In the United States Court of Federal Claims

No. 06-896L

Filed: February 8, 2022

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THE WESTERN SHOSHONE 

IDENTIFIABLE GROUP, represented 

by the YOMBA SHOSHONE TRIBE, 

a federally recognized Indian Tribe, 

et al.,

 Plaintiffs,

v. 

UNITED STATES,

Defendant.

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Kelli J. Keegan, Barnhouse Keegan Solimon & West LLP, Los Ranchos de 

Albuquerque, NM, for plaintiffs. Of counsel were Randolph Barnhouse and Michelle 

Miano, Barnhouse Keegan Solimon & West LLP, Los Ranchos de Albuquerque, NM, and 

Steven D. Gordon, Holland & Knight, LLP, Washington, D.C.

Joshua P. Wilson, Trial Attorney, Natural Resources Section, Environment 

& Natural Resources Division, United States Department of Justice, Washington, D.C., 

for defendant. With him were Peter K. Dykema, Natural Resources Section, Environment 

& Natural Resources Division, and Todd S. Kim, Assistant Attorney General, Civil 

Division, Department of Justice. Of counsel were Anthony P. Hoang, Natural Resources 

Section, Environment & Natural Resources Division, United States Department of Justice, 

Washington, D.C., Dondrae N. Maiden, Michael Bianco and Christopher King

Edelstein, Office of the Solicitor, United States Department of the Interior, Washington, 

D.C., and Thomas Kearns and Rebecca Saltiel, Office of the Chief Counsel, United 

States Department of the Treasury, Washington, D.C. 

O P I N I O N

In this Native American tribal trust fund case, three tribal plaintiffs and three 

individual plaintiffs have sued defendant, the United States, for the mismanagement of

plaintiffs’ three tribal trust funds, received as a result of three separate cases before the 

Indian Claims Commission (ICC) and its successors for the government’s taking of the 

plaintiffs’ ancestral lands in Nevada and California without just compensation, over a 

thirty-three-year period. Plaintiffs seek to recover $133,125,302.00 in damages for the 
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government’s mismanagement of the largest of the tribal trust funds, the 326-K Fund, and 

$1,592,822.43 in damages for the government’s alleged mismanagement of the two 

smaller tribal trust funds, the 326-A-1 and 326-A-3 Funds.1 The three tribal plaintiffs are 

the Yomba Shoshone Tribe, Timbisha Shoshone Tribe, and the Duckwater Shoshone 

Tribe, three of the federally recognized Western Shoshone Tribes and three of the 

members of the Western Shoshone Identifiable Group. The three individual plaintiffs are 

Maurice Frank-Churchill, an enrolled member of the Yomba Shoshone Tribe, Jerry Millet, 

an enrolled member of the Duckwater Shoshone Tribe, and Virginia Sanchez, also an 

enrolled member of the Duckwater Shoshone Tribe. Plaintiffs allege that defendant 

“imprudently” invested their tribal trust funds in securities that were too short-term, 

resulting in less than maximum returns. It is not disputed by the parties that defendant 

was the trustee of the funds at issue, and was responsible for the administration, 

management, and investment of the funds at issue from the time the funds were 

appropriated for deposit in the trust accounts for the benefit of the Western Shoshone 

Identifiable Group until the time the funds were distributed to plaintiffs. 

The complicated events leading up to this case, and this case, once filed, have a 

long history. The case in this court was filed in 2006 and originally assigned to a Judge 

other than the undersigned. On August 26, 2015, this case was transferred to the 

undersigned after the original presiding Judge had issued two Opinions in this case, one 

denying defendant’s motion to dismiss and one denying defendant’s motion for 

reconsideration. See W. Shoshone Identifiable Grp. v. United States, No. 06-896L, 2008 

WL 9697144 (Fed. Cl. Oct. 31, 2008); see also W. Shoshone Identifiable Grp. v. United 

States, No. 06-896L, 2009 WL 9389765 (Fed. Cl. Nov. 24, 2009). After the issuance of 

two Opinions, there were settlement discussions and settlement attempts before the case 

was reassigned to the undersigned. Upon being assigned the above-captioned case in 

2015, the undersigned pressed the parties to initiate and intensify efforts on pretrial 

proceedings and to get ready for trial, earlier settlement efforts having failed. Thereafter, 

the court held a five-day trial regarding liability in Washington, D.C. and, on June 13, 

2019, issued an Opinion which addressed the issues of liability and whether the 

government breached its fiduciary duty to plaintiffs when investing the tribal trust funds. 

See generally W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 

143 Fed. Cl. 545 (2019). After extensively and carefully reviewing the lengthy record in 

this case, including the documents and expert reports in evidence, the trial testimony, and 

the post-trial filings, the court found “that there were various times during the investment 

periods at issue for both the 326-K Fund and for the 326-A Funds when the government’s 

investment of all three tribal trust funds fell below the required standard of prudence.” See

id. at 658. After the court’s June 13, 2019 liability Opinion, the parties engaged in 

extensive expert discovery on the issue of damages, and after expert discovery was 

completed, and after a delay due to COVID related challenges, the court held a four-day 

trial to address the issue of damages. 

The facts described below are a brief summary of important, pertinent events taken 

from the extensive record before the court. By no means are the below facts an event1 As discussed below, alternatively, plaintiffs seek $113,830,811.00 in damages.
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by-event description of everything that happened over the thirty-three-year period at 

issue. Some of the relevant facts from the court’s June 13, 2019 liability Opinion are 

repeated below, and the court’s earlier Opinion on liability is incorporated into this 

Opinion. Although the case was divided for purposes of liability and damages, in order to 

promote efficiency and given the complexity of the legal and factual issues, the Opinions 

still address the same, single case, and consider the same factual framework. 

FINDINGS OF FACT

Origin of Plaintiffs’ Tribal Trust Funds

Plaintiffs are the beneficial owners of three tribal trust funds stemming from three 

separate judgment awards. The first judgment occurred on August 15, 1977, when the 

ICC awarded $26,145,189.89 to the Western Shoshone Identifiable Group in Docket 326-

K for the taking of ancestral land located in modern day Nevada and California. Unlike 

the plaintiffs’ awards in its second case before the ICC, docket number 326-A-1, 

discussed below, in which the plaintiffs were awarded a judgment, plus interest, based 

on the record before the court and the parties’ revised joint stipulations of fact in the 

above-captioned case, plaintiffs were not awarded any interest for the award of the 

$26,145,189.89 in the 326-K Fund case. Both parties appealed the ICC’s August 15, 1977 

award of $26,145,189.89, which was subsequently affirmed by the United States Court 

of Claims2 on February 21, 1979. See Temoak Band of W. Shoshone Indians, Nevada v. 

United States, 219 Ct. Cl. 346, 361, 593 F.2d 994, 1002, cert. denied, 444 U.S. 973 

(1979). On December 19, 1979, the ICC’s award of $26,145,189.89 was deposited into a 

tribal trust fund account in the United States Treasury under account number JA9334697. 

The parties in the above-captioned case refer to this tribal trust fund as the “326-K Fund,” 

and it is the largest of the three tribal trust funds at issue.

The second judgment occurred on December 3, 1991, when the United States 

Claims Court3 entered a judgment in Western Shoshone Identifiable Group v. United 

States, Docket Number 326-A-1, in the amount of $823,752.64 in favor of the Western 

Shoshone Identifiable Group. See Te-Moak Bands of Western Shoshone Indians of 

Nevada, et al. v. United States, United States Claims Court, Docket No. 326-A-1, 

Judgment (Dec. 3, 1991). The award of $823,752.64 was comprised of $815,209.67, 

together with interest of $8,542.97. See id. On March 25, 1992, the second judgment 

award of $823,752.64 was deposited into trust in the United States Treasury under 

2 The United States Court of Claims is the predecessor court to the United States Court 

of Appeals for the Federal Circuit and the United States Court of Federal Claims, the court 

on which the undersigned presides over the above-captioned case. See Alford v. United 

States, 961 F.3d 1380, 1384 (Fed. Cir. 2020) (“Our predecessor court, the Court of 

Claims . . . .”).

3 The United States Claims Court was renamed the United States Court of Federal Claims

in 1992. See Federal Courts Administration Act of 1992, Pub. L. No. 102-572, § 902, 106 

Stat. 4506, 4516 (1992).
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account number JA9087691. The parties refer to this tribal trust fund as the “326-A-1 

Fund.”

The third judgment occurred a little more than three years later, on June 16, 1995, 

when the United States Court of Federal Claims entered a judgment in Docket Number 

326-A-3, in the amount of $29,396.60, in favor of the Western Shoshone Identifiable 

Group. See Te-Moak Bands of Western Shoshone Indians of Nevada, v. United States, 

United States Court of Federal Claims, Docket No. 326-A-3, Judgment (June 16, 1995). 

According to the final judgment entered on the 326-A-3 docket, which was introduced at 

trial as a joint exhibit, the 326-A-3 award did not appear to include interest. On September 

15, 1995, the award of $29,396.60 was deposited into trust in the United States Treasury 

under account number JA1009693. The parties refer to this tribal trust fund as the “326-

A-3 Fund.” The account number and type, and the sources of the three funds are 

displayed below: 

ACCOUNT NO. & TYPE SOURCE OF FUND

JA9334697 WESTERN SHOSHONE JUDGMENT FUNDS INITIAL AWARD OF $26,145,189.89 ON 12/19/1979, 

ICC DOCKET 326-K

JA9087691 WESTERN SHOSHONE JOINT JUDGMENT FUNDS INITIAL AWARD OF $823,752.64 ON 3/25/1992, 

ICC DOCKET 326-A-1

JA9087691 WESTERN SHOSHONE JOINT JUDGMENT FUNDS INTEREST CLAIM OF $29,369.60 ON 9/15/1995,

ICC DOCKET 326-A-3

Investment of Tribal Trust Funds

The parties have stipulated that “Tribal Trust Funds” are tribal monies, including 

judgment awards, revenues, and other payments made to Indian tribes, which are 

required by law to be deposited in the United States Treasury and historically to be 

managed by the United States Department of the Interior. The parties also have stipulated 

to an abbreviated summary of the relevant history to the above-captioned case, some of 

which is described below. Some historical highlights for the purpose of providing context 

follow. In 1880, the Department of the Interior was authorized to deposit tribal trust funds 

in the United States Treasury to earn a simple interest rate of four percent per year 

whenever it determined that such a course of action was in the best interest of an Indian 

tribe. In 1918, the Department of the Interior was permitted to deposit tribal trust funds 

into any public-debt obligations of the United States and into any notes, bonds, or other 

obligations that were unconditionally guaranteed as to both principal and interest, when 

the Department of the Interior determined doing so was in the best interests of an Indian 

tribe. In 1938, Congress passed the Act of June 24, 1938, ch. 648, § 1, 52 Stat. 1037, 

currently contained at 25 U.S.C. § 162a (2018), the statute at issue regarding plaintiffs’ 

allegations of breach of trust in the above-captioned case, which codified the authority of 
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the Secretary of the Department of the Interior to invest tribal trust funds.4 According to 

Subsection (a) of 25 U.S.C. § 162a:

The Secretary of the Interior is hereby authorized in his discretion, and 

under such rules and regulations as he may prescribe, to withdraw from the 

United States Treasury and to deposit in banks to be selected by him the 

common or community funds of any Indian tribe which are, or may hereafter 

be, held in trust by the United States and on which the United States is not 

obligated by law to pay interest at higher rates than can be procured from 

the banks. The said Secretary is also authorized, under such rules and 

regulations as he may prescribe, to withdraw from the United States 

Treasury and to deposit in banks to be selected by him the funds held in 

trust by the United States for the benefit of individual Indians . . . .

25 U.S.C. § 162a(a).

Subsection (a) of 25 U.S.C. § 162a further provides that:

[T]he Secretary of the Interior, if he deems it advisable and for the best 

interest of the Indians, may invest the trust funds of any tribe or individual 

Indian in any public-debt obligations of the United States and in any bonds, 

notes, or other obligations which are unconditionally guaranteed as to both 

interest and principal by the United States. 

25 U.S.C. § 162a(a). As both parties noted during the liability trial, Subsection (a) of 25 

U.S.C. § 162a limits the government’s investment of tribal trust funds to fixed-income 

securities backed by the full faith and credit of the United States, including bonds issued 

by federal agencies, the United States Department of Treasury (Treasury securities), 

mortgage-backed securities, and certificate of deposits (CDs). Moreover, both parties 

agreed that Subsection (a) of 25 U.S.C. § 162a would not allow the government to invest 

in stocks or foreign-issued bonds. The parties do not contest that the government 

invested any of plaintiffs’ three tribal trust funds in investments prohibited by law, nor do 

the parties contest that the government misappropriated any of the plaintiffs’ tribal trust 

funds. 

