IN THE UNITED STATES DISTRICT COURT 

 FOR THE DISTRICT OF COLUMBIA 

 

 

____________________________________ 

ELOUISE PEPION COBELL, et al. ) 

 ) 

 Plaintiffs, ) 

 ) 

 v. ) Case No. 1:96CV01285 

 ) (Judge Robertson) 

DIRK KEMPTHORNE, Secretary of the ) 

Interior, et al. ) 

 ) 

 Defendants. ) 

____________________________________) 

 

 

 

 

DEFENDANTS’ PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 

FOLLOWING THE EVIDENTIARY HEARING THAT COMMENCED 

ON OCTOBER 10, 2007 


 

PROPOSED FINDINGS OF FACT ............................................................................................... 1 
I. Background/Development Of 2007 HSA Plan................................................................... 1 
A. Data Systems and Documents........................................................................................ 1 
1. Accounting systems used by DOI in the administration of IIM trust accounts .......... 1 
a. Paper Records ......................................................................................................... 1 
b. Integrated Records Management System (IRMS) .................................................. 1 
c. Trust Funds Accounting System (TFAS) ............................................................... 2 
d. LRIS/TAAMS......................................................................................................... 4 
e. Trust Funds Receivable System (TFR)................................................................... 4 
2. Inconsistencies between agency and regional offices................................................. 4 
3. Destruction of documents ........................................................................................... 6 
B. Predecessor Historical Accounting Plans .................................................................... 13 
C. IIM-related Projects Preceding Those In The 2007 Plan............................................. 16 
1. Paragraph 19 project ................................................................................................. 16 
2. Mass cancellation project.......................................................................................... 23 
3. 20-year tribal reconciliation project.......................................................................... 27 
4. TIME project............................................................................................................. 28 
5. Straw Man project..................................................................................................... 29 
6. Various audits ........................................................................................................... 29 
7. Treasury and GAO Settlement of Account Packages ............................................... 31 
D. Establishment Of The AIRR In Lenexa....................................................................... 34 
E. Changes To Historical Accounting Project Reflected In 2007 Plan............................ 38 
1. Historical accounting schedule ................................................................................. 38 
2. Statistical sampling design........................................................................................ 39 
3. Judgment and Per Capita accounts ........................................................................... 43 
4. Special Deposit Accounts ......................................................................................... 44 
5. Office that will provide land asset statement assets.................................................. 45 
F. Rationale For 2007 Plan .............................................................................................. 46 
II. Areas Within The Scope Of The 2007 HSA Plan............................................................. 49 
A. Information Contained Within Historical Statements Of Account.............................. 49 
B. Beneficiaries Receiving HSAs Under 2007 HSA Plan ............................................... 51 
C. Transactions To Be Reconciled Under 2007 HSA Plan .............................................. 53 
1. Judgment/Per Capita Accounts ................................................................................. 55 
2. Land-Based Accounts ............................................................................................... 55 
a. “Electronic Ledger Era” (1985-2000) - completed as a result of the Litigation 
Support Accounting Project.......................................................................................... 57 
b. “Paper Ledger Era” (pre-1985)............................................................................. 65 
D. Reconciliation Process................................................................................................. 68 
1. Accounting Standards Manual.................................................................................. 68 
2. Materials relied upon ................................................................................................ 71 
3. Systems relied upon .................................................................................................. 73 
4. Contractors involved................................................................................................. 76 
5. Error rate; definition of “error”................................................................................. 78 
6. Data from Eastern Region reconciliation project...................................................... 79 
E. Mailing HSAs To Beneficiaries................................................................................... 80 
F. Anticipated Administrative Appeals Process .............................................................. 80 
G. Data Completeness Validation Project ........................................................................ 81 
1. DCV work completed as of Sept. 30, 2007 report.................................................... 83 
2. Evidence regarding percentage of missing data restored through the DCV project 
thus far .............................................................................................................................. 91 
H. Posting Test/Land-to-Dollars Test............................................................................... 94 
1. Pilot test at Horton Agency - conclusions, limitations ............................................. 94 
2. Plans for future posting tests..................................................................................... 97 
I. Interest Recalculation Project ...................................................................................... 97 
J. Land Title Records Office Test ................................................................................... 98 
III. Areas Outside The Scope Of The 2007 HSA Plan ..................................................... 102 
A. Account Sampling (i.e., reconciliation of all transactions within sampled accounts)102 
B. Reconciliation Of Account Balances......................................................................... 103 
C. Reconciliation Of Opening Balances......................................................................... 104 
D. Reconciliation Of DOI Records And Treasury Records............................................ 104 
1. Daily reconciliation of receipts and disbursements by OST................................... 105 
2. Regulatory reporting to Treasury by OST .............................................................. 106 
E. Asset Statements ........................................................................................................ 108 
F. Special Deposit Accounts .......................................................................................... 109 
G. Predecessor Accounts ................................................................................................ 112 
H. Probate Determinations.............................................................................................. 113 
I. Cadastral Surveys ...................................................................................................... 118 
J. IIM Trust Funds Managed By Compacting/Contracting Tribes Utilizing Their Own 
Record System .................................................................................................................... 121 
K. Direct Pay Accounts .................................................................................................. 122 
L. Routine Collection Of Third Party Records .............................................................. 123 
M. Analysis of MMS Systems ........................................................................................ 126 
N. Administrative Fees Deducted From IIM Accounts.................................................. 130 
O. Youpee Escheated Interests ....................................................................................... 131 
P. Accounts And Transactions Outside The Temporal Scope Of The HSA Plan ......... 132 
IV. Cost Of Performing The Historical Accounting ......................................................... 133 
A. Cost Of Historical Accounting Work Completed So Far .......................................... 133 
B. Anticipated Cost Of Completing 2007 HSA Plan ..................................................... 135 
C. Estimated Cost Of Performing The Accounting Demanded By Plaintiffs ................ 135 
D. Congressional Appropriations For HSA Work.......................................................... 137 
V. Throughput..................................................................................................................... 138 
A. Total Amount Of Money Collected By The Government On Behalf Of IIM 
Beneficiaries ....................................................................................................................... 140 
B. Total Amount Of Money Distributed To IIM Beneficiaries...................................... 147 
VI. Certification Of The Administrative Record .............................................................. 155 
CONCLUSIONS OF LAW ........................................................................................................ 155 
I. Law of the Case Circumscribes The Court’s Review of Interior’s Plan and Available 
Remedies................................................................................................................................ 155 
II. Interior’s Plan is Reasonable in Light of Time and Cost Considerations....................... 162 
III. The Secretary Properly Exercised Discretion In Adopting And Executing The 2007 
Plan For Completing The Historical Accounting ................................................................... 167 
A. Interior’s Plan Makes Reasonable Use Of Statistical Sampling................................ 167 
B. Interior’s Plan Reasonably Anticipates Additional Work Needed To Complete The 
Historical Accounting ......................................................................................................... 168 
C. Interior’s Plan Complies With Applicable Statutory Requirements.......................... 170 
1. Interior’s Plan Satisfies the 1994 Act’s Mandate to Account for “All Funds”....... 171 
2. Interior's Plan Provides for Historical Accountings to All IIM Account Holders With 
Accounts Open on or After October 25, 1994 ................................................................ 173 
a. Legislative History Underlying the 1994 Act Confirms Congressional Intent That 
the Accounting Requirements Set Forth in the 1994 Act Apply With Respect To Funds 
Held In Trust On Or After the Date of the Statute’s Enactment................................. 177 
b. The Court of Appeals Has Not Resolved the Issue Whether the 1994 Act 
Mandates Accounting Duties for Accounts That Closed Prior to Passage of 
the Statute.................................................................................................................... 179 
3. Consistent With the Express Statutory Language of the 1994 Act, Interior’s Plan 
Reviews Transactions Going Back to the Later of the Initial Transaction Opening Of An 
Account or the Act of June 24, 1938 .............................................................................. 181 
4. The 1994 Act Does Not Establish an Obligation to Perform Historical Accountings 
for the Closed Accounts Of Deceased IIM Account Holders......................................... 181 
a. Concerns About the Account Balances of Deceased IIM Account Holders Are 
Properly Addressed by Comprehensive Probate Proceedings .................................... 181 
b. Plaintiffs Lack Standing to Assert Any Alleged Rights of Deceased IIM Account 
Holders........................................................................................................................ 182 
5. The 1994 Act Does Not Establish an Obligation to Perform Historical Accountings 
for Amounts That Never Entered the IIM Trust, Such as Direct Payments to IIM 
Beneficiaries ................................................................................................................... 184 
D. Plaintiffs’ Claims of “Impossibility” Are Premised On Requirements That The Court 
Has Rejected ....................................................................................................................... 186 
IV. Notwithstanding More Generous Elements of Interior’s Plan, Claims for Accounting of 
Transactions Prior to October 1, 1984, are Barred by the General Six-Year Statute of 
Limitations, 28 U.S.C. § 2401, and Tolling Language in Annual Appropriations Riders 
Since 1990.............................................................................................................................. 188 
CONCLUSION.......................................................................................................................... 190 



PROPOSED FINDINGS OF FACT 

I. Background/Development Of 2007 HSA Plan 
A. Data Systems and Documents 


1. Accounting systems used by DOI in the administration of IIM 
trust accounts 


a. Paper Records 


1. In the period prior to February 1985, which the Department of the Interior (Interior) 
refers to as the Paper Ledger Era, Interior had transaction registers, paper printouts of 
early computer transactions, as well as hard copy paper ledgers. Tr. 443:5-444:4 
(Herman). 


b. Integrated Records Management System (IRMS) 










2. For the reconciliation of Individual Indian Money (IIM) financial transactions during the 
Electronic Ledger Era, two computer systems are the most relevant: the Integrated 
Records Management System (IRMS) and the Trust Funds Accounting System (TFAS). 
The IRMS was the first system in the Electronic Ledger Era. Tr. 435:14, 448:9-13 
(Herman). 


3. Beginning in the 1970s at some locations and continuing into the 1980s, Interior 
implemented the IRMS on a regional basis. Tr. 288:13-20 (Ramirez). 




4. In the early days of IRMS, the area office had a centralized computer that would keep the 
IRMS data for the agencies in that area. Tr. 2059:16-2060:1, 2060:21-2061:8 (Christie). 


5. IRMS came online at Interior gradually. IRMS was first installed in the Billings regional 
office (now the Rocky Mountain region) in the late 1970s. Tr. 1743:24-1744:2 (Infield); 





By 1988 or 1989, Interior required that all regions use IRMS. Tr. 1743:17-21 (Infield). 
Tr. 2058:24-25, Tr. 2059:2-3 Tr. 2060:2-12 (Christie); see also Tr. 691:6-9 (Herman). 


6. The IRMS system was designed with several subsystems, or platforms, to keep track of 
lease information, ownership information, and personal account information. Tr. 2041:1- 
2 (Christie). 


7. The IRMS system included an IIM subsystem which had accounting information for IIM 
transactions, including account numbers and names. Tr. 343:23-344:1 (Ramirez). 


8. One of Michelle Herman’s first projects was to help aggregate all of the data relating to 
the IIM subsystem of the IRMS into a single database. Tr. 435:7-14 (Herman); see also 
Tr. 571:19-24 (Herman). 


c. Trust Funds Accounting System (TFAS) 


9. The other important system is the Trust Funds Accounting System (TFAS), which is the 
current system. Tr. 448:14-16 (Herman). 


10. Interior’s processing of IIM Trust funds from the late 1990s through the present relies 
upon TFAS, as well as several other automated systems. See DX-239 (Trust Funds 
Processing flow chart), identified at Tr. 867:10-18 (Winter). 




11. Interior’s conversion to TFAS began in August 1998 and was completed in March 2000. 
Tr. 866:10-14 (Winter). 


12. This conversion permitted Interior to produce and mail quarterly IIM account statements 
to beneficiaries since at least March 2000. Tr. 866:15-867:9 (Winter). These statements 
include the beginning balance, all transactions that occurred in their account, with a 
description of those transactions, and an ending balance. Tr. 867:1-3 (Winter). 





13. TFAS also keeps track of the pooled investments of IIM funds. Tr. 872:10-12 (Winter). 
TFAS identifies accounts as restricted or unrestricted, the latter type permitting automatic 
disbursements when the account balance reaches $15. Tr. 872:13-22, 874:5-9 (Winter). 


14. Restricted accounts include those of a minor or an estate account or a whereabouts 
unknown account, where the balance is being held either because Interior does not have a 
valid address or because the beneficiary is a minor and cannot yet legally receive the 
funds. Tr. 872:16-19 (Winter). 


15. Some beneficiaries request that money be held above the regular $15 threshold so that 
they only receive the money upon request or to pay a bill for the individual Indian. Tr. 
873:13-23 (Winter). In the case of oil and gas income, the threshold is $5 instead of the 
usual $15 amount for automatic disbursement. Tr. 874:10-24 (Winter). 


16. Beginning in about October of 2005, OST implemented a lockbox system for depositing 
IIM collections. Tr. 867:20-868:5 (Winter). 


17. As of September 2007, all of the BIA agencies had converted to TAAMS, which 
produces invoices that are sent to lease holders, who “then turn around and send their 
monies back with the invoice to the lockbox.” Tr. 868:6-11 (Winter). 


18. OST also processes funds received as “manual batches,” where the information is entered 
directly into TFAS. Tr. 875:10-16 (Winter). These batches include oil and gas interfaces 
and checks for agencies not yet converted to the lockbox. Tr. 875:10-16 (Winter). 


19. Since the mid- to late- 1990s, all TFAS entries have been subjected to extensive quality 
assurance checks. Tr. 875:17-876:11 (Winter). 


20. As part of the audit of OST’s financial statements, TFAS has been “audited for internal 
controls . . . through generally accepted auditing standards for financial statement 





control.” Tr. 898:18-22 (Winter). Whether OST’s auditors follow – or are required to 
follow – standards of the Committee of Sponsoring Organizations of the Treadwell 
Commission (COSO) was not established, see Tr. 898:23-899:18 (Winter). 


d. LRIS/TAAMS 


21. The Land Record Information System (LRIS) includes a database that records the history 
of ownership for all tracts of Indian Trust land. AR-405 at 5. LRIS was not used for 
current income disbursements or day-to-day financial transactions, which were handled 
by other systems, like the IRMS. AR-405 at 5. 


22. To perform historical accounting work, LRIS may be used to certify the accuracy of a 
historical land-based income transaction. AR-405 at 5. 




23. The Trust Asset and Accounting Management System (TAAMS) is the successor to LRIS 
that Interior has converted to since 2005. Tr. 69:6-13 (Cason); Tr. 867:24-868:11, 870:4- 
7 (Winter). Among other things, TAAMS provides information "as to when a payment is 
due" to Interior’s recently implemented Trust Funds Receivable (TFR) System. Tr. 
869:14-19, 903:10-904:5 (Winter). 


e. Trust Funds Receivable System (TFR) 


24. In addition to the above systems, by early 2006, Interior had rolled out and has now fully 
implemented its Trust Funds Receivable System (TFR), an accounts receivable system 
for those agencies that have converted to TAAMS. Tr. 902:23-903:14 (Winter). 


