Master of Jurisprudence in Indian Law - University of Tulsa College of Law
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Cobell
DOI attorney faults BIA office in Palm Springs


An Interior Department attorney who has been locked out of his office at the Bureau of Indian Affairs accused the agency on Tuesday of failing to account for millions of dollars in trust funds.

After a stint in Oklahoma, field solicitor Robert McCarthy went to work for the BIA in Palm Springs, California, over three years ago. He said he quickly learned that the agency didn't have a way to track more than $30 million in annual lease payments owed to members of the Agua Caliente Band of Cahuilla Indians.

"The agency had a very poor system of record-keeping and was grossly mismanaging the leases ... and was generally not enforcing the leases," testified McCarthy, one of the witnesses for the plaintiffs in the Cobell trust fund lawsuit.

Enforcement was so lax that it was impossible to tell whether Agua Caliente landowners received the right amount of money for the use of their land and whether they received it on time, McCarthy said. The BIA essentially relied on the word of developers, private parties and outsiders.

"I saw files that were years in default," McCarthy said of leases that weren't enforced.

Even when a payment was made, the BIA didn't always pass it on to the beneficiary, McCarthy testified. In one case, the BIA kept a trust payment of $130,000 in a "special deposit account" for over 25 years because the agency didn't know whose money it was.

After some research, McCarthy said he discovered the owner "in fact was a very prominent tribal official."

McCarthy and Keith Harper, an attorney for the plaintiffs, were careful not to identify the official but the Department of Justice -- during a particularly harsh cross-examination -- later disclosed it was Barbara Gonzales Lyons, the tribe's former vice chair. One document that was entered into evidence showed she finally got all of her money in late 2004 -- 27 years after it was placed in the SDA.

Despite the apparent mismanagement, the BIA made money off of Agua Caliente landowners. "In virtually every case for virtually every type of administrative action," the agency charged a fee for its services, McCarthy said.

For example, a fee of 1 percent was applied to every single land sale, McCarthy said. In Palm Springs -- where real estate is big business -- this amounted to payments to the BIA that were as high as $60,000, according to one document entered into evidence.

But federal regulations limit fees for land sales to $22.50, McCarthy said. The regulations also cap fees for leases at $500, though that apparently wasn't followed in Palm Springs.

"Those fees are charged in Palm Springs on every lease," McCarthy told the court.

Similar problems were identified in a 1992 audit by the Interior Department's Inspector General. The report recommended the BIA add a field solicitor to the Palm Springs office and develop a system to ensure Agua Caliente landowners were getting paid fair market value and that their leases were being enforced.

The first recommendation was implemented but McCarthy said there was no evidence the BIA was handling the trust "any different from 1992." The agency did buy a computer system to track and enforce the leases but it "was not put into use," he testified.

"I found that it was in a back room in a locked office," he said.

More recently, the BIA started to enter Agua Caliente data into the Trust Asset and Accounting Management System (TAAMS). But a September 2006 memo from a realty officer in Palm Springs called the $40 million system little more than a "database of misinformation," according to a document entered into evidence.

The situation prompted McCarthy to warn his superiors in the Solicitor's Office, the Inspector General and eventually Jim Cason -- the associate deputy secretary at DOI who was in charge of the BIA at the time -- about the problems in Palm Springs. "I was kicked out of my office after I made my disclosures," McCarthy told Judge James Robertson, who wondered why the solicitor was working from home -- with pay -- rather than at the BIA office.

"Everyone stopped talking to me," McCarthy added. "I was shunned."

And when McCarthy informed his superiors that he was going to testify in the Cobell trial, he was told he was going to be fired for allegedly disclosing confidential trust data to the media. The Public Employees for Environmental Responsibility group is defending McCarthy, who has filed appeals over his employment status.

A draft Inspector General audit that has been circulating among Agua Caliente members appears to confirm the lapses in management in Palm Springs. It said BIA lacks a system to account for leases and cited BIA employees who said the TAAMS system was essentially useless.

After his direct testimony, McCarthy was treated in a hostile manner by Robert Kirschman, a DOJ attorney. Kirschman attempted to show that McCarthy tried to take sole credit for identifying the proper owner of the $130,000 trust payment, mischaracterized the way in which Agua Caliente leases are tracked and gave inaccurate information in the memo to Cason.

McCarthy appeared to withstand the scrutiny and Kirschman cut off his cross-examination after seeming to stumble on a question about fees. Kirschman also tried to make an issue out of a memo that he said McCarthy failed to provide to the court.

McCarthy was followed on the stand by Mona Infield, a longtime BIA employee who at one point was sent home for criticizing the agency for its trust management. She is back in her office in Albuquerque, New Mexico, where she is in charge of data recovery efforts.

Infield, a member of the Citizen Potawataomi Nation of Oklahoma, gave succinct but detailed testimony about trust accounting practices dating back to the 1980s. She spoke of outdated systems, missing computer records and a lack of enforcement.

"They were relying on an honor system to pay the royalties," she said of government agencies.

Infield concluded her testimony yesterday afternoon after DOJ attorneys declined to ask questions. Kevin Gambrell, a former DOI trust manager in Farmington, New Mexico, who was removed from his position for alleged insubordination and alleged destruction of documents, was set to testify today.

Trial Transcripts:
Day 1 AM | Day 1 PM | Day 2 AM | Day 2 PM | Day 3 AM | Day 3 PM | Day 4 AM | Day 4 PM | Day 5 AM | Day 5 PM | Day 6 AM | Day 6 PM | Day 7 AM | Day 7 PM | Day 8 AM

Inspector General Audit:
Indian Trust Investigative Review (July 2007)

Google Map:
Agua Caliente Lands in Palm Springs

Relevant Links:
Indian Trust: Cobell v. Kempthorne - http://www.indiantrust.com
Cobell v. Norton, Department of Justice - http://www.usdoj.gov/civil/cases/cobell/index.htm

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