Jun 15, 2008 - 04:06:16 CDT
A federal judge took note of witness testimonies last week in a landmark trial that will award a historic cash settlement to American Indian landowners in a class-action suit against the Interior Department.U.S. District Judge James Robertson will determine who gets award money and how much. He will likely make a decision by the end of summer.
Lawyers in the Elouise Cobell vs. Dirk Kempthorne trial have told the judge a settlement figure rests between $400 million and $58 billion.
The case has spanned a dozen years. Last week's trial ended Thursday and will resume on Monday. It is expected to last between two to three weeks.
Cobell, the lead plaintiff and a resident of the Blackfeet Reservation, filed suit in June 1996 on behalf of 500,000 Indian landowners across the country. At stake is money earned from natural resource income from grazing leases, mining proceeds and sales of timber, oil and gas. Billions of dollars have been collected and held in trust by the U.S. Interior and Treasury departments, respectively. The departments and their bureaus have been designated by Congress to distribute the money to indigenous people.
The accounts were created as the result of Congress' 1887 General Allotment Act, known as the Dawes Act. The measure called for dividing large, land-based reservations into tiny plots that were then allotted to individual tribal members. Any remaining land was given to non-Indians for settlement.
Government lawyers and attorneys for the Indians have been sparring for years about how much money went into Individual Indian Money, or IIM accounts, since 1887.
January court filings show an estimated $14.3 billion was collected between 1909 and 2005 for the IIM accounts. About $10.7 billion was distributed to account holders. The Interior and Treasury departments can't explain what happened to the remaining $3.6 billion.
Meanwhile, government lawyers claim it can prove another $3.2 billion was disbursed before 1971, leaving only $400 million unaccounted for, a number government attorneys "have repeatedly said represents the average 'float' in the IIM trust," said Robertson in court filings.
"These figures are of course estimates, calculated according to unverified hypotheses, using data that are opaque," Robertson said. "They provide only a starting point in assessing the size of the IIM trust fund that cannot be accounted for."
On Wednesday, government witness Michelle Herman, a financial consultant, said money ends up in the IIM accounts that should not be there, including money from school plays, cemetery funds and lease bid deposits.
"What does that do to the total collections number?" said Michael Quinn, a Justice Department attorney.
Herman replied: "It would overstate collections to individual accounts."
Lawyers for the landowners called upon Don Pallais, a certified public accountant with more than 30 years' experience. He told the court he read up to 150 reports that outline historical accounting problems in the IIM accounts. He described how government-managed accounts allowed for release of IIM money without authority, how it went to the wrong people and how it was stolen.
In one Arthur Anderson report, up to 30 percent of landowners said they never received money that was shown to have been paid them, according to a 1988 accounting audit.
A 1953 Government Accounting Office report for the Bureau of Indian Affairs detailed the need for segregation of accounting duties. It's an accounting problem that has been in place "across the decades" said Pallais. The system has allowed workers to handle money without any checks and balances, meaning one person could approve checks, write dollar amounts on checks and handle all accounting for the checks.
"If the person makes a mistake, nobody will ever notice it because they're the ones that do the follow-up," said Pallais. "If they want to misappropriate funds, that's the position to do it in because you approve it, pay it to yourself, and then bury it in the accounting records."
Over the past 12 years, the Interior Department has been court-ordered to provide a historical accounting. In 1998, BIA officials estimated they had approximately 1.4 billion pages of IIM trust records. But government experts later said the number was overestimated by some 1.2 billion pages because they "had not adequately accounted for destroyed documents."
(Reach reporter Jodi Rave at 800-366-7186 or at jodi.rave@lee.net.)
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