Details sought on tribe monies

A federal judge has ruled Utah must conduct an accounting as far back as 1955 of its $150 million oil trust fund held for the Navajos in San Juan County, which may mean Utah could be on the hook for as much as $35 million in allegedly unaccounted funds, plus interest.

In her ruling issued this week, U.S. District Judge Tena Campbell said Utah must conduct a more detailed accounting of how it has managed the Utah Navajo Trust. What this means is that state officials must dig through five decades' worth of documentation to show accounting for millions of dollars in funds allocated for projects that were to benefit Navajos.

Because Utah is the trustee, ultimately if the state cannot account for the funds the state will be on the hook to pay the money back, said Salt Lake attorney Brian Barnard, who represents several Navajos whose families filed a class action in 1992, demanding an accounting of the trust.

The lawsuit is one of a long line dating back to the 1970s charging the state is mismanaging the trust. The class action seeks an accounting and to recover any misappropriated money.

The trust was created by Congress in 1933. It mandated that 37.5 percent of royalties derived from oil and gas exploration on Navajo reservations be placed in the trust and then managed by the state of Utah. The funds were to be spent for the health, education and general welfare of the Navajos.

Barnard said while there is evidence that the state had correctly managed and invested the trust funds, there is also evidence that the state gave funds to organizations that embezzled the money. "The state has never taken money. What has happened is that the state has mismanaged it," Barnard said.

In particular, Barnard said, an accounting report shows that the Utah Navajo Trust Fund gave an estimated $35 million to the Utah Navajo Development Council, a nonprofit group based in New Mexico that had created a for-profit group called Utah Navajo Industries, which invested trust monies to develop and operate small businesses on reservations. Barnard said several UNDC and UNI officials were convicted of embezzling trust funds but that Utah does not seem to have sufficient paperwork to show where the money went. If the state fails to account for it, ultimately it will be responsible for paying the funds back to the trust.

But deputy Utah Attorney General Phil Lott said a judge will have to ultimately decide if Utah is on the hook for unaccounted-for funds.

"Accounting does not equal a determination that the state has to pay anything," Lott said. "We're not at that point yet."