From the Director's Desk

"The BIA has spent more than 100 years mismanaging, diverting and losing money that belongs to Indians. We don't have any political power to change it, so the government just continues to ignore us. We stand poised now to force the government to honor its legal obligation to manage our critical trust fund prudently. Century-old excuses and stonewalling will simply no longer work."

John E. Echohawk (Pawnee)
Executive Director


Enforcing the Trust

Case Summary

In the largest financial scandal lawsuit against the federal government, the Native American Rights Fund represents over 500,000 Individual Indian Money (IIM) account holders against federal government agencies and federal officials for their failure to properly manage a trust fund through which billions of dollars in Indian money have flowed for decades. The aggregate annual balance of these individual accounts totals almost one-half billion dollars annually, and nearly $300 million flows through these accounts each year.

The lawsuit filed on June 10, 1996 charges that the Bureau of Indian Affairs (BIA), a component of the Department of the Interior and Treasury, breached their fiduciary duties to prudently manage the trust funds, and consistently refused to fix an accounting system that is fundamentally flawed and completely ineffective. The federal government is required by law to manage the trust accounts in question. Although the money is processed by the BIA and deposited in the U.S. Treasury, it belongs to individual Indians who have earned it from a variety of sources such as oil and gas production, grazing leases, coal production and timber sales on their allotted* lands.

Because over the years the federal government, by its own admission, has lost or destroyed trust records regarding these accounts, the Office of Trust Funds Management has testified that it cannot assure the accuracy of even one of the 500,000 individual account statements that are required by law to be sent to IIM trust beneficiaries quarterly. The BIA has no idea how much has been collected from individuals and companies that use the land.

The History Behind the Lawsuit

For years Congress, the General Accounting Office (GAO), the Inspector General of the Department of the Interior, and private accounting firms have issued numerous reports recognizing and concluding that the federal government has failed to carry out its fiduciary duties and has breached its trust responsibility to over 500,000 IIM account holders. Moreover, the Office of Management and Budget has consistently placed the financial management of Indian trust funds as a "high risk liability" to the United States.

Even though the United States has known for a long time that its trust accounting is deficient, administrations refused to seriously address or even attempt to resolve the problem. In 1994, after years of pressure by both Indians and legislators, Congress enacted therein the Indian Trust Fund Management Reform Act and appointed a Special Trustee to straighten out the 150 year old mess. Instead of aiding the Special Trustee in his attempt to fix the broken system, the Department of Interior has been an obstacle to reform and has prevented the Special Trustee from carrying out the duties conferred upon him by Congress. In addition, it continuously fails to request sufficient funds to adequately implement the 1994 Act.

What's Next

On February 4, 1997, the Federal District Court for the District of Columbia certified the class action lawsuit. Accordingly, NARF now represents all past and present individual Indian trust beneficiaries of IIM accounts. NARF's efforts on behalf of the account holders center around three overall goals:

* To complete an accurate and reliable calculation of the moneys due individual Indian trust beneficiaries to make them whole

* To properly restate the trust fund accounts in conformity with that calculation

* To require the federal government, particularly the Department of Interior, to create an accounting system that is reliable and accurate so that they can fulfill their trust duties in the future

The federal government has retained Arthur Anderson, LLP as its expert in the case, and NARF and the IIM plaintiffs have retained Price Waterhouse and Coopers. These firms are developing an economic model which will appropriate the functional equivalent of an accounting system, with the objective to determine the amount due to IIM account holders.

Despite stalling tactics by the government, a first phase trial date has been set for March 15, 1999. This first trial will focus on fixing the trust fund system. The second trial, which has not been scheduled yet, will focus on the restatement of the IIM trust and accounts.

What are Allotments

In 1887, Congress passed the Dawes Allotment Act in an effort to assimilate Indians into white society by teaching them the techniques of farming and the values of individualism and private property ownership. Reservation lands were shifted from tribal ownership to "allotted" or parceled sections that were designated to individual tribal members for the purpose of farming or raising livestock. Generally, heads of families received 160 acres and single persons over eighteen years of age received 80 acres.

