Native American Trust Fund: Massive Mismanagement | Friends Committee On National Legislation
Elouise Cobell has posthumously received the Presidential Medal of Freedom for her advocacy for Native American self-determination and financial independence. FCNL lobbied Congress to approve the settlement in Cobell’s lawsuit against the U.S. government to ensure Native Americans were paid for...
When the U.S. government took control of Native Americans' property rights in 1887, Indians were assured they would receive all the income from their land. They never did. The Cobell v. Salazar class action lawsuit resulted in a settlement for Native American plaintiffs.
According to accounts from whistle-blowers, money belonging to individual Indians was pilfered, skimmed, redirected, or thrown in with general government funds by the U.S. Department of the Interior or its appointed representatives.
In 1996 banker Elouise Cobell filed a class action lawsuit charging the government mismanaged more than $100 billion in oil, timber, grazing and other royalties on land owned by some 500,000 individual Indian beneficiaries.
After a trial in June 2008, Judge James Robertson ordered that the government is responsible for about $455 million of missing Native American money. The Native American plaintiffs expressed disappointment at the verdict, which holds the government accountable for only a fraction of the amount descendants claim to be owed, and have not yet said whether they will appeal.
In early December 2009, the government offered and the plaintiffs accepted a settlement in this 13-year-old case. The settlement provides $1.4 billion to be shared among the plaintiffs (yielding just $1000 per plaintiff). The federal government commits another $2 billion to buy up small shares of scattered properties from their current owners. The settlement includes the creation of a "$60 million federal Indian Education Scholarship fund to improve access to higher education for Indian youth, and … a commitment by the federal government to appoint a commission that will oversee and monitor specific improvements in the Department's accounting for and management of individual Indian trust accounts and trust assets, going forward.
In late 2010, the House and Senate both approved the Cobell lawsuit settlement. In addition to the payments to individual class members, the Cobell settlement agreement provides for a $1.9 billion Trust Land Consolidation Fund, through which interested individual owners receive payments for voluntarily selling their fractional interests in Indian country land. That land would then be held in trust for the tribe with jurisdiction.
1915
The Report of the Joint Commission of the Congress of the United States described the "great wealth in the form of Indian funds" [derived from lands held in trust] as "an inducement to fraud, corruption, and institutional incompetence almost beyond the possibility of comprehension."1934
The Indian Reorganization Act was passed. It stopped all further allotments of portions of tribal reservations to individual owners. It also made perpetual the special trust arrangements which had been created for the lands deeded or allotted to individual Indian owners.1955
A U.S. General Accounting Office report stated, "The deficiencies [in trust management] include disbursements of individual Indian moneys without adequate support, deficiencies in accounting for cash and bonds and in computation and distribution of interests income and other weaknesses in internal procedures."1986
David Henry, an accountant with BIA, became a prime whistle-blower on the fraud and mismanagement which he witnessed was taking place within the Bureau of Indian Affairs regarding funds held by BIA for tribes and individual Indian owners/allottees.1990
During oversight hearings, then-Rep. Albert Bustamante (TX) reportedly stated, "I have a tribe that I represent in my district, but throughout the years, most of these people have been abused by many, and you in the BIA ought to be the ones that really look after them. If this happened in Social Security, I tell you there would be a war. If we can manage Social Security, we ought to be able to manage this."1991
Secretary of the Interior's Annual Statement and Report to Congress stated, "The Bureau's management of Individual Indian Monies (IIM) [accounts] and Tribal trust funds is inadequate to properly maintain and administer the $2 billion dollar fund for which it has responsibility. The BIA's management of tribal and Individual Indian Trust Funds lacks effective management/internal controls, reliable systems and management information. Tribal and individual accounts lack credibility and have never been reconciled in the entire history of the trust fund."1992
The House Committee on Government Operations published its report entitled "Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund." It contained serious accusations of malfeasance, and called for significant changes in the Department of Interior's handling of IIM and tribal trust funds.1994
The Indian Trust Fund Management Reform Act of 1994 was enacted which made significant changes in the Department of Interior organization and its administration of the trust funds. Its passage came despite the vigorous opposition of the Department of Interior. Under the act, a Special Trustee was appointed to serve directly under the Secretary of Interior, and separate from the Bureau of Indian Affairs, in an effort to remedy the problems in both tribal accounts and IIM accounts.June, 1996