Because Subsection (a) of 25 U.S.C. § 162a only allows the government to invest 

tribal trust funds in government-backed securities, both parties agree that the government 

4 The Secretary of the Interior has had and continues to have the authority pursuant to 25 

U.S.C. § 161 (2018) and 25 U.S.C. § 161a (2018) to deposit tribal trust funds in the United 

States Department of Treasury in lieu of investing tribal trust funds in securities allowed 

under 25 U.S.C. § 162a. See 25 U.S.C. §§ 161, 161a. The plaintiffs in the abovecaptioned case, however, do not allege that defendant breached a duty regarding the 

investment of the three funds at issue in the United States Treasury pursuant to 25 U.S.C. 

§ 161 or 25 U.S.C. § 161a, nor that defendant retained plaintiffs’ three tribal trust funds in 

the United States Treasury instead of investing the funds. 
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faces virtually no credit risk when investing tribal trust funds, i.e., a risk that the fixedincome security5

issuer will default on the security. Both parties also agree that the 

primary risk that the government faced when investing plaintiffs’ tribal trust funds was 

“interest rate risk,” the risk that interest rates will change over the life of a fixed-income 

security. As both parties agree, the risk that interest rates will fluctuate is greater for fixedincome securities that have a longer-term maturity.6 At the liability trial, defendant’s 

liability expert, Dr. Laura Starks, explained in her expert liability report, “if interest rates 

increase, bond prices fall. That risk is greater for longer-maturity investments.” Similarly, 

plaintiffs’ rebuttal expert, Dr. Michael Goldstein, explained in his rebuttal expert report 

that, “longer-term investments” “[t]raditionally” experience higher-yields than shorter-term 

investments to reflect the “interest rate risk that the holder is taking (i.e., when rates 

change).” Thus, as the parties agree, if a bond-holder had to sell a bond prior to maturity, 

and interest rates increased from the time the bond-holder purchased the bond, the bondholder will likely experience a loss on the principal of the bond because the bond’s value 

has decreased. Conversely, if a bond-holder had to sell a bond before maturity, and 

interest rates decreased since the time of purchase, the bond-holder would likely 

experience a gain on the principal of the bond because the bond’s value has increased. 

If the bond-holder holds the bond to maturity, any change in interest rates would not affect 

the bond’s principal value. Interest rate risk, thus, becomes relevant when an investor 

5 At the liability trial and the damages trial, and in their expert reports prepared for both 

trials, both parties’ liability and damages experts referred interchangeably to “fixedincome securities” and “bonds” when discussing general investment principals. Thus, as 

with the June 13, 2019 liability Opinion, for purposes of this Opinion, this court 

interchangeably shall refer to fixed-income securities and bonds, as used by the parties, 

when summarizing the parties’ positions regarding general investment principals. 

6 As explained at the liability trial, the definition of a “longer-term” security versus a 

“shorter-term” security varies somewhat throughout the investment industry. According to 

the testimony at the liability trial of plaintiffs’ expert, Mr. Kevin Nunes, “ultra-short-term” 

securities have maturities of one year or less, “short-term” securities have maturities 

between one and five years, “intermediate-term” securities have maturities greater than 

five and less than ten years, and “long-term” securities have maturities between ten and 

thirty years. Contrastingly, defendant’s expert, Dr. Laura Starks, testified at the liability 

trial, “[p]eople define” the terms “short-term,” “intermediate term,” and “long term” 

differently and that during her career, she has “actually seen these definitions change 

over time.” According to Dr. Starks’ trial testimony, “short-term investments is -- typically, 

to me, that would be a year or less, maybe a little over a year,” and whether securities 

with a maturity of “two years” should be considered short-term would be “debatable.” Dr. 

Starks testified at trial that “intermediate term” would be “primarily three to five years,” 

and that “[t]here are others that extend intermediate to longer term.” Dr. Starks also 

testified that “long term” would “typically” include securities with maturities of “ten years 

or more.” Dr. Starks testified that securities with a maturity between five to ten years “don’t 

have a real definition,” and that “[t]o me, it’s between what’s clearly intermediate and 

what’s clearly long term.”
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decides to sell a bond before maturity. The interest rate risk facing the government when 

investing plaintiffs’ three tribal trust funds will be discussed in more detail below.

Subsection (d) of 25 U.S.C. § 162a, another provision of the statute relevant to

plaintiffs’ allegation of fund mismanagement, provides that:

The Secretary’s proper discharge of the trust responsibilities of the United 

States shall include (but are not limited to) the following:

(1) Providing adequate systems for accounting for and 

reporting trust fund balances.

(2) Providing adequate controls over receipts and 

disbursements.

(3) Providing periodic, timely reconciliations to assure the 

accuracy of accounts.

(4) Determining accurate cash balances.

(5) Preparing and supplying account holders with periodic 

statements of their account performance and with balances of 

their account which shall be available on a daily basis.

(6) Establishing consistent, written policies and procedures for 

trust fund management and accounting.

(7) Providing adequate staffing, supervision, and training for 

trust fund management and accounting.

(8) Appropriately managing the natural resources located 

within the boundaries of Indian reservations and trust lands.

25 U.S.C. § 162a(d).

The Department of the Interior’s Investment Policies and Procedures 

In 1966, the Bureau of Indian Affairs (BIA), the office within the Department of the 

Interior which was delegated the task of investment tribal trust funds, began a formal 

investment program and published an investment policy statement. The 1966 policy 

statement, in pertinent part, stated that “[p]repatory to undertaking any investment 

program with surplus trust funds, a tribe necessarily would have to make a careful 

analysis of its current and future cash needs” to cover “at least two six-months periods.” 

The 1966 policy statement also stated that “[e]ach Area Office is requested to review the 

amount of tribal trust funds each tribe in the respective Areas has on deposit in the 

Treasury,” and that “[w]herever it appears that the amount is in excess of foreseeable 

cash needs of the tribe, discussions should be held with the tribal council and its wishes 

regarding investment of the funds ascertained.” The 1966 policy statement also noted 

that “[g]overnment-backed securities, while basically safe, can result in losses unless held 

to maturity.” 

In 1973, Congress passed the Indian Tribal Judgment Funds Use and Distribution 

Act, Pub. L. No. 93-134, 87 Stat. 466 (1973) (Use and Distribution Act of 1973), which 
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established a process for distributing judgment awards to Indian tribes. Pursuant to the 

Use and Distribution Act of 1973, the Secretary of Interior had 180 days from “after the 

appropriation of funds to pay a judgment of the Indian Claims Commission or the Court 

of Claims to any Indian tribe,” and to “prepare and submit to Congress a plan for the use 

or distribution of such funds.” Use and Distribution Act of 1973, Section 2(A). When 

preparing the distribution plan, the Secretary was required to consider any distribution 

plan proposed by the tribes. See id. at Section 3(A)(1). The Secretary of Interior also was 

required to hold a “hearing or record” with the tribes to obtain their input regarding the 

distribution plan. See id. at Section 3(A)(2). The Secretary of Interior could request a 90-

day extension of the 180-day timeline for submitting a proposed plan for the distribution 

of a judgment award to an Indian tribe, and such request was “subject to the approval of 

both the Senate and the House of Representatives committees on Interior and Insular 

Affairs.” See id. at Section 2(B). The Secretary of Interior’s plan submitted to Congress 

would become effective after 60 days, absent Congressional disapproval of the plan. 

Upon the plan becoming effective, the Use and Distribution Act of 1973 required that the 

Secretary of Interior “take immediate action to implement the plan for the use or 

distribution of such judgment funds.” See id. at Section 5(A). If the Secretary of Interior 

did not submit a proposal within 180 days of the date of the appropriation of the particular 

judgment award, and no 90-day extension was granted, then the Secretary of Interior 

would have to submit proposed legislation to Congress in order for the funds to be used 

or distributed. 

The Secretary of the Interior did not submit a distribution proposal within the 

required 180 days for the three funds at issue, given the complexity of the distribution 

issues, and no 90-day extension was granted. Thus, pursuant to the Use and Distribution 

Act of 1973, Congress would be required to pass legislation authorizing the distribution 

of the 326-K and 326-A Funds. As explained in more detail below, over the years, various 

members of Congress introduced bills for distributing the three tribal trust funds at issue, 

each of which did not pass. Distribution legislation was finally passed in 2004, and the 

326-K Fund was fully distributed in 2012. The principal of the 326-A Funds was never to 

be distributed and is currently held in trust as a permanent education trust fund, with the 

interest of the 326-A-1 and 326-A-3 Funds to be used as educational grants for qualifying 

members of the Western Shoshone tribes. 

In 1974, the BIA Acting Deputy Commissioner of Indian Affairs sent BIA’s updated 

investment policy in a memorandum to the Area Directors of the BIA based in different 

geographical regions in the United States and in charge of overseeing the investment of 

various tribal accounts from tribes in their particular regions, which stated:

Area and agency offices should work very closely with the tribes to 

determine the cash needs and ascertain if trust funds are available for 

investment. When a decision has been made that surplus funds are 

available for investment, arrangements should be made immediately with 

the Branch of Investments, Albuquerque, to invest the funds.
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The 1974 policy memorandum also stated:

Investments can be made for a period of one day or for as much as 25 years 

or longer. Therefore, all funds except the funds for immediate needs can be 

invested to provide a greater income to the tribe. The maturity dates can be 

arranged to coincide with the needs for the funds. If requested, the funds 

are returned to the U.S. Treasury at maturity and are available immediately 

for expenditure through the normal procedures for the advance of funds to 

the tribe. 

It is the policy of the Bureau of Indian Affairs to maximize returns on all 

tribal, as well as individual, trust funds. This comports with the recent 

decision in Manchester Band of Pomo Indians v. United States, 363 F. 

Supp. 1238 (N.D. California 1973). 

Each Area Director has the responsibility for determining if surplus funds 

are available for investment purposes and notifying the Branch of 

Investments, Albuquerque, to take the necessary action to invest the funds.

(underline in original).

Subsequently, the BIA included a policy statement as part of the BIA’s “REPORT 

OF INVESTMENT OF INDIAN TRUST FUNDS FOR FISCAL YEARS 1986 and 1987,” 

which was introduced as a joint exhibit at trial. (capitalization in original). The “REPORT” 

contained two separate sections which discussed the BIA’s investment policy. 

(capitalization in original). The first section, titled “AUTHORITY,” stated: 

Our basic authority is contained in 25 USC 162a [sic], which is specific for 

Tribal and individual trust funds, and PL 98-146 which authorizes the 

investment of collections from irrigation and power projects. The Bureau 

can invest in certificates of deposit with banks and savings and loans which 

are insured by FDIC [Federal Deposit Insurance Corporation] or FSLIC 

[Federal Savings and Loan Insurance Corporation], or in banks which have 

pledged collateral securities guaranteed as to both principal and interest by 

the U.S. Government. Most of the purchased CD’s are for periods of less 

than 1 year, although 1, 2 and 3 year CD’s have been purchased on 

occasion. Investments can also be made through purchases of public debt 

obligations of the United States (Treasury issues) or other obligations which 

are guaranteed as to both principal and interest by the U.S. Government. 

(capitalization and emphasis in original). The second section, titled “INVESTMENT 

POLICIES AND INSTRUCTIONS,” stated: 

Although BIA is the Trustee for Indian funds, an ideal investment 

relationship is one in which Tribes participate fully by providing well thoughtout investment policies and instructions based on realistic cash flow 
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projections which are based on complete tribal budgets. It is possible, 

through knowing the amounts required and when disbursements are 

necessary, to plan the timing of investment maturities to maximize interest 

rates and earnings and also have the funds available when needed. 

(capitalization and emphasis in original). The parties agree that throughout the 1980s and 

until the early 1990s, the BIA had a program in which it pooled approximately 70% to 80% 

of tribal trust funds managed by the Department of the Interior into short-term jumbo CDs 

in banks nationwide, which had a maturity of one year or less. Plaintiffs’ liability expert, 

Mr. Nunes, testified at trial that during the 1980s, the BIA had a “blanket kind of approach 

to all Indian funds that we saw,” which was to invest tribal trust funds in “very short term 

and almost entirely in their CD program.” Defendant’s liability expert, Dr. Starks, similarly 

testified at the liability trial that:

[I]n the 1980s, the primary investments were into certificate of deposits, and 

the -- the Government had this unique CD program in which they pooled the 

money from a lot of different tribes and invested it in bank CDs all over the 

country, and because of the pooling, they were able to buy very large CDs.

Dr. Starks further stated at the liability trial, the general maturities of the BIA’s CD 

investments “were usually one year or less.” By pooling tribal trust funds, as Dr. Starks 

testified at trial, the BIA was able to achieve higher returns while ensuring that the tribal 

trust funds remained protected against any bank failures. Dr. Starks also testified at trial 

that the returns on the CDs were generally comparable to two- to three-year Treasury 

bonds.