2. Inconsistencies between agency and regional offices 




25. IRMS was based regionally. Tr. 449:4-12 (Herman). All 12 regions, however, used the 
IIM subsystem of IRMS. Tr. 448:21-448:3 (Herman). 





26. The use of IRMS was “voluntary” at the BIA regions in the 1970s and early 1980s. Tr. 
2040:9-16; 2062:8-10 (Christie). As IRMS was implemented in other BIA agencies 
beyond Billings, there was not a standard usage of IRMS, as each agency accommodated 
the system to their particular way of doing things. Tr. 2062:2-20 (Christie). 




27. Different regions over time used different processes of bookkeeping entries that were 
followed consistently within a region but varied across regions. Tr. 572:19-573:15 
(Herman). This variation made the data more difficult and time-consuming to analyze, 
but did not impair the reliability or integrity of the data. Tr. 573:6-10 (Herman). 


28. Historically, the Osage Tribe did its own accounting for oil and gas revenues and did not 
use the Bureau of Land Management (BLM) staff to conduct their field operations. Tr. 
1737:10-24 (Infield). Money generated for Osage allottees was deposited directly into 
an Osage account at Treasury; subsequently it flowed to a Special Deposit Account 
(SDA) held by Interior and then to each allottee. Tr. 1738:2-21 (Infield). However, in 
1988, the Osage entered their prior balances into IRMS and thereafter used IRMS to 
handle their annuity payments. Id. at 1740:6-24. Therefore, IRMS contains oil and gas 
revenue data for Osage allottees, but for pre-1988 revenues, information other than 
balances would be obtained from paper ledgers and other systems, including, IBM system 
36, and TFAS. Id. at 1740:24-1741:6. 


29. Historically, the Muskogee Tribe’s (as well as the Osage’s) ownership records were kept 
at as many as 70 different county courthouses. The Muskogee Tribe began using IRMS 
in approximately 1988 or 1989. Tr. 1743:17-21 (Infield). 





3. Destruction of documents 


30. With few exceptions, the Indian Trust records needed for the historical accounting exist, 
are being located with success, and are being used to reconcile IIM account transactions. 
AR-565 at 8. 


31. Despite the passage of time and the disposal of some records pursuant to Government 
record retention schedules, Interior’s experience with the historical accounting has 
unearthed much supporting material. As of March 31, 2007, the Accounting 
Reconciliation Tool (“ART”) used by OHTA and its contractors to perform historical 
accounting work contained 9.1 million coded IIM images and 8.1 million coded tribal 
images. These images constitute 2.5 million IIM and tribal documents. AR-533 at 5. 




32. Of the approximately 80,000 document requests made by FTI Consulting, the OHTA 
contractor conducting the Data Completeness Validation (DCV) testing (described in 
detail below), about 35,000 document requests were pending as of the date of the trial. 
Approximately 20 full-time searchers working in Lenexa, Kansas at the AIRR support 
FTI’s DCV work. Tr. 465:25-466:12 (Herman). 


33. Although documents related to IIM transactions have been lost or destroyed, Tr. 1263:4 
(Angel), the evidence shows that multiple copies of transactional documents were 
typically created and distributed to multiple Interior offices, so that this loss has not 
proven material. See Tr. 1264:8-11 (Angel). Typically, even where a document was 
destroyed, more than one copy of a particular document was created. Tr. 1282:6-7 
(Angel). BIA employees typically made three copies of leases and multiple copies of 
some of the financial transaction documents. Tr. 1282:4-6 (Angel). 





34. OHTA accountant and On-Site Manager of the AIRR, Katherine Ramirez, has over 20 
years of experience at BIA, OST and OHTA, including being in charge of the Paragraph 
19 document search and working at the Branch of IIM where she visited dozens of the 
BIA agencies, Tr. 298:1-299:19 (Ramirez); Tr. 409:10-14 (Ramirez). She is familiar 
with the documentation relevant to the historical accounting and how it was distributed 
among BIA agency, area and regional offices. Tr. 299:22-323:6 (Ramirez) (discussing 
DX-215 (Lease), DX-206 (Bill for Collection), DX-222 (Schedule of Collections), DX- 
208 (Deposit Ticket), DX-223 (Summary of Collections), DX-228 (Title Status Report), 
DX-214 (Journal Voucher), DX-212 (Ledger Card), DX-213 (“139-B” check application, 
“DDR Daily Disbursement Report,” and check carbon), Tr. 339:7-340:24 (Ramirez). 


35. The series of exemplar, form documents described by Ms. Ramirez was assembled during 
the Paragraph 19 search project to show the audit trail or accounting process of a 
transaction. Tr. 300:10-20 (Ramirez). Those forms were used before and during Ms. 
Ramirez’s tenure at the IIM branch in the late 1980s and early 1990s. Tr. 340:16-24 
(Ramirez). 


36. The ample availability of such “audit trail” documents results from the number of copies 
(originals, carbons, and photocopies) that Interior routinely generated in processing IIM 
transactions and from the geographic distribution of those copies. Tr. 299:22-323:6, Tr. 
339:7-340:24 (Ramirez). The following table estimates the number of copies of each 
type of IIM transactional document that BIA typically generated, and where those copies 
were usually distributed: 





 Type of 
Document 




No. of 
Copies 

Locations 

Exh. No. 

Transcript Cite 

Lease 

realty office; land 
title records office; 
agency jacket file 

DX-215 

Tr. 300:2-301:5 
(Ramirez) 

Bill for Collection 

lessee; realty office; 
Branch of IIM; 
area/region; LTRO 

DX-206 

Tr. 301:20-303:2 
(Ramirez); Tr. 
2044:6-7 (Christie) 

Schedule of 
Collections 

agency; area/region 

DX-222 

Tr. 303:3-5, 307:10- 
17 (Ramirez) 

Collections 
Summary 

area/region; multiple 
agencies 

DX-223 

Tr. 306:23-307:2, 
307:24-308:9 
(Ramirez) 

Deposit Ticket 

bank; central office; 
region; multiple 
agencies 

DX-208 

Tr. 308:11-16, 309:5- 
14 (Ramirez) 

Title Status Report 

agency (printout); 
LTRO (electronic) 

DX-228 

Tr. 309:23-25, 311:8- 
23 (Ramirez) 

A&E Card 

area/region; agency 

(none) 

Tr. 311:24-312:16 
(Ramirez) 

Ledger Card 

agency, region, 
account holder 

DX-212 

Tr. 315:10-316:10, 
318:5-17 (Ramirez) 

139B Check 
Application 

agency &/or 
area/region 

DX-213 

Tr. 319:10-16, 
322:16-24 (Ramirez) 

Daily 
Disbursement 
Report 

central office; agency 
or region 

DX-213 

Tr. 319:10-12, 
(Ramirez) 

Check Carbon 

agency or region; 
central office 

DX-213 

Tr. 319:19-22, 322:4- 
12 (Ramirez) 

 



3 

7 

1+ 

3+ 

5+ 

2 

2 

2+ 

2 

2 

2 

In sum, BIA typically generated at least two contemporaneous copies of these audit trail 
forms, resulting in duplicate records usually maintained in at least two locations; see Tr. 


386:18-387:1, Tr. 393:12-394:21 (Ramirez) (describing how, within the AIRR, many 
boxes from different BIA offices may contain copies of the same document, and how 
information on the exterior of the boxes stored at the AIRR is used to locate documents). 

37. There are additional documents relevant to the historical accounting. For example, a 
distribution worksheet was a document created contemporaneously from information in 
the IRMS system that would give a snapshot of what owners were involved in a 
particular lease, what their percentage of ownership was, how much was collected for the 
lease, how that was then distributed via the ownership record and the percentage against 
the amount collected, and then how much was put into the accounts. Tr. 2041:12-23 
(Christie). 

38. Copies of distribution worksheets were located during the tribal trust reconciliation, 
discussed below. Tr. 2082:15-18 (Christie). In fact, during the search for documents as 
part of the tribal trust reconciliation project, “massive” amounts of records were found, 
including “thousands and thousands of boxes” coming by tractor trailer loads, including a 
mix of tribal and IIM records. Tr. 2094:6-22 (Christie). 

39. A Journal Voucher, which was used to document the transfer of money from a Special 
Deposit Account (SDA) (described in detail below) into an individual’s IIM account 
would identify to whom the money was going and what their share was. Tr. 2089:18- 
2090:20 (Christie). 


40. A “transaction register” would also document the money flow into an IIM account. Tr. 
2091:1-4 (Christie). 


41. Thus, there is a vast amount of Indian records available for Interior’s historical 
accounting and Plaintiffs produced no evidence to the contrary. There are approximately 





“43 miles of [Indian] records” at the National Archives and at the AIRR, although not all 
would necessarily be useful to the accounting. Tr. 1198:14-21 (Angel). These 43 miles 
consist of approximately 67,000 cubic feet of NARA records and approximately 160,000 
cubic feet at the AIRR. This is in addition to the “approximately 10,000 cubic feet of 
[MMS] and USGS records that would be potentially useful for a historical accounting.” 
Tr. 1181:5-8 (Angel). 


42. Along with their utility for the accounting, these historical Indian records also 
demonstrate a historic regularity and reliability in Interior’s IIM fund process. Tr. 
1195:12-13, 20 (Angel) (“[T]here was a regularity relating to recordkeeping” and a 
“regularity to reporting.”). 


43. To the extent that trust records were in poor shape at the time of the 1994 Act, work at 
the AIRR remedied many of those problems. Tr. 1197:2-3; 8-9 (Angel). 


44. To preserve Indian trust records used for historical accounting, OHTA continues to work 
with NARA on the transfer of ART data and documentation to NARA's Electronic and 
Special Media Records Services Division. AR-533 at 6. During the second quarter of 
FY2007, OHTA prepared 75 cubic feet of inactive records to be transferred to AIRR for 
permanent storage and preservation. AR-533 at 6. 


45. Nearly all testimony elicited by Plaintiffs concerning the destruction of documents or the 
availability of data, whether on cross-examination of Government witnesses or through 
their own witnesses, involved dated information that neither rebuts nor addresses more 
recent developments such as the Paragraph 19 project results, the Litigation Support 
Accounting (LSA) results or the DCV results. E.g., Tr. 426:11-429:15 (Ramirez); Tr. 
720:2-721:24, 737:-738:3 (Herman); Tr. 1739:25-1742:14 (Infield). 





46. Plaintiffs’ trust expert, Paul Homan admitted that he had no current understanding 
regarding the reconciliation work performed on the LSA project or for the Judgment and 
Per Capita accounts. Tr. 1593:18-1594:5 (Homan) (“I’m not aware of the current 
situation at all.”) 


47. Plaintiffs’ statistical sampling expert, Mr. Dwight Duncan, conceded that the fact that 
some data or documents have been destroyed does not mean that other copies of sources 
of the information are unavailable. Tr. 1479:3-13 (Duncan). 


48. Although Plaintiffs’ expert Richard Fitzgerald contended that Interior cannot perform a 
fiduciary accounting because the records are incomplete, Tr. 1911:4-15 (Fitzgerald), he 
conceded on cross-examination that he had not personally reviewed any of the documents 
used in the administration of the IIM accounts. Tr. 1918: 17-24 (Fitzgerald). Nor has he 
been to the AIRR. Tr. 1928:16-18 (Fitzgerald). 


49. Plaintiffs’ auditing expert, Mr. Don Pallais, has never worked with the records used by 
Interior to conduct the accounting, Tr. 1819:16-21 (Pallais), and his opinions are thus 
more theoretical than those of Defendants’ expert, Ms. Caren Dunne, who has worked 
with the documents extensively over several years. Tr. 2117:2-3 (Dunne). In her 
experience, Ms. Dunne has witnessed that the records are largely available and 
accessible, and can be used and are being used currently in the reconciliation process. Tr. 
2117:3-5 (Dunne); see also, Tr. 2125:3-5 (Dunne). The documents are sufficiently 
reliable and are not lacking corroborating evidence. Tr. 2118:11-12 (Dunne). 


50. Plaintiffs’ witness, Mona Infield, an Interior employee, provided anecdotal information 
about her experience with what she claimed were missing data on IRMS. Ms. Infield did 
not (nor did any other Plaintiffs’ witness) state whether information was subsequently 





restored or whether the alleged missing data was contained elsewhere. She also did not 
explain whether such information was material to providing Historical Statements of 
Account. Tr. 1746:9-1747:14 (Infield). 


51. Ms. Infield also provided anecdotal information concerning the overwriting of recycled 
files on the RDRS system; however, she did not state whether any data were lost and if 
so, how extensive any loss was. Tr. 1749:24-1751:13 (Infield). She testified that certain 
data had to be manually entered into the RDRS system or it could be lost. Id. at 1750:8- 
23. Since 2003, weekly back-up files containing such data are kept in perpetuity. Id. at 
17851:5-6. Ms. Infield did not indicate - and no evidence in the record demonstrates - 
that this manual process for a particular subset of leases resulted in any actual loss of data 
or has impaired Interior’s ability to prepare Historical Statements of Account. 


52. During the time that Mr. Joe Christie was Superintendent of the Hoopa Agency (in the 
early 1980s) , the scaling ticket – a document used in the management of money collected 
into the IIM system pursuant to timber contracts – was not kept electronically. Tr. 
2044:1-2 (Christie). However, more than one copy of the scaling ticket was usually 
kept. Tr. 2044:5-6 (Christie). During the search and collection of documents for the 
tribal trust reconciliation, Mr. Christie observed that some scaling tickets were routinely 
destroyed either at the BIA agency or as part of routine document destruction at Federal 
Records centers. Tr. 2044:20-2045:3; Tr. 2054:17-2055:6 (Christie). Mr. Christie did 
not testify that the only copy of any particular scaling ticket was destroyed, or that the 
information from a destroyed scaling ticket was not contained elsewhere or was essential 
to the preparation of an HSA. 





B. Predecessor Historical Accounting Plans 


53. Performing a historical accounting for individual Indian Money (IIM) accounts has been 
an immense task for which the Department of the Interior has had no clear model or 
roadmap to follow. Tr. 55:21-56:7 (Cason). As a result, it has constituted a learning 
experience for Interior, and Interior has made refinements and adjustments to how it 
would perform the historical accounting work in a way to maximize the use of the funds 
that have been appropriated by Congress for the task. Tr. 56:8-12 (Cason). 


54. As explained by James Cason, the Associate Deputy Secretary for the Department of the 
Interior, “there has not been in the past and still as of today, no previous model about 
how exactly we should go about this job. . . . we’re finding that we learn a lot as we go 
through the process, and that that’s an iterative process where we learn and redesign, 
learn and redesign.” Tr. 65:1-9 (Cason). 




55. Although Plaintiffs’ counsel argued repeatedly that the January 6, 2003 Historical 
Accounting Plan for Individual Indian Money Accounts (2003 Plan) and the May 31, 
2007 Plan for Completing the Historical Accounting of Individual Indian Money 
Accounts (2007 Plan) “are plans 8 and 9,” see, e.g., Tr. 141:5-6 (Mr. Dorris), Plaintiffs 
failed to present any testimony or evidence that either identified eight or nine separate 
“plans” to perform a historical accounting or established a basis for the allegation that 
there were eight or nine historical accounting “plans.” See Tr. 92:16-93:6 (Cason). 


