MR. GINGOLD: Your Honor, thank you very much. On behalf of 500,000 current Individual Indian Trust beneficiaries and an extremely dedicated litigation team, we thank you very much for the time this Court has spent in the short period that it has had available to prepare for this proceeding, which this Court noted has been a long time coming. And we thank you very much for that. And this courthouse -- this Court, the District Court, is one of the few sanctuaries that our clients have found in 120 years. So we thank you very much for that.
There are three things that I agree with what Mr. Kirschman said this morning. One is, the government filed the July 2, 2000 plan; is the other is, the government filed their July 6th, 2000 plan; the other is, what they've been doing is a litigation support accounting plan, and they are estimating and projecting probabilities as to what might have occurred in certain accounts. Other than that, Your Honor, I disagree completely with what was represented to you this morning.
The reality is, the litigation support accounting plan is a plan based on documentation in the administrative record that is designed for one purpose: To limit the liability of the United States government. That's why it is called the Litigation Support Accounting plan; that is what is being done. It is not an accounting that has been declared by this Court, it is not an accounting duty that the United States government has owed our clients since the government first exercised control over our clients' Trust lands, the natural resources, and the funds and proceeds generated therefrom.
The United States Supreme Court, in Mitchell II has determined the Trust duties of the United States government, specifically with request to the Individual Indian Trust, in 1983. Whereas here, the government has exercised control, and continues to exercise control, all traditional Trust principles apply to the government's management of the Trust.
Therefore, with all due respect to Mr. Kirschman, this is not an APA case. We understand the tension in the Court of Appeals opinions. How those tensions are ultimately explained, Your Honor, I think is anyone's guess at this point in time. But what is abundantly clear is this is not an ordinary Administrative Procedure Act case, this is not an ordinary Trust case. Your Honor, this is not an ordinary Trust.
When the United States government established this Trust, it did not settle the Trust, notwithstanding what our august colleague has suggested. The lands were not lands owned by the United States. The resources were not resources owned by the United States. The lands were principally held by the tribes on reservations pursuant to treaties that went back decades before the Trust was established in 1887.
What happened with regard to the Allotment Act, Your Honor, which was the General Allotment Act of 1887, was that the reservations were broken up. Approximately 40 percent of the land owned by the tribes was reserved for the tribes in Trust. 40 percent was reserved for the individuals. This is all west of the Mississippi. And another 20 percent was available for whatever the United States government wanted to do, whether it wanted to provide the land to homesteaders for various companies that were developing the large cities out west, for railroads, or anything else.
So Your Honor, this Trust was not settled by the United States government. The land was contributed to the Trust, which was owned legally by the Indians. The money that was generated from those lands were monies of the Indians. The Trust duties are duties that are established in accordance with Trust law.
Congress established the Trust; it did not settle the Trust. The United States government is the trustee; the Interior Department is not. The Secretary of the Interior and the Assistant Secretary of Indian Affairs are among the trustee delegates who have been charged with the fiduciary duty to manage the Trust in accordance with Trust law. The Secretary of the Treasury is another trustee delegate.
What this Court has held, and what the Court of Appeals has affirmed, is that there is a fiduciary duty that preexisted the 1994 Trust Reform Act. And again, that duty, in accordance with Mitchell II, began at the time the government exercised control of the lands. The exercise of control was decided by the Supreme Court in two principal ways: Whether it's by statute and regulation; or, in the absence of statute, by practice.
The practice element was determined in 2003 in the United States Supreme Court case involving the White Mountain Apache Tribe. The government contested both the Mitchell II decision, and it contested the White Mountain Apache, and the government lost in both. The government took the position that duties -- this was a bare Trust, not a true Trust. The duties did not apply
In reality, the Supreme Court said no, that's not true. The duties do apply. And unless Congress specifically to the contrary limited those duties, they applied as they would apply in traditional Trust law.
Your Honor, statutes were enacted subsequent to 1887: In 1889, statutes were enacted with regard to the duty to account for proceeds of leased lands. You had statutes in the mid-1890s; you had statutes in 1910; and you had statutes again, beginning in 1918; and the 1938 statute, Your Honor, amended the 1918 statute. The 1994 statute amended the 1938 statute.
The statutes weren't repealed; they were superseded and expanded for the purpose of enforcing the Trust duties of the United States, not limiting or reducing in any way the Trust duties of the United States.
IIn 1918 there were several statutes in existence with regard to forestry, oil and gas, grazing. Regulations were promulgated by the Department of Interior with regard to this sort of management. Even the United States Forest Service, which was not part of the United States Department of Interior, was involved with regard to the management of these Trust lands, specifically with regard to the sale of timber.
