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From gas, oil: The tribe accuses the state of misspending tens of millions of dollars

Published January 12, 2006 12:05 am

This is an archived article that was published on sltrib.com in 2006, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

For years, Navajos in San Juan County battled to force Utah to account for millions of dollars they say were lost from a trust fund through mismanagement by the state. And for years, the state fought back with arguments about filing deadlines and other legal points.

On Wednesday, U.S. District Judge Tena Campbell ruled that the fight will go additional rounds. She rejected the contention that the request for the state to provide information about how it handled the Navajo Trust Fund came too late.

The decision could accelerate the case, which has been inching through the justice system for 14 years, and even lead to settlement talks.

The fund was created in 1933 to hold 37 1/2 percent of the royalties from oil and gas drilling on the tribe's land in San Juan County. The class-action lawsuit, filed in 1992 on behalf of 7,000 to 8,000 Navajos living in San Juan County, centers on the management of the trust fund by the state, which acts as trustee.

Substantial money began flowing into the account in 1955, but an audit in 1991 found that millions could not be accounted for.

At the time of the audit, the fund contained $12 million. An expert for the Navajo plaintiffs has estimated that if properly managed, there should have been about $100 million in the trust.

The tribal members want an accounting of the money that went in and out of the fund and reimbursement of up to $150 million, the amount with interest they allege was squandered.

Attorneys for the state counter that the money was not lost but was spent, with approval by a board.

In addition, the state's attorneys have pointed out that a request for an accounting was made in three previous lawsuits. They argued that although the accounting was never prepared, a legal standard called "res judicata" - a Latin term for "the thing has been decided" - means that the plaintiffs in the current case are barred from pressing the matter.

A board that took over the fund in 1992 now spends $2 million annually for scholarships, construction of new water and power lines, housing and road maintenance equipment.

pmanson@sltrib.com