56. The July, 1998 High Level Implementation Plan (“HLIP”), for example, cannot 
accurately be characterized as a predecessor historical accounting plan. The HLIP is a 
trust reform document that addresses 13 sub-projects within Interior intended to foster 
improvements in support systems (such as records management, training, policy and 





procedures, and internal controls). PX-4154 at 3-4. It contains no plan to perform the 
historical accounting. 


57. The July 2, 2002 report to Congress represents Interior’s initial iteration of how it 
planned to perform the historical accounting. AR-561; Tr. 58:5-9 (Cason). 


58. The July 2, 2002 report to Congress fulfilled a request of the House and Senate 
appropriations committees for Interior, made first during the FY2001 budgeting process 
and then reaffirmed in the FY2002 budgeting process. AR-561 at 21. 


59. In 2001, the House committee stated that “[b]efore the Department agrees to any method 
for undertaking a historical IIM accounting, the Committee directs the Department to 
submit a comprehensive report to the Committee detailing the costs and benefits and 
likely results associated with any proposal.” AR-561 at 21, quoting H.R. Rep. No. 107- 
103, at 89 (2001). 


60. Also in 2001, the conferees stated that they “remain very concerned about the costs 
associated with [a historical] accounting,” and that funds appropriated to Interior “may 
not be allocated prior to the report requested by the Committees detailing the methods 
and costs associated with a historical accounting.” AR-561 at 21, quoting H.R. Conf. 
Rep. No. 107-234, at 99 (2001). 


61. The July 2, 2002 report to Congress called for a transaction-by-transaction accounting for 
each account. AR-561 at 41-42, 90; Tr. 109:1-11 (Cason). 


62. Interior estimated that the total cost for the historical accounting set forth in the July 2, 
2002 report to Congress would be $2.4 billion. AR-561 at 16. 


63. In a December 9, 2002 letter to Secretary of the Interior Gale Norton, the House 
Committee on Resources responded to Interior’s July 2, 2002 report, indicating that it 





found the report “troubling in several areas.” AR-184. Writing for the Committee, 
Chairman James V. Hansen stated, in part: 


Given the length of time required to complete the broad accounting 
outlined in the Report, as well as the costs associated with such an 
activity, which are likely to come at the expense of other key Indian 
programs, we request that you promptly consider ways to reduce the costs 
and the length of time necessary for an accounting. 

 
* * * 




 

The Report notes that the Department will encounter “gaps in 
documentation” during the historical accounting, and that various options, 
including forensic accounting methods, can be used to address such gaps. 
The Committee asks that before committing significant resources to the 
broad approach described in the Report, the Department consider all 
available options regarding the use of alternative accounting methods. 


 AR-184. 

64. Shortly thereafter, on January 6, 2003, Interior issued its Historical Accounting Plan for 
Individual Indian Money Accounts (2003 Plan). PX-507. 

65. The work described in the 2003 Plan was expected to take five years to complete and was 
preliminarily estimated to cost approximately $335 million. The 2003 Plan expressly 
noted that its successful implementation was “dependent upon sufficient appropriations.” 
PX-507 at 1. 

66. Interior did begin historical accounting work under the 2003 Plan prior to 2007, when it 
began reconciling transactions under the LSA project. Tr. 95:20-98:2 (Cason). 





C. IIM-related Projects Preceding Those In The 2007 Plan 


1. Paragraph 19 project 


67. Years before OHTA completed the LSA project, the Paragraph 19 search and collection 
process demonstrated that sufficient records to conduct the historical accounting exist and 
are retrievable. 


68. In 1999, Interior and Treasury engaged the firm Arthur Andersen to assist them in 
searching for and collecting documents required to be produced pursuant to Paragraph 19 
of the First Order for Production of Information (Paragraph 19). Trial 1.5 Tr. 38:2-22 
(Brunner 6/6/03 PM). Paragraph 19 required the production of all documents, records or 
tangible things that embody, refer or relate to the IIM accounts of the named Plaintiffs or 
their agreed upon predecessors in interest. Trial 1.5 Tr. 39:5-11 (Brunner 6/6/03 PM). 






69. Robert L. Brunner was the individual at Arthur Andersen who oversaw the firm’s work 
on behalf of Interior and Treasury. Trial 1.5 Tr. 38:2-22, 46:10-47:2 (Brunner 6/6/03 
PM). Mr. Brunner spent 15 years at Arthur Andersen, where he was a Principal, the 
national partner in charge of the firm’s Complex Data Management and Class Action 
practice, and the partner in charge of the firm’s Value Solutions Litigation Consulting 
Practice for the Pacific Northwest. Trial 1.5 Tr. 28:10-17 (Brunner 6/6/03 PM). In May 
of 2002, Mr. Brunner joined KPMG, where – at the time he testified in June 2003 – he 
was a principal in the forensic practice and national partner in charge of the class action 
and complex data management practice. Trial 1.5 Tr. 28:2-7 (Brunner 6/6/03 PM). 


70. With respect to Treasury, Arthur Andersen assisted in four primary areas related to 
compliance with Paragraph 19: the development of a plan; the development of protocols 
and procedures for implementing the search and collection process; the development and 





implementation of quality control procedures to ensure the effectiveness and 
comprehensiveness of the search; and the issuance of an opinion as to the thoroughness 
and adequacy of the search. Trial 1.5 Tr. 39:16-40:9 (Brunner 6/6/03 PM). Arthur 
Andersen performed these tasks and completed its work for Treasury by January 31, 
2001. Trial 1.5 Tr. 40:10-51:14 (Brunner 6/6/03 PM). 


71. After the completion of its work for Treasury, Andersen rendered its professional opinion 
that Treasury’s response to Paragraph 19 had been “a thorough, well-executed search that 
met or exceeded industry practices.” Trial 1.5 Tr. 51:15-52:9 (Brunner 6/6/03 PM). 
Treasury ultimately produced approximately 2,300 documents in response to Paragraph 
19. Trial 1.5 Tr. 52:10-12 (Brunner 6/6/03 PM). 


72. Arthur Andersen’s role with respect to Interior’s Paragraph 19 response was to provide 
management advice and consulting, as well as assistance with the development of search 
and collection procedures. Trial 1.5 Tr. 52:13-53:3 (Brunner 6/6/03 PM). The search 
and collection process with respect to Interior was in some respects facilitated by the fact 
that recordkeeping is often tied to the geography of the corresponding IIM account 
holder. Trial 1.5 Tr. 53:16-54:5 (Brunner 6/6/03 PM). 


73. Interior ultimately searched approximately 80 facilities for documents responsive to 
Paragraph 19. Trial 1.5 Tr. 54:6-55:8 (Brunner 6/6/03 PM). Katherine Ramirez, 
currently OHTA’s On-Site Manager at the AIRR, was then in charge of the document 
search effort for OST. Tr. 276:9-14 (Ramirez). Criteria employed to determine whether 
documents were responsive included the names and aliases of the named Plaintiffs and 
predecessors, account numbers, associated tract numbers, associated lease numbers, and 
transactions. Trial 1.5 Tr. 56:1-57:7 (Brunner 6/6/03 PM). 





74. Interior implemented a number of procedures to ensure quality control in every aspect of 
its Paragraph 19 search and collection process, including quality control checks and 
certifications by team members that they had properly and completely performed 
searches. Trial 1.5 Tr. 61:11-62:4 (Brunner 6/6/03 PM). The quality control procedures 
implemented by Interior exceeded those typically employed in the context of private 
business litigation. Trial 1.5 Tr. 62:2-4 (Brunner 6/6/03 PM). 


75. Interior’s Paragraph 19 response encompassed the “appropriate universe of records,” 
“applied the appropriate search criteria,” was based on a “well-planned and wellorganized 
search,” and included “a component of quality control throughout that entire 
process;” as such, it was “a well-executed, well-thought out search that . . . exceeded 
industry practices.” Trial 1.5 Tr. 65:12-66:4 (Brunner 6/6/03 PM). Interior produced 
approximately 160,000 documents in response to Paragraph 19. Trial 1.5 Tr. 66:5-7 
(Brunner 6/6/03 PM). 


76. In early 2001, the Department of Justice retained the firm Ernst & Young to review 
documents that had been gathered pursuant to Paragraph 19 and to analyze those 
documents with respect to the accounts of the named Plaintiffs and predecessors 
encompassed by Paragraph 19. Trial 1.5 Tr. 53:5-54:12 (Rosenbaum 6/9/03 AM). Ernst 
& Young prepared a list of the transactions that appeared in ledgers maintained by 
Interior and determined whether those transactions could be verified by comparing them 
to the relevant supporting documents that were gathered pursuant to Paragraph 19. Trial 
1.5 Tr. 54:5-12 (Rosenbaum 6/9/03 AM). 


77. The individual at Ernst & Young with primary responsibility for this project was Joseph 
R. Rosenbaum. Trial 1.5 Tr. 53:14-20 (Rosenbaum 6/9/03 AM). At the time of his 2003 





testimony, Mr. Rosenbaum was a partner with Ernst & Young and practiced in its Global 
Investigations and Disputes Advisory Services Practice. Trial 1.5 Tr. 6:17-7:4 
(Rosenbaum 6/9/03 AM). Mr. Rosenbaum was a Certified Public Accountant in 
California and also held a law degree and a master's degree in business administration. 
Trial 1.5 Tr. 5:17-22; 9:14-25 (Rosenbaum 6/9/03 AM). At the time of Trial 1.5, Mr. 
Rosenbaum had over 20 years of experience as an accountant with international firms, 
specializing in the area of forensic accounting related to investigations, analysis of 
historical information, dispute resolution, and litigation consulting services. Trial 1.5 Tr. 
5:23-9:13, 12:19-14:18 (Rosenbaum 6/9/03 AM); AR-522 at 4 (Mar. 28, 2003 Expert 
Report of Joseph R. Rosenbaum). 


78. To perform its assigned work, Ernst & Young completed a number of specific tasks: (1) 
assembly of transaction histories; (2) identification of ownership information; (3) linking 
of transactions to supporting documents; (4) identification of any variances between 
transactions and documentation; (5) comparison of expected revenue from leases to 
transaction entries; and (6) recalculation of interest paid on the subject accounts. Trial 
1.5 Tr. 61:25-63:21 (Rosenbaum 6/9/03 AM); AR-522 at 5. 


79. Ernst & Young assembled complete transaction histories, from the inception of the 
accounts, for 25 named Plaintiffs and predecessors. The transactions analyzed ranged in 
time from 1914 through 2000. Trial 1.5 Tr. 64:3-66:7 (Rosenbaum 6/9/03 AM); AR-522 
at 6, 12; Tr. 62:12-16 (Cason). 


80. Ernst & Young obtained from Interior account balances as of December 31, 2000, as set 
forth in the TFAS, and compared those balances to balances Ernst & Young calculated as 
of the same date, with no differences noted. AR-522 at 6-7. 





81. Ernst & Young’s successful assembly of transaction histories demonstrates that the 
documents collected pursuant to Paragraph 19 are sufficient to create a listing of the 
transactions, including monies collected and disbursed, for 37 IIM accounts of 25 
individuals who are named Plaintiffs or predecessors of named Plaintiffs. Trial 1.5 Tr. 
56:15-22 (Rosenbaum 6/9/03 AM); AR-522 at 3, 6, & 12. 


82. Ernst & Young verified ownership information relating to allotments owned by the 
named Plaintiffs and their predecessors to ensure that the payments allocated to those 
individuals accurately reflect the percentage of their ownership interests in such 
allotments. Trial 1.5 Tr. 70:20-71:17 (Rosenbaum 6/9/03 AM). Ownership information 
was verified by reviewing the Land Record Information System, and then confirming that 
information by examining probate documents collected pursuant to Paragraph 19. Trial 
1.5 Tr. 71:8-17 (Rosenbaum 6/9/03 AM). 


83. Many of the named Plaintiffs and their predecessors held small, fractionated interests in 
allotments, which resulted in a substantial number of transactions for small dollar 
amounts – nearly 60 percent were for less than $10.00. Trial 1.5 Tr. 67:15-24 
(Rosenbaum 6/9/03 AM); AR-522 at 4. For example, one individual owns a 7/58,320 
fractionated interest in a particular allotment which generates lease income of $858.54 
per year; because of the tiny fractional interest, the income allocable to the individual is 
only ten cents per year. Trial 1.5 Tr. 46:17-51:14 (Rosenbaum 6/9/03 PM); DX-155 at 
D155-0124–D155-0155. 


84. The total balance for all of the accounts of the named Plaintiffs and their predecessors 
analyzed by Ernst & Young as of December 31, 2000, is less than $3,000. Trial 1.5 Tr. 
77:20-78:10 (Rosenbaum 6/9/03 AM). 





85. Ernst & Young was able to locate supporting documentation for 86 percent of the 12,617 
transactions it reviewed, representing 93 percent of the total dollar value of those 
transactions, which was approximately $1.1 million. Trial 1.5 Tr. 75:5-76:19, 77:6-19 
(Rosenbaum 6/9/03 PM); AR-522 at 3, 13, 14. 


86. The fact that sufficient supporting documentation could not be found with respect to a 
small percentage of the transactions reviewed by Ernst & Young does not suggest that 
such transactions were erroneous, only that adequate supporting documentation could not 
be found; rather, given that a large percentage of the transactions reviewed were 
successfully linked to supporting documentation, it is likely that supporting 
documentation existed at one time also for those transactions for which no support could 
be found. Trial 1.5 Tr. 76:20-77:5 (Rosenbaum 6/9/03 AM). 


87. Ernst & Young’s experience confirms that sufficient data exist to perform an accounting 
for the named Plaintiffs (and their predecessors), and that Interior’s IIM records related to 
their accounts are substantially accurate. Ernst & Young’s analysis demonstrates that the 
documents collected pursuant to Paragraph 19 are sufficient contemporaneous evidence 
that 86 percent of the transactions reviewed by Ernst & Young, representing 93 percent 
of the dollar value of those transactions, did occur and were recorded in ledgers. Trial 
1.5 Tr. 56:23-57:2 (Rosenbaum 6/9/03 AM); AR-522 at 3, 8 & 13-15. 


88. Except for one $60.94 collection that was erroneously credited to an individual whose 
account number was similar to that of the intended recipient, Ernst & Young found no 
indication that there were any transactions that had not been recorded in the available IIM 
ledgers. Trial 1.5 Tr. 57:3-7, 78:11-79:2 (Rosenbaum 6/9/03 AM); AR-522 at 3. Ernst & 
Young discovered the single error by performing an analysis of the expected payments 





that should have been made and those that were actually made pursuant to the relevant 
lease. Trial 1.5 Tr. 31:11-39:22 (Rosenbaum 6/9/03 PM). 