And Your Honor, even from the beginning of the Trust, concerns were expressed by Congress about the lack of control, about the corruption. As a matter of fact, at the turn of the 20th century, $700,000 was at issue, and an investigation was conducted. Of course, there were no results.
I think it was in 1908, Your Honor, that Theodore Roosevelt executed the largest timber contract in the history of the United States at that point in time involving Indian timber lands. The largest in the history of United States. We're not7 talking about peanuts, we're not talking about $13 billion,we're not talking about 10-dollar accounts, Your Honor. We're talking about some of the most valuable resources in the United States for 120 years.
The allotments were made before the General Allotment Act or the Dawes Act in 1887. The government's own records and the administrative record demonstrate allotments were made at least as early as the 1850s. And they were pursuant to treaty, Your Honor; and again, some of those lands are leased and some are not.
So we're dealing with a comprehensive federal scheme with regard to the management and regulation of the Individual Indian Trust lands, the beneficial interests solely in the hands of the individual Indians, not the United States government. The United States government took the legal title. It didn't have the legal title to give to anyone.
So we have an entirely different situation. And one of the myths that has been propagated by the government, including in representations to the Court of Appeals, is one of the reasons that this Trust doesn't have to be managed nearly so well as anyone else's Trust, is because Indians aren't paying for it. This is free; therefore, whatever Congress appropriates, that's all it can do, and the nature and scope of the Trust duties is limited by whatever an appropriations act is going to provide.
Your Honor, that is fundamentally untrue. From the very beginning of this Trust, fees have been charged for the management of the Trust lands; eight to 10 percent with regard to the sale of timber. Your Honor, if you had a trust today in the Wilmington Trust Company, whether you're a Dupont or anybody else, you're not paying eight percent, you're not paying 10 percent. You're paying a management fee of never more than three percent, and probably less, depending on the size of the trust.
So our clients have not only been paying for the management of the Trust, they've been paying for the management of their Trust more than any other citizen in this country has ever paid for the management of the Trust. This is not a free Trust. What we're looking at is an abuse that has gone on for 120 years, and we're hoping this is the beginning of the end of that abuse.
Therefore, Your Honor, coupled with the complete exercise and control of our clients' Trust lands, the fact that they have been paying dearly for the management of their Trust, there is absolutely no excuse why the fiduciary duty to account that was declared by this Court, affirmed by the Court of Appeals, and has existed with respect to our clients for nearly 120 years, should not finally be discharged.
It is not, Your Honor -- in fact, the 2007 plan is a repudiation of the declaratory judgment of this Court on December 21st, 1999. There's a repudiation of the declaratory judgment affirmed and refined by the Court of Appeals on February 23rd, 2001. None of the subsequent Court of Appeals decisions purport to limit the nature of the declared accounting duty.
What the cases do, in an attempt to reconcile how they relate to this Court's original declaratory judgment and Cobell VI on February 23rd, 2001, is that this Court cannot tell the government precisely how to do the accounting of all funds for every single Individual Indian Trust beneficiary, and establish accurate account balances.
But, if what the government isn't doing will result in that, this Court doesn't have to sit back and let it happen. This judiciary itself is a trustee with regard to the Trust. It is the United States government. And there is nowhere in any of the opinions, in whatever dicta, that says that there is no duty to account to each Trust beneficiary for all funds, that there is no duty to account and establish accurate account balances.
As a matter of fact, in Cobell VI it was explicit: Where the government's expert Dr. Lasater, who Mr. Kirschman indicated will be testifying again, indicated in that particular plan they were doing a statistical sampling based on the variable sampling; not attribute, not adapted, but variable. It has its on characteristics.
And Dr. Lasater testified in a hearing before this Court on November 23rd and November 24, 1998 that they could not establish accurate account balances unless they began with the opening balance of the account. Cobell VI confirmed it. How is it possible, the Court asked, to do the accounting and establish accurate balances without examining and reconciling the opening balance?
That is not being done here, Your Honor. And as a matter of fact, if you're looking at what the accounting, the Litigation Support Accounting plan, is doing, it's excluding the vast majority of the beneficiaries. Not some, but the majority of the beneficiaries, the beneficiaries whose accounts were not reflected on the system as open on October 25th, 1994.
Your Honor, one of the interesting admissions in the administrative record is a document that states that trying to determine the number of accounts and the history of the Trust is entirely speculative. Your Honor, in order to determine whether or not each Trust beneficiary is being provided an accounting of his or her funds, we also have to know how many accounts exist.