Also, in 1983, 1984, and 1989, the Department of the Interior consulted with 

various private investment firms and received three investment proposals from outside 

firms with recommendations on how to improve the Department of the Interior’s 

investment of its tribal trust funds. BIA received (1) a joint proposal from the American 

Indian National Bank (AINB) and Lehman Management Company (Lehman), (2) Security 

Pacific National Bank (Security Pacific), and (3) PricewaterhouseCoopers (PWC).7 None 

of the firms proposed specific investment strategies for any particular tribal trust fund, 

including the tribal trust funds at issue in the above-captioned case, but instead 

recommended general investment strategies for tribes which had immediate cash flow 

needs and for tribes which had longer-term investment horizons. The Department of the 

Interior ultimately did not adopt those particular suggestions. 

PWC submitted the first, and most in-depth investment proposal, to the 

government on December 24, 1983. According to PWC, it conducted “an in-depth review 

7 The court notes that although the parties refer to the December 24, 1983 investment 

proposal as the “PWC investment proposal,” at the time of the proposal, the company’s 

name was “Price Waterhouse.” For consistency, and to follow the lead of the parties, the 

court refers to the December 24, 1983 investment proposal as the PWC investment 

proposal and refers to the company as PWC.
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of the management of Indian trust funds,” which consisted of the government’s various 

tribal trust funds, “individual Indian monies” (IIM) accounts, “Indian Monies Proceeds of 

Labor” accounts, “Contributions,” and the “Alaska Native Escrow Fund. Plaintiffs’ 326-K 

Fund was one of various tribal trust funds the government held in trust during the 1980s. 

PWC reviewed the BIA’s investment of “Indian trust funds” between 1976 and 1983. The 

PWC proposal stated that “there is no evidence that outside money managers would have 

improved on the investment performance during the period 1976-1983,” but that moving 

forward, “we [PWC] recommend that the Bureau [of Indian Affairs] engage an outside 

investment advisor.” 

PWC’s December 24, 1983 investment proposal stated:

In assessing the overall performance of the funds in recent years, we have 

found that the BIA Branch of Investments has achieved excellent 

investment results relative to other managed portfolios operating under 

similar investment authorizations. These recent successes are primarily 

attributable to a strategy of investing in short-term assets in the face of 

volatile interest rates and to the discovery of federal subsidies implicit in the 

pricing of FDIC and FSLIC insured CD’s. 

However, as the volatility of interest rates declines, yields will begin to reflect 

the relative risks associated with the maturity and underlying credit 

characterizing security investments. Further, the subsidies associated with 

fdic and fslic securities are under consideration by bank regulators and may 

not be available in the future. 

(capitalization in original). The PWC investment proposal also noted that the “[w]hile the 

BIA investment strategy has worked well in the past, the unusual market conditions of the 

recent past,” i.e., that the yield curve for bonds was inverted such that short-term 

securities had out-performed longer-term securities for the “last decade,” 1973 to 1983, 

“may not continue.” PWC also stated that “there is no guarantee that the current strategy 

of investing primarily in highly liquid short-term assets will achieve the same investment 

performance relative to other strategies if the capital markets return to traditional pricing 

behavior,” which is what the BIA did and achieved for the 326-K Fund from its deposit into 

the Treasury on December 19, 1979 until December 24, 1983, the date of the PWC’s 

proposal. According to the PWC investment proposal, unlike the “unusual” inverted yield 

curve between 1973 and 1983, “[u]nder the traditional yield curve,” meaning that longerterm investments out-perform shorter-term investments, “investors who assume the risks 

associated with long-term securities, are rewarded more than investors who place their 

funds in shorter term issues.” 

Although PWC concluded that the BIA’s management of the Indian trust funds 

between 1976 and 1983 was “excellent,” PWC noted that its “[m]easurement of actual 

portfolio performance” of the Indian trust fund “was confounded by an absence of data” 

and that PWC had to make various assumptions when analyzing the BIA’s investment 

performance during this time. The PWC investment proposal noted that: 
12

The current BIA accounting system does not produce periodic reports of 

total returns (interest accrued each period plus changes in market value) 

for the Indian trust fund portfolios. In order to analyze the performance of 

the portfolio, we estimated total portfolio returns based on published returns 

earned on the following generic categories of securities comprising the 

Indian trust fund portfolios:

o Insured or collateralized Certificate of Deposit (6 months to 

maturity) 

o Treasury Securities (5 months to maturity)

o U.S. Government Agency Securities (7.1 years to maturity)

The PWC investment proposal stated that “[t]he asset allocation among” the three generic 

securities listed above for its analysis of the government’s investment of Indian trust funds 

“was assumed to be the actual asset allocation for the IIM portfolio as of August 1983,” a 

different type of account than the tribal trust funds at issue in this case. 

The PWC investment proposal also provided “numerous recommendations by 

which the BIA can adjust to the changing investment environment and provide enhanced 

services to the beneficiaries of the trust funds,” which included the recommendation that 

BIA “[d]evelop and implement an ongoing process which will assist tribes and individuals 

to formulate investment objectives.” The PWC investment proposal recommended to the 

BIA a portfolio investment strategy of “passive diversification,” i.e., “[i]nvestment in 

securities representing a variety of market sectors, and maturities where such 

investments are held to maturity,” in order “to achieve the trust fund investment objectives 

as the capital markets begin to reflect the more traditional risk/return relationships.” PWC 

included five sample portfolios to illustrate that by using the passive diversification 

strategy, “a portfolio of securities can be chosen that will perform better than any single 

security in the portfolio.” PWC also explained in its investment report that of the five 

sample portfolios, three were “dominant,” meaning that these three portfolios earned the 

greatest return for the least risk. The first dominant portfolio was comprised of “10% Tbills, 30% C.D.’s” and “30% Intermediates, 30% Long Term” and had an “Expected 

Return” of 11.20%.8 The second dominant portfolio was comprised of “5% T-bills,” “50% 

C.D.’s,” and “25% Intermediates, 20% Long Term,” and had an “Expected Return” of 

“10.92%.” The third dominant portfolio was comprised of “20% T-bills, 40% C.D.’s” and 

“40% Intermediates,” and had an “Expected Return” of “10.40%.” 

Of the non-dominant portfolios, the first was comprised of “22% T-bills, 70% C.D.’s” 

and “8% Intermediates,” and had an “Expected Return” of “10.02%.” The second was 

comprised of “22% T-bills, 70% C.D.’s” and “8% Intermediates,” and had an “Expected 

Return” of “9.90%” The three dominant portfolios, which were expected to experience the 

8 The PWC investment proposal did not define what constitutes an “Intermediate” security 

and what constitutes a “Long-term” security. The PWC investment proposal, however, 

noted that “[t]wo-, three-, and five-year notes” were not considered “Long-term bonds.” 
13

highest rate of returns from PWC’s five sample portfolios, contained the highest 

combination of long-term and intermediate-term securities. 

The PWC investment proposal also noted that because the five portfolios assumed 

that a typical yield curve, i.e., when longer-term investments out-perform shorter-term 

investments, “observed during the period of 1926-1973 would prevail, it is not surprising 

that the dominant portfolios (earning the greatest return for least risk) contained a 

substantially larger proportion of longer-term securities than we have observed in the BIA 

portfolios.” 

AINB and Lehman submitted their joint investment proposal to the government on 

October 30, 1984 and “jointly” proposed “to organize, manage, and administer a mutual

fund to serve as an alternative investment vehicle for the American Indian Tribal Trust 

Funds.” Unlike PWC, AINB and Lehman did not present a review of the BIA’s past 

investment of the Indian trust fund in its joint investment proposal, nor commented on 

whether the BIA had obtained “excellent” investment results in the past. AINB and 

Lehman proposed that the Department of the Interior’s tribal trust funds, depending on 

the cash flow needs of a particular tribe, be invested in one of two portfolios. The first 

proposed portfolio was a money market portfolio “invested in money market instruments 

with maturities not exceeding one year.” The second proposed portfolio was “an 

intermediate-term portfolio invested in obligations with maturities not to exceed five years. 

Such maturities typically have higher yields than money market instruments.”

Security Pacific discussed its investment recommendations with the government 

during an investment meeting in San Diego, California from December 7-8, 1989, and its 

recommendations were memorialized in a BIA memorandum dated January 17, 1990. 

The BIA memorandum did not discuss whether Security Pacific had conducted a review 

of the BIA’s past investment of the Indian trust fund in its investment proposal, nor did the 

BIA memorandum comment on whether Security Pacific believed that the BIA’s 

investment of the Indian trust fund was “excellent,” as PWC had concluded in its 

investment proposal. Security Pacific recommended that the BIA pool together and invest 

the largest twenty-five tribal trust funds as follows: 48% of the funds in short-term 

securities, 38% of the funds in intermediate-term securities, and 14% of the funds in longterm securities.9 Security Pacific recommended that the BIA pool together and invest the 

remaining tribal trust funds as follows: 61% in short-term securities, 29% in intermediateterm securities, and 10% in long-term securities. 

The BIA memorandum memorializing Security Pacific’s investment 

recommendations did not state whether plaintiffs’ 326-K Fund was one of the tribal trust 

funds considered by Security Pacific. According to the testimony of defendant’s damages 

expert, Justin Mclean, at the liability trial, plaintiffs’ 326-K Fund would have been among 

one of the largest twenty-five tribal trust funds pooled together and invested in Security 

Pacific’s proposed portfolio. The 326-A-1 and 326-A-3 Funds, the other two trust funds at 

9 The Security Pacific proposal did not define what maturities would constitute a “shortterm” security, an “intermediate” security, or a “long-term” security. 
14

issue in this case, were not yet in existence at the time that Security Pacific made its 

recommendations to the BIA.

In 1990, the Office of Trust Funds Management was established within the BIA at 

the Department of the Interior. The Office of Trust Funds Management consolidated the 

accounting and investment functions managing and governing tribal trust funds. As both 

parties’ liability experts testified during the liability trial in the above-captioned case, during 

the early 1990s, the Department of the Interior transitioned from its program of pooling 

together and investing tribal trust funds in short-term jumbo CDs to primarily investing 

tribal trust funds into other securities with varying maturities, such as agency and 

Treasury securities. Plaintiffs’ liability expert, Mr. Nunes, testified at the liability trial that 

around the early 1990s, the BIA made “a wholesale transition away from the CD program, 

which ultimately went away completely, and monies now were being invested in agency 

securities, mortgage-backeds, callable bonds, and things like that.” Defendant’s liability 

expert, Dr. Starks, testified at the liability trial that “[a]fter about [19]91,” the BIA made a 

“programmatic” switch from investing tribal trust funds in jumbo CDs into “agency 

securities in particular and a little bit longer term U.S. Treasuries.” 

The Department of the Interior’s shift from CDs was reflected in the October 1, 

1992 edition of the Office of Trust Funds Management’s quarterly journal “TRUST,” 

introduced at trial in the above-captioned by both parties as a joint exhibit. (capitalization

in original). According to the October 1, 1992 journal, the Branch of Investments Chief at 

the Department of the Interior, Fred Kellerup, “got OTFM [Office of Trust Funds 

Management] on the right road four years ago [in 1988] when the trust funds investment 

portfolio began its transformation from CD’s to government securities.” Mr. Kellerup 

provided the following advice to tribes in the October 1, 1992 journal: “Stay away from the 

long bond. There’s no need for tribes to invest beyond 15 years. You’re too far out if 

interest rates turn around. Shorten up on the maturity. Even if you have cash flow needs, 

go for the three-to-seven year government securities. Avoid the one-year CDs.” 

(emphasis in original). 

Also, during the early 1990s, Congress investigated BIA’s management and 

investment of the Indian trust fund, comprised of tribal trust funds, such as the three tribal 

trust funds at issue in the above-captioned case, and the IIM trust fund. The 

Congressional Committee on Government Operations published the results of the 

investigation in an April 1, 1992 report, titled “MISPLACED TRUST: THE BUREAU OF 

INDIAN AFFAIRS’ MISMANAGEMENT OF THE INDIAN TRUST FUND,” (the 1992 

Congressional Report) introduced at trial in the above-captioned case by both parties as 

a joint exhibit. (capitalization in original). The 1992 Congressional Report explained that 

the IIM trust fund is “a deposit fund, usually not voluntary, for individual participants and 

tribes.” The Department of the Interior’s investment of the IIM trust fund is not at issue in 

the above-captioned case. The 1992 Congressional Report also explained that as of April 

1, 1992, “the BIA is responsible for managing and investing almost $2 billion in tribal and 

individual Indian funds.” 
15

The 1992 Congressional Report summarized the BIA’s duty to Indian tribes as a 

“fiduciary duty to ‘maximize the trust income by prudent investment.’” (quoting CheyenneArapaho Tribes v. United States, 206 Ct. Cl. 340, 348, 512 F.2d 1390, 1394 (1975) 

(Cheyenne-Arapaho)). The 1992 Congressional Report explained that “[t]his 

responsibility requires the Government to stay well-informed about the rates of return and 

investment opportunities and to intelligently choose from among authorized investment 

opportunities to obtain the highest rate of return to make the trust funds productive.” The 

1992 Congressional Report noted that “the Bureau’s fiduciary responsibilities are not 

dissimilar to the duties performed by many private trustees” and that:

To fulfill these important obligations it is necessary for the agency to fully 

understand both its fiduciary duties and the financial marketplace. Stated 

simply these fundamental assignments are: To accurately account to the 

beneficiary; to make accounts productive for the beneficiaries; and to 

maximize the trust income through prudent investment. To successfully 

perform these tasks, the Bureau of Indian Affairs, as any fiduciary, must 

conduct itself as a sophisticated investor, a smart shopper, and a highly 

diligent and resourceful manager.