89. For the $1.1 million in total transaction value that Ernst & Young reviewed, the total net 
variance was $3,235.18, or less than one percent of the total transaction value. Trial 1.5 
Tr. 53:14-54:1 (Rosenbaum 6/9/03 PM); AR-522 at 15. Of 452 individual variances 
discovered, 401 were for $1.00 or less, and approximately 270 were off by approximately 
one penny, which was most likely due to rounding differences. Trial 1.5 Tr. 54:2-9 
(Rosenbaum 6/9/03 PM); AR-522 at 15. 


90. As part of its analysis, Ernst & Young also performed an “expected versus actual” 
comparison, that is, it compared available lease information to transaction listings by 
reviewing the available farming and oil/gas leases, analyzing payments due under such 
leases (which were then multiplied by the appropriate fractionated interests), and 
comparing those amounts against the amounts indicated in the ledgers. Trial 1.5 Tr. 
54:17-55:10 (Rosenbaum 6/9/03 PM); AR-522 at 9-10. 


91. In connection with its lease analysis, Ernst & Young identified and analyzed 80 percent 
of the leases (representing 98 percent of the dollar value) relating to farm lease income, 
and 95 percent of the relevant oil and gas leases.1 
Trial 1.5 Tr. 57:20-58:3 (Rosenbaum 
6/9/03 PM). 


92. Ernst & Young researched each discrepancy it found in the lease comparison to ascertain 
whether there was an explanation for the discrepancy. Trial 1.5 Tr. 55:11- 56:1 
(Rosenbaum 6/9/03 PM). Where Ernst & Young could not find an explanation for 




1 Ernst & Young’s lease analysis with respect to oil and gas income included bonus and rental 
payments, but not royalties. AR-522 at Ex. D. 


differences between the amounts due under the relevant lease and the amount listed in the 
transaction ledger, the differences were noted as “Unexplained Differences.” Id. at 
55:21-56:1 (Rosenbaum 6/9/03 PM); AR-522 at 16. The total unexplained difference 
between the expected lease payments and amounts reflected in the ledgers for all of the 
transactions in all of the accounts analyzed by Ernst & Young was $32.04, or .01 percent. 
Trial 1.5 Tr. 57:11-13 (Rosenbaum 6/9/03 PM); AR-522 at 16. Thus, the amounts shown 
in the leases were accurately and appropriately reflected in the account ledgers. Trial 1.5 
Tr. 58:13-17 (Rosenbaum 6/9/03 PM); AR-522 at 16. 


93. OHTA has learned from and taken advantage of that which Interior, Treasury and Arthur 
Andersen learned in going through the Paragraph 19 search. Trial 1.5 Tr. 67:19-21 
(Brunner 6/6/03 PM). 


94. The work undertaken in response to Paragraph 19 showed that “when Interior and 
Treasury were required to find documents, they could find documents . . . of any nature.” 
Trial 1.5 Tr. 67:4-8 (Brunner 6/6/03 PM); Tr. 62:12-16 (Cason). 


95. The Paragraph 19 project demonstrated that, although there were errors in the accounts, 
the errors were relatively few, the errors tended to be small, and the errors occurred on 
both sides of the ledger. Tr. 62:12-21 (Cason). 


2. Mass cancellation project 


96. The provisions of the Competitive Equality Banking Act of 1987 (CEBA) that initiated 
“limited payability” of Treasury checks took effect on October 1, 1989. DX-231 at 1, 18; 
Tr. 323:17-324:4 (Ramirez). 


97. Since October 1, 1989, Treasury checks – which include IIM checks – may only be 
cashed for one year from the date of issuance. DX-231 at 1; Tr. 323:17-324:4 (Ramirez). 







98. CEBA also required the cancellation of all issued Treasury checks that were at least one 
year old by April 1, 1991. DX-231 at 1, 3; Tr. 323:17-324:4, 325:13-20 (Ramirez). 


99. Some issued and still outstanding checks dated back as far as 1954. Tr. 324:8-14 
(Ramirez); DX-217 at 1. 


100. To terminate the Treasury’s obligation to pay those old checks, CEBA mandated a 
Government-wide “mass cancellation” of over 10 million checks with an aggregate value 
over $5 billion. DX-225 at 8 (table comparing BIA disbursing symbol 4844 “vs. ALL 
OTHERS”). 


101. These 10 million checks included approximately 61,000 IIM checks with a face value of 
about $1.9 million. DX-217 at 2; Tr. 324:15-20, 327:9-18 (Ramirez); Tr. 346:11-13, 
348:13-16, Tr. 351:5-15, 352:8-17 (Ramirez). 


102. Katherine Ramirez was the manager of BIA’s “Mass Cancellation Project.” Tr. 323:11- 
15, 332:8-20 (Ramirez). BIA’s “Mass Cancellation Project” sought to identify the 
specific IIM checks that had been mass-canceled and, to the extent possible, re-credit 
affected IIM accounts in the amounts of the uncashed checks. Tr. 331:8-14 (Ramirez); 
DX-207 at 1. 


103. The first obstacle to re-crediting the IIM accounts was CEBA’s provision that “no 
moneys will be available to agencies from this cancellation.” See DX-231 at 4; Tr. 
326:9-20 (Ramirez). In other words, the U.S. Treasury retained the money that any 
Federal agency – including BIA – had deposited to cover the payment of checks that 
were ultimately canceled. Tr. 329:18-330:6 (Ramirez); DX-230. 


104. To overcome this obstacle, Interior pursued and obtained an appropriation for re-crediting 
IIM accounts. P.L. 102-381 at 1391 (Oct. 5, 1992) (“$3,000,000 shall be available [] to 





liquidate obligations owed tribal and individual Indian payees of any checks canceled 
pursuant to section 1003 of [CEBA], 31 U.S.C. 3334(b)”); Tr. 365:1-11 (Ramirez). 


105. In the meantime, BIA requested and received from the Department of the Treasury 
computer tapes containing Treasury’s database of the mass-canceled checks for the entire 
U.S. Government in July 1992. DX-209; DX-210; Tr. 330:7-331:2, 333:8-13, 334:4-9 
(Ramirez). 


106. As Contracting Officer Technical Representative (“COTR”) on the project, Ms. Ramirez 
worked with a contractor, Soza & Company, Ltd., Tr. 332:21-333:4 (Ramirez), to trace 
the data on the tapes to specific individual IIM and Tribal IIM accounts, DX-207 at 1; Tr. 
342:14-343:18 (Ramirez). The data consisted of a disbursing symbol, check serial 
number, check amount, and the date canceled. DX-207 at 1; Tr. 334:14-16, Tr. 341:17- 
342:8 (Ramirez). The list, however, did not indicate the checks’ date of issuance. DX- 
207 at 1; Tr. 332:2-13 (Ramirez). 


107. BIA started by focusing on the checks that used IIM’s current (as of 1992) “disbursing 
symbol,” 4844, as well as other symbols previously used for IIM checks. Tr. 334:10- 
335:13, Tr. 348:13-22 (Ramirez) (discussing table of IIM disbursing symbols, DX-217 at 
2). 


108. From the data, Interior determined that over 22,000 checks were “zero dollar” checks that 
had either been: (1) voided by BIA because, for example, they were accidentally 
damaged in the printing process, or (2) voided by Treasury because Treasury had 
received no issuance information for checks in BIA’s old “check stock” that pre-dated 
mass cancellation; those old checks were unusable because they did not bear the post- 
CEBA, limited payability legend “void after one year.” Tr. 349:3-350:22 (Ramirez) 





(discussing DX-217 at 2). After subtracting the 22,407 “zero dollar” checks from the 
universe of 60,961 canceled IIM checks, 38,554 checks remained to be traced to 
individual accounts. DX-217 at 2; Tr. 352:18-353:4 (Ramirez). 


109. By August 6, 1993, BIA had traced $616,736.31 (32 percent of the face value of those 
38,554 mass-canceled IIM checks) to specific accounts that were either reimbursed or to 
checks that had actually been voided rather than canceled. DX-221 at 2; Tr. 353:5-8, Tr. 
354:11-356:7 (Ramirez). 


110. At that point, the data showed that less than $1.3 million of the mass-canceled checks 
($1.914,528.45 - $616,736.31 = $1,297,792.14) remained to be resolved. See DX-221 at 
2. As of December 2, 1993, BIA reported that more than $278,000 was re-credited to 
IIM accounts, leaving a balance of at least $338,000 ($616,736.31 - $278,000) 
attributable to voided checks. Tr. 356:12-357:9 (Ramirez); see DX-220 and DX-221 at 2. 


111. Therefore, of the 38,554 “non-zero dollar” mass-canceled IIM checks issued in the 35- 
year period from 1954 through 1989, the amount of uncashed checks totaled no more 
than $1,576,528.45 ($1,914,528.45 - $338,000). Tr. 357:10-12 (Ramirez). 


112. By comparison, during one week in 1989, BIA disbursed over $1.6 million in IIM 
checks. Tr. 288:21-289:17 (Ramirez); DX-218 at 3-4. 


113. The documents presented at trial do not show the results of the BIA Mass Cancellation 
Project beyond December 1993. See DX-220. However, Interior continues to maintain a 
fund totaling approximately $500,000 to pay claims on mass canceled checks, although 
no claims against the fund have been made recently. Tr. 364:4-365:11 (Ramirez) 
(discussing Osage Agency inquiry regarding IIM check issued in 1986 (DX-216)); Tr. 
844:21-845:11 (Winter). 





3. 20-year tribal reconciliation project 


114. Using agreed-upon procedures, the 20-year reconciliation project was intended to 
reconcile Tribal Trust funds, funds that are separate and distinct from IIM funds. Tr. 
2071:10-19 (Christie). 


115. The period of the Tribal Trust to be reconciled was July 1, 1972 through September 29, 
1992. Tr. 2074:9-10 (Christie). 




116. The 20-year reconciliation project began in December 1992 and was terminated in 1995, 
with reports issued to the tribes in late 1995 and early 1996. Tr. 2073:8-17 (Christie). 
“Fill-the-gap” work was still being performed on the project when it was ordered shut 
down. Tr. 2084:6-20 (Christie). 


117. Interior was able to accomplish the tribal trust reconciliation even though they 
encountered missing documents. Tr. 2076:17-21 (Christie). Interior used varying 
standards to describe whether a particular transaction was considered reconciled 
according to the agreed-upon procedures and the extent of the reconciliation was noted. 
Tr. 2077:21-2078:19 (Christie). The tribes could then review the results and decide 
whether they accepted the level of reconciliation. Tr. 2078:19-21, Tr. 2080:6-9 
(Christie). 


118. There were approximately 320 reconciliations provided to the tribes, covering their one 
or more accounts in the Tribal Trust fund. The tribes received a virtual ledger on CDROM 
and copies of documentation supporting each transaction, covering approximately 
98 percent of revenue and 85 percent of disbursements. AR-507. 





4. TIME project 


119. In 2000, DataCom Sciences, Inc., carried out what was called the “TIME project.” The 
stated purpose of the project was to “examine the accuracy of the current ownership 
document information in LRIS by comparing mandatory elements.” PX-4352 at 4. In its 
report, DataCom asserted an error rate in LRIS postings from the Rocky Mountain region 
of approximately 30 percent. PX-4352; AR-405 at 8. 


120. DataCom’s asserted error rate in LRIS postings is inconsistent with the results of 
NORC’s 2003 pilot study of the accuracy of probate entries in Tract History Reports 
(“THRs”) held in LRIS. NORC found no evidence to support a 30 percent error rate. 
AR-405 at 8. Although NORC’s sample was modest in size and, therefore, not suitable 
for estimating an “error rate” among probate entries, NORC found no material errors 
contained in the LRIS database. AR-405 at 4. 




121. Statistical variance alone cannot explain the discrepancy between NORC’s findings and 
DataCom’s assertions. Instead, DataCom identified more discrepancies within LRIS as 
“errors” because it did not assess whether the “error” actually would affect the “fitness 
for use” of the data. AR-405 at 6-8; Tr 1079:3-9 (Scheuren). 


122. Dr. Fritz Scheuren of NORC believes DataCom’s definition of what constituted an error 
is problematic in the TIME project analysis. Tr. 1078:21-25 (Scheuren). 


123. DataCom’s definition of error has been criticized because it focused on conformance to 
requirements, rather than fitness for use, for example, treating a misspelled word as an 
error, even if the document could still be used appropriately. Tr. 1079:1-9 (Scheuren). 


124. DataCom’s TIME project report does not address “fitness for use.” PX-4352. DataCom 
recorded as a “data entry error” any instance in which the information in LRIS and 





information contained in the original document was “inconsistent.” PX-4352 at 6. 
DataCom’s report did not describe or characterize the “inconsistencies” found. In 
addition, if a document number had an alpha at the end of it, DataCom also considered 
that to be a “data entry error.” PX-4352 at 7. 


125. Of nine documents described within the TIME project report as “Acts of Congress,” only 
one was found to have no error, while five were reported as having “data entry errors” 
and three were reported as “not available,” for a reported error rate of 88.89 percent. PX- 
4352 at 8. 


5. Straw Man project 


126. Dr. Scheuren wrote a document about a proposed “Straw Man Pretest” as one of his early 
works, in approximately August-September 2001. Tr. 1080:4-21 (Scheuren); AR-170; 
AR-634 (complete copy of document). 


127. Dr. Scheuren’s document presented a series of questions for Interior in his early efforts to 
learn more about relevant facts. Tr. 1081:8-1082:7 (Scheuren). 




128. The “Straw Man Pretest” was offered not as a final recommendation to Interior but as a 
proposed starting point for the gathering of data, following listening meetings that NORC 
attended. AR-170; AR-634. 


6. Various audits 


129. In developing the 2007 Plan, OHTA considered various audits as background for its 
accounting project. While the exact number of audits is unknown, NORC reviewed 263 
audits as part of its meta-analysis of audit and reconciliation studies. AR-440 at 2. As 
noted by their inclusion in the Administrative Record, in developing the 2007 Plan, 
OHTA considered independent auditor reports from December 1996 (AR-379), January 





1998 (AR-378), March 1999 (AR-377), May 2000 (AR-376), January 2001 (AR-375), 
June 2001 (AR-374), April 2002 (AR-369), March 2003 (AR-355), December 2003 (AR- 
352), November 2004 (AR-350), November 2005 (AR-347) and December 2006 (AR- 
343). 


130. Many of these independent audits contain qualified opinions due to the following: cash 
balances were greater than amounts reported by the U.S. Treasury; deficiencies in 
internal controls; potential liability to the Federal Government as a result of lawsuits by 
trust beneficiaries; and trust beneficiaries disagreed with balances recorded on their 
accounts. See AR-343, AR-347, AR-350, AR-352, AR-355, AR-369, AR-374 to AR- 
379. 




131. Mr. Pallais opined that Interior’s records could not be relied upon to perform a historical 
accounting due to the deficient internal controls noted in these annual audits. Tr. 1820:3- 
9, Tr. 1867:3-9 (Pallais). However, he admitted that he has never examined or performed 
an audit of Interior’s trust records. Tr. 1819:16-21 (Pallais). 


