FOR IMMEDIATE RELEASE April 17, 2001


SPECIAL MASTER FINDS FEDERAL RESERVE CULPABLE
FOR "PROFOUNDLY TROUBLING" DESTRUCTION
OF INDIAN TRUST DOCUMENTS


WASHINGTON, D.C.  - The Court-appointed Special Master overseeing 
individual Indian trust litigation issued an opinion today finding 
Federal Reserve banks and branches culpable for "profoundly troubling" 
destruction of trust-related documents, despite a federal judge's 
orders that the records be preserved.

Special Master Alan L. Balaran said that, "to date," 29 of 37 branch 
offices in the nationwide Federal Reserve system have reported 
destruction of financial records that are material to Cobell v. Norton, 
a class action lawsuit by individual Indian trust beneficiaries against 
the Interior and Treasury departments.

Referring to the Fed's "abysmal record" of preserving the documents, 
Balaran added, "Given the center stage that issues concerning document 
retention and preservation have occupied in this litigation, this lack 
of oversight is profoundly troubling."

Balaran's findings were part of a legal opinion analyzing whether the 
Treasury Department or the Federal Reserve were to blame for the 
destruction under terms of an order issued by U.S. District Judge Royce 
C. Lamberth, who is presiding over the Cobell litigation.

"Saying the government's actions are 'profoundly troubling' is putting 
it politely," said Elouise Cobell, the lead plaintiff. "We have been 
saying for over a year that Treasury and the Fed do not have the 
safeguards in place to replicate the information they keep destroying, 
nor do they have a plan to establish any safeguards. It is a small 
vindication to find out that the Special Master agrees with us."

The financial records maintained by the Fed reflect investment of up 
to $500 million a year of Indian trust funds in government securities 
on behalf of at least 500,000 individual trust beneficiaries. They are 
vital for an accounting ordered by the Court for each dollar deposited 
and withdrawn since 1887. The plaintiffs believe that tens of billions 
of dollars have been held in the trusts since the late 19th century, 
but the government has conceded that it cannot say accurately what has 
happened to the funds.

To read the Special Master's opinion, go to www.indiantrust.com


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