FROM THE ARCHIVE
Trust fund accounts getting Interior boot
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FRIDAY, JANUARY 25, 2002

Fourth in a series of articles about the state of trust reform.

The Department of Interior is moving to close thousands of Indian trust accounts even though it can't guarantee the balance of any is correct and has yet to start the massive undertaking required to do so.

In an action affecting more than 18,000 individual Indian landowners throughout the country, the accounts are being closed in order to reduce administrative and other costs, according to the department's most recent status report. Declaring the accounts "inactive" can save the government up to $7.6 million a year, Assistant Secretary Neal McCaleb has told a federal judge.

Moreover, eliminating the accounts -- most of which have low balances but a growing number include assets of $1 million or more -- will reduce the probate backlog, McCaleb said. Probate, the process by which land inheritance is settled, is one of the most daunting aspects of trust reform, department officials believe.

But to the Indian beneficiaries whose funds are at stake, saving money and reducing the government's workload are not valid reasons for the undertaking. "They close them, but to what accuracy?" wondered Robert Chelberg, a member of the Red Lake Band of Ojibwe in Minnesota.

Last June, Chelberg was informed that his Individual Indian Money (IIM) account was being closed because it hadn't seen activity for the past 18 months. The notice came in the form of a check worth $6.69 -- an amount Chelbert admits is insignificant but nevertheless troubles him.

Until an historical accounting is complete, Chelberg believes the Interior shouldn't act. "Shouldn't it still remain active and open?" he said.

Accounts can be closed for a number of reasons. Many are eliminated under a program where individual land holdings are consolidated and returned to tribes in order to reduce a problem called fractionation.

Chelberg voluntarily participated because he said "it was a good idea for the tribe." But McCaleb, in the status report, acknowledges there are still accounting and auditing issues the department hasn't resolved when the land is consolidated.

In other instances, however, accounts can be eliminated without the consent of a landowner. Solicitor Bill Myers is in the process of finalizing a legal opinion affecting thousands of American Indians, a large number of whom the department admits it can't find.

Whatever the case, an attorney representing the IIM beneficiaries in a class action says closing even one account is a breach of the Interior's trust obligations. "No account should be closed until there is an accounting," said Dennis Gingold.

"If you don't know how much should be in an account, how how do you know whether or not you should close a single account?" he said.

According to the Office of the Special Trustee, there are 18,453 "inactive" accounts with balances of less than $1.00. The total for these accounts is $5,460.48 but the OST can't locate owners for half of them.

Additionally, there are a number of "special deposit accounts" with balances totaling millions that have been declared "inactive." The OST does not provide statistics and only writes that "the number of special deposit accounts that have been opened and remained inactive over 18 months has proliferated."

U.S. District Judge Royce Lamberth was told last fall the legal issue regarding the accounts would be resolved by the end of the year.

Other Trust Reform Updates:
Intro | Secretary's Observations | Special Trustee Observations | Trust Transition Observations | Departmental Organization | Historical Accounting | Computer Security | Trust Management

Get the Report:
Status Report to the Court Number Eight (1/16)

Relevant Links:
Indian Trust, Department of Interior - http://www.doi.gov/indiantrust
Indian Trust: Cobell v. Norton - http://www.indiantrust.com
Trust Reform, NCAI - http://130.94.214.68/main/pages/
issues/other_issues/trust_reform.asp

Related Stories:
Indian trust seen in new light (1/23)
Computer security finally a concern (1/23)
Norton scraps trust reform blueprint (1/18)
Under watch of Swimmer, TAAMS halted (1/18)
Official: Norton report still 'inadequate' (1/18)
Andersen taking on IIM accounting (1/18)
Norton signs trust reform update (1/17)
Trust reform status report due this week (1/16)
Norton ordered to submit trust fund report (12/18)
Exclusive: Trust reform assessment (12/12)
Interior Solicitor on trust fund crash course (10/17)
Trust fund progress testing 'credibility' (10/11)
Trust fund fix risking 'failure' (10/10)
Memo: Solicitor's order was 'intimidating' (10/10)
In The Hoop: Interior Bungling (10/10)
Infighting delaying trust fund fix (9/20)
Objections delaying trust fund report (9/6)
Trust fund contract canceled (6/28)
Report: Litigation threatening reform project (3/8)

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