132. Moreover, when reconciling accounts, “the fact that there are qualified independent audit 
reports or opinions out there does not render the documents that are generated by the 
entity as unreliable.” Tr. 2119:24-2120:1 (Dunne). When finding evidence of internal 
control weaknesses, the ASM addresses such weaknesses “by seeking to apply 
corroborating evidence, expanding testing procedures . . . and increasing the sample size, 
which is consistent with the auditing guidance of audit sampling.” Tr.2120:16-20 
(Dunne). Auditors “can increase the scope of their substantive testing to sufficiently 
satisfy themselves that the numbers stated in the financials represent or present fairly in 
all material respects the activity of the entity.” Tr.2128:25-2129:4 (Dunne). 





7. Treasury and GAO Settlement of Account Packages 


133. NARA holds 8,315 boxes of GAO records that are potentially useful for the historical 
accounting. Tr. 1192:7-13 (Angel). OHTA’s contractors have reviewed these GAO 
“settlement packages” as part of the historical accounting, and have also reviewed similar 
Treasury Department “settlement packages.” AR-344; AR-348; AR-436; AR-626 at 5- 
25. 


134. Between 1890 and 1950, Congress authorized the Treasury Department and, later, the 
GAO to “settle the accounts of all Federal agents who handled public monies,” which 
included Indian agents who were typically the superintendent of BIA agencies. AR-348 
at 34, 81. “The agents transmitted financial data first to the Bureau of Indian Affairs 
(BIA) headquarters, which reviewed the Indian agent's account. After this initial review, 
the account package was either returned to the Indian agent for further information, or the 
BIA forwarded the account package to the GAO for its review and settlement.” AR-348 
at 34. Essentially the same process occurred for packages that Treasury reviewed. 
Compare AR-348 at 25 (Treasury flow chart) with AR-348 at 81 (GAO flow chart). The 
auditor concluded the process by issuing a Certificate of Settlement of Account. AR-348 
at 25, 81; see AR-348 at 83 (July 21, 1931 GAO certificate for Ft. Bidwell Indian 
Agency). 




135. The Certificates of Settlement of Account used the words “certify” and “examined,” 
which were common terms during those time periods associated with audits. Also, 
correspondence in the settlement packages raising questions for response by the agents 
frequently used the word “audit.” AR-348 at 2; AR-348 at 5 (“settlement packages were 
audited”). 





136. A Certificate was not issued until the audit official handling the settlement examination 
had every question or issue answered to his satisfaction. Correspondence in the 
settlement packages involved sums of less than a single dollar in some instances. AR- 
348 at 2. 


137. Settlement packages were audited by the Department of Treasury, Office of the Auditor 
for the Interior Department, for the period 1890 through 1920. AR-348 at 5. 


138. In addition to the certificate, the GAO settlement package usually contained: 


• A Cash Flow Summary of (1) balance at prior settlement date, (2) aggregated 
receipts and disbursements, (3) transfers, and (4) balance at current settlement 
date with separate columns for Tribal, IIM, appropriated and other funds. 


• Receipt data support. 


• Disbursement data support. 


• Correspondence between the Agency Superintendent/Special Disbursing Agent 
and the Commissioner of Indian Affairs and/or GAO Auditor. 

 
AR-348 at 30. The GAO packages contained BIA-generated documentation such as IIM 
account cards, financial vouchers, and collection schedules. Tr. 1176:20-24 (Angel); see 
DX-243 through DX-257 (GAO settlement packages). The Treasury packages usually 
contained the same documents except for the cash flow summary. AR-348 at 6. 






139. In 1921, Congress passed the Budget and Accounting Act (42 Stat. 20). This act 
transferred the settlement function from Treasury to the newly-created General 
Accounting Office. As a result of this legislation, auditors from Treasury moved to the 
GAO and continued their settlement duties for the GAO. AR-348 at 34. 

140. By settling these accounts, Congress, through GAO, and Treasury provided indirect 
oversight to BIA’s activities. See Tr. 1195:24-1196:3, Tr. 1282:15-16 (Angel). 

141. OHTA’s contractors have reviewed “Settlement of Account” packages prepared by 
Treasury and the GAO from 1890 to 1950. AR-344; AR-348; AR-436; AR-626; AR-533 





at 3. The Treasury and GAO samples were randomly selected from a sampling 
population of 20,700 Treasury and 23,000 GAO account settlement packages, located at 
the NARA Archives II facility in College Park, MD. AR-533 at 3. 


142. NORC was the OHTA contractor involved in selecting the sample of settlement packages 
for review. AR-436 at 15, 30; Tr. 1022:8-1023:9 (Scheuren); see AR-344 at 3. 


143. OHTA contractor Reznick Group reviewed the settlement packages from an accounting 
perspective. AR-344 at 2-3 (report regarding Treasury packages); AR-346 at 6. 


144. The historical evidence is inconclusive whether auditing IIM account balances was a 
consistent part of the Treasury and GAO oversight, AR-533 at 2, but the entire 
certification process was detailed enough to establish that internal controls did exist in the 
processing of Indian Trust funds for the Treasury and GAO settlement periods. AR-533 
at 2-3; see AR-436 at 35-36, 39. 


145. Reznick found that “[i]n general, the [Treasury] packages were reasonably organized, the 
documents ranged from good to poor condition (taking into account the documents were 
86 to 116 years in age), and the types of funds in the settlements included IIM funds, 
Tribal funds, Indian Money Proceeds of Labor (IMPL) or Proceeds of Labor (PL), special 
deposits, interest, miscellaneous collections, sundry receipts and government 
appropriated funds.” AR-344 at 4. 


146. Reznick similarly concluded that the GAO packages were well organized, the documents 
ranged from being in good to poor condition, and the types of funds in the settlements 
included IIM. AR-346 at 4. Reznick found that a systematic audit process was 
consistently carried out regularly over time. AR-346 at 6. 





D. Establishment Of The AIRR In Lenexa 


147. The American Indian Records Repository in Lenexa, Kansas was opened in 2004. AR- 
563 at 11-12 (Historical Accounting for Individual Indian Monies - A Progress Report 
(Sep. 1, 2005) (Progress Report)). 


148. The AIRR is located adjacent to the National Archives and Records Administration’s 
Federal Records Center (FRC) in Lenexa, and Indian trust records are stored in the FRC. 
Tr. 371:3-22 (Ramirez); see AR-563 at 12. It is within an underground limestone mine. 
Tr. 378:19-379:17 (Ramirez); DX-177, DX-178, DX-179 (AIRR photos). 




149. As of September, 2005, Interior was storing more than 120,000 boxes totaling about 250 
million pages of Indian records. AR-563 at 12. The FRC now contains over 160,000 
boxes of Indian Records. Notice of Filing of September 2007 Status Report by the 
Department of the Interior Office of Trust Records at 3 (Oct. 16, 2007) (Dkt. No. 3436). 


150. The FRC’s storage bays containing Indian trust records have been constructed in 
accordance with higher standards for the preservation of archival records than most other 
U.S. records storage facilities. In addition to lower temperature and humidity controls, 
the FRC has controls for particulate matter and ultraviolet light. AR-563 at 12; Tr. 
370:17-19 (Ramirez). 


151. The FRC also has sufficient capacity to hold all of Interior's American Indian records. 
Documents will continue to be shipped to AIRR as BIA and Office of the Special Trustee 
for American Indians headquarters and regional field offices retire records. AR-563 at 
12. 


152. OHTA and the Office of Trust Records (“OTR”) maintain offices within the AIRR. Tr. 
367:1-8, Tr. 371:23-372:2 (Ramirez). OHTA’s on-site manager at the AIRR, Katherine 





Ramirez, manages OHTA’s contract staff who work there. Tr. 276:9-14, 366:25-367:1 
(Ramirez). Off-site from the AIRR, OTR manages an annex where a contract staff of 60 
to 90 people indexes and inventories boxes received from across the country. Tr. 372:7- 
19 (Ramirez); DX-163-DX-176 (photos of Annex). 


153. OHTA employs two contractors with about 130 contract staff at the AIRR, about half of 
whom search for documents and about half of whom image and code the documents that 
the researchers find. Tr. 367:9-15 (Ramirez). Clifton Gunderson (formerly Chavarria, 
Dunne & Lamey), an accounting firm, performs the document search work, and Ecompex 
performs the imaging and coding. Tr. 367:16-22 (Ramirez). 


154. Sealed shipments of boxes, shrink-wrapped on pallets, are delivered by truck and 
offloaded at the Annex, Tr. 373:12-21, Tr. 374:3-375:20 (Ramirez); DX-163, DX-165, 
DX-166, DX-167, DX-168, DX-169, DX-170 (Annex photos). OTR marks the boxes 
with accession numbers provided by NARA that identify boxes as Indian records. Tr. 
376:11-377:4, Tr. 380:15-18 (Ramirez); DX-171, DX-172 (Annex photos). 


155. The box accession numbers and indexing information for the documents in each box are 
input by contractor personnel (Labat-Anderson) to the BISS database at the Annex, 
which database enables OHTA researchers to search for documents. Tr. 372:18-373:7, 
377:5-378:9, 385:19-386:19, 385:25-386:11 (Ramirez); DX-173, DX-174 (Annex photos 
of BISS data input); DX-204 (exterior of records box showing information captured by 
BISS). 


156. After indexing, custody of the boxes is transferred from OTR to NARA for storage at the 
AIRR, where they are available to OHTA’s accountants who are performing historical 
accounting work. Tr. 371:9-22, 372:25-373:2, 378:10-378:18, 379:18-379:22, 380:19- 





381:17, 381:7-14 (Ramirez); DX-175, DX-176 (Annex photos of handling of boxes); 
DX-180, DX-181 (AIRR photos of boxes stored in NARA bays). 


157. Once the boxes are stored with NARA, the documents in them become available for 
OHTA’s four accounting firms who are performing historical accounting work. Tr. 
380:19-381:17 (Ramirez). Those firms submit requests for particular documents. Tr. 
381:7-14 (Ramirez). 


158. One of the accounting firms, Clifton Gunderson, has staff who are assigned solely to 
search for requested documents. Tr. 381:3-10, Tr. 383:16-19 (Ramirez); DX-186 (AIRR 
photo). Clifton Gunderson managers query the BISS to identify the boxes most likely to 
contain the requested documents, and then order those boxes from NARA for actual 
searching. Tr. 381:18-25 (Ramirez); DX-183 (AIRR photo). 


159. NARA is currently delivering 300 to 350 requested boxes daily to OHTA’s Box Logistics 
Operations Center for sorting and tracking, also part of Clifton Gunderson’s AIRR work. 
Tr. 382:1-383:9 (Ramirez); DX-184, DX-185 (AIRR photos). 


160. Ms. Ramirez gave the Court an example of how the search process works: 


If our office has assigned a particular accounting firm to reconcile certain 
transactions or certain accounts, when that accounting firm looks at this 
one transaction, like a posting into someone's account for $50, and it's [a] 
plus, so it's a collection, the accounting firm knows from the experience 
and training that we've given them, that you need to find either the bill for 
collection or the deposit ticket or all of that, and then even further, earlier 
in the process you need to find the lease, because you want to ensure that 
it was suppose -- it is $50 that you were supposed to collect and not $80. 
So that accounting firm . . . knows that they need the bill, the schedule of 
collections, the deposit ticket, and the lease. So they will make that request 
to this facility for all those documents. And then [we] will query through 
the BISS, find that it's these 10 or 20 boxes, pull those out, search them, 
find them, either photocopy . . . [the documents or if the documents are 
large] pass the whole box on to the imaging/coding side of the house, and 
they'll image and code that document. 





 Tr. 384:12-385:12 (Ramirez). 




161. OHTA quality control ensures that boxes have been properly searched. Tr. 383:5-12 
(Ramirez). 

162. The final step of the research process at the AIRR is the work by contractor Ecompex to 
image and code the documents found in response to the accounting firms’ requests. Tr. 
383:20-384:11, Tr. 385:3-11, Tr. 387:2-389:15 (Ramirez); DX-187, DX-188, DX-189, 
DX-190. The imaging process converts the original paper records into electronic images. 
The coding process captures specific identifying information (e.g., IIM account number, 
date, type of transaction and amount), from an imaged document so that the imaged 
document can be retrieved at a later time. A document may consist of several related 
records (images) that can be grouped together for further analysis. AR-533 at 5. 

163. The imaged documents are then quality-control checked to ensure that the image is not 
crooked, cut off, or blurred. Tr. 387:23-388:17 (Ramirez); AR-533 at 5. 


164. After being imaged, the documents are “double blind” coded with information as 
determined by OHTA and the accounting contractors. Tr. 388:18-389:5 (Ramirez). 
Quality control of the coding subsequently ensures that any inconsistency in the coding is 
resolved correctly. 389:5-7 (Ramirez). 


165. Coded images are then loaded into the Accounting Reconciliation Tool (“ART”) system 
for use by OHTA in conducting historical accounting work for individual Indians as well 
as tribes. AR-533 at 5 (Status Report to the Court No. 29 (May 1, 2007)); Tr. 368:15-25 
(Ramirez). 





166. As with other IIM transaction data used to perform the historical accounting, OHTA and 
its contractors have never stored ART on a system connected to the Internet. AR-533 at 
5. 


167. Among the paper records found at the AIRR are ledger books of Indian transactions 
handled by Interior dating back to 1879. Tr. 389:16-391:1, Tr. 400:12-401:18 (Ramirez) 
(discussing photographs of ledger book, DX-191, DX-192, DX-193, DX-194, DX-195, 
showing receipts and disbursements for 1879 and 1880). Additional examples of ledger 
books from the AIRR document individual Indian transactions from 1924-25, 1932 and 
1958. Tr. 391:18-394:16, Tr. 401:19-402:19 (Ramirez) (discussing photographs of ledger 
books, DX-196, DX-197, DX-198, DX-199, DX-200, DX-201, DX-202, DX-203, 
showing receipts and disbursements). 


E. Changes To Historical Accounting Project Reflected In 2007 Plan 


168. Interior has been implementing the 2003 Historical Accounting Plan. The 2007 Plan 
represents a new iteration and the continuation of the work accomplished under the 2003 
Plan, as well as a road map of the activities that Interior plans to undertake to finish the 
historical accounting. Tr. 66:22-67:3 (Cason); AR-565 at 4-5. 


169. A 22-page “options paper” that was created by OHTA was presented to Mr. Cason, 
providing various options for possible changes to the 2003 Plan. Tr. 1947:1-1948:1 
(Zippin); AR-600. 




1. Historical accounting schedule 


170. One of the changes to the historical accounting project reflected in the 2007 Plan is a 
change to the schedule for completing the historical accounting work. In the 2003 Plan, 
Interior estimated that the accounting work could be completed in approximately five 





years, at a cost of $335 million. The 2007 Plan estimates that the work will now be 
completed by approximately the end of 2011. Tr. 67:21-25 (Cason); AR-566 at 24-25. 


171. Interior was not able to complete the historical accounting work by the end of 2007 
because, in large part, Interior had underestimated the size of the task and how expensive 
it would be to perform, and because Interior overestimated the amount of funding it 
would be able to obtain from Congress. Interior asked for considerably more money 
from Congress than Congress appropriated and that lengthened the timeline to perform 
the work. Tr. 67:24-68:7 (Cason). 