All other tribal members received 40 acres each. The legislation required that the allotments be held in trust for twenty-five years. Thereafter, individual Indians acquired title to their land and could sell it. The Act also enabled the federal government to purchase "surplus" land to be sold to white settlers.

The allotment process failed miserably and proved disastrous for tribes culturally, politically and economically. Culturally, private ownership seriously conflicted with the universally held tribal belief that land was a sacred resource to be used communally. And while many eastern tribes were traditionally agriculturists, and could take credit for teaching farming techniques and introducing new crops to the first settlers, farming represented a completely alien way of life for most western Indians.

Politically, the allotment process seriously eroded the role and sovereignty of tribal governments. Economically, the Allotment Act brought further poverty and loss of land to the tribes. By 1934 the government had allotted more than one hundred reservations, and tribes had lost ninety million acres, approximately two-thirds of the land they held in 1887. Sixty million acres of this lost land had been sold as "surplus.". Government officials often intentionally allotted poorer land to Indians and labeled more desirable parcels "surplus" for sale to settlers. In terms of real land value, not just total acreage, tribes lost more than 80 percent of their land wealth. Since their land was often unsuitable for agriculture and since the government's promises of money, supplies, and technical advice rarely materialized, Indians could not compete with their white neighbors, who were beginning to use machines to successfully farm larger areas. Unable to farm, many Indians were forced to lease or sell their lands to white settlers. Between 1903 and 1993, one million acres of Indian lands passed into non-Indian hands each year. Since many of the Indians spoke no English and were not familiar with the cash economy, the BIA put the money derived from leases into trust accounts.

As is still the case today there was no accounts receivable system in place, no reconciliations or audits ever conducted, and there were no checks and balances to prevent abuse of the system.

"The Indian problem [will] disappear like the snow in the Spring."

- Senator Dawes (author of the legislation), when speaking about the expected results of the Dawes Allotment Act

On the Case

Robert Peregoy, a Flathead Indian of Pend d' Oreille and Kootenai descent, joined NARF as a staff attorney in 1984. Currently the lead staff attorney in the Washington, D.C. office, he has also worked in the Boulder office. Robert's current legal work at NARF focuses on the IIM case, however he also works in the areas of religious freedom, repatriation issues, federal recognition, land claims and legislative monitoring. His experience prior to joining NARF includes a tenured associate professorship at Montana State University and a Ford Foundation Fellowship. Robert has a B.A., M.P.A. and J.D. from the University of California, and an Ed.D. from Montana State University. He is admitted to practice law in Colorado and the District of Columbia. From 1991-96, he served as the Chief Justice of the Court of Appeals of the Confederated Salish and Kootenai Tribes.

Keith Harper, a member of the Cherokee Nation of Oklahoma, has been a staff attorney at the Native American Rights Fund since 1995. He first came to NARF as a Skadden Fellow in 1994. In addition to the IIM case, his casework at NARF includes treaty claims, religious freedom, federal recognition, land claims, and legislative advocacy. Prior to joining NARF, Keith was an associate at Davis, Polk & Wardwell and then served as law clerk to the Honorable Lawrence W. Pierce of the U.S. Court of Appeals, Second Circuit. He has a B.A. in sociology and psychology from the University of California, Berkeley and a J.D. from New York University. Beginning this fall, Keith will teach "Federal Indian Law" at Catholic University Columbus School of Law and American University School of Law on an adjunct basis. He is admitted to practice in New York and the District of Columbia, as well as numerous federal courts.

Lorna Babby, a member of the Oglala Sioux Tribe, joined the Washington, D.C. staff of the Native American Rights Fund and the IIM litigation team in January 1998. She is a graduate of Gonzaga University and Yale Law School, and has focused professionally on issues relating to the protection of Indian lands and water rights. Prior to joining NARF, Lorna was a staff attorney with the Indian Law Resources Center, and a Water Rights Specialist with the Bureau of Indian Affairs. She is admitted to practice law in Montana.

