Rosebud Sioux Tribe v. US, BUR. OF INDIAN AFF.

• Citation: 714 F. Supp. 1546
• Decision Date: 21 June 1989
• Docket Number: Civ. No. 86-3014.
• Parties: ROSEBUD SIOUX TRIBE, Plaintiff, v. UNITED STATES of America, BUREAU OF INDIAN AFFAIRS, Defendant.
• Court: U.S. District Court — District of South Dakota

714 F. Supp. 1546

ROSEBUD SIOUX TRIBE, Plaintiff, v. UNITED STATES of America, BUREAU OF INDIAN AFFAIRS, Defendant.

Civ. No. 86-3014.

United States District Court, D. South Dakota, C.D.

June 21, 1989.

COPYRIGHT MATERIAL OMITTED

Terry L. Pechota, Finch, Viken, Viken & Pechota, Rapid City, S.D., for plaintiff.

David L. Zuercher, Asst. U.S. Atty., Pierre, S.D., for defendant.

MEMORANDUM OPINION

DONALD J. PORTER, Chief Judge.

On April 8, 1986, plaintiff Rosebud Sioux Tribe filed this action alleging that defendant United States through the Bureau of Indian Affairs (BIA) breached the trust obligation owed the Tribe. Specifically, the Rosebud Sioux Tribe claims that the BIA failed to adequately supervise economic development on the Rosebud Sioux Indian Reservation. The Tribe seeks monetary damages, declaratory relief, and a writ of mandamus to compel the BIA to issue regulations governing economic development on Indian reservations.

The parties obtained postponements of the trial date on several occasions and on November 6, 1987 filed a joint motion for submission of the case on a set of stipulated facts. The case then floundered, since the parties ultimately were unable to agree to a stipulation of facts. On November 3, 1988, this Court issued an order establishing a schedule for the submission of the case on briefs because the case presents primarily legal rather than factual issues and because the parties have indicated a desire to avoid trial of the case if possible.¹ The case now has been fully briefed and is ready for a decision. Because this Court lacks jurisdiction to grant the money damages requested and because a writ of mandamus is inappropriate in this case, this Court transfers the bulk of the case to the Claims Court for further proceedings.

I. FACTS.

Plaintiff Rosebud Sioux Tribe is a federally recognized tribe with governmental responsibilities on the Rosebud Indian Reservation in the southwestern portion of South Dakota. Defendant United States through the Bureau of Indian Affairs assists and partially supervises the Tribe.

In February and March of 1984, officials of the Rosebud Sioux Tribe entered discussions with Harvey Greenwald, a non-Indian businessman, concerning business enterprises on the Rosebud Indian Reservation. Greenwald's elaborate plans for bringing prosperity to the depressed economy of the Rosebud Indian Reservation won over the support of then tribal chairman, Webster Two Hawk. Two Hawk introduced Greenwald to the Rosebud Tribal Council and began negotiating a management agreement under which Greenwald would begin business on the Reservation.

On March 21, 1984, the Rosebud Tribal Council passed Resolution No. 84-60, which authorized Two Hawk to complete the execution of a management agreement with Greenwald. Initially, the Tribe believed that the federal government did not need to approve the management agreement with Greenwald.² The initial drafts of the management agreement, nonetheless, were submitted to BIA officials.

The draft of the management agreement went through formal BIA review, including review by BIA Area Director Jerry Jaeger and the Regional Office of the Solicitor of the United States Department of the Interior. These officials expressed reservations and made numerous suggestions for revisions of the initial management agreement. Among the BIA suggestions was that the background and credentials of Greenwald and his business be investigated.³

The BIA conducted a limited background check on Greenwald, but the search primarily was focused on whether Greenwald had any criminal convictions. The search revealed very little information about Greenwald, and BIA officials reported to the Tribe that it had scant information about Greenwald. Wilson Barber, who was the BIA agency superintendent for the Rosebud Indian Reservation at the time, met with Chairman Two Hawk and Greenwald in March of 1984. Barber purportedly asked Greenwald for financial documentation of Greenwald's assets and studies of the feasibility of the elaborate business plans. Barber also expressed concerns about the sweeping nature of the proposals and the legal ramifications. Greenwald never produced any financial reports, and the BIA did not press its request for financial documentation. Meanwhile, Greenwald and the Tribe had already begun to perform under the management agreement.