172. While the cost of reconciling a transaction proved to be considerably higher than Interior 
had anticipated in 2003, the work performed prior to the 2007 Plan indicated that the 
transactional error rate was sufficiently low that Interior would not have to reconcile as 
many transactions to reach reliable conclusions about the relative accuracy of its 
accounting system as it believed would be needed when it prepared the 2003 Plan. This 
served as aw “trade-off” that lowered the overall cost of the historical accounting project. 
Tr. 68:8-19 (Cason). 


2. Statistical sampling design 


173. The 2007 Plan is different in character from the 2003 Plan regarding land-based accounts, 
because the number of transactions Interior plans to sample and reconcile from the 
Electronic Ledger Era is considerably smaller. Tr. 93:24-94:14 (Cason). Based upon its 
original assumptions regarding the availability and quality of necessary documents, 
Interior planned to reconcile approximately 233,000 transactions, but it now anticipates 
reconciling approximately 6,600 transactions in the Electronic Ledger Era. Tr. 95:2-19; 
98:3-17 (Cason); AR-566 at 22-23. 





174. That change is based upon NORC’s recommendation that far fewer transactions needed 
to be reconciled in the Electronic Ledger Era, as a result of the high degree of accuracy 
revealed through the LSA project. Tr. 94:4-14 (Cason). 




175. When NORC designed the sample for Interior’s 2003 Plan, it proposed sampling landbased 
transactions under $5,000 and reconciling all larger transactions because of initial 
concerns as to whether Interior would be able to find records. Tr. 963:15-964:1 
(Scheuren); Tr. 968:2-20 (Scheuren); AR-402 at 6. 


176. The sample design for the 2003 Plan proposed sampling 160,000 land-based transactions 
in the Electronic Ledger Era within two strata, i.e., 80,000 transactions under $500 and 
80,000 transactions in the $500-5,000 range. Tr. 969:2-8 (Scheuren); AR-402 at 6. 


177. The plan to sample 160,000 land-based transactions in the Electronic Ledger Era was 
extremely large for the population. AR-566 at 23. 


178. NORC recommended a very large sample for the 2003 Plan based upon “what people 
thought was wrong with the system” and the “possibility of local problems in some 
agencies.” Tr. 969:11-16 (Scheuren). 


179. NORC’s recommendation for the 2003 Plan was an “adaptive approach” that would 
allow for increasing sample size in situations where problematic data was encountered. 
Tr. 969:17-970:7 (Scheuren); AR-566 at 23. 


180. NORC’s concern pertained to anticipated mistakes in the accounting and missing data 
Tr. 970:8-18 (Scheuren). 


181. NORC’s sample design for the 2003 Plan was based upon hypotheses about missing data 
and high error rates. Tr. 971:8-15 (Scheuren). 





182. After initial analysis of very small value transactions, NORC reduced the sampling work 
for small transactions because the cost of reconciling them was significant, and Interior 
was not learning anything from reconciling small transactions, particularly credits, 
because very few understatement errors were found. Tr. 964:23-965:16 (Scheuren). 


183. Contrary to NORC’s initial assumptions about missing records when they designed the 
sample for the 2003 Plan, the LSA project results revealed “an astonishingly successful 
outcome” in that Interior’s accountants found over 99 percent – “virtually all” – 
randomly selected records. Tr. 977:15-22 (Scheuren); AR-438 at 4. 


184. In the 2003 Plan, Interior planned to ensure that a sample was taken from each agency for 
purposes of the statistical analysis, but the results of the LSA project convinced Interior 
that this was unnecessary in the 2007 Plan. Tr. 1950:23-1952:10 (Zippin). Every 
account and every agency remained subject to sampling. Tr. 1952:13-15 (Zippin). 


185. The LSA project randomly selected land-based transactions from all 12 BIA regions. Tr. 
977:23-24 (Scheuren); AR-438 at 4. 


186. In light of the results of the LSA project work for the sampled land-based transactions, 
NORC concluded that even if the remaining unreconciled transactions were erroneously 
recorded – a “severe model assumption” – that would not alter NORC’s conclusions to be 
drawn from the reconciled transactions. Tr. 978:3-14 (Scheuren); AR-438 at 4. 


187. With regard to debits (that is, disbursements), NORC concluded that the debit difference 
rate was 0.4 percent, which is a very low error rate, even in the commercial world. Tr. 
978:15-23 (Scheuren); AR-438 at 4. 





188. With regard to debits, NORC concluded that with a 99 percent assurance level, the error 
rate for the debit population was 1.3 percent or less. Tr. 978:24-979:4 (Scheuren); AR- 
438 at 4. 


189. With regard to debits, NORC concluded that with a 99 percent assurance level, the 
“disadvantageous” error rate for the debits population – payments to beneficiaries below 
what should have been received – was 0.7 percent or less. Tr. 979:5-20 (Scheuren); AR- 
438 at 4. 


190. With regard to debits, NORC concluded that with a 95 percent assurance level, the 
“disadvantageous” error rate for the debits population – was 0.6 percent or less. Tr. 
980:7-10 (Scheuren); AR-438 at 4. 


191. NORC’s conclusions about error rates found through the LSA project was an attribute 
analysis. Tr. 980:11-15 (Scheuren). 


192. With regard to debits, NORC performed a variable analysis and concluded that with a 99 
percent assurance level, the “disadvantageous” dollar estimate was $4 million or less. Tr. 
980:19-981:5 (Scheuren); AR-438 at 4. NORC concluded that with a 95 percent 
assurance level, the “disadvantageous” dollar estimate was $2 million. Tr. 981:11-16 
(Scheuren); AR-438 at 4. 


193. With regard to credits (that is, receipts), NORC concluded that the credit difference rate 
was 1.3 percent. Tr. 981:22-25 (Scheuren); AR-438 at 4. 


194. With regard to credits, NORC concluded that with a 99 percent assurance level, the error 
rate for the credit population was 7.0 percent or less. Tr. 981:17-982:4 (Scheuren); AR- 
438 at 4. 





195. With regard to credits, NORC concluded that with a 99 percent assurance level, the 
“disadvantageous” error rate for the credits population – mistakes not in favor of 
beneficiaries – was under 4.0 percent. Tr. 982:5-12 (Scheuren); AR-438 at 4. 


196. With regard to credits, NORC concluded that with a 95 percent assurance level, the 
“disadvantageous” error rate for the credits population – was 3.0 percent, not exactly half 
of the 4.0 percent due to rounding. Tr. 980:7-10 (Scheuren); AR-438 at 4. 


197. With regard to credits, NORC performed a variable analysis and concluded that with a 99 
percent assurance level, the “disadvantageous” dollar estimate was $86 million or less. 
Tr. 982:17-23 (Scheuren); AR-438 at 4. At the 95 percent assurance level, NORC’s 
“disadvantageous” dollar estimate was $42 million. Tr. 982:20-24 (Scheuren); AR-438 
at 4. 


198. NORC’s analysis revealed that errors in the system were “even-handed” in that errors 
were statistically equal in terms of being both “advantageous” and “disadvantageous” to 
beneficiaries. Tr. 982:25-983:21 (Scheuren); AR-438 at 4. 


3. Judgment and Per Capita accounts 


199. Interior has reconciled over 83,700 Judgment and Per Capita accounts, leaving 
approximately 13,600 yet to be reconciled in the historical accounting population. AR- 
565 at 10; AR-533 at 3 (table). Substantial work has been completed with respect to 
reconciling those accounts, including gathering most supporting documents and verifying 
transactions. AR-566 at 18, 24. 


200. In the 2007 Plan, Interior “reprioritized” the work being performed on the judgment and 
per capita accounts, so that it could target appropriated funds more effectively toward 
progress on the accounting for land-based accounts. Tr. 80:16-20 (Cason); AR-533 at 3. 







At least for the balance of 2007, and possibly beyond, Interior has deferred work on 
reconciling the remaining Judgment and Per Capita accounts to marshal its scarce 
resources. AR-566 at 18, 24; AR-533 at 3. 




201. Interior still intends to provide all of the more than 96,800 account holders with an HSA 
for their Judgment and Per Capita accounts. AR-566 at 24. 


4. Special Deposit Accounts 


202. In the 2003 Plan, Special Deposit Accounts (SDAs) were treated as a fourth type of 
account to be addressed through the historical accounting project. PX-507 at III-1. 
SDAs were deemed outside the scope of the 2007 Plan because, as a result of their unique 
nature and the purpose of the historical accounting, the SDAs did not fall within the 
historical accounting work being performed. AR-566 at 27. The objective of the 
historical accounting is to provide each covered IIM account holder with an accounting 
of the transactions in their individual IIM account up through December 31, 2000. 


203. SDAs, however, are by definition not associated with a specific IIM account holder. 
SDAs are temporary holding accounts for the deposit of monies that could not 
immediately be credited to the proper owners. AR-566 at 27; AR-533 at 4; see Tr. 70:3- 
15, Tr. 156:15-24 (Cason). Historically, monies deposited into SDAs came from various 
sources, and could belong to tribes, individuals or other parties. AR-566 at 27; AR-533 
at 4; see Tr. 2065:2-24 (Christie). 




204. SDAs may include funds received in connection to a particular contract relating to 
multiple allotments or multiple fractional interests in an allotment. Non-IIM Trust funds 
sometimes were collected into SDAs, such as tribal money and bid deposits submitted in 
competitively bid contracts. AR-566 at 27; Tr. 742:2-24 (Herman). Sometimes 





administrative fees charged by Interior to lessees or other contracting parties (not 
beneficiaries) would first be deposited into an SDA when paid by the third party. Tr. 
742:2-24 (Herman). 


205. Once the proper ownership of the money placed in an SDA account is determined, the 
money is distributed to those owners. At that point, the current account statements of 
those account holders would take account of that deposit. Tr. 70:16-22 (Cason); see Tr. 
157:20-158:1 (Cason); Tr. 2042:23-2043:13 (Christie). 


5. Office that will provide land asset statement assets 


206. The 2003 Plan had called for OHTA to provide, for land-based accounts, a statement 
identifying the land assets that a beneficiary had at the time Interior issued the 
beneficiary’s HSA. The 2007 Plan eliminated that part of the historical accounting 
project because a similar land asset statement is now being developed by the Office of 
Special Trustee, as part of a project that is converting the old legacy LRIS system into the 
more robust land title system, TAAMS. AR-566; Tr. 68:20-69:22 (Cason). 


207. The Special Trustee is planning to issue, along with the periodic statements of accounts 
that beneficiaries currently receive, a record of the land each individual owns, whether it 
is leased or not. Tr. 69:14-17 (Cason). 




208. This change in the Plan regarding which office will provide the land asset statement was 
made on or around May, 2007. Tr. 151:4-22 (Cason). 


209. The change represented a management decision to streamline the process. With the 
change, OHTA can focus on the IIM funds accounting and OST and BIA will be 
responsible for including the asset statements as part of their quarterly account 
statements. Tr. 153:2-17 (Cason). 





F. Rationale For 2007 Plan 


210. The accounting work performed by Interior prior to 2007 demonstrated that the records 
necessary to perform the historical accounting do exist, that those documents can be 
indexed and used by the accounting firms to perform the historical accounting work, and 
historical statements of accounts can be assembled. Tr. 66:3-6 (Cason). 


211. The previous accounting work performed by Interior revealed no evidence of systemic 
accounting errors or systemic fraud. Tr. 66:10-13 (Cason). 




212. In performing the historical accounting, Interior has weighed the limited resources it has 
received against the need to complete the accounting work in a timely manner, and made 
trade-offs and choices about the work it will perform. Tr. 71:19-72:16 (Cason). 


213. The more complicated the accounting process is made within the same budget, the longer 
it will take for Interior to produce the accounting required by the Court. Tr. 72:17-20 
(Cason). 


214. Interior has attempted, therefore, to balance competing factors, because as the demand for 
accuracy and completeness of data rises, more time is required to complete the 
accounting, in light of the greater expense and a constrained budget. Tr. 72:21-73:2; Tr. 
84:11-25; 85:5-9 (Cason). 


215. Based upon the results of the LSA project, NORC reassessed the sample design in 
Interior’s 2003 Plan. Tr. 1003:3-11 (Scheuren); AR-442. 


216. NORC reassessed the sample design for the 2003 Plan because the results of the LSA 
project provided additional information about the population of electronic transactions 
and, as a result, NORC concluded that the 2003 Plan sample design was over-engineered 
and unnecessarily large. Tr. 1003:12-19 (Scheuren); AR-442. 





2 A “replicate” is a representative sub-sample of an overall sample. Tr. 993:7-14 (Scheuren). 

217. NORC reassessed the sample design for the 2003 Plan because the results of the LSA 
project indicated that, contrary to initial expectations, Interior could find documents, and 
the error rates were “quite low” relative to expectations. Tr. 1003:20-1004:4 (Scheuren). 


218. Based on the LSA project results, NORC recommended that no further reconciliation 
work be performed for posted electronic transactions, because the cost of additional work 
would not result in a sufficient lowering of the margin of error around the estimate for the 
error rate. Tr. 1004:17-1005:7 (Scheuren). 


219. The cost of performing the reconciliation work for a second replicate2 would have been 
“a little under” $20 million, and the cost to complete all four replicates would have been 
“close to” $60 million. Tr. 1006:9-14 (Scheuren). 


220. The 2003 Plan indicated that an adaptive approach would be followed, and that would 
have led to larger sample sizes if error rates had been higher than expected. Tr. 1006:15- 
1007:1 (Scheuren); AR-442 at 2. 


221. Based upon the results of the LSA project, NORC recommended no further testing for 
debit transactions based upon the low error rates and variable dollar estimates. Tr. 
1007:24-1008:4 (Scheuren); AR-442 at 3. 


222. Based upon the results of the LSA project, NORC recommended no further testing for 
credit transactions because the cost of performing the reconciliation work would not 
result in a sufficient reduction in the margin of error for the low error rates and variable 
dollar estimates to justify such an expenditure. Tr. 1008:5-24 (Scheuren; AR-442 at 3). 





223. If Interior had reconciled a second replicate, the point estimate for the error rate might not 
have been the same as after the first replicate, i.e., 1.3 percent, but the more important 
consideration was the upper bound, and NORC concluded that the cost of performing the 
second replicate would not result in a sufficient reduction from 7.0 percent to be costeffective. 
Tr. 1009:11-1010:14 (Scheuren). 


224. Interior adopted NORC’s recommendation that reconciling a second replicate of credit 
transactions would not be cost-effective. Tr. 1010:10-14 (Scheuren). 


225. Based upon the LSA project results, NORC recommended that no further reconciliation 
of transactions from the sampling frame – posted electronic transactions – be performed. 
Tr. 1010:20-1011:5, Tr. 1012:4-7 (Scheuren); AR-427 at 2-5. 


226. Based upon the LSA project results, NORC recommended that additional work be 
performed with regard to transactions not in the LSA project sampling frame. Tr. 
1011:23-1012:7 (Scheuren); AR-427 at 4-5. 