The Eagle Feather

The Native American Rights Fund (NARF) is pleased to announce that two Alaska Native regional corporations, Arctic Slope Regional Corporation (ASRC) and NANA Regional Corporation, have together pledged $43,500 to co-sponsor a two-year attorney fellowship in NARF's Anchorage office. The ASRC / NANA Fellowship is part of a national project launched by the National Association for Public Interest Law and The Open Society Institute that is designed to facilitate partnerships in under-served communities among public service organizations, private sector corporations, and fellows.

Conrad Bagne, Chief Operating Officer of Arctic Slope Regional Corporation says, "As Alaska Natives, we are facing many challenges to our way of life and values. ASRC is proud to be a partner in support of this fellowship. It will help address some of the inequities that exist in our legal system by providing legal and advocacy services for Native people in Alaska."

Charlie Curtis, President of NANA Regional Corporation adds, "We are highly committed to ensuring that Alaska Native issues are at the forefront. The Native American Rights Fund is a vehicle that enables our voices to be heard and our rights to be defended for the benefit of all indigenous people."

Eric Johnson, a graduate of Stanford Law School and formerly with Alaska Legal Services in Barrow, Alaska has been selected for the ASRC / NANA Fellowship. Johnson's fellowship will begin in September and will focus on Alaska Native sovereignty and subsistence protection issues.


Update

On April 1, 1998, a bill to settle the water rights claims of the Chippewa Cree Tribe of the Rocky Boy's Reservation in Montana was introduced in the Senate by Max Baucus (D-Montana) and Conrad Burns (R-Montana), and in the House of Representatives by Rick Hill (R-Montana). The Bill is the first Indian water rights settlement that has the support of the Clinton Administration, as well as the State of Montana and the Tribe. The bill ratifies the compact between the Tribe and the State of Montana that quantifies the Tribe's on-reservation water rights and establishes a water administration system designed to accommodate the needs and concerns of downstream non-tribal water users. The bill also authorizes the initial steps and funding for a more extensive process of obtaining a long-term drinking water supply for the Chippewa Cree Tribe -- a process that is vital to the survival of the Tribe.

On June 24, 1998, a hearing was held on the Rocky Boy water rights settlement bill in the Senate Committee on Indian Affairs. The parties are awaiting the scheduling of mark-up of the bill by the Committee. In the House of Representatives, a hearing on the bill has not yet been scheduled by the Subcommittee on Water and Power of the House Committee on Resources to which the bill was referred. The parties are still hopeful that the bill will be enacted during this Congress even though very few days remain in this congressional year. If the settlement bill is not enacted by Congress this year, it will be reintroduced in the first session of the 106th Congress beginning in January 1999.

Events

NARF will be hosting a very special event in Los Angeles, California on October 12, 1998. For further information on the event and/or to get on the invitation mailing list, please call our Development Department at (303) 447-8760.

NARF is pleased to announce that Ada Deer (Menominee) has been renamed to its National Support Committee (NSC). Deer is currently a senior lecturer at the University of Wisconsin in Madison, Wisconsin and has over two decades of local, regional and national experience in the areas of education, politics, Indian policymaking, social work, and community service. Former chair of NARF's National Support Committee and chair of the NARF board of directors, Deer earned a Masters of Education from Chicago's Loyola University and an undergraduate degree in History Education from Brigham Young University. Among her numerous achievements, Deer is perhaps best known for spearheading the restoration of the Menominee Nation as a federally recognized tribe in the 1970s, and for classifying 226 Alaska Native villages as federally recognized tribes in 1993 during her tenure as Assistant Secretary of Indian Affairs.

As a member of the NSC, Deer will assist NARF in its fundraising and public relations efforts. ~ ~ ~

The U.S. Environmental Protection Agency (EPA) recently presented staff attorneys Mark Tilden (Navajo) and Don Wharton with an "Outstanding Environmental Achievement Award" for NARF's work with the Oglala Sioux Tribe on developing a Tribal Environmental Policy Act. Facing major environmental problems and wanting to temper or avoid further harm due to new development on the reservation, the Tribe asked NARF to help develop a review process for tribal and non-tribal developers whose project may affect the environment. Both Tilden and Wharton were honored at a special awards ceremony held in Denver, Colorado on July 23, 1998. ~ ~ ~

Eyapaha

EYAPAHA - Lakota word meaning camp crier.