From the beginning of the Trust, from the beginning of time, the government exercised control. When the '94 Act was enacted, again it was enacted to give authority to the special trustee because Congress was not satisfied with the Secretary's discharge of the Trust duty after years of hearings and difficulties.
So it required a special trustee; not Mr. Cason. It required the special trustee to assure that the account balances are accurate. There's language in the Act, Your Honor, I think it's Section 3 of the Act. Mr. Cason is not the special trustee; Mr. Swimmer is the special trustee. Mr. Swimmer, Ross Swimmer, special trustee for American Indians. Mr. Swimmer is also the former assistant Secretary of the Interior, Indian Affairs, in the 1980s. Mr. Cason, in the 1980s, Your Honor, was the deputy to Steven Griles when Steven Griles was the assistant Secretary for Minerals Management.
So both Mr. Cason and Mr. Swimmer were around at the period of time when Congress was involved in heated discussions about the Trust. And in fact, in a 1989 report of the special committee for investigations by the Senate Committee of Indian Affairs, they found pervasive fraud and corruption at the Department of Interior with regard to the Indian oil programs.
Your Honor, that corruption was identified in 1989; it was identified in documents in 1928; it was identified by Congress in the predecessor to the Brookings Institution; reports of 1915; reports at the turn of the century. And during the deposition of Mr. Cason that I took in preparation for one of our many trials, Your Honor, I asked Mr. Cason if there was any investigation for fraud that was found. And Mr. Cason said he wasn't aware of any fraud that was found in the first place, and therefore he wasn't aware of any investigation that was conducted.
Your Honor, the systems that house our clients' Trust assets and money have been without control. There's no management. All of this, by the way, is in the administrative record. The data is not only unreliable; it's been repeatedly stated as unreliable by every single independent certified public accountant that has looked at the information. There was not even an audit of the Trust for the first 100 years of the Trust.
And the auditor, which was Arthur Andersen, explicitly said they could not render an opinion because the systems were so poor, the controls were so bad, the staffing was so inadequate, that there was no way to render an accurate assessment of whatever was going on in the Trust.
That was a 1990 report, Your Honor, and it covered FY 1986 and '87, I believe, or it was '87 and '88. And the auditor itself said, this is the first audit of the Trust in 100 years.
So Your Honor, you've had a trust operating for 100 years, and the government would like you to suspend belief that notwithstanding the absence of controls and adequate management, everything was just right and there isn't even a one-percent error.
Let me give you an example of why -- there's a certain amount of perverse humor in this, Your Honor. We've been dealing with a statistician who's providing all this valuable information regarding the adequacy of the paper records era database for use in the statistician's statistical sampling. It's using meta-analysis, and it represented that it's relying on more than 900 documents to come to the conclusion that, notwithstanding all the concerns and findings made by everyone for over 100 years, that what they found was okay.
Let me tell you something, Your Honor. This Court entered an order on Saturday night, and we thank you very much for spending the time. It's rare that I've seen, in my 33 years of practice, for that to happen on a Saturday night, on a three-day weekend, in particular: An order that the documents be produced to Plaintiffs.
In the course of very candid discussions we've had with government counsel, we've been told that many of the documents are missing, are not available, were never available even though they were referenced in the report; that many or most of the documents are missing critical pages. But they're not available because those documents were reviewed by NORC with the missing pages; that the database that was represented in the meta-analysis report as being complete and usable in supporting the conclusions that this august group that rents space at the University of Chicago has produced really didn't exist; that there was no database completed; there is no usable database; and representations in the report that say, "We have created a usable database of all the documents that we relied on in order to come to our conclusions," doesn't exist, Your Honor, because the database was never completed.
So what we have, Your Honor, is a statistician using what most people consider to be junk science to come to the conclusion that, using incomplete data, that the government database and the paper records era is complete. We can appreciate irony, Your Honor, but that's not what a trustee does with respect to the Trust beneficiaries. Candor is critical.
The Justice Department has been very candid with us since the order has been entered, Your Honor, so we have no complaints about the Department of Justice. But there is something inherently wrong with the process with conclusions are made that have an impact on so many people, when there is no concern about precision and language, completeness of the information, or the conclusions reached.
On the other hand, Your Honor, I'm not sure it would have changed at all because the Litigation Support Accounting is for one purpose. As Mr. Kirschman said, it was originally created as a purpose of settlement negotiations with Cobell plaintiffs.