227. One element of additional work recommended by NORC was with regard to “posting” 
tests, such as the Horton Agency Land-to-Dollars pilot test. Tr. 1012:2-1013:5 
(Scheuren); AR-427 at 5; AR-435. 


228. A second element of additional work recommended by NORC was with regard to “cleanup” 
testing, such as sampling from transactions restored as a result of FTI’s DCV work. 
Tr. 1014:6-17 (Scheuren); AR-427 at 5. 


229. While the 2003 Plan used a 99 percent assurance level, the 95 percent assurance level is 
sufficient for the sample design stage and determining sample size. Tr. 1024:21-1025:7 
(Scheuren); DX-6 at 16. 





230. Regardless of which assurance level is used at the sample design stage, Interior will be 
able to report results at 95 percent and 99 percent assurance levels, based on the same 
sample size. Tr. 1025:3-21 (Scheuren); DX-6 at 16. 


231. Contrary to the initial written opinion of Mr. Dwight Duncan, the 2007 Plan’s sampling 
conclusions were not based solely upon attribute sampling, and Mr. Duncan subsequently 
retracted that opinion. Tr. 2154:24-2155:5 (Hinkins) (discussing PX-4284, at 5 
(Executive Summary)). 


232. Mr. Duncan also conceded that sampling of transactions is “one of the tools” that could 
be used “to assess the integrity of a system.” Tr. 1497:22-24 (Duncan). 


II. Areas Within The Scope Of The 2007 HSA Plan 


A. Information Contained Within Historical Statements Of Account 


233. Upon completion of the historical accounting, Interior plans to provide each covered IIM 
account holder with an accurate and complete HSA package that details their account 
transaction history. AR-565 at 4. 


234. Interior plans to provide its conclusions regarding the relative accuracy of the account 
transaction history contained within the HSAs, and the relative accuracy of the 
accounting system. AR-565 at 4; Tr. 73:9-15, Tr. 107:10-108:23 (Cason). 






235. For the land-based IIM accounts, the HSAs will be part of an HSA package distributed to 
IIM account holders. The package will include the Historical Statement of Account, with 
a statement of known differences attached to it, a transmittal letter that explains why the 
account holder has received this statement, a statement of limitations that would include a 
summary of the work that was performed on the account, and a question and answer 
brochure. Tr. 644:16-647:8 (Herman). 





236. The HSA package contents were still in a draft stage at the time of the evidentiary 
hearing, but the components of the package are specified in the ASM. Tr. 644:16-645:2 
(Herman); see AR-8 at 12. 


237. Ms. Herman prepared several draft HSAs for OHTA and these exemplars were submitted 
to the Court during the evidentiary hearing. Tr. 440:6-441:1 (Herman). See also DX- 
113, DX-114, DX-115, DX-116, DX-117, DX-119 (exemplar HSAs). 


238. Plaintiffs offered no evidence to contest the adequacy of the information to be provided 
in the draft HSA packages. 


239. The HSAs, including a statement of known differences, are expected to be similar to the 
draft HSAs prepared by Michelle Herman. DX- 113, DX-114, DX-115, DX-116, DX- 
117, DX-119. 


240. To aid HSA recipients’ understanding of their HSAs, Interior plans to provide an 
explanatory brochure that will explain the components of HSA. Tr. 621:6-622:2 
(Herman). The content of the brochure remains in the draft stage, but a mock up of an 
HSA explanatory sheet was introduced at the hearing. DX-109. 


241. The statement of known differences appears after the transaction listings on each of the 
exemplar HSAs. See DX- 113, DX-114, DX-115, DX-116, DX-117, DX-119. These 
statements will disclose any differences identified through the Data Completeness 
Validation work, the LSA work, the interest recalculation work (described in detail 
below), or any other tests that OHTA is performing that is not reflected in the HSA 
transaction listings. Tr. 623:18-624:7 (Herman); see also Tr. 520:1-521:1 (Herman). 


242. Interior is preparing an explanation sheet to accompany the statement of known 
differences that will aid IIM account holders in interpreting the information contained on 





their statements. Tr. 624:8-625:5 (Herman). A draft explanatory sheet for the statement 
of known differences was introduced. DX-120. 


243. Another planned component of the HSA packages for land-based accounts is a statement 
of limitations. This statement will address known issues that may affect the information 
contained in the HSA, such as further reconciliation sampling to be undertaken, any 
interest recalculation that remains to be performed, or further transaction information 
pending from reconciliation work extending back into the Paper Ledger Era. Tr. 645:22- 
647:8, Tr. 647:22-648:15 (Herman). The statement will be similar to the corresponding 
statement of limitations that Interior has included with the Per Capita and Judgment 
based HSAs. Tr. 647:22-648:15 (Herman). 


B. Beneficiaries Receiving HSAs Under 2007 HSA Plan 


244. In its July 2, 2002 report to Congress, Interior estimated that, as of December 31, 2000, 
there were 235,984 open IIM accounts (excluding Special Deposit Accounts). AR-561 at 
15-16; see AR-566 at 26 (chart). 


245. In its July 2, 2002 report to Congress, Interior estimated that those 235,984 IIM accounts 
represented approximately one-quarter to one-third of all the IIM accounts that have 
existed since Interior began taking money into trust. AR-561 at 16. 




246. Depending on assumptions made regarding the average life-span of land-based IIM 
accounts, the number of land-based accounts existing at any time between 1910 and 2006 
is now estimated at between 490,960 and 643,424. DX-97 at 1-6; Tr. 1122:1 - 1123:4 
(Haspel). The number of land-based accounts existing at any time between 1938 and 
2006 is now estimated at between 480,837 and 619,804. DX-97 at 1-6; Tr. 1122:9 - 





1122:19 (Haspel). See generally DX-101 (illustrating how the number of IIM accounts 
grows over time); Tr. 1124:6-19 (Haspel). 


247. Depending on assumptions made regarding the average life-span of judgment and per 
capita accounts, the number of such accounts existing at any time from 1910 to 2006 is 
estimated at between 264,288 and 409,458. DX-97 at 7-12; Tr. 1123:5 - 1124:5 (Haspel). 
The number of judgment and per capita accounts existing at any time between 1938 and 
2006 is estimated at between 262,520 and 405,3335. DX-097 at 7-12. 


248. Interior plans to provide a historical accounting for all IIM accounts that were open as of 
October 25, 1994 through December 31, 2000. That includes accounts that were open as 
of October 25, 1994, but were closed after that date. 


249. That also includes accounts open as of October 25, 1994, that reached a “zero balance” at 
some point after that date. In fact, most accounts reached a zero balance at some time 
after October 25, 1994. Tr. 182:11-183:24 (Cason). 


250. Where an account was open as of October 25, 1994 but was not identified on IRMS or 
TFAS, and Interior subsequently discovers through its accounting work the existence of 
that open account, Interior will perform a historical accounting for that account. Tr. 
183:25-184:18 (Cason). 


251. An HSA package will also be provided for all accounts open as of October 25, 1994, 
even if the account was part of a decedent's pending probate proceeding initiated prior to 
that date. See Tr. 872:13-19, 889:11-17 (Winter) (discussing estate accounts as open IIM 
Trust fund accounts); Tr. 183:21-24 (Cason) (Interior’s intent is to provide an HSA for 
“any account that was open as of October 25, 1994"). 





252. Roughly three-quarters of all the land-based accounts open on or after October 25, 1994, 
originated after 1985, with all of their transactions recorded in electronic ledgers. AR- 
566 at 18. See AR-565 at 15 (“[a]pproximately 65,000 of nearly 268,000 land-based IIM 
accounts in the historical accounting population were opened prior to the electronic 
ledger era”). Interior will first prepare HSA packages for the beneficiaries of those landbased 
accounts. See Tr. 80:21-81:11 (Cason). 


C. Transactions To Be Reconciled Under 2007 HSA Plan 


253. The 2007 Plan provides for the historical accounting to be completed in six steps. AR- 
565 at 8. 


254. The 2007 Plan describes the six steps as follows: 




The first step. . . is to gather the data posted in each account - credit transactions 
showing money coming into an account, debit transactions showing money 
disbursed from an account, and interest transactions showing money earned from 
investments. These data exist in electronic ledger accounting systems or in paper 
ledgers that were used to maintain the IIM accounts. These account transactions 
are examined for accuracy and constitute the HSA to be provided to account 
holders. AR-565 at 7. 

 
The second step is to conduct the reconciliation of transactions to 
determine their accuracy. This requires locating the records that were 
contemporaneously created and associated with a transaction at the time 
the transaction is posted to an IIM account. Interior verifies the accuracy 
of a transaction by reconciling or comparing the amount of the actual 
posted transaction with the amount expected to be posted, based on the 
contemporaneous records. This step includes examining the accounting 
system and land records systems for the completeness of the data the 
systems contain, accuracy of the data, and how well the systems 
functioned. Additional tests are performed to create a complete historical 
accounting. This step ensures that the HSA provided to account holders is 
complete and is the basis for including with the HSA a separate statement 
on the accuracy of the transactions that appear on an HSA. AR-565 at 7. 




 

[Third,] after the transaction data have been gathered, reconciled, and other tests 
are performed, Interior has the data from which it is in position to prepare the 


HSAs and accompanying materials--the HSA package. At this point Interior can 
petition the Court for approval to begin assembling and mailing the HSA package. 
AR-565 at 8. 

 

[Fourth,] the information for the HSA package is developed in Steps 1 to 3. 
However, the actual printing of the hard copy of the HSA and accompanying 
materials for mailing must await permission to mail from the Court. The reason 
Interior will await permission to mail is to ensure that the mailing uses the most 
current address available when printing the HSA package. (Interior has learned 
that even small delays between assembly and mailing of the HSA package can 
result in missed address changes that affect the success of the mailing.) AR-565 
at 8. 

 

[The fifth] step is mailing the HSA package. Interior’s duty to account - 
the historical accounting - is met with mailing the HSA. When received, it 
moves forward the process of reaching agreement with account holders as 
to the correct balance in their account. The assembled HSA package will 
be mailed to the most current address available, but many of the HSA 
packages will be prepared and sent to former account holders for whom 
Interior does not have current address information. Many of these may be 
returned. Also, many of the current account holders are “whereabouts 
unknown” for whom Interior does not have a good address. Interior will 
pursue a number of due diligence steps to obtain an address for these 
whereabouts unknown. AR-565 at 8. 

 

[Sixth,] account holder[s] receiving an HSA package may have questions 
or wish to challenge or lodge a concern regarding the accuracy or 
completeness of the HSA. Interior is establishing an administrative appeal 
process for account holders. AR-565 at 8. 

 

255. In its July 2, 2002 report to Congress, Interior estimated that, for the period 1985-2000, 
the total number of transactions for IIM accounts is 44 million. AR-561 at 15. 

256. The transactions from 1985 through 2000 are generally numerous and very small. Of the 
non-interest credit transactions from February 1985 through December 2000, over 64 
percent were worth less than $10. Over 88 percent of the non-interest credit transactions 
were worth less than $100, and those transactions represent only four percent of the credit 
throughput for the time period. Conversely, credit transactions of $100,000 or more 
represent only 0.03 percent of the number of transactions, but constitute over 42 percent 


of the dollar value of all those transactions. PX-869. Most debit (disbursement) 
transactions during this period were similarly small. PX-870 (review of dollar stratum 
for debit transactions from 1985 to 2000); DX-152 at 16 and Tr. 567:19-568:1 (Herman) 
(addressing dollar stratum of debit transactions covered by the DCV project). 

257. A large number of disbursement transactions occur in the $10 to $100 stratum because of 
an automatic disbursement arrangement under which Interior disburses the balance in an 
IIM account whenever it reaches a certain amount, typically $15. Tr. 569:5-17 (Herman). 


1. Judgment/Per Capita Accounts 


258. Interior uses transaction-by-transaction reconciliation for Judgment and Per Capita 
accounts. To date, Interior has reconciled approximately 86 percent of 96,823 accounts. 
AR-565 at 12. 


259. Since 2002, Interior has received approval to mail 17,096 HSAs for Judgment and Per 
Capita accounts and has mailed approximately 12,280 of those HSAs. An additional 822 
HSAs have been mailed and returned because some current or former account holders’ 
whereabouts are unknown. AR-566 at 13. Currently, Interior is awaiting Court approval 
to mail an additional 66,130 HSAs to Judgment and Per Capita beneficiaries, AR-533 at 
4; AR-565 at 13. 




2. Land-Based Accounts 


260. The 2007 Plan uses statistical sampling to assess the accuracy of the land-based IIM 
account transaction histories. AR-565 at 14-15. 


261. Statistical sampling is a well-accepted scientific technique that allows one to draw 
systematically a sample and make an inference about the population from which the 
sample is drawn. Tr. 936:3-12 (Scheuren). 







262. Interior’s sampling plans incorporated “probability sampling,” which involves drawing a 
sample where the selection of units is done with a known probability of being selected. 
Tr. 939:24-940:7 (Scheuren). 


263. The process of determining an appropriate sample size is the product of discussions 
between the party drawing the sample and its client and considerations regarding the data 
to be sampled. Tr. 936:16-937:3 (Scheuren). 


264. The determination regarding an appropriate sample size can evolve over time. Tr. 936:3- 
937:3 (Scheuren). 


265. When determining sample size, the sampler starts with a hypothesis about the 
population’s error rate to determine a provisional sample size. Tr. 937:11-18 (Scheuren). 


266. If the sampler assumes high error rates, the provisional sample size will be larger to 
achieve the same level of precision than would be the case with a low error rate. Tr. 
938:16-22 (Scheuren). 


267. If the sampler’s initial hypothesis is not borne out by actual sample results, the sample 
design should be changed. Tr. 938:8-15 (Scheuren). 


268. Sample size determination involves a four-step approach: initial planning, initial 
sampling, drawing inferences from sample, and redesign based on what has been learned 
from the sampling. Tr. 964:23-966:6 (Scheuren). 


269. Interior’s sampling plans allowed one to estimate both attributes, i.e., error rates, and 
variables, i.e., quantification of dollars in error. Tr. 941:5-17 (Scheuren). 


270. The concepts of precision or “margin of error” refers to the confidence interval, such as 
“95 percent confidence,” and when referring to a 95 percent confidence interval, it means 





that when one draws a sample, the estimate will fall within a range (confidence interval) 
with the correct value 95 percent of the time. Tr. 944:16-945:2 (Scheuren). 


271. Interior’s 2003 Plan used a 99 percent assurance level, which means that the confidence 
interval would be larger than the confidence interval for a 95 percent assurance level. Tr. 
945:13-18 (Scheuren). 


272. A 99 percent confidence level is not standard in business settings; it is extreme, and a 95 
percent confidence level is appropriate for most business settings. Tr. 967:17-968:1 
(Scheuren). 


273. NORC used a 99 percent confidence level because of the nature of the Cobell case, and 
that resulted in a sample design with considerably larger sample sizes. Tr. 967:17-968:1 
(Scheuren). 