Upon review of the BIA’s investment of Indian trust fund, the 1992 Congressional 

Report found that the BIA had “longstanding financial management problems in its 

administration of the Indian trust fund,” primarily due to a failure to “accurately account 

for trust fund moneys.” The 1992 Congressional Report explained that: 

Indeed, it [BIA] cannot even provide accountholders with meaningful 

periodic statements on their account balances. It cannot consistently and 

prudently invest trust funds and pay interest to accountholders. It does not 

have consistent written policies or procedures that cover all of its trust fund 

accounting practices. Under the management of the Bureau of Indian 

Affairs, the Indian trust fund is equivalent to a bank that doesn’t know how 

much money it has.

Notably, the plaintiffs in the above-captioned case do not at all allege that defendant 

breached its fiduciary duty by failing to keep accurate records of the plaintiffs’ tribal trust 

funds or that the defendant failed to provide plaintiffs with periodic account statements. 

Plaintiffs, instead, argued that the defendant invested their three tribal trust funds in too 

short-term securities, and, thus, did not maximize the investment return on their tribal trust 

funds.

Subsequently, Congress passed the American Indian Trust Fund Management 

Reform Act, Pub. L. No. 103-412, 108 Stat. 4239 (1994) (1994 Trust Fund Management 

Reform Act), which created the Office of the Special Trustee for American Indians (Office 

of the Special Trustee) within the Department of the Interior, to be headed by the Special 

Trustee. See 1994 Trust Fund Management Reform Act, codified at 25 U.S.C. § 4001 et

seq. According to the 1994 Trust Fund Management Reform Act, the Special Trustee was 

to “ensure proper and efficient discharge of the Secretary’s trust responsibilities to Indian 
16

tribes and individual Indians.” 25 U.S.C. § 4043(a)(1) (1994). The 1994 Trust Fund 

Management Reform Act also recognized that 

[t]he Special Trustee shall ensure that the Bureau [of Indian Affairs] 

establishes appropriate policies and procedures, and develops necessary 

systems, that will allow it-- (i) properly to account for and invest, as well as 

maximize, in a manner consistent with the statutory restrictions imposed on 

the Secretary’s investment options, the return on the investment of all trust 

fund monies . . . . 

 

Id. at § 4043(b)(2)(B) (1994). 

The 1994 Trust Fund Management Reform Act also established a nine-member 

Advisory Board to assist and advise the Special Trustee with implementation of the 1994 

Trust Fund Management Reform Act. In 1996, the Office of the Special Trustee, a 

separate office within the Department of the Interior, took over the responsibility of 

managing tribal trust funds from the BIA. As the parties jointly stipulate, on September 

11, 1996, the Special Trustee appointed the “OTFM Management Board” to establish an 

operating policy to ensure that tribal trust funds were maintained in a proper and prudent 

mix and maturity distribution, “represent sound extensions of credit, and are appropriate 

assets with regard to legal requirements and needs of the Indian beneficiaries involved.” 

(internal quotation marks omitted). The OTFM Management Board, as both parties jointly 

stipulated to in the above-captioned case, became known in April 2005 as the Office of 

the Special Trustee Investment Management Committee, and was sometimes referred to 

as the “Portfolio Review Committee,” according to the testimony of defendant’s fact 

witness, Mr. Robert Winter, at the liability trial. 

Mr. Winter also testified at the liability trial that the Portfolio Review Committee is 

“a group of senior officials that are well versed in all of the management functions in OST 

[Office of the Special Trustee], that meet with the investment group to review specifics 

about investments for all tribal trust funds annually.” Mr. Winter also testified that he 

became a member of the Portfolio Review Committee in 2001 and was still a member of 

the committee at the time of liability trial in the above-captioned case. As Mr. Winter 

explained, the Portfolio Review Committee would review the account objectives for each 

tribal trust fund and whether the tribal trust fund was invested in accordance with the 

agency’s policies. According to Mr. Winter’s testimony at the liability trial, if the Portfolio 

Review Committee disagreed with a particular investment manager’s investment strategy 

for a specific fund, the Portfolio Review Committee had the authority to direct the 

investment manager to change the investment strategy. With regard to plaintiffs’ 326-K 

Fund, Mr. Winter noted:

You know, each year this account came up we made sure that we asked 

what further information do you have or, you know, certainly knowing 

amongst ourselves, we definitely got news of, you know, pending 

legislation, legislation that’s been introduced, you know, the possibilities of 
17

that legislation passing. So this was definitely a time period[10] when there 

were bills being introduced which caused us to, you know, limit it to -- not 

limit it to, but to make those maturities around two years.

On February 7, 1997, the Office of the Special Trustee sent a memorandum, which 

was introduced by both parties in the above-captioned case as a joint trial exhibit, titled 

“OTFM POLICY MEMORANDUM NO. POL97-002” to the Office of Trust Funds 

Management Division’s Chiefs, Area Trust Accountants, and Agency Personnel, which 

discussed the Office of the Special Trustee’s “Investment Policy” (1997 Office of the 

Special Trustee Policy). (capitalization in original). The 1997 Office of the Special Trustee 

Policy established “the criteria by which OTFM will manage the Tribal, Individual Indian 

Monies, and Special Funds entrusted to it for investment.” Pursuant to the 1997 Office of 

the Special Trustee Policy, the “investment activities of OTFM will be conducted to 

achieve” three primary objectives. The first objective was “Quality” of the investment 

portfolio, which included the “safety of principal, minimization of market risk and overall 

risk diversification.” (capitalization and emphasis in original). The second objective was 

having some “Liquidity” of investments, meaning that “an adequate percentage of the 

portfolio should be maintained in liquid, short-term investments that could be converted 

to cash, if necessary, in order to meet the tribal disbursement requirements.”

(capitalization and emphasis in original). The last objective was the “Rate of Return” of 

the portfolio. (capitalization and emphasis in original). According to the 1997 Office of the 

Special Trustee Policy, 

[o]f major importance in all of the OTFM managed portfolios is an 

acceptable rate of return over the long term without compromising the other 

stated objectives of quality and liquidity. The specific portfolios should be 

structured to achieve at least a market-average rate of return throughout 

economic cycles, taking into account the specific tribe’s risk constraints and 

the cash flow requirements dictated by its use and distribution plans and/or 

budget forecasts. Whenever possible, and consistent with risk limitations as 

defined herein and prudent investment principles, investment officers shall 

seek to augment returns above the market average rate of return.

At the liability trial, defendant’s fact witness, Mr. Winter, explained his 

understanding of the 1997 Office of the Special Trustee Policy’s Rate of Return objective 

and his involvement in reviewing and updating the Office of the Special Trustee’s policies 

throughout the late 2000s. Mr. Winter testified that he began working at the Office of the 

Special Trustee in 1998 and that between “2007 and 2011,” he “headed up the Office of 

Trust Services” which oversaw the “Office of Trust Funds Investments.” The Office of 

Trust Funds Investments, according to Mr. Winter, is “essentially the investing shop at the 

Office of the Special Trustee.” Mr. Winter also testified that during his time at the Office 

10 According to Mr. Winter’s trial testimony at the liability trial, the “time period” referenced 

was the early 2000s, when Mr. Winter joined the Portfolio Review Committee and when 

Congress began, once again, to introduce bills for the distribution of plaintiffs’ three tribal 

trust funds. 
18

of Trust Services, he was responsible for “developing investment policy and reviewing 

and amending investment policy” for the Office of the Special Trustee, and also to “review 

the past policies of the Office of the Special Trustee and even those of its predecessor, 

the BIA.” Mr. Winter testified at the liability trial that his understanding of the Rate of 

Return objective “simply refers to, in conjunction with ensuring the quality is there and 

that the cash flows have been identified and that there will be adequate liquidity within the 

portfolio, that we should structure the remainder of the portfolio in such a manner as to 

achieve above-average market rates.” Mr. Winter also testified that in order to obtain 

“above-average market rates,” as required by the Rate of Return objective contained

within the 1997 Office of the Special Trustee Policy, it was his understanding that “we 

need to do adequate analysis of the cash flows in order to ensure that we obtain the 

highest rates for the maturities that we select in order to maintain those proper flows.” At 

the liability trial, Mr. Winter testified that the cash flow analysis differs with respect to 

different tribal accounts. Mr. Winter testified that regarding a cash flow analysis for a 

judgment fund, “where it’s 100 percent per capita payout,” like plaintiffs’ 326-K Fund at 

issue in the above-captioned case, “then really all you need to know is the distribution 

date.” When asked by defendant’s counsel at trial what the effect of an uncertain timeline 

for the distribution of a particular judgment fund would have on the Office of the Special 

Trustee’s cash flow analysis, Mr. Winter responded that, “[w]ell, we certainly try to obtain 

the most accurate data we can about a particular distribution date if there’s not one 

already stated, and, you know, we try to base our maturity schedule on the earliest 

available date that that fund might be paid out.” 

The 1997 Office of the Special Trustee Policy also listed “ACCEPTABLE 

PORTFOLIO INVESTMENTS AND PRACTICES,” which explained, among other 

practices, the Office of the Special Trustee’s “‘Holding’ versus ‘Trading’” practice. 

(capitalization and emphasis in original). According to the section of the 1997 Office of 

the Special Trustee Policy discussing “Holding versus Trading,”

OTFM intends to manage its Indian trust portfolios in a manner that protects 

the integrity of the primary function of the portfolio, which is to provide 

maximum income for the tribes while conforming to prescribed statutory 

limitations and prudent fiduciary investment principles.

Because OTFM has a small number of investment managers responsible 

for the investment management of over 1450 separate portfolios, OTFM will 

purchase securities with the intent to hold each security until maturity, while 

realizing that sales can and may occur prior to maturity form some of the 

following reasons: 

1. When account review presents obvious opportunity for 

portfolio enhancement from the reinvestment of sales 

proceeds into comparable maturities thereby improving 

yield or quality without adversely affecting overall quality, 

mix or maturity of the investment portfolio.

2. The need to improve or increase portfolio liquidity.
19

3. The need to invest the proceeds of a security maturing 

within one year because of an interest-rate scenario that 

would be detrimental to the performance of the portfolio if 

held to maturity before investing, i.e., a rapidly falling 

interest rate period. 

4. A reduced credit rating of the issuing Agency renders the 

security to be of less than acceptable quality to remain in 

the portfolio. 

The 1997 Office of the Special Trustee’s “Holding versus Trading” section also 

noted that “[i]nfrequent investment portfolio restructuring carried out in conjunction with a 

prudent overall risk-management plan that does not result in a pattern of gains being 

taken and losses deferred will generally be viewed as an acceptable practice within the 

context of an investment portfolio.” According to the trial testimony of defendant’s fact 

witness at the liability trial, Mr. Winter, the 1997 Office of the Special Trustee’s “Holding 

versus Trading” practice meant that,

that we need to purchase securities with the intent and ability to hold to 

maturity; and that, secondly, we’re permitted infrequent investment 

restructuring if the market conditions present themselves as such, but we 

can’t be doing so by establishing a pattern of buying and selling, reaping 

gains and losses on any sort of frequency. 

According to Mr. Winter, the 1997 Office of the Special Trustee Policy was the “first formal 

policy adopted by the Office of the Special Trustee.” Mr. Winter testified at the liability trial 

that the Office of the Special Trustee issued amendments to the 1997 Office of the Special 

Trustee Policy in 1999, 2000, and 2005, but that these policy amendments, apart from 

extending the maturity limits of certain government-backed securities from an “average 

life” of ten to fifteen years, were not “material” changes to the 1997 Office of the Special 

Trust Policy. Moreover, Mr. Winter testified that the 2005 policy amendment was the 

policy in place up until the distribution of the 326-K Fund. 

The Investment Market for Bonds from the Early 1950s to 2013 

At the liability trial, the parties agreed that between the early 1950s up until 1979, 

the beginning of the period at issue in the above-captioned case, interest rates on bonds 

steadily increased, and that there was an inverted “yield curve.” A “yield curve” displays 

the relationship between a bond’s yield and maturity. An inverted yield curve occurs when 

shorter-term securities are experiencing higher yields than longer-term securities. For 

example, beginning around 1958, the 5-year Treasury bond achieved higher returns than 

the 7-year Treasury bond or the 20-year Treasury bond, and such was the case until 

1979.

