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Historical Timeline of Indian
Trust Funds Management
1887
The United States Congress enacts the General Allotment Act that institutes a policy to divide tribal lands among the tribes individual members in 40, 80, 160 and 320 acre parcels. Allotted land is held in trust by the United States government.
1915
Joint Commission of US Congress releases the Report on the Business and Accounting Methods employed in the Administration of the Office of Indian Affairs citing, “…due to the increasing value of his remaining estate, there is left an inducement to fraud, corruption, and institutional incompetence almost beyond the possibility of comprehension”.
1934
The Indian Reorganization Act (IRA) stops further allotment and makes individual Indian trusts perpetual.
1992
The House Committee on Government Operations issues a
Report entitled “Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund,” documenting the mismanagement of Indian trust assets.
1994
Congress enacts the Indian Trust Fund Management Reform Act of 1994
June 10, 1996
Native American Rights Fund (NARF) files the largest class action suit ever filed against the federal government charging that the Departments of Interior and Treasury breached their fiduciary duties to prudently manage the Indian trust funds and refused to fix an accounting system that is fundamentally flawed and ineffective.
November 27, 1996
US District Judge Royce C. Lamberth signs an order requiring the government to produce all records and documents
pertaining to the individual Indian Money (IIM) accounts of five named plaintiffs in the class.
March 3, 1997
The government certifies to the Court that it has produced all such documents for the five named plaintiffs.
May 5, 1998
Almost two years after the suit was filed, the Court again orders the government to produce relevant documents and
records for the five named plaintiffs.
November 23, 1998
Department of Treasury’s Financial Management Service destroys 162 boxes of documents.
December 18, 1998
Judge Lamberth issues an order to show cause why Interior Secretary Babbitt, Treasury Secretary Rubin and Assistant Interior Secretary Gover should not be held in contempt of court for failure to produce the documents for the five named plaintiffs.
February 22, 1999
Judge Lamberth rules that Secretary of the Interior Bruce Babbitt, Secretary of the Treasury Robert Rubin, and Kevin
Gover, Assistant Secretary of Indian Affairs, are in civil contempt of court for their failure to produce court- ordered records.
June 10, 1999
The first phase trial begins. It focuses on fixing the trust fund system. Secretary Babbitt admits that the “fiduciary
responsibilities” of the US are “not being fulfilled.”
August 10, 1999
Judge Lamberth orders Interior and Treasury to pay $600,000 in penalties for their long delay in reporting the destroyed documents.
October 8, 1999
Judge Lamberth appoints a mediator in an attempt to settle the case.
December 21, 1999
Judge Lamberth issues a 126-page opinion ruling that the “United States has breached its trust duties to individual Indian trust fund beneficiaries and has unreasonably delayed trust reform efforts.” The Court ordered continued judicial oversight for a period of at least five years.
January 3, 2000
The government appeals Judge Lamberth’s order.
November 15, 2000
Treasury discloses that it has destroyed more Indian trust documents.
February 23, 2001
The US Court of Appeals, DC Circuit affirms that the federal government has a legally enforceable duty to properly manage and account for Indian trust assets.
March 15, 2001
The Treasury Department reports Indian trust document
destruction by at least 16 Federal Reserve banks and branches.
April 19, 2001 The Special Master Alan Balaran orders a senior Treasury official to give specific, written approval before any trust documents are destroyed by Federal Reserve banks and branches, and to inform the Special Master and the plaintiffs immediately of any such approvals.
June 5, 2001
The Senate Government Affairs Committee cites Interior’s “abusing the trust of American Indians” as No. 2 in the Government’s Top 10 Worst Examples of Mismanagement. The betrayal of trust includes:
1. Untold billions in income from the use of Indian-owned
land, held in trust by the U.S. but “lost” by the Interior and Treasury Departments.
2. $31 million in federal litigation costs.
3. $625,000 in fines paid by the US government for contempt-of-court citations in 1999.
