IIM suit headed for trial

11/23/98

WASHINGTON, D.C. - The federal government and 500,000 American Indians are headed for trial.

A class action lawsuit filed June 10, 1996 on behalf of all American Indians with an IIM account, will finally get its day in court after nearly18 months of briefs, motions for dismissal and memorandums of opinions. A federal judge denied all government motions for dismissal of the suit. A March 15, 1999 trial date has been set.

This lawsuit is being touted as the largest, longest, financial scandal in the Nation.

"Justice is just around the corner for Native Americans," said Robert Peregoy, lead counsel for the Native American Rights Fund, which filed on behalf of the accountholders.

The original class action suit, Cobell et al vs. Bruce Babbitt was filed on June 10, 1996 by Louise Cobell, director of the Blackfeet Reservation Development fund, and lead plaintiff.

Judge Royce Lamberth, United States District Judge, opened the door for trial with a Nov. 5 Memorandum of Opinion that denied the last of the federal government's motions to dismiss the suit.

"This was a landmark decision handed down by Judge Lamberth. In that decision, Judge Lamberth rejected the government's numerous motions to dismiss this case in its entirety," Peregoy said.

"He ruled, very significantly, that this case will proceed to trial and will be decided under long standing principles of traditional trust law, which includes the common law. This means that the United States, as trustee for individual Indians and tribes, will be held to the same standards of conduct of any trustee managing or administering any trust.

"Judge Lamberth's watershed ruling means that for the first time in the history of this nation, the first Americans will be afforded equal treatment under the law - the common law of trust," Peregoy said.

The largest class action suit in history against the U.S. Government alleges the federal government was negligent in its management of some 500,000 Individual Indian Money accounts by "losing, misplacing or destroying documents" resulting in tens of billions of dollars in missing funds, according to Peregoy.

"It was estimated that it would cost $281 million just to reconcile those IIM accounts and at the end of the day any information they came up with would be virtually worthless because of the missing, lost and destroyed records," Peregoy said.

The suit asks the court to order the BIA and the Department of Interior to provide an accounting of the funds in the IIM accounts.

The law suit is not asking the government to make up the difference of lost funds, but to provide an accurate accounting.

According to transcripts of oral hearings, NARF attorneys were not asking for an "infusion" of money into the accounts as argued by the government. Judge Lamberth made it clear in his opinion that the defendants seek only an accounting.

An accounting has been likened to the loss of a personal checkbook. It isn't known what the balance is until the checkbook is found or otherwise reconciled. What the class action suit alleges is that the accounting system was broken and the IIM account holders are asking the court to order the government to fix it. NARF is also claiming the IIM accounts are underestimated because of mismanagement and they want the accounts adjusted. In 1994, Congress created the Indian Trust Fund Management Reform Act to alleviate many of the management problems of the trust fund and also created the office of Special Trustee to administer the funds.

The Secretary of Interior is accused of interfering with the Special Trustee's mandate to reform the trust system by under-funding the office and withholding funds.

NARF attorney's claim that documents and information essential to the case against the government, were withheld preventing them from acquiring necessary information to proceed in the case, according to court documents and Peregoy. On Nov. 6, the day after Judge Lamberth's opinion was issued, a hearing ironed out the differences and the government will have to provide the information.

This decision set the wheels in motion for trial.

"(The government's) been on some pipe dream about this case was going to go away, but they now know it's not going to go away after my ruling yesterday," Judge Lamberth said during the Nov. 6, hearing.

The IIM accounts are held by the U.S. Treasury and administered by the Department of Interior. They represent some 500,000 account holders that have land held in trust and the revenues that go into the accounts are fees from leased land, coal and oil extraction and other mineral rights fees.

The money belongs to the individuals, not the federal government, but is managed by the government. IIM accountholders, through their attorneys, agree that the money is in the accounts somewhere, but the lack of proper accounting procedures prevents anyone from reconciling each account thus determining the balance.

The government admits that thousands of documents had been lost and that proper reconciliation and accounting procedures are necessary. The special trustee has been given the authority to carry out that function.

It is possible that criminal charges could be leveled at some individuals as more information and documentation becomes available. "That remains to be seen in terms of what documents are produced by the government, what they show and do not show. But we have certainly seen evidence of past criminal conduct and unlawful conduct in the administration of these accounts," Peregoy said.

Each year an estimated $350 million to $450 million in fees are administered, posted and distributed to the owners of the trust land. The BIA and Department of Interior admitted there was no way of determining the actual dollar figure of the IIM accounts and the GAO issued a report saying the accounts could not be properly reconciled because of lost or destroyed records and poor accounting procedures.

The law suit is filed within the laws of trust. This means the government is held liable as the trustee of the accounts and funds, just as any individual fulfilling the position of trustee for any other individual would be, requiting a proper accounting and disbursement of funds. By suing the government as a trustee, the class action participants prevent the government from avoiding suit by claiming sovereign immunity.

Peregoy and NARF claim the accounting of the trust funds will be retroactive to 1887 when the Dawes Act allocated reservation land to individuals and families. Going back that far will push the total figure of fee revenues into the tens of millions of dollars, according to Peregoy. The figures are estimated, because exact figures are not possible without all records.

Some $2.4 billion in tribal trust funds are also missing. The two are not related, other than the federal government again was charged with maintaining a trust responsibility of the revenues. The General Accounting Office also uncovered the problem.

"The IIM accounts are in much worse shape than the tribal trust accounts," Peregoy said.

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