From December 1979 until 1981, the first three years of the period at issue in the 

above-captioned case, interest rates on bonds continued to increase and the yield curve 

remained inverted. As defendant’s liability expert, Dr. Starks, testified at the liability trial, 
20

the “peak of interest rates from between 1950 and 2012” occurred in September 1981.

Following the September 1981 interest rate peak until September 2013, the end of the 

period at issue, the parties agreed that the interest rates generally decreased and that 

bond prices steadily increased. The parties agreed that following the September 1981 

interest rate peak, but for a few short-lived periods, the yield curve was upward sloping 

until 2013, the end of the investment period at issue. An upward sloping yield curve means 

that longer-term securities experience higher returns than shorter-term securities. 

The parties agree that, the despite the inverted yield curve between the 1950s and 

1981, the yield curve for fixed-income securities is typically upward sloping. Plaintiffs’ 

liability expert report by Rocky Hill Advisors, Inc. (Rocky Hill Advisors) noted that a “2007 

study of the past 80 years found that in 72 of those years (90% of the time) the yield curve 

was upward sloping and that, on average over all of those years, long-term Treasury 

bonds[11] tended to yield about 1-1/2% more than short-term Treasury bills.” Defendant 

did not contest the validity of the 2007 study cited to by plaintiffs in their liability expert 

report. Plaintiffs’ Rocky Hill Advisors’ liability expert report also noted: 

Generally, the longer the maturity of a fixed-income investment, the higher 

will be its coupon interest rate (the contract rate of interest) and potential 

return. This is because investors perceive higher risk the further out in time 

an investment extends, thus they demand higher returns to compensate for 

the additional risk. Although there are periods where this relationship inverts 

(that is, interest rates on shorter-term investments exceed those on longerterm investments), the frequency and duration of such events is de minimis 

when compared to the norm.

(footnote omitted). Defendant’s damages expert report, prepared by Dr. Gordon

Alexander, similarly noted that the yield curve is normally upward sloping, stating that 

“[g]iven the fact that the yield curve is generally upward sloping, the practical result of this 

observation would be to invest primarily in long maturities when monies are expected to 

remain invested for longer periods.” 

Plaintiffs’ liability expert report by Rocky Hill Advisors provided a hypothetical 

which illustrated that longer-term investments generally would have out-performed 

shorter-term investments during the thirty-three-year period at issue in this case.

According to plaintiffs’ expert report by Rocky Hill Advisors, if an investor were to have 

invested $1,000.00 in three separate portfolios beginning in December 1, 1979, the 

starting month of the relevant time period in the above-captioned case, and have left that 

$1,000.00 fully invested through September 30, 2013, the end date of the relevant period 

in this case, the portfolio with the longest-term securities would have achieved the highest 

rate return. The three portfolios from the hypothetical are as follows: 

11 Plaintiffs’ liability expert report did not define what maturities of Treasury securities 

would be considered “long-term Treasury bonds.” 
21

• Portfolio 1 in a short-term (i.e., an average maturity of about 3 years) 

basket of Treasury securities represented by the Barclays 1-5 Year U.S. 

Treasury Index;

• Portfolio 2 in an intermediate-term (i.e., an average maturity of about 7.5 

years) basket of Treasury securities represented by the Barclays U.S. 

Treasury Index; and

• Portfolio 3 in a long-term (i.e., an average maturity of 20+ years) basket of 

Treasury securities represented by the Barclays Long-Term U.S. Treasury 

Index.

According to the hypothetical, the $1,000.00 in Portfolio 1, the short-term portfolio, would 

have grown to $10,154.94 by September 30, 2013. The $1,000.00 in Portfolio 2, the 

intermediate-term portfolio, would have grown to $13,720.07 by September 30, 2013. The 

$1,000.00 in Portfolio 3, the long-term portfolio, would have grown to $20,868.30 by 

September 30, 2013. 

Defendant’s damages expert report by Dr. Alexander in advance of the liability trial 

referred to a hypothetical similar to the hypothetical included in plaintiffs’ expert report by 

Rocky Hill Advisors. Defendant’s damages expert report looked at three $1,000.00 

portfolios from 1979 to 2013. The first portfolio was invested in 5-year Treasury bonds, 

the second portfolio was invested in 7-year Treasury bonds, and the third portfolio was 

invested in 20-year Treasury bonds. The $1,000.00 invested in 5-year Treasury bonds 

grew the least, to approximately $14,000.00. The $1,000.00 invested in 7-year Treasury 

bonds grew to approximately $15,500.00. The $1,000.00 invested in the 20-year Treasury 

bonds grew the most, to approximately $21,000.00. 

Additionally, plaintiffs’ rebuttal expert witness at the liability trial, Dr. Goldstein, 

illustrated in his rebuttal expert report that, with regard to the 326-K Fund, a “simple buyand-hold strategy that invested” plaintiffs’ 326-K Fund “in 10-year U.S. Treasuries,” from 

1979, when the 326-K Fund was deposited into the United States Treasury, through 2004, 

when Congress passed the distribution plan legislation for plaintiffs’ tribal trust funds, and 

“then rolling [the 326-K Fund] into 1-year U.S. Treasuries,” from 2005 until 2013, the end 

of the period at issue, the government would have experienced higher returns than what 

it actually achieved. According to Dr. Goldstein’s calculations, “had the BIA simply 

followed a mechanical strategy of investing in 10-year U.S. Treasuries, it would have 

ended the period with an additional $72 million above what it did under its chosen 

strategy.” Dr. Goldstein did the same exercise “with 20-year U.S. Treasuries” and “[u]nder 

this simple strategy, the WSIG [Western Shoshone Identifiable Group] account would 

have held an additional $179 million.” Dr. Goldstein noted in his report that “I stress that 

these are not damages estimates, which I have not been asked to provide. The figures 

are just a clear way to illustrate the benefits of locking in typically higher long-term rates 

over the relevant period.” 
22

The Department of the Interior’s Investment of the 326-K Fund

The period at issue regarding the government’s investment of the 326-K Fund was 

from December 19, 1979, the date on which the ICC’s initial award payment of 

$26,145.189.89 was deposited into the United States Treasury, until September 30, 2013, 

the last date for which the Trust Account Database (TAD), the government’s electronic 

account database, reported account information for the 326-K Fund. According to the 

testimony of plaintiffs’ liability expert, Mr. Nunes, at the liability trial, the TAD is “a 

compilation of several sub-databases that include information regarding the different 

accounting systems the Government had and the coding that they used to identify, you 

know, what a transaction was. It includes from 1972 -- from July 1, 1972, forward” a 

“compendium of all the transactions that went through an account, and then there’s a lot 

of descriptive and other data that’s in there as well.” Mr. Nunes also testified at the liability

trial that the government provided plaintiffs with access to the TAD for plaintiffs’ three 

tribal trust funds for the period at issue, December 1979 through September 2013. Both 

of the parties’ liability experts relied on the TAD when re-constructing the investment 

performance of plaintiffs’ 326-K Fund between December 1979 and September 2013 in 

their respective liability expert reports and damages expert reports. Both parties do not 

contest the data reflected in the TAD for the 326-K, 326-A-1, and 326-A-3 Funds. 

The initial amount of the 326-K Fund, when deposited in the United States 

Treasury on December 19, 1979, was $26,145,189.89. Before the first distribution 

payment of the 326-K Fund was issued in 2011 to 3,187 individuals, the 326-K Fund 

balance had grown to approximately $183,794,000.00. According to defendant’s opening 

statement at trial, between December 1979 until the first distribution of the 326-K Fund in 

2011, the 326-K Fund experienced an average annual return of 6.8%, the accuracy of 

which plaintiffs did not contest. The final distribution payments of the 326-K Fund were 

made on September 29, 2012 and October 2, 2012. As of September 2013, the last date 

for which data was available regarding the government’s investment of the 326-K Fund, 

a residual amount of approximately $36,000.00 remained in trust by the government. 

Plaintiffs’ counsel explained at the closing argument for the liability phase of trial, that 

plaintiffs are not seeking to recover the residual amount of $36,000.00 in the abovecaptioned case. Plaintiffs’ counsel did not clarify why $36,000.00 remained in the 

government’s account. Plaintiffs’ counsel at closing argument stated that a potential 

reason for the residual amount left in trust with the government was because “maybe you 

haven’t identified a recipient or there’s been some glitch, something like that.” 

The Maturity Structure of the 326-K Fund 

In their liability expert reports, and at the liability trial, both parties discussed the 

“average weighted maturity” of the 326-K Fund. According to the testimony of defendant’s 

liability expert, Dr. Starks, at the liability trial, the “average weighted maturity” is based on 

the maturity of all the securities in which the 326-K Fund was invested in at a given time. 

Dr. Starks testified that the maturity is then viewed as a “weighted average” based on the 

“value” that the securities “are in their portfolio, so that if you have an investment that’s 

very short term and is, you know, 50 percent of the portfolio, then it’s going to be lower 
23

overall and vice versa.” Plaintiffs argued that the average weighted maturity of the 326-K 

Fund throughout the thirty-three-year period at issue was too short- term, and, therefore, 

the 326-K Fund was imprudently invested. Defendant argued to the contrary. 

At the liability trial, the parties discussed three different methods for analyzing the 

average weighted maturity of the 326-K Fund. The first method calculated the average 

weighted maturity of the 326-K Fund based on the securities’ stated years to maturity. 

For example, a ten-year bond has a stated ten-year maturity. The second method 

calculated the average weighted maturity of the 326-K Fund based on the securities’ 

“years to call,” which uses the call date of callable securities in which the government 

invested the 326-K Fund. According to the testimony of plaintiffs’ liability expert, Mr. 

Nunes, at the liability trial, a callable security is a security for which the issuer retains the 

right to call the security back before maturity by a specific “call” date. Therefore, if an 

issuer exercises its right call back a ten-year callable bond after five years following its 

issuance, then the ten-year bond’s maturity would be five years. The parties’ liability 

experts agreed in their respective expert reports that the government began to invest the 

326-K Fund in callable securities beginning in the early 1990s. According to the testimony 

of plaintiffs’ liability expert, Mr. Nunes, at the liability trial, approximately 85% of the 

callable securities in which the 326-K Fund was invested were called back, which 

defendant did not contest. Even though only approximately 85% of the callable securities 

chosen by the government for the 326-K Fund were called back, both of the parties’ 

liability experts appear to use the call dates for all callable securities in which the 

government invested the 326-K Fund when calculating the average weighted maturity 

based on years to call.

The third method discussed by the parties based the average weighted maturity of 

the 326-K Fund on the call dates of the callable securities and made an adjustment for 

the prepayment of mortgage-backed securities. Mortgage-backed securities, as 

explained in plaintiffs’ rebuttal expert report by Dr. Goldstein,

are asset backed securities backed by mortgages and include pass-through 

securities (such as those from GNMA [Government National Mortgage 

Association], FNMA [Federal National Mortgage Association], and FHLMC 

[Federal Home Loan Mortgage Corporation]) and Collateralized Mortgage 

Obligations (“CMOs”). Pass-through securities such as those from GNMA, 

FNMA, and FHLMC differ from normal bonds in that the principal value of 

the bond is amortized and thus paid off over time, rather than just at the 

time of maturity, so that each payment over the life of the mortgage-backed 

security contains some principal repayment. As such, the stated maturity of 

pass-through securities is not representative of the expected, or average, 

life of the investment. Some mortgage-backed securities, such as CMOs, 

are often also divided into tranches, each with a different level of risk. Higher 

tranches (such as tranche A) have their principal paid back first, whereas 

later tranches have to wait longer hence have a longer expected life.
24

(footnotes omitted; capitalization in original). According to plaintiffs’ rebuttal expert report, 

“in the 1990s,” the government invested the 326-K Fund “into mortgage backed securities 

where the average or expected life is notably shorter than the stated maturity. As a result, 

the actual weighted maturity of the fund,” even “after considering the impact of callable 

bonds,” would be “overstated” if not adjusted for the pre-payment of various mortgagebacked securities. Similar to plaintiffs’ rebuttal expert report regarding the government’s 

use of mortgage-backed securities, defendant’s liability expert, Dr. Starks, testified at trial 

that the government began investing in mortgage-backed securities during the early 

1990s, and that, “what’s important about mortgage-backed securities is, especially in a 

falling interest rate environment, people refinance their homes, and so -- so you -- you 

usually don’t get the maturity you think you’re going to get because it can be paid off 

early.” 