274. The relationship between sample size and precision is not linear, i.e., doubling sample 
size does not lead to twice as precise an estimate, and at some point, increasing the 
sample size will not make a difference in terms of precision. Tr. 960:22-962:8 
(Scheuren); DX-006 at 5 (Table 1). 


a. “Electronic Ledger Era” (1985-2000) - completed as a 
result of the Litigation Support Accounting Project 

 
275. NORC drew a sample of land-based transactions from the Alaska Region using the 2003 
Plan sample design, but a “hold” was placed on the 2003 Plan work because of expressed 
judicial and congressional concerns. Tr. 971:16-972:9 (Scheuren). 






276. NORC drew a sample from accounts that existed on or after October 1994. Tr. 972:24- 
973:6 (Scheuren). 


277. After sampling accounts for the Alaska Region, NORC sampled transactions within the 
sampled accounts. Tr. 984:11-985:5 (Scheuren); AR-438 at 26. 


278. After the 2003 Plan was placed on hold, Interior and NORC proceeded with the LSA 
project. Tr. 973:7-16 (Scheuren). 


279. The Litigation Support Accounting project was so-named because of directions Interior 
received from Congress in the FY2004 appropriations bill. The bill limited the type of 
work Interior could perform on the historical accounting. Therefore, to make progress on 
land-based accounts consistent with Congress’ instructions, Interior had a statistical 
sample of land-based accounts designed to provide factual information to support this 
litigation and then-ongoing, Congressionally directed, settlement discussions. AR-566 at 
13; Tr. 62:2-64:5 (Cason). 


280. The purpose of the work performed under the LSA project was not principally to limit the 
liability of the Government. Tr. 96:18-20 (Cason). Instead, the LSA project allowed 
Interior, under the constraints of Congress’ appropriation language, to learn where the 
funds were located, what the relative errors actually were, what the difficulty in finding 
the data actually was, and whether Interior needed to design the historical accounting 
process in a different way. Interior used the LSA project to become knowledgeable about 
what it should expect to find in the land-based accounts from the Electronic Ledger Era 
and, thus, become better informed for any discussions related to a possible settlement, to 
present a more well-founded position. Tr. 96:20-97:10, 201:20-25, 205:16-19, 208:22- 
209:14 (Cason). 


281. In October-November 2003, NORC was asked to draw a sample in connection with the 
LSA. Tr. 974:7-12 (Scheuren). 





282. NORC recommended that a large sample of 1,000 accounts be drawn, with an average of 
20 transactions per account. Tr. 974:13-17 (Scheuren). 


283. NORC’s focus in the LSA project was different than in the 2003 Plan in that they were 
trying to get an understanding of the system – not necessarily to generate estimates for a 
historical accounting – to assess how much work would be needed. Tr. 974:18-975:1 
(Scheuren). 


284. NORC expected to find higher error rates, and if the results of the LSA project sample 
work were consistent with their expectations, then much more work would have been 
required. Tr. 974:23-975:3 (Scheuren). 


285. After performing the work for the Eastern Region and the Alaska Region, Interior 
proceeded to analyze transactions in the remaining ten Regions. Tr. 988:4-11 (Scheuren); 
AR-438 at 22-26. 


286. The LSA had two components. Tr. 442:17-443:1 (Herman). One part involved all 
transactions that were greater or equal to $100,000, both credits and debits in land-based 
IIM accounts. The second was a sample of transactions in the land-based accounts. 
Those transactions were allocated among the various accounting firms, and each team 
reconciled the transactions back to the supporting financial documents, realty documents, 
and ownership documents. Tr. 442:17-443:1 (Herman). 


287. NORC drew the sample for the remaining ten Regions in December 2003, utilizing 
transaction data which had undergone data validation procedures conducted by OHTA’s 
contractor, FTI. Tr. 988:12-989:12 (Scheuren); AR-438 at 22. 





288. The sample design for the LSA project provided for a 100 percent reconciliation of all 
transactions of $100,000 or more, as compared to the $5,000 threshold set forth in 
Interior’s 2003 Plan. Tr. 990:12-991:7 (Scheuren). 


289. NORC’s sample for the remaining ten Regions was drawn from transactions valued at 
under $100,000, using population information supplied by FTI Consulting, one of 
OHTA’s historical accounting contractors. Tr. 989:12-17, 989:22-990:8; (Scheuren) AR- 
438 at 22. NORC’s sample design for the remaining ten Regions drew a sample of 1,020 
accounts. Tr. 989:18-21 (Scheuren); AR-438 at 22. 


290. The sample of accounts was to be allocated across the remaining ten Regions in rough 
proportion to the number of accounts in the Regions, with a minimum of 20 accounts to 
be selected for each Region to ensure representativeness across geography, time, and 
transaction type. Tr. 992:18-993:1 (Scheuren); AR-438 at 22. 


291. NORC initially designed a sample of 20,000 transactions for the ten Regions, to be 
divided into four replicates, i.e., representative sub-samples of the overall sample. Tr. 
993:3-994:7 (Scheuren); AR-438 at 22. 


292. Interior completed one of the four replicates during the LSA project, and as a result, the 
statistical inferences to be drawn from the single replicate included larger margins of 
error. Tr. 994:8-17, 994:22-995:5 (Scheuren); AR-438 at 25. 


293. For the LSA project, NORC selected a sample of 2,372 debit transactions, and the 
accounting firms engaged by OHTA reconciled all but nine of the transactions and found 
no errors in the reconciled debit transactions. Tr. 997:1-12 (Scheuren); AR-438 at 13 
(Table 4). 





294. From a statistician’s point of view, Interior’s ability to reconcile 2,363 out of 2,372 was 
“an astonishingly good result.” Tr. 997:13-18 (Scheuren). 


295. In drawing statistical inferences from the LSA project results for the debit transactions, 
NORC used a very conservative assumption that the nine unreconciled transactions were 
all erroneous. Tr. 998:2-24 (Scheuren); AR-438 at 14. 


296. NORC’s assumption that all unreconciled debit transactions were erroneous was not 
based upon any knowledge that the transactions were, in fact, erroneous. Tr. 999:14-22 
(Scheuren). 


297. NORC also selected a sample of 2,128 credit transactions in the LSA project, and the 
accounting firms engaged by OHTA reconciled all but 11 of the transactions. Tr. 1000:2- 
12 (Scheuren); AR-438 at 16 (Table 7). 


298. In drawing statistical inferences from the LSA project results for the credit transactions, 
NORC based its analysis on findings of 36 errors, including the 11 unreconciled 
transactions. Tr. 1000:7-20 (Scheuren); AR-438 at 16 (Table 7). 


299. In drawing statistical inferences from the LSA project results for the credit transactions, 
NORC used “the most conservative missing data model” by assuming that the 11 
unreconciled transactions were all erroneous. Tr. 1000:21:1001:11 (Scheuren); AR-438 
at 17. 


300. NORC’s assumption that all unreconciled credit transactions were erroneous was not 
based upon any knowledge that the transactions were, in fact, erroneous. Tr. 1001:12-15 
(Scheuren). 


301. Interior’s accountants were able to reconcile all of the transactions with values of 
$100,000 or greater. Tr. 1001:16 - 1002:6 (Scheuren); AR-437. 





302. Because the transactions valued at $100,000 or more constituted such a small percentage 
of the total number of transactions (0.02 percent of all debit transactions and less than 
0.01 percent of all credit transactions), the overall estimates reported in NORC’s 
September 30, 2005, Report (AR-438) were largely driven by the results for the 
statistically sampled transactions. AR-437 at 3. 


303. NORC’s report dated September 30, 2005 (AR-438) noted that based on the data, 
differences found were as likely to advantage as to disadvantage the individual Indian 
account holder, and that conclusion was not altered after NORC considered the additional 
work performed to reconcile transactions of $100,000 or more. AR-437 at 3. 


304. “Coverage” issues are important to statisticians because they are asked to draw a sample 
and to make inferences about a population, based on the sample. Tr. 2148:6-10 
(Hinkins). 


305. To address coverage concerns, every element of the population must have a chance of 
being selected from the sampling frame. Tr. 2148:10-13 (Hinkins). 


306. The population tested by the LSA project is only one part of the total population to be 
tested under Interior’s 2007 Plan. Tr. 2149:1-8; (Hinkins); Tr. 2150:1-22 (Hinkins) 
(discussing DX-4, at 10). 


307. The LSA project was not intended to substantiate statements about the entire Electronic 
Ledger Era. Tr. 2169:19-22 (Hinkins). 


308. Plaintiffs’ expert, Mr. Duncan, erroneously concluded that NORC used the results of the 
LSA project to make inferences about the entire Electronic Ledger Era population. Tr. 
2151:3-18 (Hinkins). 





309. The target population in the LSA project does not include all transactions in the 
Electronic Ledger Era. Tr. 2170:3-6 (Hinkins). 


310. OHTA was aware when the initial sample population was drawn that not all eligible data 
had been compiled into the population data set. Tr. 689:11-24 (Herman). NORC knew 
that other projects, such as the DCV work and the Interest Recalculation work (described 
in detail below), could identify additional transactions beyond those in the LSA project 
sampling frame. Tr. 2170:11-25 (Hinkins); see AR-533 at 4. 


311. Interior’s 2007 Plan addresses additional tests of Electronic Ledger Era transactions 
beyond those included in the LSA project sampling frame, including the DCV and Landto-
Dollars work. Tr. 2171:5-18, 2172:1-5 (Hinkins). The expectation is that there will be 
another sample drawn once the data set is restored. Tr. 702:16-24, 704:10-14 (Herman). 


312. To the extent transactions are identified as part of the DCV analysis that occurred during 
the sampling time frame for the LSA project but were not originally included in the 
sampled populations, OHTA is going to consider such transactions in adjusting the 
population. Tr. 574:8-575:5 (Herman). 


313. Consistent with proper statistical practice, NORC was careful to only draw inferences as 
to the portion of the population sampled. Tr. 2152:9-16, Tr. 2152:17-2153:3 (Hinkins). 


314. NORC drew a sample of transactions to gather information about the overall soundness 
of the accounting systems in terms of the number of errors and dollar error rates. Tr. 
2153:24-2154:16 (Hinkins). 


315. Initial transactions that opened new accounts, and thus established an opening balance, 
were subject to sampling by NORC. Tr. 2154:17-20, Tr. 2178:24-2179:16 (Hinkins). 





316. Mr. Duncan admitted during his direct examination that he did not understand the target 
population in NORC’s LSA project analysis when he issued his initial expert report in 
August 2007. Tr. 1391:18-1392:6 (Duncan). 


317. Mr. Duncan agreed with Dr. Hinkins’ explanation in her rebuttal expert report that the 
LSA project sample is only being used to make inferences about the population from 
which that sample was drawn. Tr. 1392:7-12, 1444:20-1445:8 (Duncan). 


318. Mr. Duncan’s attempt to estimate work remaining for the Electronic Ledger Era – PX- 
4486 – overstates months of “missing” electronic data because he erroneously included 
many months where Regions had not yet converted from paper records to IRMS. Tr. 
1469:19-1472:23 (Duncan). 


319. Mr. Duncan’s attempt to estimate work remaining for the Electronic Ledger Era – PX- 
4486 – overstates months of “missing” electronic data because he erroneously failed to 
consider that some agency offices did not process transactions on a monthly basis when 
he counted those months as “missing.” Tr. 1474:17-1475:11 (Duncan). 


320. Mr. Duncan’s attempt to estimate work remaining for the Electronic Ledger Era – PX- 
4486 – overstates the dollar impact of “missing” electronic data because he did not 
consider the disproportionate impact of very large dollar transactions in his calculation of 
“average throughput per transaction.” Tr. 1475:12-1476:4 (Duncan). 


321. Mr. Duncan’s attempt to estimate work remaining for the Electronic Ledger Era – PX- 
4486 – overstates the impact of “missing” electronic data because he erroneously failed 
to consider that interest was posted every six months, rather than monthly, during the 
early periods of the Electronic Ledger Era. Tr. 1476:5-18 (Duncan). 





322. Mr. Duncan agreed that he did not know the relative sizes of the sampled population, i.e., 
the LSA project sample, and the entire Electronic Ledger Era population and that he 
should have noted that the third page of his related demonstrative exhibit, PX-4485, was 
“not necessarily to scale.” Tr. 1484:1-16 (Duncan). 


323. Mr. Duncan conceded that when he criticized Interior’s sampling plan, he failed to take 
into consideration the 2007 Plan’s discussion of work to be completed, such as the DCV, 
Land-to-Dollars test, and other tests. Tr. 1493:17-24 (Duncan). 


324. Mr. Duncan conceded that the DCV, Land-to-Dollars test, and other tests could identify 
the types of transactions which he originally concluded would be “missing, erroneous, or 
omitted” from the sample. Tr. 1506:13-20 (Duncan). 


325. Mr. Duncan conceded that his original expert report was in error when he criticized 
Interior’s sampling plan as solely employing attribute sampling. Tr. 1502:17-1503:10 
(Duncan). 


326. Mr. Duncan conceded that when he criticized Interior’s sampling plan as failing to detect 
transactions that were “intentionally altered, accidentally altered, or erroneously entered,” 
he did not know what “alternative procedure[s]” were contemplated by the ASM. Tr. 
1506:21-1507:3 (Duncan). 


327. Mr. Duncan stated that he was not offering opinions as to what would constitute 
“adequate reconciliation procedures.” Tr. 1485:19-24 (Duncan). 


b. “Paper Ledger Era” (pre-1985) 


328. The 2007 Plan follows a NORC recommendation made in a May 25, 2007 memorandum 
that Interior test an initial hypothesis that the Paper Ledger Era would produce an error 





rate similar to the Electronic Ledger Era. Tr. 1014:18-1015:13 (Scheuren); AR-426; AR- 
565 at 15. 


329. An initial hypothesis test would allow Interior to draw a smaller sample at the outset and 
in a cost-effective manner, and if the initial hypothesis is wrong, Interior can then 
increase the sample. Tr. 1015:22-1016:8; 1016:17-1017:16; 1019:4-9 (Scheuren). 




330. If testing demonstrates that the initial hypothesis is accepted, Interior’s work will be 
completed with regard to assessing the error rates in the Paper Ledger Era. Tr. 1018:18- 
1019:3 (Scheuren); AR-426 at 3. 


331. Cost is a valid statistical consideration in sample design. Tr. 1017:18-1018:6 (Scheuren). 


332. In its May 25, 2007 memorandum, NORC recommended that Interior first draw a sample 
of accounts from a list of accounts believed to have Paper Ledger Era transactions and, 
second, draw a sample of transactions from the sampled accounts. Tr. 1018:9-17 
(Scheuren); AR-426 at 2-3. 


333. The 2003 Plan called for the reconciliation of approximately 260,000 transactions in the 
Paper Ledger Era; however, that work has not materially started. Tr. 98:22-99:3 (Cason). 


334. Interior, however, has been collecting the information needed to perform reconciliations 
in the Paper Ledger Era. Tr. 99:3-4 (Cason); AR-565 at 13. 


335. Based on the results of the reconciliation work so far, Interior anticipates that it can use a 
statistical sample of transactions in the Paper Ledger Era similar to the sample in the 
Elec