Eloise Cobell recounts long legal fight over U.S. mismanagement of Indian trust funds

Eloise Cobell, executive director of the Native American Community Development Corporation and lead plaintiff in the class action Cobell v. Kempthorne, told an audience at the University of Montana in Missoula that the federal government has never properly accounted for money from individual Indian trust accounts since allotment began in 1887.

"This is not about asset management. It's about money that the government has collected off of our resources," Cobell said, summarizing the thrust of the lawsuit and the plaintiffs' demand for an accounting and, if required, restitution.

Cobell framed the case as three discrete claims: first, to require the federal agencies to fix their accounting systems; second, to provide each individual account holder with an accounting of funds collected on their behalf; and third, to make adjustments to account balances if restitution is warranted. She said the suit, filed June 10, 1996, on behalf of more than 500,000 individual Indian account holders, has produced repeated court findings in the plaintiffs' favor but limited practical relief.

Why it matters: Cobell said courts have recognized systemic failures dating to the Dawes Act allotments, and subsequent litigation produced rulings that forced fixes in theory but not necessarily in practice. She said the appellate court applied compound interest to earlier government accounting determinations, producing an estimate of about $176 billion in potential liability, though she and others later proposed a discounted settlement of $27.5 billion. Cobell said a government settlement proposal of roughly $7 billion was "insulting," and she described congressional maneuvers that repeatedly delayed or constrained the court process.

Cobell recounted procedural milestones and government responses: a protective order early in the case to preserve documents; contempt findings and fines against senior officials in the Treasury and Interior departments for destroying or withholding records; appointment of a special master and a court monitor to evaluate agency compliance; and a scathing report by U.S. District Judge Royce Lambert criticizing Interior's management and calling practices "racist" and unethical. She said the administration and its allies in Congress repeatedly sought riders and appropriations changes that undercut court oversight, and an appellate decision removed Judge Lambert from the case.

Cobell also described operational and security concerns: court-appointed reviewers found Interior's information systems vulnerable to hacking, and a judge temporarily shut down systems in February to protect accounts. She said that shutdown, and other litigation developments, prompted some agency offices to stop issuing checks and that individual account holders were sometimes told to call her to complain when payments were delayed.

On settlements and negotiations, Cobell said plaintiffs had obtained third‑party resource accounting for timber, oil and gas, and minerals and had a detailed methodology for estimating funds owed. She described the arithmetic used by plaintiffs and by government lawyers — with figures ranging from the agencies' acknowledgment that some $13 billion had passed through accounts, an appellate estimate with compound interest of about $176 billion, the plaintiffs' discounted settlement figure of $27.5 billion, and a government offer of about $7 billion.

Cobell called on the public and lawmakers to keep pressure on Congress and the executive branch. "If you don't do it, who will?" she asked, urging audience members and elected officials to resist tradeoffs in Congress that could sacrifice a settlement for other district interests.

Background: Cobell placed the origins of the dispute in the 1887 Dawes Act (the Allotment Act), which redistributed tribal land into individual allotments and created the separate category of individual Indian trust accounts administered by the Department of the Interior and Department of the Treasury. She invoked corporate accounting reforms such as the Sarbanes‑Oxley Act as an example of government insistence on private accountability, contrasting that with what she described as uneven enforcement when the federal government is trustee for trust funds.

Cobell closed by framing the struggle as an ethical one: she said the plaintiffs' legal victories have proved the government's failures, but that enforcement, transparency and a fair settlement remain outstanding. "This is morally and ethically the right thing to do is to give us justice," she said.