Although the parties discussed the pre-payment mortgage issue, neither party 

presented at the liability trial, or, in their expert reports, an accurate, complete calculation 

of the average weighted maturity of the 326-K Fund taking into account the pre-payment 

issue. Defendant’s liability expert, Dr. Starks, presented at trial her attempt to account for 

the pre-payment issue in defendant’s Demonstrative Exhibit 10,12 a line graph depicting 

the 326-K Fund’s average weighted maturity based on (1) the stated maturity, (2) years 

to call, and (3) years to call with an adjustment for the pre-payment issue. Dr. Starks, 

however, admitted at trial that her attempt was not the most accurate because she “throws 

out the mortgage-backed securities because of the prepayment issue” from her 

calculations, and, thus, undercalculates the average weighted maturity of the 326-K Fund. 

Plaintiffs did not present any calculation of the average weighted maturity of the 326-K 

Fund which accounted for the pre-payment issue during the course of the liability trial. 

When analyzing the average weighted maturity of the 326-K Fund, the court will 

rely on the average weighted maturity based on the years to call. This method, as both 

parties agreed, more accurately depicts the maturity structure of the 326-K Fund than the 

average weighted maturity based on the stated years of maturity. As plaintiffs’ counsel 

noted at closing argument, “Dr. Starks [defendant’s liability expert] and Mr. Nunes 

[plaintiffs’ liability expert] agree[]” that “the stated years to maturity was not as accurate 

when you’re dealing with callable bonds, because it was more accurate to use the call 

date.” Dr. Starks, defendant’s liability expert, testified at trial that only considering the 

stated years to maturity of the 326-K Fund would make the 326-K Fund maturity structure 

appear a “little too long,” because the government had invested in callable bonds that 

were called back before maturity. Mr. Nunes, plaintiffs’ liability expert, similarly testified at 

trial that relying only on the stated years to maturity when calculating the average 

weighted maturity of the 326-K Fund, “actually makes the portfolio look like it has a longer 

structure than it actually does” because “almost entirely” all of the government’s callable 

bonds were called back. The court is aware that the average weighted maturity based 

12 Both parties’ counsel used various demonstrative exhibits throughout the liability trial, 

which were all introduced and accepted into the trial record for the liability trial. The parties 

similarly used demonstrative exhibits, some of which are referenced below, and which 

were admitted into the trial record for the damages trial. 
25

only on years to call does not take into account the pre-payment of the mortgage-backed 

securities. The record before the court, however, does not contain an accurate depiction 

of the weighted average maturity, taking into account the pre-payment issue of mortgagebacked-securities for the 326-K Fund, and the actual calculations to analyze the 

performance of the 326-K Fund, taking into account the pre-payment issue, remain 

somewhat elusive and speculative. 

According to both parties’ liability expert reports, which relied on the government’s 

data from the TAD, beginning in December 1979 to approximately December 1991, the 

average weighted maturity years to call of the 326-K Fund never exceeded two years, 

and during most of this period, the average weighted maturity was one year or less. 

Beginning in December 1991 until September 1993, the average weighted maturity years 

to call increased, reaching a peak of a little less than ten years. Following this peak in 

September 1993, until May 2002, the average weighted maturity years to call steadily 

decreased, reaching a low of approximately less than one year in May 2002. Then, from 

June 2002 until approximately early-2008, the average weighted maturity years to call 

fluctuated between a less than one year and slightly more than two years. Beginning 

around mid-2008 until December 2010, the average weighted maturity years to call 

fluctuated, starting around two and a half years, increasing to almost three years, and 

then dropping back down to approximately one year. Beginning in early-2011, when the 

government began to distribute the 326-K Fund to qualifying members of Western 

Shoshone tribes, the government effectively liquidated the 326-K Fund such that the 

average weighted maturity years to call decreased to an all-time low of almost zero years 

of maturity and flatlined at almost zero years of maturity until September 2013, the end of 

the time period at issue.

As a visual aid of the 326-K Fund’s average maturity structure throughout the thirtythree-year period at issue, defendant’s Demonstrative Exhibit 10, which was introduced 

at trial during defendant’s direct examination of defendant’s liability expert, Dr. Starks, 

and used by plaintiffs’ counsel during their cross-examination of Dr. Starks, is displayed 

below. Defendant’s Demonstrative Exhibit 10 is titled “Maturity of WSJF [Western 

Shoshone Judgment Funds]13 portfolio varies over time” and contains three separate 

lines. The top most line, which was colored gray, displays the average weighted maturity 

of the 326-K Fund based on the stated years to maturity. The middle line, which was 

colored a light blue, depicts the average weighted maturity of the 326-K Fund, based on 

the call dates of the securities, and is the line which the court looks to in this Opinion. The 

bottom line, which was colored dark blue, displays the average weighted maturity of the 

326-K Fund, based on the call dates of the securities and which did not include any 

mortgage-backed securities in order to account for the mortgage-backed security 

prepayment issue. As previously discussed, defendant’s attempt to account for the pre13 As the Western Shoshone Claims Distribution Act, Pub. L. No. 108-270, 118 Stat. 805 

(2004) (the Claims Distribution Act of 2004), the act which created the distribution 

mechanism for the three funds at issue, states, the “Western Shoshone Judgment Funds” 

refers to the 326-K Fund. The “Western Shoshone Joint Judgment Funds” refers to the 

326-A-1 and 326-A-3 Funds.
26

payment issue in Demonstrative Exhibit 10 would distort the average weighted maturity 

of the 326-K Fund and is not considered by this court. At the liability trial, plaintiffs did not 

contest Demonstrative Exhibit 10’s representation of the average weighted maturity of the 

326-K Fund based on the stated years to maturity, which was colored gray in 

Demonstrative Exhibit 10, or the years to call, which was colored light blue in 

Demonstrative Exhibit 10.14 In addition, both parties agree that the years to call, the 

middle line, which was colored a light blue, is a more accurate indicator than the years to 

maturity, the top line, which was colored gray.

15

14 At the liability trial, plaintiffs did contest Demonstrative Exhibit 10’s depiction of the 

average weighted maturity of the 326-K Fund that was adjusted to account for the prepayment issue, which was colored dark blue. 

15 Demonstrative Exhibit 10 displays only one line between December 1979 and 

December 1991. This is because, as defendant’s liability expert, Dr. Starks, testified to at 

trial, the 326-K Fund was not invested in any callable bond or mortgage-backed securities 

during this time, and, therefore, the average weighted maturity of the fund was the same

whether one considered the years to maturity, the years to call, or whether there was any 

adjustment made for the pre-payment of mortgages.
27
28

The Types of Securities in which the Government Invested the 326-K Fund 

According to both parties’ liability expert reports, which relied on the government 

data in the TAD, from 1979 to 1989, the government invested the 326-K Fund almost 

solely in jumbo CDs, with a small portion of the 326-K Fund invested in agency, Treasury, 

and “overnight” securities. According to the testimony of Mr. Winter, one of defendant’s 

fact witnesses and director of Trust Operations at the Office of the Special Trustee at the 

Department of the Interior, at the liability trial, overnight securities are highly “liquid” “oneday” securities that are invested and redeemed “the very next day.” In the early 1990s, 

although the government continued to invest a portion of the 326-K Fund in CDs, the 

government began investing the 326-K Fund in a combination of agency securities, 

Treasury securities, mortgage-backed securities, and overnight securities. Some of the 

securities selected by the government beginning in 1991 were callable securities. 

Notably, by June of 1995, the government was no longer investing any of the 326-K Fund 

in CDs. From June 1995 until July 2011, the government invested the 326-K Fund in a 

mixture of agency securities, Treasury securities, mortgage-backed securities, nongovernment securities, and overnight securities. Beginning in August 2011, the 

government invested the 326-K Fund solely in overnight securities. 

The Department of the Interior’s Investment of the 326-A-1 and 326-A-3 Funds

The investment period at issue for the 326-A-1 Fund was from March 25, 1992, 

when the judgment award of $823,752.64 was deposited into the United States Treasury, 

until September 30, 2013. The investment period at issue for the 326-A-3 Fund was from 

September 15, 1995, when the judgment award of $29,396.60 was deposited into the 

United States Treasury, until September 30, 2013, the last date for which the TAD, the 

government’s electronic account database, reported account information for the 326-A 

Funds. The government did not co-mingle the 326-A-1 Fund with the 326-A-3 Fund and 

kept them in separate investment accounts. As discussed in more detail below, defendant 

did not present any evidence at trial regarding the 326-A-1 and 326-A-3 Funds because, 

according to defendant, plaintiffs do not have standing to assert a breach of trust with 

regard to the 326-A-1 and 326-A-3 Funds. Throughout the liability trial and the damages 

trial, plaintiffs referred to the 326-A-1 and 326-A-3 Funds together as the “326-A Funds.” 

Therefore, as with the June 13, 2019 liability Opinion on liability issued by the court, for 

purposes of this Opinion, the court will discuss the investment performance of the 326-A1 and 326-A-3 Funds together. By September 30, 2013, according to the TAD, the 

balance of the 326-A-1 and 326-A-3 Funds had grown to a total of $2,022,891.50.

The Maturity Structure of the 326-A-1 and 326-A-3 Funds

The only party to present evidence at the liability trial regarding the maturity 

structure of the 326-A-1 and 326-A-3 Funds were plaintiffs, who based their maturity 

calculations on data from the TAD. At trial, plaintiffs’ liability expert, Mr. Nunes, testified 

that, as with the 326-K Fund, the government called back approximately 85% of the 

callable bonds in which the 326-A-1 and 326-A-3 Funds were invested. As with the 326-

K Fund, Mr. Nunes also testified at trial that the average weighted maturity of the 326-A
29

Funds, based on the years to call, more accurately displays the maturity structure of these 

two funds than the average weighted maturity based on the stated years to maturity. For 

purpose of this Opinion, when discussing the maturity structure of the 326-A-1 and 326-

A-3 Funds, the court, therefore, refers to the average weighted maturity years to call.16

Between the deposit dates for the 326-A-1 Fund, which occurred on March 25, 

1992, and the 326-A-3 Fund, which occurred on September 15, 1995, and August 1999, 

the average weighted maturity years to call for the 326-A-1 and 326-A-3 Funds was 

approximately three years or less. Then, around September 1999, the average weighted 

maturity years to call for the 326-A-1 and 326-A-3 Funds spiked to approximately six 

years. The 1999 spike in maturity was relatively short-lived. The average weighted 

maturity years to call of the 326-A Funds fluctuated between five and seven years until 

September of 2001, when the average weighted maturity years to call for both A Funds 

decreased to less than one year. For the next eight years, from October 2001 to February 

2009, the average weighted maturity years to call for both A Funds did not exceed three 

years. Around March 2009, the average weighted maturity years to call for the 326-A-1 

and 326-A-3 Funds spiked to a high of approximately ten years and then immediately 

began to decrease, reaching an average weighted maturity years to call of five years by 

August 2009. Between September 2009 to February 2012, the average weighted maturity 

years to call for the 326-A-1 and 326-A-3 Funds fluctuated between approximately five 

and eight years. Around February 2012, the average weighted maturity years to call for 

the 326-A-1 and 326-A-3 Funds, increased to fourteen years and began to decrease 

around December 2012, reaching an average weighted maturity years to call of eleven 

years. The average weighted maturity years to call for the 326-A-1 and 326-A-3 Funds 

remained at approximately eleven years until September 2013, the end of the time period 

in question. 

As a visual aid of the 326-A-1 and 326-A-3 Funds’ maturity structure throughout 

the twenty-one-year period at issue, plaintiffs’ Demonstrative Exhibit 14, introduced at 

trial, and prepared and testified to by plaintiffs’ liability expert, Mr. Nunes, is displayed 

below. Plaintiffs’ Demonstrative Exhibit 14 contains two separate lines. The top line of the 

graph, which was colored blue, depicts the average weighted maturity based on the 

stated years of maturity. The bottom line of the graph, which was colored red, displays 

the average weighted maturity for the 326-A-1 and 326-A-3 Funds, taking into account 

the call dates for the callable securities and is the line which the court looks to in this 

Opinion. Defendant did not contest plaintiffs’ representation of the average weighted 

maturity of the 326-A Funds contained in plaintiffs’ Demonstrative Exhibit 14. 

16 As with the 326-K Fund, the record before the court does not contain data regarding 

the average weighted maturity of the 326-A Funds accounting for the pre-payment of 

mortgage-backed securities. 
30
31

The Types of Securities in which the Government Invested the 326-A-1 and 326-A-3 

Funds 

According to plaintiffs’ expert liability and damages report by Rocky Hill Advisors, 

which relied on the TAD, beginning from August 1992, when the government began to

invest the 326-A-1 Fund, until March 1993, the government invested the entire 326-A-1 

Fund in jumbo CDs. Around March 1993, the government began to diversify its 

investment of the 326-A-1 Fund by decreasing its investment in jumbo CDs and 

increasing its investment in agency securities. Then, from 1995, when the 326-A-3 Fund 

was deposited into the United States Treasury, until 2011, the government invested both 

the 326-A-1 and 326-A-3 Funds primarily in agency securities with a small portion of the 

funds invested in overnight securities and Treasury securities. From 2012 until September 

2013, the government invested the 326-A-1 and 326-A-3 Funds in a mix of agency 

securities, mortgage-backed securities, and overnight securities. 

