Skip to main content

Accusations mount in trust funds case

WASHINGTON - Interior Secretary Bruce Babbitt has once again become the focus of new allegations in an ongoing class action lawsuit against the federal government involving the mismanagement of tribal trust funds.

A motion was filed on Aug. 14 by Indian plaintiffs in the case asking a federal judge to cite Babbitt and representatives of the BIA for contempt of court. Plaintiffs attorneys claim BIA officials retaliated and harassed Mona Infield, a computer specialist in the BIA's Albuquerque office, after she provided affidavits critical of the government's management of trust accounts.

"The recent contempt motion is the first in a series of actions we expect to file, but this one is significant," said Denis Gingold, lead attorney. "The information she provided upset some of her supervisors and they retaliated. This raises serious legal issues."

The motion was filed as part of Cobell vs. Babbitt, a lawsuit which has been ongoing since 1996. The suit was initiated by a group of Indian plaintiffs seeking to force the federal government to account for billions of dollars in unreconciled tribal trust funds and individual Indian monies.

Just last year, the federal district judge in the case found Babbitt, former Secretary of Treasury Robert Rubin and Assistant Secretary for Indian Affairs Kevin Gover in contempt of court for failing to comply in a full and timely manner with a discovery order in the case. In response to those charges, Interior claimed they could not comply because many documents required were covered in mouse droppings and in a state of disarray. To date, approximately $625,000 in sanctions has been leveled against the federal government for violations during the court's consideration of this case.

The recent motion states that Mona Infield, a member of the Citizen Band of Potawatomi, was "slandered, stripped of her trust management and reform duties and supervisory responsibilities, evicted from her office, and assigned indefinitely to her home" in direct violation of a court order. In May 1999, the court placed an order against Babbitt, Gover and other Interior officials prohibiting retaliation against government employees who provide testimony in the case.

"We think the evidence is quite strong," Gingold said. "This is a very experienced and highly qualified Indian employee who has been punished for doing her job and complying with the law."

Scroll to Continue

Read More

The federal government holds approximately $450 million in nearly 500,000 individual trust accounts. There are reportedly no records for more than $100 million of those dollars. In tribal trust accounts overall, $2.4 billion remains unreconciled. The General Accounting Office, the Inspector General of the Department of the Interior, as well as private accounting firms, have issued various reports detailing how the federal government has failed to perform its fiduciary duties and breached its trust responsibility to the beneficiaries of these accounts.

For more than a quarter century, the BIA has failed to invest in the modernization of account systems. In addition, the BIA's investment activity in general left many questions unanswered with regard to the potential for funds had they been properly invested. There are charges that hundreds of millions of dollars in potential interest was lost because money was left as cash for long periods of time. As a result of this and the widespread perception that the BIA is wasteful and ineffective, many in Congress say they are hesitant to appropriate money to an entity so riddled with apparent financial mismanagement.

For more than 30 years, basic operating principles were neglected by the BIA's Office of Trust Fund Management while tribal resources flowed from the reservations. Without an accounts receivable system and with so many leases "missing," the BIA has been unable to tell trust account holders whether all of the income due on their asset leases has been collected. Mineral Management Service (MMS) operations continued on tribal lands with no system to guarantee the legal amount due a tribe or individual on those resources was in fact paid.

In 1994 Congress passed the Indian Trust Fund Management Reform Act in an attempt to begin to rectify these long-standing problems. Among other things, it created the Office of the Special Trustee for American Indians and the Advisory Board on Trust Fund Management Reform. It was expected the special trustee would create an accountable system by implementing necessary reforms for proper discharge of the secretary's trust responsibilities to Indian nations and people.

However there have been numerous obstacles in resolving the myriad levels of mismanagement. The first special trustee, Paul Homan, resigned in protest of what he claimed were attempts to obstruct his efforts to reconcile trust accounts.

The contempt motion will be heard by Alan Balaran, a special master appointed by the judge in the case. It should be noted that Balaran gained recent attention for a jail sentence he imposed on a prison warden, a federal official, for violation of a court order.

The federal government has until Sept. 19 to respond to the plaintiff's motion.