Your Honor, the purpose, as stated in the administrative record, was to drive down the liability with respect to the negotiations with the plaintiffs, make sure the process is done to avoid errors, minimize errors. Because if the errors are reflected, the liability of the United States government will increase. That's the accounting that's being done for a sliver of the class. That's not the accounting that was declared.
And I do agree with Mr. Kirschman with one other respect. The steps taken aren't going to unduly delay the accounting, Your Honor. The steps taken are not designed to render an accounting, so they can't possibly delay the accounting. Certainly they're not so deficient that they delay an accounting that they state they're going to be providing, because they're not providing accounting of all funds to each beneficiary. They're not establishing accurate account balances.
The statistician, the august statistician who rents space at the University of Chicago, in a rebuttal report specifically said in response to criticisms from plaintiffs' statistical expert, the defending -- I think the credibility of the analysis done by NORC, that, "Don't tell us the steps we are taking in doing the analysis are incorrect or unsound with respect to the establishment of account balances, because we're not doing that." The statistical sampling will not result in the establishment of accurate account balances. The most fundamental, easy requirement identified by Cobell VI and this Court, and it's not being done.
So Your Honor, I agree with Mr. Kirschman: The steps they are taking will not delay the accounting. They are not doing the accounting. You will hear testimony from witnesses that attest to that. You will see documents that provide that. We are dealing with data that has been distorted over the years, and has been used to protect the United States government. The declared duty is a duty that is owed to our clients. It can't be used as a shield to limit the liability of the United States government.
And as an aside, Your Honor, we also hear about the throughput issue, which this Court properly put before this Court, among the four questions that are to be addressed in this proceeding.
The government has said for years, and represented in affidavit, and Mr. Cason himself in an affidavit provided to the Court of Appeals said there's been $13 billion that has gone into the Individual Indian Trust. There may be gaps in it, no information prior to 1909, no information prior to -- or subsequent to December 31, 2000. And there are all kinds of other problems with regard to gaps in collection.
But, based on the first date that Morgan (sic) Angel, an expert of defendants, could find any deposits, that's why they began in 1909 to come up with that number; now we hear, "Oh, that's an overstatement of the number."
Your Honor, I understand the administrative record. I've read the record, so I now how difficult it is to review. So I understand the difficulty Mr. Kirschman has in reporting the information that's in the record, particularly since Mr. Kirschman wasn't involved in the trial, Trial 1.5, and other information.
But the government, not only in the administrative record, says that it's at least 13 billion. There's an August 22nd, 2001 e-mail when there was a discussion -- as a matter of fact, it was the Justice Department that opened up the discussion, because of the concern that the information with regard to throughput wasn't reliable coming from the Department of the Interior. So they brought the Treasury Department into it.
And Your Honor, as a result of the Treasury Department's brief review, there was a conclusion that maybe the information they're reviewing is inadequate and incomplete, and maybe we have to look at something else to see what we're talking about, throughput.
And Your Honor, in a conversation, in an e-mail that Bert Edwards was involved in, and others at Justice Department and Treasury, the decision was that they seemed to be short about $15 billion in throughput, only from 1951 to 2000, because no one took into consideration the overnighter transactions that Treasury was undertaking every night, using Individual Indian Trust funds.
Your Honor, overnighter transactions in banking parlance are fed funds transactions which are loans to banks overnight by the Federal Reserve. The Federal Reserve loans are pursuant to a discount rate. It's a below-market rate, but it's a rate that enables the banks to maintain their liquidity overnight. It's essential in the system.
Those funds were lent, interest was paid, and $15 billion was not included in the throughput. And that's an August 22nd, 2001 e-mail that I'm referring to, and that will be discussed during the course of the trial.
So Your Honor, what you're looking at is, everything that you're going to be hearing is accurately, with respect to a litigation support plan, to drive down the liability of the government. But it is not what this Court declared, and it's not what the government owes to our clients. It is time, Your Honor, that we consider dealing with the issues that we filed this case about in 1996.
Many of our clients have died in the interim, Your Honor, and many of our clients have been put in nursing homes. Children have been going to school. The poverty has increased considerably over the years. We have disease and illness rates on reservations that are obscene. Very little to do about it.
The government is holding all the assets. There are approximately 11 million acres in Trust right now, Your Honor, generating income. 54 million acres existed at the time this Trust was created.
When I deposed Bert Edwards, the executive director of the Office of Historical Accounting, I asked him what happened to the 40 million or so acres of land that is no longer in the Trust. He said, "Well, I don't know." I said, "Did it just vanish?" He said, "Maybe it did."
