August 15, 2001

Treasury Department Retrained Lawyers
After Rubin Was Cited in Case, Papers Say

By JOHN J. FIALKA 
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- The Treasury Department gave more than 2,000 of its lawyers 
retraining in legal ethics and federal-court rules after former Treasury 
Secretary Robert Rubin was cited for failing to respond to court orders 
in a case involving allegations of mishandling trust funds for American 
Indians.

The unusual 1999 retraining effort was disclosed in court papers ordered 
released by U.S. District Judge Royce Lamberth here after lawyers for 
Dow Jones & Co., which publishes The Wall Street Journal, moved to have 
them unsealed.
 
No details on the cost of the retraining or how long the course took were 
included in the papers. Lawyers for the Treasury agency had asserted that 
releasing the information violated its lawyers' privacy rights. The 
department had no comment yesterday on the documents' release.

The case involves allegations that there have been widespread losses from 
Indian accounts due to mishandled records and a slipshod accounting 
system run by the Interior Department's Bureau of Indian Affairs. The 
actual accounts are kept by the Treasury, and the Justice Department 
has been called in to defend the actions of the two agencies in the case.

The Indians are asking the government for a complete accounting of all 
their funds. About $500 million a year flows through the accounts. 
Release of the information isn't expected to affect the outcome of the 
case, but it provides new embarrassing details about how the government 
has wrestled with the allegations.

In an opinion accompanying his order to release the papers, Judge Lamberth 
said the public's right to know about such cases "can not be overstated." 
While applauding the Treasury's retraining effort, he noted that "it 
stands in marked contrast to the dearth of corrective action taken by 
the Interior Department and the Justice Department," whose lawyers have 
been involved in the five-year-old case.

Signaling he could take further punitive actions, the judge said the 
federal government is engaged in a "continued breach of its substantial 
trust responsibilities" to control a banking system it has run on behalf 
of individual Indians and Indian tribes since the 19th century.

The Treasury documents released by the judge blamed "poor communication 
between two sets of senior attorneys" in the agency. According to the 
papers, it resulted in a three-month gap in 1999 between when Treasury 
lawyers found that canceled checks possibly related to the case were 
being destroyed and when the lawyers informed senior agency officials 
about it.

The gap occurred while Mr. Rubin was being tried by Judge Lamberth for 
contempt charges for failing to respond to court deadlines.

The Treasury probe resulted in reprimands to four lower-level lawyers 
for "failing" to communicate, but found no "substantial evidence" that 
they intentionally sought to hide information. It found that Neal Wolin, 
then the agency's general counsel, was unaware of the destruction of 
documents until three months after his lawyers discovered it. Some of 
the checks, government payments to Indians that were being routinely 
destroyed, according to the Treasury Department, may have been among 
those covered by a court order.

Judge Lamberth, who already has determined that the U.S. breached its 
trust responsibilities in the case, will hold a second trial next year 
that will attempt to determine how much Indian money might have been 
lost through government mishandling of trust fund records. Dennis 
Gingold, an attorney for Indian plaintiffs in the class action, claims 
it could be as much as $10 billion. Lawyers for the government assert 
that provable losses are minimal.

So far, the government has balked during several attempts to settle the 
case.

Mr. Gingold, said he will soon file a series of motions to hold federal 
officials and lawyers for the three agencies in contempt for allegedly 
failing to respond to court orders for documents and for corrective 
action by the agencies. "We're talking about a fraud perpetrated on this 
court," he said.