Chairman Two Hawk and Greenwald eventually incorporated nearly all of the suggestions made by BIA officials into a revised management agreement. The Tribal Council on May 23, 1984 enacted Resolution No. 84-121, which adopted the amendments to the management agreement and reauthorized the execution of the agreement. On June 11, 1984, BIA Area Director Jerry Jaeger met with Harvey Greenwald at a Tribal Council meeting and approved the amended management agreement. According to Jaeger, the Rosebud Tribal Council was pressuring the BIA to approve the management agreement with Greenwald.

The management agreement established a business network to control economic development on the Rosebud Indian Reservation. Greenwald himself had established a business called Rosebud Industries, Inc., which was to act as a financier and management consultant for three wholly-owned tribal businesses. These three tribal businesses, created pursuant to the management agreement, were Rosebud Mobile/Modular Homes, Rosebud Real Estate and Construction, and Rosebud Procurement and Fundraiser. The management agreement required Greenwald to provide at least $250,000 of initial financing to these three tribal companies. Greenwald had represented to tribal members that he was worth somewhere in the range of twenty million dollars and that he was interested in developing businesses on the Rosebud Indian Reservation to take advantage of tax shelters and deductions. Greenwald, through Rosebud Industries, Inc., was to provide financial advice and was to receive forty percent of the net profits derived from the operation of the three tribal companies. The management agreement also provided that, while no tribal assets were to be used in the industries, the Tribe would enter into leases with Greenwald to provide assets for the three tribal entities.

To house the Rosebud Mobile/Modular Home business, the Tribe agreed to lease Greenwald the Commodity Program building in Antelope, South Dakota. The Tribe then moved the Commodity Program to a building in Rosebud and paid $18,000.00 to remodel the Rosebud building. The building in Antelope also had to be remodeled at a cost of $11,000.00 to house the planned construction of mobile homes. In exchange for the lease, Greenwald agreed to pay $7,000.00 per year on a loan that the Tribe had received from the Small Business Administration. The modular home business was short-lived, and Greenwald never made the $7,000.00 yearly payment.

The same unfortunate fate awaited Greenwald's other grandiose plans. Believing that the consolidation of a number of different tribal enterprises would yield substantial profit, Greenwald had devised a plan to use cattle from the tribal ranch to supply a tribally owned slaughterhouse and then to return beef products back to the tribal jail, hospital, nursing home, and schools. Greenwald, along with an associate by the name of Robert Wood, who was the primary owner of Dellwood Co., decided to purchase the financially troubled Fort Pierre packing plant called Cedar Breaks Beef. Greenwald had earlier secured without the knowledge of the Tribal Council a power of attorney from the Tribe dated March 26, 1984 and signed by Tribal Chairman Webster Two Hawk.⁴ With the power of attorney in hand, Greenwald negotiated an agreement whereby Dellwood Co. bought Cedar Breaks Beef on behalf of the Tribe with the intention to donate shares of Cedar Breaks Beef to the tribal entities. Ultimately, twenty percent of the shares of Cedar Breaks Beef were donated to Rosebud Sioux Procurement and Fundraiser and allegedly thirty-six percent of the shares were transferred directly to Indian individuals. Greenwald assumed a $175,000 indebtedness owed to the Small Business Administration and Bankwest as consideration for the purchase of the packing plant. As collateral for the arrangement, Dellwood Co. put up the deed to some land in Texas worth between $50,000 and $70,000. Cedar Breaks Beef failed, and Bankwest and the Small Business Administration absorbed much of the loss. The BIA was unaware at the time that the Tribe had purchased part of Cedar Breaks Beef.

Meanwhile, perhaps at the urging of Harvey Greenwald, the Rosebud Sioux Tribe's bank account containing over $2 million had been transferred from a Mission, South Dakota bank to Stockmens National Bank in Rushville, Nebraska without the knowledge of the Tribal Council. Coinciding with the transfer of the accounts to Stockmens National Bank, the bank made a number of personal loans to Webster Two Hawk and several other tribal council members. None of these loans were repaid. The bank also made an $8,000 loan on July 24, 1984 to Rosebud Sioux Real Estate and Construction to finance a gravel exploration and development enterprise that Harvey Greenwald spearheaded.⁵ Apparently without the approval of the Tribal Council, $7,000 had already been supplied by the Tribe to Greenwald to finance the gravel exploration project, although the tribal constitution prohibited the use of tribal assets without Tribal Council approval. None of this money was returned, and the gravel exploration and development project also failed.

Yet another enterprise that Harvey Greenwald entered into on the Reservation was the buying and selling of hay. In 1984, a drought in Texas triggered an increased demand for hay from Texas ranchers. Greenwald borrowed money from the Tribe to set up an account to pay for the expenses of transporting hay to Texas. The Tribe never recovered this money and lost approximately $1,680 in this enterprise.

In addition, some time in the...