Attorney: Utah must 'do the right thing'

CHINLE, Dec. 20, 2007

Utah Gov. Jon M. Huntsman's recent attempt to have the state removed as the trustee for the Utah Navajo Trust Fund should not absolve the state from accounting for millions of dollars in trust income, an attorney in the Pelt, et al. v. Utah case said Tuesday.

"As attorneys, we are not taking any position on whether it is a good idea or a bad idea for the state to walk away from the trust, and we are not endorsing anyone as a trustee," said John Pace of Salt Lake City. "All we are saying is, if there is a switch, it is still incumbent on the state of Utah to do the right thing by Utah Navajos."

Utah Assistant Attorney General Philip Lott did not return a phone call to his office Tuesday.

Huntsman last month asked Congress to remove the state from the trust and appoint a new trustee, but so far, no legislation to that effect has come up, Pace said.

"We have spoken with several groups and individuals in San Juan County who feel that part of any legislation proposed should be to hold Utah accountable for the years it was the trustee, and, if it's going to get involved, that Congress should help the state settle this issue," he added.

The suit, filed in 1992, involves the $150 million trust fund established in 1933 when Congress extended the Navajo Reservation boundaries to include parts of San Juan County, Utah.

Legislation extending the boundary included a provision that 37.5 percent of any oil and gas royalties from the area should go into a trust fund for the Navajos in the new area of the reservation. In 1968 the responsibility of the trust was expanded to include all Navajos living in San Juan County.

Today, between 7,000 and 8,000 Navajos are beneficiaries of the trust.

Over the years, the trust has been used to build medical facilities and other improvements in the area.

However, as in the nationwide Cobell v. Kempthorne lawsuit against the U.S. Interior Department, the Pelt plaintiffs allege the state has mismanaged or failed to track the trust fund monies.

They believe tens of millions of dollars may have been lost over the years. In some years, the plaintiffs allege, bookkeeping for the trust amounted to a box full of receipts.

The Utah Navajos want a full accounting and reimbursement for any money the state can't find. The state has argued the accounting would be such a mammoth undertaking it would place an undue burden on the people of Utah.

The most recent hearing, in U.S. District Court in Salt Lake City last Thursday, involved whether the state had any standards in place for investing the trust money and whether the state must account for the money it took in on behalf of the trust as well as what it paid out. Pace said a decision is expected within the next few months.

On Aug. 23, Judge Tena Campbell reaffirmed her original order that Utah must account for what it did with the trust money, including $29 million that was given to the nonprofit Utah Navajo Development Council in the late 1980s and early 1990s.

The council created a for-profit group called Utah Navajo Industries to invest seed money in startup businesses on the reservation, but some officials for both entities were later convicted of embezzling funds.

As a start, Campbell gave the state until June 2008 to account for the period July 1987-June 1991, when it was funneling money to UNDC.

In January 2006, Campbell had ordered that the accounting must go back to the mid-1950s - the earliest records the state has for the trust. That decision was appealed to the 10th U.S. Circuit Court of Appeals in March and the parties are awaiting a ruling in that appeal.

While the case appears to be crawling through the courts, Pace said he's pleased with Campbell's efforts to move it through the system.

"I would say that it was crawling until 1996, when the present judge was appointed," he said. "I'm convinced that Judge Campbell has made a good-faith effort to expedite the case."

Meanwhile, the Cobell case continues to move through the court system as well, with rulings so far in favor of the Native plaintiffs, and the Pelt attorneys are keeping an eye on it.

"While the holdings in Cobell do not directly affect Pelt, they are certainly something we can draw from," Pace said.