Leader on BP claims blames fraud for slow payouts

ORANGE BEACH, Ala. (AP) - BP's $20 billion fund to compensate victims of the Gulf oil spill has been inundated with inflated or unsupported claims and in some cases, outright fraud - all slowing down the process of getting money to people who need and deserve it, the administrator of the program says.

Kenneth Feinberg said more than a third of the roughly 104,000 applicants need to do more to back up their claims, and thousands of claims have no documentation at all. He added that the amount sought in some cases bears no resemblance to actual losses, such as a fisherman's claim for $10 million "on what was obviously a legitimate claim of a few thousand dollars."

"People can put down on a claims form all sorts of numbers," he said.

At the same time, hundreds of claims that were initially denied have been accepted as Feinberg adjusts rules for compensation, such as whether people need to be physically close to the spill to get paid.

"At the beginning, it's always rough," said Feinberg, an attorney who previously oversaw claims for 9/11 victims. "Hopefully, by the end of this program, people will feel that the fund treated them fairly."

Many claimants are still waiting for checks from the Gulf Coast Claims Facility, which is doling out BP's money to oil spill victims. The Associated Press interviewed dozens who say they have received small fractions of the compensation they requested. Claims have been bogged down by the sheer volume of requests for money as livelihoods have crumbled since the April 20 rig explosion that killed 11 workers and spewed more than 200 million gallons of oil over about three months.

"We don't have any business left," said Sheryl Lindsay, a beach wedding planner who filed a claim for about $240,000 for lost revenue from July through December because of cancellations. The check she received from the BP claims center was for just $7,700.

Lindsay said she recently learned that her claim will be reviewed for possible additional payments, but she needs money now. She closed her coastal Alabama office and said she will soon file for bankruptcy.

Such complaints have "not fallen on deaf ears," Feinberg said. In an interview last week, he promised that kinks would be worked out and more generous payments would come, but that it is taking time to sort the legitimate claims from the overstated and the fraudulent.

"We have scores of applications for financial aid that appear to be fraudulent," and are being reviewed for possible forwarding to the Justice Department for criminal investigation, Feinberg said. Some of the suspect claims have obvious discrepancies, while others appear to be multiple filings for the same loss, he said.

"Our resources are diverted, and we become skeptical and concerned," he added. "Fraud always slows the process down."

To date, the fund has paid out nearly $1 billion to about 50,000 claimants. Claims officials would not provide AP with the total amount actually requested by those claimants. A Feinberg spokeswoman said the number is "irrelevant," given the volume of claims filed with problems.

In the past week, the number of denied claims actually fell, from 528 to 118, as checks were cut and mailed to businesses that were initially told they would get no help.