Fraudulent Claims Surface in Gulf Coast

Natural disasters, it is said, bring out the best in people. Victims put aside differences and unite for a common cause, helping neighbors through difficult times.

But disasters can also bring out the worst in people, as they see the help offered as a way to get rich quick.

Residents of the Gulf Coast were portrayed for months as innocent victims of a careless corporate polluter's mismanagement. Fishermen and tour operators told of lost jobs, restaurants were shut down, and the economy in many affected areas was devastated.

But that halo has begun to tarnish as many residents line up to file fraudulent claims of compensation offered by British Petroleum.

Most of the BP oil spill victims are honest and in need of legitimate help, but Kenneth Feinberg, the administrator of the program to compensate victims, said more than a third of the applicants need to back up their claims—and thousands of claims have no documentation to support them at all.

"We have scores of applications for financial aid that appear to be fraudulent," Feinberg said, and those are being forwarded to the Justice Department.

In some cases, "victims" are filing multiple claims for the same loss; in others, people are demanding greatly inflated compensation for legitimate losses—such as one fisherman's claim for $10 million in losses instead of a few thousand dollars.

There will always be people who exploit national tragedies. In the months and years after the September 11, 2001, attacks, officials were deluged by fraudulent claims for everything from health problems to destroyed property to fake life insurance claims.

For example, a San Diego man named Terry Smith collected more than $135,000 from charities and life insurance policies by falsely claiming his wife had died at the World Trade Center. Another woman claimed her non-existent brother, Jeffrey Montgomery, also died in the same attack.

Those who submit fraudulent claims may try to justify it by feeling like they're sticking it to deep-pocketed Big Oil, but in fact not only is the behavior in some cases criminal, but causes harm to those who genuinely need help.

Because of the fraud, says Feinberg, "our resources are being diverted and we become skeptical and concerned. Fraud always slows the process down."

photo: Fishermen in the Gulf. Credit: Associated Press