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Judge advances Chippewa trust mismanagement case
Thursday, February 23, 2006

Four Chippewa tribes who were awarded $52 million for the loss of their lands can challenge the United States for allegedly mismanaging those funds, a federal judge ruled last month.

In a 55-page opinion that the Native American Rights Fund is calling a "stunning victory," Judge Emily C. Hewitt of the U.S. Court of Federal Claims said Congress created a fiduciary responsibility when it appropriated money to pay the tribes for the loss of 20 million acres. She rejected the Bush administration's attempt to deny the existence of a trust relationship and avoid an historical accounting of the funds.

In two separate proceedings, the Indian Claims Commission had awarded the tribes $52 million, money which was sent to the Treasury Department for the intended beneficiaries. So there can be no dispute that such funds are "trust" funds even if the word "trust" is not mentioned in the acts of Congress that authorized the award, Hewitt concluded.

"Both the intent of Congress," Hewitt wrote and long executive branch practice support the conclusion that 'funds appropriated to Indians to satisfy judgments of the Indian Claims Commission or of this court' ... are, when kept in the Treasury, held in trust for the Indians."

Hewitt also ruled that the federal government has a fiduciary duty to make the funds "productive" to the tribes. Since an accounting has never been provided, she said she would hold a trial to determine the "contours" of the exact responsibilities owed regarding the investment of the $53 million award.

"The executive branch has been charged by Congress with a fiduciary responsibility for the productive investment of funds held in trust for the Indians through the enactment and amendment of investment statutes that create specific fiduciary duties," she wrote.

And in another significant finding, Hewitt rejected the suitability of the controversial Arthur Andersen "reconciliation" reports provided to a number of tribes in the mid-1990s. In the case of the Chippewas, she said the exercise -- which cost the federal government at least $21 million -- failed to provide the tribes with a "meaningful accounting" of their trust funds.

On a fourth issue, Hewitt ruled in favor of the tribes as well. She said the Chippewa Cree Tribe of Montana, the Little Shell Chippewa Tribe of Montana and the Turtle Mountain Band of Chippewa from North Dakota -- the three original plaintiffs -- can add the White Earth Band of Ojibwe in Minnesota to the lawsuit because the Indian Claims Commission, under the authority granted to it by Congress, already identified them as "Pembina" descendants whose ancestors were forced to give up the 20 million acres.

The ruling comes almost 14 years after the tribes first filed the case with the help of the Native American Rights Fund, a non-profit organization that is also co-counsel on the Cobell v. Norton case involving individual Indian trust funds. NARF, in a statement issued last week, said it hopes the Chippewa tribes can now move forward to resolve a key issue: "how much money should there have been in the Pembina Judgement Fund to distribute to the beneficiaries had the trustee properly and timely accounted for and invested the Pembina Judgement Fund."

NARF, however, expects the government to raise a few more challenges before "it seriously considers settlement" of the case.

Hewitt's decision is the latest in a series from the Court of Federal Claims that have gone in favor of tribes and their trust fund claims. The Osage Nation of Oklahoma and the Eastern Shoshone Tribe and the Northern Arapaho Tribe, both of Wyoming, have won key rulings, with the Wyoming tribes the furthest along in the lengthy process. The Wyoming tribes have already settled some claims.

The Bush administration attempted to shut down the tribal and Cobell cases by asking the U.S. Supreme Court to limit the federal government's responsibilities. Government lawyers argued that Congress must be very specific in defining the trust relationship in order for Indian beneficiaries to go to court over the mismanagement of their funds.

The justices rejected that line of thought in two cases decided in March 2003. Although one case went in favor of a tribe and the other went against a tribe, the court reaffirmed the historic Mitchell precedent that provided the groundwork for Indian trust lawsuits.

Get the Decision:
Chippewa Cree Tribe v. US (January 26, 2006)

Relevant Links:
Little Shell Tribe - http://www.littleshelltribe.us
Turtle Mountain Chippewa - http://www.tmbci.net
White Earth Reservation - http://www.whiteearth.com
Native American Rights Fund - http://www.narf.org

Related Stories:
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Statute of limitations about to run out on tribal trust (12/07)
Supreme Court refuses Bush appeal of trust case (04/19)
Supreme Court to weigh appeal of trust lawsuit (04/07)
Bush administration won't give up fight on Cobell (03/18)
McCain weighs GAO probe of Indian trust debacle (03/10)
Wyoming tribes win appeal of breach of trust lawsuit (04/08)
Appeals court revives Wind River royalty fraud case (4/7)
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Osage Nation trust suit survives first test (07/31)
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Audit files for Navajo lease recreated (6/11)
Navajo leaders criticize upheaval at trust fund office (05/09)
Judge upholds ongoing trust relationship (04/29)
Supreme Court upholds common law trust claim (3/5)
High court ruling makes 'passive' trustee of U.S. (3/5)
A mixed bag for Indian trust (3/5)
Bush strategy assumes no trust mismanagement (11/05)
Andersen reports cited in tribal trust cases (08/12)
Norton handed worst nightmare (7/25)
Royalty ruling impacts Indian trust (04/30)
Trust accounting looms for tribes (3/20)
Bush administration bets on accounting (3/18)
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