The Distribution of the 326-K, 326-A-1 and 326-A-3 Funds 

In 1973, even before the ICC entered its judgment in Docket 326-K, the BIA was 

aware that the distribution of any potential judgment award to the plaintiffs would require 

advance planning. According to a February 15, 1973 internal memorandum, the BIA 

stated that:

[A]lthough the Western Shoshone case as of October 11, 1972 has only 

reached the interlocutory stage, it is mandatory that planning begin now in 

terms of the identification of beneficiaries, the disposition of the funds and 

the dissemination of useful information to interested groups and individuals. 

We are aware that the award of $26,154,600, subject to allowable offsets, 

may be appealed by either or both parties, but we are in full agreement with 

the Agency and the Western Shoshone Claims Committee that early 

attention to this case is necessary if we hope to avoid the confusion and the 

very time consuming problems encountered with the rather similar Northern 

Paiute judgment.

Mr. Nunes, plaintiffs’ liability expert, testified at the liability trial that the distribution of the 

Northern Paiute judgment, which was referenced by the BIA in its February 15, 1973 

internal memorandum, had taken approximately sixteen years to execute.

Shortly following the deposit of the 326-K Fund into the United States Treasury, 

the BIA put together a research memorandum about the Western Shoshone. According 

to the research memorandum, dated March 11, 1980, there was a significant element of 

the Western Shoshone who, “[f]or many years,” opposed any monetary award in the 

Western Shoshone Identifiable Group’s case on Docket No. 326-K, which was litigated 

before the ICC regarding the Western Shoshone Identifiable Group’s claim for title to 

aboriginal lands. This faction of Western Shoshone believed that their ancestral lands in 

Nevada never were ceded over to the government or taken by the government. They, 

therefore, believed that granting of the 326-K award “would deprive all Western Shoshone 
32

of the land itself or at least jeopardize their claim to such land.” The March 11, 1980 

research memorandum also recognized that “[t]he Western Shoshone entities were and 

are extremely scattered,” and that “[i]t is not possible to describe the Western Shoshone 

in terms of forming a tribe or group of organized tribes.” Nonetheless, the March 11, 1980 

memorandum identified the following entities as the Western Shoshone beneficiaries of 

the 326-K Fund located in Nevada: 

1. Temoak Bands of Western Shoshone Indians (Elko, Battle Mountain, 

South Fork and. Wells)

2. Shoshone-Paiute Tribes of the Duck Valley Reservation 

3. Duckwater Shoshone Tribe of the Duckwater Reservation 

4. Yomba Shoshone Tribe of the Yomba Reservation

5. Ely Indian Colony

6. Reno-Sparks Indian Colony

7. Paiute-Shoshone Tribe of the Fallen Reservation and Colony

8. Fort McDermitt Pauite and Shoshone Tribes of the Fort McDermitt Indian 

Reservation

9. Walker River Pauite Tribe of the Walker River Reservation

10.Lovelock Paiute Tribe of the Lovelock Indian Colony

The March 11, 1980 memorandum also identified the following entities as the Western 

Shoshone beneficiaries of the 326-K Fund located in California: 

1. Owens Valley Paiute-Shoshone Band of Indians (Bishop, Big Pine, Fort 

Independence and Lone Pine Reservations),

2. Death Valley Timbi-Sha Shoshone Band. 

Despite the divisions of interests and different positions on their claims among the 

Western Shoshone, the BIA attempted to work with the Western Shoshone to submit a 

distribution plan to Congress for approval within the 180-day statutory timeline, as 

required under the Use and Distribution Act of 1973. For example, on February 23, 1980, 

representatives from the BIA and Western Shoshone individuals met in Elko, Nevada. At 

the meeting, the “Western Shoshone Planning Committee” was officially formed to elicit 

distribution proposals from the various tribal groups of the Western Shoshone. This 

committee consisted of “about 10 [individuals]” from various tribal groups with the 

possibility of an additional three individuals, two of whom would be from Californian 

Shoshone tribal groups. 

The BIA’s willingness to move forward with a distribution plan, however, was 

temporarily slowed down by the August 25, 1980 Order granting an injunction in United 

States v. Dann, Civil No. R-74-60, Order (D. Nev. Aug. 25, 1980) before the United States 

District Court for the District of Nevada. In United States v. Dann, the United States had 

sued Mary Dann and Carrie Dann, two sisters, who were members of an autonomous 

band of the Western Shoshone, for trespass, alleging that the sisters, in grazing livestock 

without a permit from the United States, were acting in violation of regulations issued by 

the Secretary of the Interior. The sisters denied that they were trespassing, affirmatively 
33

asserted their beneficial ownership of the land, and argued that their aboriginal title to the 

land precluded the United States from requiring grazing permits. In United States v. Dann, 

Judge Thompson found that the December 6, 1979 judgment in the ICC Docket 326-K 

was the date that Western Shoshone’s title to the Nevada land was extinguished, as 

opposed to July 1, 1872, the date to which both the Western Shoshone Identifiable Group 

and the government had stipulated was the takings date of the Western Shoshone 

Identifiable Group’s land before the ICC in Docket 326-K. Judge Thompson also enjoined 

the Dann sisters from using the lands located in Nevada, which the sisters had alleged 

belonged to them, as a basis to allow their livestock to graze upon, without first complying 

with the requirements of the Taylor Grazing Act of 1934, Pub. L. 73-482. Steve Feraca, a 

Tribal Services Specialist for the BIA, wrote in a memorandum to the Chief of the Division 

of Tribal Government Services for the BIA, dated May 6, 1980: 

In view of the [April 1980 district court] Thompson decision which cites a 

new taking date, December 6, 1979, I said that I could not recommend that 

a proposal for the funds be prepared until legal advice was forthcoming from 

the Solicitor [of the Department of the Interior] and the Department of 

Justice. 

On May 23, 1980, BIA reviewed the April 25, 1980 Order issued in Dann and 

decided to try to move forward with preparing a distribution plan. The BIA concluded that 

the April 25, 1980 Dann Order “in no way affects the mandate of the 1973 Indian 

Judgment Funds Act,” and that “[w]e appreciate that it is possible to meet the statutory 

deadlines,” for submitting a distribution plan. 

On June 20, 1980, the then Department of the Interior, Acting Deputy Assistant 

Secretary for Indian Affairs, Ralph Reeser, made a formal request to the United States 

Senate Select Committee on Indian Affairs for a 90-day extension of the 180-day period 

to submit a distribution plan to Congress. According to Mr. Reeser’s letter, “the 180-day 

period for the submittal of a Secretarial plan ended on June 16, 1980.” 

On July 26, 1980, the BIA held a public hearing for Western Shoshone members 

to discuss a potential distribution plan for the 326-K Fund. According to an August 1, 1980 

article published in the Native Nevadan, 85 individuals testified or submitted written 

statements at the July 26, 1980 public hearing regarding the distribution plan for the 326-

K Fund. According to the article, the majority of the individuals who testified were opposed 

to immediate distribution of the funds. The article stated: 

In Summary, the majority of people who testified wanted the award money 

to be placed in an interest-bearing account until such times as the title issue 

is legally resolved. Those who testified in favor of an immediate distribution 

favored a 100 percent per capita distribution, with the 1/4 degree eligibility 

requirement.

William Robert McConkie, the BIA official leading the July 26, 1980 public hearing 

wrote a memorandum for his files, dated August 3, 1980, regarding his experience at the 
34

public hearing. According to Mr. McConkie, there appeared to be disagreement among 

those that testified regarding the distribution plan, but such disagreement was allegedly 

staged by three lawyers representing certain Western Shoshone groups. Mr. McConkie 

wrote: 

Eighty persons testified. The hearing was adjourned at 5:30 p.m. The three 

lawyers were quite disruptive during the proceedings. They each 

represented essentially the same group. The Planning Committee had no 

lawyer. It was the apparent purpose of the lawyers opposed to the 

distribution to prevent the hearing, or secondarily to control the hearing and 

have their people discuss the various Federal District Court suits which 

dealt with obtaining the land rather than the judgment from the Court of 

Claims. Mrs. Carrie Dan [sic] was escorted from the hall after about 6 or 7 

minutes testimony by herself. She refused to limit her remarks and I directed 

a tribal policeman to escort her into the lobby.

On August 4, 1980, Congress denied BIA’s requested 90-day extension to submit 

a distribution proposal for the 326-K Fund. Senator John Melcher, Chairman of the Select 

Committee on Indian Affairs, wrote to Ralph Reeser, Department of the Interior, Acting 

Deputy Assistant Secretary for Indian Affairs, on August 4, 1980, noting that “[a]s a 

general rule, such extensions are routinely granted upon Departmental request. However,

there are several factors which weigh against granting the extension in this case,” 

including that “a significant number of Western Shoshone people oppose acceptance of 

the award at this time,” and that,

[t]here is pending litigation in the case of U.S. v. Dann in the U.S. District 

Court for the district of Nevada in which title to certain land and the date of 

compensable taking are still in issue. The outcome of that case could clearly 

have a strong bearing on the course of action the Congress, the Department 

and the Western Shoshone people might wish to pursue.

(underline in original). Mr. Melcher concluded by noting that “I trust the Department will 

submit appropriate legislation early in the 97th Congress.” 

Following Congress’s denial of the BIA’s request for a 90-day extension on August 

4, 1980, the BIA worked with the Western Shoshone to get a draft distribution plan ready 

to submit to Congress. Although the BIA continued to work with the Western Shoshone, 

the BIA was aware that actually submitting a plan to distribute the 326-K Fund to 

Congress would likely have to await the outcome of the Dann sisters’ appeal of the August 

25, 1980 District Court Order in United States v. Dann, in which Judge Thompson 

established a takings date of the Western Shoshone’s Nevada land as December 7, 1979.

See United States v. Dann, Civil No. R-74-60, Order.

On December 30, 1980, Jay Suager, the Acting Director of the Office of Indian 

Services at the BIA wrote to Senator Alan Cranston of California, stating:
35

[A] significant faction among the Western Shoshone people rejects the 

award and is seeking title to the land. In particular, this faction is supporting 

the continuance of litigation in United States v. Dann which pertains to 

Western Shoshone land title issues. Probably, all interested parties will 

have to await the outcome of the appeal in the Dann litigation.

The Secretary of the Interior, pursuant to direction of the Act of October 19, 

1973, 87 Stat. 466, undertook, through the Commissioner of Indian Affairs,

to prepare a plan for the distribution of the judgment funds within 180 days 

of the appropriation of those funds. Such plan was not completed. A request 

for a 90-day extension . . . was denied by the Senate Select Committee on 

Indian Affairs. Accordingly, under the 1973 Act authorizing legislation will 

be necessary before there may be any distribution of the judgment funds. 

That should present sufficient opportunity to address questions which may 

be raised by United States v. Dann. 

As of August 20, 1981, approximately one year after Congress denied the BIA’s 

90-day extension, an internal government memorandum sent from Kenneth Payton, the 

BIA Acting Deputy Assistant Secretary for Indian Affairs, to the BIA Phoenix Area Director, 

stated: 

Primarily due to the status of the Dann litigation, in which some Western 

Shoshone people assert title to a vast portion of Nevada, the Senate Select 

Committee on Indian Affairs denied an extension of the date for the 

submittal of a Secretarial plan. The case is on appeal. If the plaintiffs’ 

assertions are denied, we will then propose legislation. The existence of the 

Dann litigation, however, does not inhibit further discussion with the eligible 

Western Shoshone entities on the programing potential of these funds. On 

the contrary, such possibilities can be thoroughly examined and proposals 

developed during this time. This subject was considered at previous general 

Western Shoshone meetings and with the individual tribes prior to the 

Hearing of Record of July 26, 1980.

On January 22, 1982, in an internal BIA memorandum sent from the BIA Deputy 

Assistant Secretary for Indian Affairs to the BIA Phoenix Area Director, the BIA Deputy 

Assistant Secretary stated that, “we should now begin working with the beneficiaries on 

the development of the legislation which will be required in this instance.” The BIA Deputy 

Assistant Secretary also stated in the January 22, 1982 memorandum:

To be kept in mind during this process is the fact that the actual introduction 

of legislation may not be possible until the Dann litigation is completed. 