Don Ragona, Director of Planned Gifts

On May 19, 1998 the Native American Rights Fund and I lost a close friend. John Ungar possessed a special understanding of the problems that face Native Americans. Because of this, he and his surviving wife Aine, supported NARF's work through financial contributions over the past several years.

John's support originated not from some romantic, stereotypical perception of Indian people, but rather from what his parents, Helen and Sidney instilled in him. Helen & Sidney Ungar were Holocaust survivors. They understood what it meant to be persecuted for one's race and religious beliefs. They knew first hand what it meant to lose everything they had ever worked for. And they taught John never to turn his back on the downtrodden and less fortunate. They taught him to fight for the underdog. John learned those lessons well.

I first met John and Aine in New York in 1993. Whenever I travel on NARF business I try to meet with donors to personally thank them for their support and to update them on our work. When I met John and Aine they wanted to know more. How did NARF get started? What does it take for an organization like NARF to achieve justice for Indian people?

Aine and John's commitment to NARF's work grew over the years. In 1995 we invited John and Aine to join NARF's National Support Committee. They enthusiastically accepted our invitation and the following year kicked off NARF's "Living Waters Endowment" with a lead gift in honor of John's parents.

As their relationship with NARF grew, so did our personal friendship. John and Aine would often call me with questions about particular Indian law cases or Congressional actions affecting Indian tribes. Inevitably our conversations would turn to other shared interests including our children. Over the past few years John and I had the opportunity to ski together. The last time I saw him was this past March in Vail, Colorado when our families got together for a ski vacation. John was thrilled to see his boys Harrison and Cole and my son Nick skiing and laughing and having such a good time.

John was many things to many people -- a father, husband, successful businessman, outdoorsman, adventurer, and world traveler. I'm going to miss him. He was an ally in our struggle for Indian rights and a good and true friend. At 52 years of age, John Ungar began his journey to the spirit world.

Dispelling the Myths about Indian Gaming

Periodically, we receive inquiries from current NARF donors and potential supporters asking why we do not get more funding from Indian casinos. In response to these inquiries, we'd like to take this opportunity to address this issue and help you, our friends, better understand Indian gaming and how revenues generated from these sources are being utilized by tribes.

There is a somewhat common belief in American society that Indians have struck it rich with the establishment of Indian casinos. However, gaming on Indian reservations has a long way to go before it significantly lowers the high levels of poverty on Indian lands nationwide. According to a "Survey of Grant Giving by American Indian Foundations and Organizations" by Native Americans in Philanthropy, the needs of reservation Indians are so great that even if the total Indian gaming revenue in the country could be divided equally among all the Indians in the country, the amount distributed ($3,000) per person would still not be enough to raise Indian per capita income (currently $4,500) to anywhere near the national average of $14,400. And out of more than 500 Indian nations, only 177 are involved in gaming. Many tribes may never participate in gaming because of their geographic location in rural, unpopulated areas.

Among the reasons for the disparity between perception and reality is the attention given to the few tribal gaming operations that have seen spectacular success -- most notably the Mashantucket Pequot Tribe in Connecticut and the Shakopee Mdewakanton in Minnesota. However, these operations are the exception, rather than the rule. As small tribes located near major urban areas, these successful gaming operations have benefited the most from the gaming boom generating 40% of all Indian gaming revenue. The remaining 175 tribal operations are only marginally profitable.

Furthermore, as sovereign entities, Indian tribes, like local and state governments, have a responsibility for the lives and well-being of their citizens. They must face the housing, medical, family, education and job training needs of their members. While the federal government continues to have a treaty based trust responsibility to provide some educational and health services to federally recognized tribes and their members, gaming revenues help offset declining federal funds for basic human services on the reservation.

As a result gaming tribes must concentrate their revenues to create and maintain tribal police, fire and ambulance services, health and child-care services, educational assistance programs, cultural enhancement, and numerous other human service programs.

In sum, gaming operations enable many tribes to reduce unemployment on their reservations, as well as fund governmental programs necessary for the survival of their tribal members.