United States District Court, E.D. Louisiana
ORDER & REASONS
CARL BARBIER, District Judge.
Before the Court is the Motion of the Special Master for Return of Payments Made to Jason Zirlott and Capt Jay, LLC (Rec. Doc. 13468); the Opposition by Jason Zirlott and Capt. Jay, LLC (Rec. Doc. 13926); and the Special Master's Reply thereto (Rec. Doc. 13997).
Having considered the motion and memoranda of counsel, the record, and the applicable law, the Court finds that the Special Master's motion should be GRANTED for the reasons set forth more fully below.
FACTS AND PROCEDURAL BACKGROUND
A. Background Regarding the Settlement and the Special Master
On December 21, 2012, this Court approved the Deepwater Horizon Economic and Property Damages Settlement Agreement ("Settlement Agreement"), a class action settlement. (Rec. Doc. 8139) The Deepwater Horizon Court Supervised Settlement Program ("Settlement Program") implements and administers the Settlement Agreement. On July 2, 2013, the Court appointed Louis J. Freeh as Special Master pursuant to Federal Rule of Civil Procedure 53 to investigate allegations of misconduct within the Settlement Program. On September 6, 2013, the Court directed the Special Master to examine and investigate any past or pending claims submitted to the Settlement Program and to initiate legal action to clawback funds paid out on fraudulent claims. (Rec. Doc. 11288)
B. Background Regarding Claims by Zirlott and Capt Jay, LLC
On November 19, 2012, Capt Jay, LLC ("Capt Jay") filed a shrimp vessel owner claim with the Settlement Program, based on Capt Jay's 2009 revenue as shown on its tax returns and financial statements. On December 4, 2012, Jason Zirlott, a member of Capt Jay, filed a shrimp boat captain claim, based on the same revenue data.
Capt Jay originally filed a claim for lost commercial fishing income with the Gulf Coast Claims Facility ("GCCF"), stating that all of the $162, 364 in income from its 2009 partnership tax return came from the sales of seafood. On November 29, 2012, after filing a claim with the Settlement Program, Capt Jay and Zirlott submitted Sworn Written Statements stating under penalty of perjury that Capt Jay landed $162, 364 of shrimp in the Gulf Coast Areas in 2009. The revenue reported on the sworn statements matched the gross receipts declared by Capt Jay on its 2009 Form 1065 partnership income tax return.
The Settlement Program relied on the documentation provided by Capt Jay and Jason Zirlott to determine that Capt Jay was entitled to compensation of $248, 371.29 on its shrimp vessel owner claim and Zirlott was entitled to compensation of $196, 906.96 on his shrimp boat captain claim. After deducting prior GCCF payments, on January 25, 2013 the Settlement Program paid Capt Jay $85, 357.82 on its vessel owner claim. On February 19, 2013 the Settlement Program paid Zirlott $197, 384.31, including accounting fees.
The former attorneys for Capt Jay and Zirlott received attorneys' fees of $43, 222.81 for handling the claims of Capt Jay and Zirlott. On October 3, 2014 the former attorneys repaid these fees to the Settlement Program and withdrew from further representation of Capt Jay and Zirlott.
C. Evidence of Fraudulent Claims
Documentation submitted by the Special Master shows that, contrary to the sworn statements filed by Capt Jay and Zirlott, most of the 2009 revenue was not from commercial shrimping, but from marine debris removal work performed in 2009 following Hurricane Ike. Of the total declared gross revenue of $162, 364, approximately ...