From the September 2002 issue of Investment Advisor • Subscribe!

A Strong Case

When trying to convince tribes to place their money in the care of his private investment management firm, or indeed any private investment firm, advisor Dean Parisian certainly has a case--especially if any of the tribe's money is currently being managed by the U.S. government. It's a bad sign when Interior Secretary Gale Norton gets hauled into court, as she did earlier this year, to face contempt charges for having allegedly covered up or lied about the failures to overhaul a system intended to improve the management of Native American funds. It's even worse when such failures only come to light after Native American plaintiffs spend six years suing the Interior Department for loss and/or mismanagement of trust funds intended to distribute to as many as 500,000 Native Americans the annual revenues from the leasing of grazing, oil, mineral, or timber rights of their own land. Thanks to mismanagement, sloppy accounting, and systematic destruction of documents, as much as $100 billion of Native American money has been lost, says Dennis Gingold, lead counsel for the plaintiffs. As Judge Royce C. Lamberth, U.S. district judge in Washington, D.C., wrote in a 1999 ruling on the case, "It would be difficult to find a more historically mismanaged federal program that the Individual Indian Money (IIM) trust. The United States, the trustee of the IIM trust, cannot say how much money is or should be in the trust.... An accurate accounting cannot be rendered for most of the 500,000-plus beneficiaries. It is fiscal and governmental irresponsibility in its purest form."

Sadly, there are more stories like this. In an effort to persuade Native American tribes to choose his firm over Uncle Sam to manage their investments, Parisian has detailed a similar story in a letter that he has presented to tribes and tribal publications. The letter goes like this:

Louis Bad Wound and Larry Red Shirt would surely cry. Both were part of the original group who worked so hard for the return of the Black Hills to the eight Sioux Tribes. In June of 1980, the Supreme Court of the United States upheld an award of $105.9 million to the Sioux for the value of land taken by the U.S. government plus accrued interest. The assets have been held "in trust" by the Bureau of Indian Affairs ever since. The money has been invested in bonds guaranteed by the U.S. government, the same government that has violated almost every treaty ever signed with tribal leaders. That original investment has grown to around the $500 million mark.

But had the Bureau of Indian Affairs been directed, asked or instructed by tribal or federal authorities to invest that monetary award, in June of 1980, into the U.S. stock market, into an unmanaged, passive index of United States stocks, the S&P index, that original $105.9 million would have grown to an absolutely staggering amount of $2,313,915,000 ($2.3 billion) in April of 1999.

Think seriously about these numbers. The time it would take to invest $105.9 million into the S&P index would be only minutes. Imagine the power these eight tribes would have with over $2 billion in assets in securing the 1.3 million acres of U.S. Forest land they wanted returned. As a former trust officer, I don't call that a trust relationship. I call that a rip-off. Stop asking what the BIA can do with your money. Start asking what professional investment management firms can do for Native American money. For if not today, when? How long can Native people wait? For all the wonderful Sioux people who could be benefiting from these funds, think very seriously.

I know Louis Bad Wound and Larry Red Shirt would.

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