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Osage Nation wins major trust fund ruling
Monday, September 25, 2006

The Osage Nation hailed victory on Friday after a federal judge ruled the tribe is owed potentially billions for the mismanagement of trust assets.

The tribe's reservation, created by an act of Congress in 1906, has been one of the top oil-producing regions in the nation. But tribal members who share ownership in mineral rights say up to $2.5 billion was squandered by the Bureau of Indian Affairs.

In a 61-page decision released Thursday afternoon, a judge in Washington, D.C. largely agreed. Judge Emily C. Hewitt of the U.S. Court of Federal Claims said the federal government breached its fiduciary duties to the tribe and its members, known as headright owners.

"[T]he court finds that the Osage Tribe is entitled to compensation for the following breaches of defendant's fiduciary duties," Hewitt wrote, outlining five specific breaches: failure to collect royalties based on the highest offered price; failure to collect full royalties during price controls; failure to deposit trust funds promptly due to an unreasonable failure to certify a federal depositary; failure to maintain appropriate cash balances; and failure to obtain investment yields in accordance with law.

Hewitt ordered the tribe and the Department of Justice to "jointly calculate" a damage award by November 2. If they can't agree, the two parties can submit their own figures, the ruling stated.

Back in Oklahoma, tribal leaders celebrated after learning of the decision. "This finding is a long time in coming," Chief Jim Gray said in a statement.

"The Osage Nation government filed this case six years ago, and our people and the shareholders in the royalties of the Osage Mineral Estate have waited for justice for many years, just as American Indians across the country have been waiting for justice in their trust cases for many years," Gray said.

The Osage claim is separate from the more than two dozen trust fund lawsuits that have been filed by tribes. It's also different from the Cobell lawsuit over Individual Indian Money (IIM) accounts.

But many of the underlying issues are the same. Tribes and individual Indians say the federal government has failed to live up to its duties as a trustee for more than 100 years.

The Clinton and Bush administrations have rejected the allegations and have attempted to have the lawsuits thrown out of court. The campaign ramped up during the Bush administration, which took two significant tribal trust cases to the U.S. Supreme Court and has appealed every single adverse ruling in the Cobell case.

In almost every respect, the government has lost on legal grounds. The courts have consistently ruled that tribes and individual Indians are entitled to an accounting of "all funds" in their accounts.

The Osages have won a series of crucial rulings before the Court of Claims. Hewitt has rejected attempts to deny the tribe an accounting all the way back to 1906, the year the mineral trust was created.

The Osages, like other tribes, were presented with a "reconciliation" report by the former Arthur Andersen accounting firm. The report stated that the BIA couldn't account for at least $791,046.37 in trust funds covering the period 1972 to 1992.

The actual figure would be much higher, based on the inception of the trust in 1960 and the interest owed on improperly handled trust funds. Gray, however, said it would be "irresponsible" to speculate on the exact amount until the court can hold further proceedings.

Hewitt has been handling several trust fund cases. One of the most notable involves the Eastern Shoshone Tribe and the Northern Arapaho Tribe, both of Wyoming. Hewitt has ruled in the tribes' favor several times, resulting in the return of millions.

In February, Hewitt ruled in favor of four Chippewa tribes who say the government mismanaged a $52 million trust fund. Their case was filed 14 years ago.

Court Decision:
Nation v. US (September 21, 2006)

Earlier Decision:
Osage Nation v. US (July 28, 2003)

Related Documents:
S.1857 | Senate Report 107-138 | Senate Testimony | House Debate

Relevant Links:
Osage Nation - http://www.osagetribe.com

Related Stories:
Osage Nation trust suit survives first test (07/31)
Judge upholds ongoing trust relationship (04/29)
Bush strategy assumes no trust mismanagement (11/05)
Andersen reports cited in tribal trust cases (08/12)
Norton handed worst nightmare (7/25)
Trust accounting looms for tribes (3/20)
Bush administration bets on accounting (3/18)
GAO: Full reconciliation impossible (2/8)

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