The Native American Rights Fund and attorney Dennis Gingold filed Cobell v. Babbitt in U.S. District Court on behalf of five named individual Indian account holders as a class action to compel an accounting and adjustment of accounts. It also sought to establish better policies for appropriate future management of the Indian trust funds.June, 1996
The BIA created a new officer, The Special Trustee, who testified to Senate Committee on Indian Affairs that the IIM account system was "as bad or worse" than the system used for tribal accounts. During the hearing, Sen. McCain (AZ) stated, "Trustees receive and disburse funds all the time for other Americans, and if they blow it they pay. In this case it's the Native Americans who are rightfully owed the money and the federal government who will be forced to compensate for their loss."November, 1996
The first of several judicial orders was entered in Cobell v. Babbitt requiring that the government produce and give to the plaintiffs' attorneys all records of accounts relating to the five individual plaintiffs.February, 1997
The case was certified as a class action lawsuit by Judge Royce Lamberth, meaning all orders entered for the benefit of the five named plaintiffs (such as the order to produce records of account) would also relate to all members of the class. It was estimated at that time that 300,000 individual Indians and their descendants were members of that class, but that estimate has since been increased to about 500,000.November 1998
Judge Lamberth issued an important ruling, over strenuous objections of lawyers for Department of Interior, that in managing IIM accounts the federal government would be held to the same account management standards as any other trustee such as a bank, rather than to the less strict statutory governmental standards. One major consequence of this ruling is that the burden of proof (that there had been appropriate management of funds and proper payments from the accounts to the beneficiaries) became the responsibility of the Department of Interior, rather than that of the plaintiffs.February, 1999
Interior Secretary Bruce Babbitt, Assistant Secretary Kevin Gover, and Treasury Secretary Robert Rubin were all found to be in contempt for failure to produce records as required by court orders.May, 1999
The government acknowledged in writing that while the case was pending, the Department of Treasury had destroyed 162 boxes of relevant documents.June, 1999
A seven-week trial was held. During his testimony, Secretary Babbitt admitted that the fiduciary responsibilities of the U.S. were "not being fulfilled."Spring and summer, 1999
Settlement discussions between the parties with the help of mediators were undertaken but were unsuccessful.December, 1999
Judge Lamberth held that the United States had breached its fiduciary duties and had "unreasonably delayed" trust reform efforts; and he ordered continued judicial oversight for at least five years. The government appealed this order.November, 2000
The Department of Treasury admitted destruction of substantial numbers of additional records which were under its control.Early 2001
The case became renamed Cobell v. Norton, to reflect the change of identity of the new Secretary of Interior.February 2001
The U.S. Court of Appeals for the D.C. Circuit affirmed the major findings of Judge Lamberth. "Not only does the 1994 Act plainly reaffirm the government's preexisting duty to provide an accounting to IIM trust beneficiaries, but it is plain that such an obligation inheres in the trust relationship itself." At another point in the decision the court stated, "…the magnitude of the government's malfeasance and potential prejudice to the plaintiff's class" justified great latitude in the judge's continuing oversight.June 2001
The Senate Government Affairs Committee issued a report in which it described the handling of these funds as one of the 10 worst examples of federal government mismanagement, second only to the Big Dig in Boston.October 2001
Government lawyers revealed to the district court that Assistant Secretary of the Interior for Indian Affairs Neal McCaleb had erased his electronic communications relating to Indian trust funds for a period of 10 months, despite court orders and internal policy to the contrary. Those communications reportedly included figures on the amounts of money going in and out of Indian trust fund accounts.November 2001
Judge Lamberth ordered Interior Secretary Gale Norton and Assistant Secretary Neal McCaleb to stand trial for being in contempt of court. McCaleb resigned shortly thereafter, and as a consequence he did not have to stand trial. The hearing took place several months later, and Norton was found by the judge to be in contempt.March 2005
Attorney General Alberto Gonzales testified that the FY 2006 budget request for the Department of Justice includes $7.4 million and 18 positions to defend the United States in law suits filed by various tribes for mismanagement of tribal assets by the Department of Interior. He stated, "The United States' potential exposure in these cases is more than $200 billion."2008
The case is renamed Cobell v. Salazar to reflect the new Secretary of the interior. Following a trial, Judge James Robertson ordered that the government is responsible for about $455 million of missing Native American money. The Native American plaintiffs expressed disappointment at the verdict, which holds the government accountable for only a fraction of the amount descendants claim to be owed.Essentially the Beruo of indian affairs a federal organization has been utter shit to the native americans for a long time.
