Indian Trust Fund Scandal Points to Decades of Poor Accounting | AccountingWEB

Indian Trust Fund Scandal Points to Decades of Poor Accounting

Thousands of American Indians are still waiting for the federal government to account for billion of dollars held in trust in what is the largest and longest-running class-action lawsuit against the government.


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The federal government has leased Indian lands for farming, grazing, mining, logging and other money-making activities, but the Interior Department has done a sloppy job of accounting for the fees. More than $100 billion, which were put into trust funds, may be lost.

U.S. District Judge Royce C. Lamberth in July condemned the government's treatment of Indians and ripped into the Interior Department for its unreliable information. He wrote that Interior's tenure as trustee has been “shot through with bureaucratic blunders, flubs, goofs and foul-ups, and peppered with scandals, deception, dirty tricks and outright villainy, the end of which is nowhere in sight."

While the trust accounts reach back to 1887, Interior could account for only 1988 to the present, and that information may not be credible, Indian Country Today reported. Poor computer records, lost data and incompetent administrators have been blamed.

Tribes have offered to settle the case for $27.5 billion, but Sen. John McCain, R-Ariz., chairman of the Senate Indian Affairs Committee, said Congress would never approve a figure that high, the Arizona Republic reported.

Legislation has been introduced that would encourage both sides to reach a settlement, but the proposal has been strongly criticized by Elouise Cobell, a rancher from the Blackfeet Nation who is the lead plaintiff in the nearly 10-year-old case brought on behalf of more than 300,000 American Indians.

McCain told Indian Country Today, “The litigation is draining resources from Indian country. In earlier bills I included a provision to allow the litigation to reach a conclusion. Two mediators and bills I introduced have not succeeded. Earlier this year, with the support of plaintiffs and defendants and with the support of many in Indian country, I said I would make one good attempt to resolve this legislatively.”

The cost of accounting for the funds is another issue. Interior says $100 million has already been spent. It could cost $10 billion to reconcile accounts from 1887.

The economics of leasing land for grazing or mining–which has involved paying Indians erratically and far less than what they consider their due–is in sharp contrast to that of the tribes who own 367 casinos. Indians entered the gaming industry in the late 1980s, and by 2004, the tribes grossed $19 billion.

Those riches extend only so far, however. According to Mother Jones magazine, Indians overall are twice as poor as average Americans. Blackfeet, for example, suffer a 34 percent poverty rate and a 70 percent unemployment rate.

Cobell told the magazine that she will continue fighting the government for the money that rightfully belongs to Indian landowners. "They can't provide the historical accounting because they've lost or destroyed too many records. Their only strategy now is to go slow and try to outlive us all."

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