Associated Press/Greg Bull
Drilling in the Bakken

Land Grab Cheats North Dakota Tribes Out of $1 Billion, Suits Allege

Abrahm Lustgarten, ProPublica

Native Americans on an oil-rich North Dakota reservation have been cheated out of more than $1 billion by schemes to buy drilling rights for lowball prices, a flurry of recent lawsuits assert. And, the suits claim, the federal government facilitated the alleged swindle by failing in its legal obligation to ensure the tribes got a fair deal.

This is a story as old as America itself, given a new twist by fracking and the boom that technology has sparked in North Dakota oil country. Since the late 1800s, the U.S. government has appropriated much of the original tribal lands associated with the Fort Berthold reservation in North Dakota for railroads and white homesteaders. A devastating blow was delivered when the Army Corps of Engineers dammed the Missouri River in 1953, flooding more than 150,000 acres at the heart of the remaining reservation. Members of the Three Affiliated Tribes—the Mandan, Hidatsa and Arikara—were forced out of the fertile valley and up into the arid and barren surrounding hills, where they live now.

But that last-resort land turns out to hold a wealth of oil, because it sits on the Bakken Shale, widely believed to be one of the world's largest deposits of crude. Until recently, that oil was difficult to extract, but hydraulic fracturing, combined with the ability to drill a well sideways underground, can tap it. The result, according to several senior tribal members and lawsuits filed last November and early this year in federal and state courts, has been a land grab involving everyone from tribal leaders accused of enriching themselves at the expense of their people, to oil speculators, to a New York hedge fund, to the federal government's Bureau of Indian Affairs.

The rush to get access to oil on tribal lands is part of the oil industry's larger push to secure drilling rights across the United States. Recent estimates show that the U.S. contains vast quantities of oil and gas. As fracking has opened new fields to drilling, and the U.S. has striven to get more of its energy from within its borders, leases from Louisiana to Pennsylvania have been gobbled up. Now the pressure is increasing on one of the last sizeable holdouts—lands owned by Native Americans.

A review of tribal and federal records as well as lawsuit documents reveals a dizzying array of lowball, non-competitive deals brokered by numerous companies, often entwined with the tribal council and with individual landholders on the reservation. But at heart the alleged practices are simple: Tribal leaders and outsiders set up companies to buy drilling rights cheap and flip them later for spectacular profits—in one case earning as much as a 200-fold return in just four years.

"Hundreds of millions of dollars were lost," said Tex Hall, the current chairman of the Three Affiliated Tribes, in an interview. "It's just a huge loss and we'll never get it back."

At the center of that particular alleged scheme, according to one of the suits, was Spencer Wilkinson, Jr., longtime manager of 4 Bears Casino, a time-worn warehouse of slot machines, swirling cigarette smoke and stained carpets that serves as the reservation's entertainment nexus and its financial hub. Wilkinson also sat on the board of the tribe's development corporation, where he was charged with finding new opportunities to enhance the economy of the reservation.

According to interviews with tribal members, former employees of the Three Affiliated Tribes, and a class action lawsuit filed in federal district court in Bismarck, ND against Wilkinson and others, Wilkinson used his access to casino funds—and to the development corporation—to gain influence and craft an oil deal that would leave him one of the richest men on the reservation.

In 2006 he became an owner of a company, Dakota-3, with Richard Woodward, a white consultant who, records show, was receiving more than $20,000 a month from tribal funds for his work at the development corporation. Together, the suit and other legal filings allege, Wilkinson and Woodward planned to raise money and buy up rights to much of the remaining land not yet slated for drilling, all the while maintaining their work with the tribes and employing Wilkinson's relationship with the council to help get the oil leases approved.


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Waabooz Biboon's picture
Waabooz Biboon
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The White House, Washington (No logo; unofficial response; my observation only.) Dear Friend: Thank you for writing. I want you to know I take your thoughts about the Keystone XL pipeline very seriously, and I appreciate your taking the time to share them with me. We know a low-carbon, clean energy economy can be an engine of growth for decades to come. I want America to build that engine, which is why my Administration has invested aggressively in renewables and energy efficiency. But it’s also true that we cannot complete that transition overnight, which is why we have taken steps to produce more oil here at home rather than buying it abroad. No matter what, allowing the Keystone XL pipeline to be built requires a determination that it will serve our national interest, and the State Department is running a process to make this determination. I want to be absolutely clear: this project will only serve our national interest if it does not significantly exacerbate the problem of carbon pollution. Thank you, again, for your message—it will be on my mind in the days ahead. Sincerely, Barack Obama **** Response to White House memo regarding the Keystone XL, dated Monday, April 07, 2014. Dear Mr. President: I really take issue with the logic in this message. When you say, " I want America to build that engine, which is why my Administration has invested aggressively in renewables and energy efficiency," you mean things like fossil fuels and nuclear energy plants, like the one being planned for in the state of Georgia at the expense of the citizens of North Carolina, South Carolina and Florida which will be handed over as a gift to the private sector for them to turn around and charge working people exorbitant prices and pocket the profit margin created by this type of energy, then this is a step backwards. We had a royal opportunity to go Clean and Green with solar, but that opportunity was allowed to slip away to the Chinese in favor of partisan politics with regard people like the Koch brothers and the Bush oil interests. This is just like England keeping her country on the coal standard because so many nobles and businesses are heavily invested in Welsh coal. Also, it is a well known fact that all oil ends up on a common market as a commodity which is played like a gambling casino on the stock markets; this is what has pushed the prices of gas and oil sky high; all we need to do is take oil off the commodities market and multiple problems would be solved. It is the insistence for the sake of private interests that this disaster by design persists. There is no fear of us running out of oil, we can always purchase it from this common market source. Further, Hugo Chavez was more than willing to give us all the oil we might ever need, but his untimely death, again, only serves American oil brokers' interests. I'm at a complete loss to know how the Keystone XL can possibly serve national interests, unless the only participants in the nation are a private elite. The Keystone XL project severely threatens the Ogallala Aquifer, which provides potable water for most of the mid-west and west. The number of oil "spills" due to shoddy building and maintenance is horrifying; the Valdez and Gulf messes still exist to this day unmitigated properly. Once the Ogallala has been sullied, it will take billions of years for it to be returned to any viable state. You say, "No matter what, allowing the Keystone XL pipeline to be built requires a determination that it will serve our national interest,..." but a more accurate telling would be to substitute "delusion" for "determination." I don't wish to be rude, just accurate, here. Also, the jobs that are so roundly touted as being generated from this project are mythical. At best five thousand ...temporary... jobs will be created which will evaporate when the project is finished. A dismal false hope for Americans considering the price being paid, part of which is the violation of the Treaty Lands of the First Nations people, who have been consistently lied to, cheated and abused since the founding of this country and it still goes on with no accountability; disgraceful and shameful behavior not worthy of America. This needs to change. Also, in violating the Treaty Lands and other American property, we run the risk of doing untold damage when private industry does what it does best; fails to make proper decisions for the sake of short term profits for a small handful of shameless men. The land is ruined, the animals suffer and We the People lose a very valuable asset to long term destruction. This is capricious and inexcusable at best. Further, it makes no difference if we here in America burn the low grade, and very dirty, product of the Tar Sands sludge, or we ship it to China and allow them to pollute the planet. In the interest of intellectual and emotional honesty, this project needs to end permanently and any forward movement is a complete violation of the will of We the People. Respectfully yours, West Winds