June-September 01
Computer experts, approved by the court and hired by Special Master Alan Balaran, hack into the computer
system that maintains IIM trust records.
November 14, 2001
Special Master Alan Balaran delivers his report documenting “deplorable and inexcusable” computer security lapses.
November 28, 2001
Judge Lamberth orders Secretary Norton and Assistant Secretary for Indian Affairs McCaleb to stand trial for
contempt.
December 5, 2001
Judge Lamberth orders the Department of Interior to disconnect its Indian trust related Internet systems because
they lack security safeguards. Seventy-one thousand employees in Interior’s 14 bureaus are disconnected from
the Internet and trust payment for more than 43,000 Native landowners are stopped.
December 10, 2001
Contempt trial begins for Secretary Norton and Assistant
Secretary McCaleb.
March 20, 2002
Plaintiffs in the class action suit file a motion to hold Interior Secretary Norton in contempt for allowing the
destruction of IIM electronic documents as a cover-up.
September 17, 2002 Judge Lamberth issues a decision holding Secretary of Interior Gale Norton and Assistant Secretary Neal McCaleb in contempt of court on 4 of 5 counts.
Frequently Asked Questions
Q. Why wasn’t this suit filed before 1996? Why not earlier or later?
A. For years the federal government has acknowledged the need for comprehensive reform of its Indian trust fund management system. Administration after administration has promised to fix the system, but failed to keep those promises. Congress recommended Indian trust fund management reform as early as the 1960’s, and beginning in the mid-1980’s, issued a series of explicit directives to that effect. Fed up with the Interior Department’s continued disregard for these repeated recommendations and directives, Congress passed the American Indian Trust Fund Management Reform Act in 1994. The Act reaffirmed the government’s duty to account for Indian trust funds, and appointed a Special Trustee to oversee comprehensive reform of the trust management system. Even after the Act was passed, however, the government made little or no effort to commence systematic reform and to account for its management of individual Indian trust funds. This lawsuit was brought because it was abundantly clear by June 1996 that the system would remain broken unless the government was forced to fix it, and that individual Indians would never be provided with an accounting unless a Federal Judge ordered it.
Q. If the federal government has mismanaged the trust funds, why have individual Indian beneficiaries never heard about the mismanagement before this suit?
A. Despite decades of mismanagement, the government has never informed its individual Indian trust beneficiaries that their Individual Indian Money (IIM) account balances were unreliable. Indian account holders have never received an account statement. During a six week trial beginning in June 1999, Interior Secretary Babbitt admitted that this information had been intentionally withheld in order to reduce the risk of lawsuits.
Q.Where does the money managed by the United States come from?
A. Individual Indian Money trust fund income is derived from individual Indian allotments. Companies lease the land from the government who manages the leasing of Indian property. Indian beneficiaries are not informed about who is leasing their land. In many instances, such allotments produce income from farming and grazing leases, timber sales, or oil and gas production.
Q.Who is currently holding these trust funds?
A.The funds are held in trust by the federal government, specifically by the U.S. Department of Treasury. The funds are pooled into a single
account and invested until such time as they are disbursed to the rightful Indian beneficiary.
Q.How much money are we talking about?
A. The federal government currently holds over $500 million in approximately 500,000 separate Individual Indian Money accounts. Additionally, more than $400 million flows through these accounts each year. Because the government has failed for over one hundred years to account for Indian trust funds, it remains at this point impossible to estimate with any accuracy the amount by which any particular IIM account has been misstated. However, to give some perspective, we can look to similar mismanagement of tribal trust accounts. A report prepared by the Arthur Andersen accounting firm following a limited effort to reconcile the tribal accounts revealed that $2.4 billion could not be accounted for just for the nineteen year period from 1973 through 1992.
Q. Does this lawsuit seek to eliminate the government’s role in trust management?
A. No. This lawsuit seeks to compel the government to carry out its fiduciary duties to individual Indian trust beneficiaries in accordance with the law, including the most fundamental duty of every trustee---the duty to account.
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