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Judge calls Cobell historical accounting 'impossible'
Thursday, January 31, 2008
Filed Under: Cobell

After 11 years of litigation in the courts and debate in Congress, a federal judge on Wednesday declared a historical accounting of the Indian trust "impossible."

In a 165-page decision, Judge James Robertson said the Interior Department is "unable to perform an adequate accounting" of the Individual Indian Money (IIM) trust. The government "has not" and "cannot" cure its breach of trust to hundreds of thousands of Indian beneficiaries who have never been told how much money they are owed for the use of their land, he wrote.

"Indeed, it is now clear that completion of the required accounting is an impossible task," said Robertson, who describe the breach of trust as "irreparable."

The decision, which came after a 10-day trial last October, brought immediate praise from Elouise Cobell, the lead plaintiff in the long-running case. The Blackfeet woman from Montana filed the lawsuit in June 1996 and has contended that a true and accurate accounting was not possible.

"This is a great day in Indian Country," Cobell said yesterday. "We've argued for over ten years that the government is unable to fulfill its duty to render an adequate historical accounting, much less redress the historical wrongs heaped upon the individual Indian trust beneficiaries."

But Robertson didn't base his conclusion on the plaintiffs' assertion that the government has destroyed or has not preserved trust documents. He said the record was "inconclusive" on that issue.

Instead, he said Interior is unable perform a satisfactory accounting due to budget constraints imposed by Congress.

"In its refusal to appropriate enough money to pay for such an accounting, Congress has not amended that demand or the common law of accounting," Robertson observed. "What it has done, instead, is to render a real accounting impossible -- or, perhaps, to recognize that such an accounting is impossible, unless it is 'nuts' enough to pay more than $3 billion to hunt down perhaps $3 billion of unexplained variances in the government's accounts."

Despite recognizing Congressional limits, Robertson did not let Interior off the hook. The department's May 2007 accounting plan -- the third since the start of the Bush administration -- "falls short of its promise to provide beneficiaries reasonable assurance that their account balances are accurate," he said.

The main problem with the accounting is that Interior won't confirm opening balances for any of the IIM accounts, Robertson noted. "If I demand an accounting for funds in my non-interest earning checking account ... I would have firsthand knowledge that the account was indeed opened with, for example, a $500 deposit," he said.

"By contrast, IIM plaintiffs who receive HSAs containing a list of transactions, however accurate, will have no ability to contextualize those transactions," he wrote, referring to the historical statements of account (HSAs) that Interior wants to provide to beneficiaries.

Robertson also said Interior's failure to tie land -- the corpus of the trust -- to the revenues generated by activities on the land makes it "utterly impossible" for a trust beneficiary to determine whether the department is fulfilling its fiduciary duties. "Beneficiaries are provided no records indicating their historical ownership interests," he said of the accounting plan.

Regarding the actual scope of the accounting, Robertson agreed that beneficiaries who receive direct payments are not included because said their funds are never "held" in trust by the government. Similarly, beneficiaries whose trust funds are managed by tribes -- there are two known cases -- are not owed an accounting by the government.

On a second scope issue, Robertson said the department cannot exclude administrative fees and Youpee interests -- named for a U.S. Supreme Court Case -- from the accounting. Fees charged by the government and unconstitutional escheatments of Indian land to tribes must be part of the plan, he said.

Special deposit accounts, however, can be excluded, Robertson concluded. He said Interior's method for dealing with the accounts -- by going after the high-dollar ones first -- is reasonable.

But he said Interior's decision to exclude IIM accounts that were closed before the American Indian Trust Fund Management Reform Act became law and to exclude predecessor interests is "not sanctioned by the common law of trusts or the plain terms of the 1994 act."

"The rationale for including predecessor accounts in the historical accounting process is simply that beneficiaries are entitled to know where their money came from," he noted.

Robertson plans a hearing in about 30 days to discuss the next step in the case -- how to "remedy" the situation. Cobell said the plaintiffs look forward to resolving the case.

"Instead of truthfully seeking to remedy the government's admitted historical mismanagement, the government elected to fight plaintiffs every step of the way," she said. "Judge Robertson has settled the debate in favor of plaintiffs and found that an adequate historical accounting is, in fact, impossible."

Robertson, a Clinton nominee, is the second judge on the Cobell case. He was assigned in December 2006 after Judge Royce Lamberth was removed when the Bush administration raised questions of bias and impartiality.

In April 2007, Robertson surprised both sides in the case when he ordered a trial on the historical accounting. The plaintiffs had long sought one but the government resisted and asked to be left alone to complete its accounting project.

Court Decision:
Findings of Fact and Conclusions of Law (January 30, 2008)

Final Briefs:
Cobell Brief: Conclusions of Law | Cobell Brief: Findings of Fact | DOJ Brief: Findings of Fact and Conclusions of Law

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 | Day 8 PM | Day 9 AM | Day 9 PM | Day 10 AM | Day 10 PM

Trial Order:
Cobell v. Kempthorne (April 20,2007)

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

Related Stories:
Judge: Cobell historical accounting 'impossible' (1/30)
Cobell statement on historical accounting decision (1/30)
Jim Cason: Historical accounting facts (01/18)
Cobell: Historical accounting far from accurate (12/14)
Bush shifts historical accounting duty again (12/5)
Opinion: U.S. wages war on Indian landowners (12/4)
Cobell historical accounting briefs due in court (11/30)
Jodi Rave: Cobell trial ends after 10 days (10/29)
Cobell historical accounting trial concludes in DC (10/26)
BIA faulted for trust management in Palm Springs (10/24)
DOJ objected to testimony from Interior attorney (10/24)
Interior attorney set to testify in Cobell case (10/22)
Interior says Cobell suit not worth billions (10/15)
Cason wraps up testimony in trust case (10/12)
Cobell accounting trial opens in DC (10/11)
Cobell historical accounting trial starts in DC (10/10)
CFO Magazine: The Indian trust fund accounting (10/5)
Cobell historical accounting trial starts October 10 (10/1)
BIA agency lacks accounting for millions in trust (09/25)
Audit finds Indian trust management problems (9/24)
Cobell: Upcoming trial tackles important issues (09/19)
Interior attorney to testify at upcoming Cobell trial (9/18)
DOI won't release trust data in Cobell case (9/11)
Interior attorney accused of disclosing trust data (08/29)
Judge opens electronic data to Cobell plaintiffs (07/10)
Another Cobell historical accounting hearing (7/9)
Judge expresses views on Indian trust fund accounting (06/19)
Hearing on Cobell historical accounting trial (6/18)
Cobell prepares for court battle on accounting (5/30)
Cobell prepares for historical accounting trial (5/18)
Judge prods DOI on Indian trust fund accounting (5/15)
First status conference for Cobell accounting trial (5/14)
Cobell status conference pushed back to May 14 (05/02)
Attorney calls $7B Cobell offer pennies on dollar (4/24)
Cobell heads to landmark accounting trial (4/23)
Judge orders Cobell accounting trial for October 10 (4/20)
Jodi Rave: Cobell calls for accountability (4/12)
BIA office in Palm Springs criticized by landowners (4/11)
BIA office in Palm Springs under investigation (4/10)

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