Utah to pay $33M to settle Navajo trust fund case

SALT LAKE CITY — A heated, nearly two decades long lawsuit over Utah's management of a trust fund for Navajos in San Juan County has come to a bittersweet end.

A federal judged approved a $33 million settlement in the case Tuesday, but some tribal members say it doesn't come close to repairing harm done to their community over the years.

"I guess this the best we can get out of it," said Harrison Johnson, who had sought as much as $200 million. "It's OK."

Johnson was among eight people who filed a class-action lawsuit on behalf of San Juan County's 8,000 Navajos in 1992. The case, Pelt v. Utah, challenged the state's management of a trust fund the federal government created in 1933. The state was appointed to manage the fund.

Money for the trust came from oil found on Navajo land, and 37.5 percent of the royalties were supposed to be deposited into the fund for the health, education and welfare of Navajos in the county. The remainder goes to tribal headquarters in Window Rock, Ariz. The lawsuit alleged Utah had mismanaged the fund, did not keep proper records and lost money or spent it incorrectly.

"It hurt the whole San Juan County," Johnson said. "They feel they've been cheated with their own money."

The lawsuit alleged that Utah did not handle the fund correctly from 1959 through 1992. Money started flowing to the trust in 1957. A federal judge ruled that although the state could account for how it spent the money, it was still responsible for all trust funds, even after money had been sent to entities designed to improve general well-being and create jobs for Navajos.

The nonprofit Utah Navajo Development Council was created to provide health care, education and general welfare. The for-profit Utah Navajo Industries was charged with starting businesses, employing Navajos and developing managerial skills. Bad investments, poor decisions (including a failed puppet-making company), misappropriation and fraud doomed both entities and squandered millions of dollars.

A University of Utah finance professor determined in 1992 that if the money had been managed properly, the fund should have had $100 million. Instead, it had about $9 million.

The settlement approved by U.S. District Judge Tena Campbell ended 18 years of litigation, the last 18 months of which were spent in mediation overseen by U.S. Court of Appeals Senior Judge William Canby.

"It was an atypical mediation process," Phil Lott, assistant Utah attorney general, said in court. "There was significant movement on both sides."