Elouise Cobell first suspected the government of mishandling Native American trust fund money while working a summer job at the Bureau of Indian Affairs more than 30 years ago.

The bureau was created in the 1820s to manage real estate owned by Native Americans-leasing the land to farmers, ranchers, oil and gas companies, and holding the proceeds in trust for American Indians. Yet throughout that summer, Ms. Cobell recalls, many Blackfeet tribe members left the bureau's office here empty-handed.

"I couldn't believe the way these people were treated," said Ms. Cobell, a member of the Blackfeet tribe and founder of Blackfeet National Bank. "This was their money, but they weren't being paid. That's when it really started to hit home for me that I had to do something."

During the 1970s and 1980s, first as treasurer of the tribe and later as the bank's chairwoman, Ms. Cobell tried to prove that the trust fund was being mismanaged. Her efforts led to a congressional audit of tribal accounts and the creation of a special trusteeship.

Finally, in 1995, Ms. Cobell and representatives of five tribes sued the Interior Department, which oversees the Bureau of Indian Affairs, alleging that it had lost billions of dollars owed to the nation's roughly 270 tribes.

The suit was later expanded to include 500,000 American Indians. And while the suit asks for no specific damages, it is being billed as the largest ever against the federal government.

"We can't even name an amount because there's no accounting and very little documentation," Ms. Cobell said. "But we know it's in the billions."

The Interior Department conceded that it has lost tens of thousands of records; it has has pledged $160 million to clean up the system by 2000. But its defense-that typical trust law does not apply in this case-was dealt a major blow this month when a federal judge ruled that the government must prove its accounts are accurate.

"Trust law places the burden of proof squarely on the trustee," said Keith Harper, an attorney for the Native American Rights Fund of Boulder, Colo., which is representing the plaintiffs.

The trial is to begin March 15. Until then, when not running the bank, Ms. Cobell will spend much of her time trying to raise money to cover roughly $2 million in annual legal costs.

"She deserves a lot of credit for raising money and awareness," said John Echohawk, executive director of the Native American Rights Fund. "This is a very expensive case and one that is not easily understood by the public or the foundation people."

Ms. Cobell, 53, never planned to be a banker. She was content running her 1,000-acre ranch with her husband and working as treasurer of the 15,000-member Blackfeet tribe.

But in 1983 the Federal Deposit Insurance Corp. closed the troubled First National Bank in Browning, leaving the Blackfeet reservation without a bank.

"Everybody that was doing business on the reservation had to make arrangements to do their banking elsewhere," Ms. Cobell said. The tribe itself was forced to bank in Great Falls, 130 miles away.

Ms. Cobell led the drive to bring a bank to Browning. She asked the state Legislature to change laws that, at the time, banned branch banking. She tried persuading other banks to charter a new bank in Browning but found them reluctant to deal with sovereignty issues or Indians' reputation as bad credit risks.

Finally, she concluded that the tribe had only had one choice: to open its own bank. It wasn't easy. No national bank had ever been opened on a reservation, so obtaining a charter was time-consuming and complicated. And an effort to raise capital from members of the tribe proved disastrous.

"Most of our community members don't even invest in CDs, so we should have known that they wouldn't be interested in a long-term investment like bank stocks," Ms. Cobell said.

Blackfeet National Bank finally opened in 1987 with $1 million of the tribe's capital. Today it has $17 million of assets.

The bank may be best known for its failed attempt to boost deposits by selling a so-called Retirement CD. The product, introduced in 1994, was essentially a tax-deferred annuity backed by deposit insurance. It was met with such opposition from the insurance industry that it was eventually shelved.

Ms. Cobell acknowledges she "knew nothing about banking" when she founded Blackfeet, but she said it does turn a small profit.

Most significantly, she said, the bank has developed expertise in lending to Native Americans and plans to create a holding company so it may open branches on other Montana reservations.

Ms. Cobell, who last year was awarded a $310,000 "genius grant" from a leading foundation for her work to improve the lives of Native Americans, also has big plans for the rest of Indian country. Specifically, she wants to see a nationwide development bank to make larger loans to American Indians.

As she sees it, Native Americans have always had collateral-land-but because of government mismanagement, they "were never allowed to access their own resources." So far 12 tribes have committed themselves to funding the development bank.

"I think this is the most untapped market in the whole country," she said.

Paul Homan, the Interior Department's special trustee for American Indians, said the future appears brighter for them thanks in part to Ms. Cobell and her determination to clean up the trust fund.

"She is one of the outstanding leaders, not just in Indian country but in America," Mr. Homan said.

Ms. Cobell's crusade for the trust fund money may be reaching its conclusion.

Congress ordered an audit of both tribal and individual accounts in 1989. Three years later Arthur Andersen & Co. uncovered a $2.4 billion shortfall in tribal money but said it would take years and another $250 million of taxpayer money to make sense of individual accounts.

Congress then passed a law creating a special trusteeship to oversee Indian accounts and develop a strategic plan for trust fund management. On the recommendation of Ms. Cobell and other tribal leaders, President Clinton in 1995 appointed Mr. Homan, a former senior deputy comptroller for bank supervision.

Mr. Homan said that as an employee of the Interior Department he could not discuss the lawsuit. But in his most recent strategic plan-approved by Congress in July-he proposed moving Native American funds out of the Bureau of Indian Affairs and into the hands of a new government-sponsored enterprise.

"There's very little proof of embezzlement and crookedness," he said, "but the fact that many files cannot be found shows gross mismanagement."

Ms. Cobell said she is pleased at the strides Mr. Homan has made. She also said she is confident that the Native Americans will prevail in court. Still, she said, a victory would not make up for what has been nearly two centuries of payments denied.

"We will never be paid back all of our money," she said.

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