Your Honor, we don't have a hole in the United States 40 million acres, bigger than the Grand Canyon. We're talking about our clients' assets. This is the only thing they have. I really believe it is time for this Court, once it hears the evidence, listens to the testimony of the witnesses, that it's time to move forward and make the following findings:
Defendants in fact and as a matter of law have exercised and continue to exercise control over Individual Indian Trust assets, including all proceeds from the sale, lease, or investments of such assets.
Your Honor, that is directly in conformity with Mitchell II, the Supreme Court standard with regard to the application of Trust duties and Trust principles in accordance with Trust law.
Second, defendants, whom this Court has held to be in breach of Trust, have not and will not discharge the declared accounting duty the United States government has owed plaintiffs since the government first exercised control over IIM Trust assets and revenues derived therefrom.
Your Honor, it's important, and Mr. Kirschman discussed the Paragraph 19 issues. I'm not going to go into much more issue there. We've beaten that issue to death for many years. But in fact, the Rosenbaum or E&Y report is not as described by Mr. Kirschman. When Mr. Rosenbaum testified, and one of his aids testified in Trial 1.5, he admitted that they didn't validate the data they were provided by the Department of Interior. They assumed it was correct, and not a single disbursement transaction was reviewed. They assumed they were correct.
What was given to Ernst & Young by the Department of the Interior were ledger sheets, and documents that Interior found that matched up with the ledger sheets. There was no investigation, no examination, nothing done in that regard, Your Honor.
And, Your Honor, when we were able to open what was then called the virtual ledger, which was difficult because of various coding and other problems, we discovered that the information wasn't accurately described at all, that documents that were allegedly matched may have had the name of the Trust beneficiary, but it nothing to do with the transaction. So the $60.94 that Mr. Kirschman refers to is just not case. I don't want to suggest that Mr. Kirschman is being dishonest. He wasn't involved in that litigation, so he doesn't know the details. But Your Honor, that is the fact.
And in fact, Your Honor, the government constantly represented to this Court that that should not -- that five named plaintiffs -- or Paragraph 19 review should not be considered an accounting because it wasn't undertaken as an accounting.
Further, in testimony before this Court, the government represented that it was not representative of whatever the class is for purposes of statistical reliability. So to now break that out and use it as a basis for saying what they're doing now is reasonable or rational and proper, Your Honor, is not supported by evidence of record. And to the extent the government wants to deal with that issue in this proceeding, we will do so.
But one last point on that. The government, was -- there was a contempt proceeding, finding of contempt for failure to produce the documents. This Court subsequently issued an order for purging that problem. That order was never complied with. Interior never even made a request of this Court that the document production should be considered to be completed pursuant to the paragraph. Not even a request, Your Honor.
This Court did request that both Treasury and Interior jointly resolve it, and that wasn't done.
So what we have is a situation which isn't reflected in the record in accordance with Mr. Kirschman's discussion. As a result of this, Your Honor, we're going to ask this Court for one final finding:
That there is no useful purpose to be served by allowing defendants another shot at the target and delay further the fair resolution of this action. We're not talking about delaying the accounting, Your Honor, because they're not doing it; we're saying delaying justice in this proceeding.
This circuit has stated that if in fact it is futile to send an action back to the agency, there is no reason to remand it back to the agency. We have an agency in this case that has been a Trustee delegate, that has fiduciary duties, that has owed these duties for 120 years; hasn't discharged the duties, will not obey this Court's declaratory judgment.
Your Honor, we thank you very much for the time you are going to be dedicating to this. It's going to be a long trial, we suspect. The information is going to be important and revealing, notwithstanding the absence of many critical documents that have not been produced, which this Court will hear during the course of the examination; documents, Your Honor, that are adverse, based on their own description in the administrative record, to the representations made to this Court by the government.
So, Your Honor, let's move this case forward, let's get it done. And hopefully, Your Honor, after more than 100 years, 120 years, some of our clients are going to see justice. Thank you very much.
Full transcript here, via Indianz.com.
Leaving Monterey after visiting my mom and taking the kids swimming I spotted Tjatjakiymatchan (coyote in Rumsien Ohlone) working the field across from Olmstead Road and the airport. I pulled the truck over and we watched tatjakiymatchan hunt for mice and gophers.
Hossein Derakhshan ("Hoder") mentioned something recently that's been nagging me for years, and not too long after Juan Cole wrote a note to the same point. Hossein's piece is a critique of the 
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