Judge refuses to suspend BP settlement payments

Former FBI Director Louis Freeh, left, leaves Federal Court with an unidentified man after meeting with U.S. District Judge Carl Barbier in New Orleans, Tuesday, July 2, 2013. Barbier appointed Freeh to investigate alleged misconduct by a lawyer who helped run BP's multibillion-dollar settlement fund. (AP Photo/Gerald Herbert)

Former FBI Director Louis Freeh, left, leaves Federal Court with an unidentified man after meeting with U.S. District Judge Carl Barbier in New Orleans, Tuesday, July 2, 2013. Barbier appointed Freeh to investigate alleged misconduct by a lawyer who helped run BP's multibillion-dollar settlement fund. (AP Photo/Gerald Herbert)

— A federal judge has rejected BP's request to temporarily halt all settlement payments to Gulf Coast businesses and residents who claim they lost money after the company's 2010 oil spill.

U.S. District Judge Carl Barbier ruled Friday after BP attorneys argued that payments should be suspended while former FBI Director Louis Freeh investigates alleged misconduct by a lawyer who helped administer the multibillion-dollar settlement program.

Lionel H. Sutton III allegedly received a portion of settlement proceeds for claims he referred to a law firm before joining the staff of court-supervised claims administrator Patrick Juneau.

BP says there is a risk that hundreds of millions of dollars in claims payments could be tainted by fraud. Plaintiffs' attorneys say the company hasn't provided any evidence that Juneau has improperly paid any claims.

Sutton, who resigned on June 21, has denied the allegations. Sutton's wife, Christine Reitano, who also worked as a lawyer for the settlement program, had her contract terminated June 26.

Barbier appointed Freeh as a "special master," authorizing him to conduct an independent investigation of the alleged misconduct and take a broader look at the program, after Juneau reported the allegations to the judge last month.

Freeh, who founded a consulting firm in 2007 after serving as FBI director from 1993 to 2001, hasn't indicated how long it will take to complete his investigation.

Juneau's attorneys argued in a court filing Thursday that BP's request for a suspension of payments is partially based on "premature speculation" and is "completely overbroad in its scope."

BP has argued that Barbier and Juneau have misinterpreted the settlement and forced the company to pay businesses for inflated and fictitious losses. The company appealed Barbier's decision to uphold Juneau's interpretation of settlement terms governing payments to businesses.

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