“Another fine example of the s--t we paid for; dead 5 years ago,” Watts wrote in a March 8, 2011, e-mail. “Mikal, fraud,” Attorney 2 replied. The complaint identifies Hilliard as the respondent.

The e-mails are being taken out of context and "paint a misleading picture" of what the lawyers were discussing, Robert McDuff, Watt’s criminal defense attorney, said when the charges were unsealed last year. Any fraud involving the workers’ claims was committed by others and will be proven at Watts’s trial in July, he said.

The case is Thim T. Nguyen v. Cracken, 2016-13749, 55th Judicial District of Harris County, Texas (Houston).

To contact the reporters on this story: Laurel Calkins in Houston at lcalkins@bloomberg.net, Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net. To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Heather Smith

By: Laurel Brubaker Calkins and Margaret Cronin Fisk

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