However, this should not preclude beginning the process of working with 

the tribes to clarify their desires with respect to programming and to initiate 

appropriate planning with them providing such technical assistance as 

requested and as resources permit.
36

The January 22, 1982 memorandum also amended the results of the BIA’s 

research report, dated March 11, 1980, which had originally listed twelve beneficiary 

groups for the 326-K Fund, reducing the number of beneficiaries of 326-K Fund to the 

following four groups:

1. Te-Moak Bands of Western Shoshone Indians (which includes the Elko, 

Battle Mountain, South Fork and Wells bands), 

2. Duckwater Shoshone Tribe of the Duckwater Reservation,

3. Yomba Shoshone Tribe of the Yomba Reservation, 

4. Ely Indian Colony.

The January 22, 1982 memorandum also stated that the “remaining beneficiaries consist 

of all other persons of Western Shoshone ancestry, in their individual capacity, who 

otherwise meet the criteria detailed in the March 11, 1980, Results of Research Report.” 

On May 11, 1982, the BIA Phoenix Area Director held a meeting with leaders of 

the Te-Moak Bands, Duckwater, Yomba, and Ely Indian Colony, the four identified 

beneficiary groups of the 326-K Fund. Following the May 11, 1982 meeting, Thomas 

Luebben, an attorney representing the Western Shoshone Identifiable Group, wrote to 

the BIA Phoenix Area Office on May 25, 1982 “to confirm the understandings” reached 

between the Phoenix Area Office and the Western Shoshone Tribal leaders, which 

included, in relevant part, the leaders’ request for “[a] commitment from the BIA to not 

begin compiling a descendancy roll in anticipation of distribution of the Western Shoshone 

judgment.” Mr. Luebben’s May 25, 1982 letter also requested from the BIA: 

A commitment from the BIA that the Interior Department will not attempt to 

draft legislation to distribute the Western Shoshone judgment prior to an 

actual written agreement between representatives of the United States and 

a Western Shoshone negotiating team (including primarily representatives 

of Western Shoshone tribal governments) on an appropriate draft of 

proposed legislation to achieve an overall settlement of Western Shoshone 

land claims and provide for distribution of the judgment funds. 

On June 8, 1982, the BIA Phoenix Area Director responded to Mr. Luebben’s May 

25, 1982 letter in writing, stating that with regard to the descendancy roll request, “[s]ince 

we cannot develop any kind of roll for distribution purposes without an approved plan, we 

have no problem agreeing to this.” With regard to the draft legislation request, the BIA 

Phoenix Area Director responded:

As far as draft legislation for the distribution of the Western Shoshone 

judgment, we can decide our course of action within the Area, however, we 

cannot make a commitment for the Central Office or the Department. We 

expect any legislation developed would have the direct input of the affected 

Tribes and individuals that have an interest in the award. 
37

On May 19, 1983, the United States Court of Appeals for the Ninth Circuit reversed 

the August 25, 1980 District Court Order in United States v. Dann and remanded the case 

back to the District Court for further proceedings regarding “factual issues of whether 

aboriginal title had been preserved to the date of trial and whether the Danns are entitled 

to share in it.” United States v. Dann, 706 F.2d 919, 923 (9th Cir. 1983) (“We reverse the 

judgment granting the injunction and remand for further proceedings.”), rev’d, 470 U.S. 

39 (1985). 

According to a July 28, 1983 internal BIA memorandum, “[s]ince the recent Federal 

court decision regarding the Dann case is now widely known, the various entities that 

have an interest in the Western Shoshone Land Claim have been actively pursuing their 

individual interests.” The memorandum further stated: 

The entities we [the BIA] are aware of are: 1. Te-moak Tribe of Western 

Shoshone Indians. This groups appears to have a split as to what they want. 

. . . 2. Western Shoshone Sacred Lands Association. . . . Their main 

contention is that by the Treaty of Ruby Valley, [

17] they never lost land title 

to their aboriginal lands. The Dann decision [by the Ninth Circuit] appears 

to support that premise. . . . 3. Tribal Chairmen Association. . . . I believe 

they support land plus money concept. 4. Great Basin Western Shoshone 

Descendants. . . . Their main interest is a per capita distribution and have 

not really been supportive of the additional land issue. . . . 5. Western 

Shoshone Land Federation. This is the newest entity to come upon the 

scene, and purportedly represent all of the above entities as a unified 

Shoshone group. Since I am not totally aware of what has been negotiated 

out among themselves with all of the already described interests, I am 

surmising that this group supports the per capita distribution, land return 

and tribal program concepts. It is my understanding that it will be through 

this group that negotiations with Federal officials to develop a 

comprehensive legislative package relative to the Western Shoshone Land 

Claim will be conducted. 

17 On October 1, 1863, the United States entered into the Ruby Valley Treaty with the 

“Western Bands of the Shoshone Nation of Indians,” which, according to the treaty, was 

a “Treaty of Peace and Friendship” between the United States and the western bands of 

Shoshone Indians. The Ruby Valley Treaty authorized non-Indians to cross the Shoshone 

land located in Nevada on several already established traveled routes, such as train, mail, 

and telegraph lines, without “molestation or injury” from the western bands of Shoshone 

Indians. It also granted the United States the right to establish military posts in Shoshone 

lands, and that such lands “may be explored and prospected for gold and silver, or other 

minerals.” In exchange for the western bands of Shoshone Indians’ “inconvenience” 

resulting from the use of the travel routes in their land by “white men,” the United States 

agreed to compensate the western bands of the Shoshone Indians $5,000.00 per year 

for twenty years, a total of $100,000.00.
38

Additionally, following the Ninth Circuit’s 1983 decision in United States v. Dann, 

the BIA notified Congress that it could not submit proposed legislation at that time. The 

Director of the Office of Indian Services at the BIA wrote to Congresswoman Barbara 

Vucanovich, who was one of Nevada’s Congressional representatives at the time, noting: 

For some time we and the Congress have been awaiting a Court of Appeals 

decision in the Dann case, Carrie and Mary Dann having contended that 

the Western Shoshone still retain aboriginal title to the Nevada portion of 

the lands claimed. On May 19, 1983, the Court ruled that no evidence had 

been presented by the Government establishing that aboriginal title had 

been lost. We do not know whether this decision will be appealed to the 

Supreme Court.[18] Meanwhile, the Western Shoshone people are 

scheduling a series of general meetings in an effort to develop a proposal 

that would incorporate the distribution of the funds and the utilization of the 

subject lands. The situation has become, as a result of the decision, 

extremely confused and under the circumstances we are most reluctant to 

submit proposed legislation for only the monetary award. 

18 The Dann case was appealed to the United States Supreme Court in 1985, which found 

that the Western Shoshone peoples’ tribal title to their aboriginal land passed to the 

government when the 326-K Fund was awarded to the Western Shoshones in the ICC 

case, Docket No. 326-K, and placed into the United States Treasury in December 1979. 

See United States v. Dann, 470 U.S. 39, 49-50 (1985). The Dann case returned to lower 

courts for further proceedings regarding whether the Dann sisters had individual 

aboriginal rights, as opposed to tribal rights, in the Nevada lands at issue. See id. at 50. 

The Dann case was appealed once more to the United States Court of Appeals for the 

Ninth Circuit in 1989, which ruled that the Dann sisters had limited individual title rights, 

“restricted” to the land that they or their lineal ancestors actually occupied prior to 

November 26, 1934, the date that the federal government withdrew the Nevada lands in 

question from entry and settlement by the public. See United States v. Dann, 873 F.2d 

1189, 1199, 1200-01 (9th Cir. 1989). Following the 1989 Ninth Circuit appeal, the Dann 

sisters pursued their land claim in the late 1990s before the Organization of American 

States’ Inter-American Commission on Human Rights, an international tribunal, which 

found, on December 27, 2002, in favor of the Dann sisters’ claim for title to their Nevada 

lands, and made the “RECOMMENDATION[]” that the sisters be “[p]rovide[d]” with “an 

effective remedy, which includes adopting the legislative or other measures necessary to 

ensure respect for the Danns’ right to property.” See Mary Dann and Carrie Dann v. 

United States, Case 11.140, Inter-Am. Comm’n H.R., Report No. 75/02, 47 (2002) 

(capitalization in original). The United States government, however, did not adopt the 

Inter-American Commission on Human Right’s December 27, 2002 recommendation. On 

July 7, 2004, Congress passed the Claims Distribution Act of 2004, which provided for a 

monetary per-capita distribution of the 326-K Fund to qualifying Western Shoshone 

members, but did not provide the Dann sisters or any other Western Shoshone members 

with title to their ancestral lands. 
39

Undoubtedly, considerable time will have elapsed before the Western 

Shoshone people, the Secretary of the Interior and the Congress are able 

to reach agreement in this complex matter.

Also, on December 15, 1983, the Assistant Secretary for Indian Affairs at the BIA wrote 

Senator Mark Andrews, the Chairman of the United States Senate Select Committee on 

Indian Affairs, noting that it was “premature and not in the best interest of either the tribes 

or the government” to introduce proposed legislation. The Assistant Secretary for Indian 

Affairs at the Department of the Interior also noted:

Presently, groups of Western Shoshone have been discussing proposed 

legislation to secure both the monetary settlement and a portion of the lands 

in Nevada. A particularly difficult problem exists with respect to any land 

restoration approach due to the virtual absence of a successor tribe or tribes 

representative of all the recommended beneficiaries. Consequently, 

meaningful planning has not yet occurred.

In November of 1984, the BIA began negotiations with the “Western Shoshone 

National Council,” regarding potential distribution legislation for the 326-K Fund. The 

Western Shoshone National Council was comprised of various Western Shoshone tribal 

governments and political organizations and was designated by the Western Shoshone 

as the entity to represent the Western Shoshone in negotiations with the United States. 

On May 20, 1985, the BIA received the Western Shoshone National Council’s 

“PROPOSAL TO COMPLETE DATA GATHERING,” (Proposal) in which the Western 

Shoshone National Council stated that they would need the next three years to prepare 

for their negotiations with the BIA. (capitalization in original). The Proposal detailed the 

various steps the Western Shoshone National Council would have to complete before 

entering into negotiations. The steps included:

[E]stablish a data base for their land and land use; organize for negotiations, 

determine general land control assignments, and determine general policy 

for joint areas; develop preliminary policy for land use and preliminary land 

development plans; and, enter into and complete negotiations with the 

Federal government and define terms that can be incorporated into a

legislated agreement.

According to the “Work Schedule” included in the Proposal, the Western Shoshone 

National Council stated that certain “Work Products,” such as “Historical Analysis,” 

“Demographic Description of Population,” “Resources Inventory,” and “Land Interests,” 

would be completed between one to three years, and that these work products would be 

“needed for negotiations and development of agreement terms.” (capitalization in 

original). 

According to the BIA, by mid-1986, whatever negotiations had taken place 

between the government and the Western Shoshone National Council came to a virtual 
40

standstill. On June 30, 1986, the BIA sent the Western Shoshone National Council a 

letter, stating that, “[a]fter over two years of negotiations, I am truly sorry that our 

respective positions remain so far apart. . . . [T]he Department does not recognize any 

valid legal claim to Western Shoshone tribal ancestral lands,” and “the Department 

believes further negotiations at this time would be futile.” As of July 27, 1986, as 

evidenced by a memorandum from the Assistant Secretary for Indian Affairs to the 

Phoenix Area Office, negotiations between the government and the Western Shoshone 

National Council were “not proceeding,” and the government “consider[ed] the 

negotiations to have been suspended indefinitely.” 

In light of the standstill in negotiations, on October 28, 1986, Senator Paul Laxalt, 

Senator Chic Hecht, Congresswoman Vucanovich, and then Congressman Harry Reid, 

of the Nevada Congressional delegation, wrote to the Secretary of Interior and noted that,

“[i]f the Shoshones do have a viable claim to private lands (approximately two million 

acres), the Nevada Congressional delegation is concerned that the Shoshone land rights 

question be resolved as quickly as possible without disruption of private titles.” The 

Nevada Congressional delegation recognized that organizing a distribution for the 326-K 

Fund had been complicated, stating that,

[t]he extent of continuing Western Shoshone land rights has been a 

frustrating problem for the Western Shoshone Indians, private parties, and 

governmental agencies for many years now. Although four negotiating 

sessions between Western Shoshone National Council delegates and the 

Department of the Interior have taken place over the last year, little progress 

has been made toward a comprehensive solution.

The Nevada Congressional delegation’s October 28, 1986 communication also noted 

that,

the United States Claims Court and the Senate Select Committee on Indian 

Affairs agree that a comprehensive legislative solution will be necessary. 

The present situation only promises to get worse. Once again, we urge the 

Department to meet with the Western Shoshone National Council to find a 

common basis for moving forward. While we realize that financial demands 

upon the Department are heavy, we urge you to consider resolution of the 

Shoshone controversy a priority, and to assist the Shoshones with 

necessary funding. 

As of mid-1987, Congress did not believe a final resolution to the Western 

Shoshone judgment claim was “immediate.” According to a May 29, 1987 letter from 

Senator Daniel Inouye, Chairman of the United States Senate Select Committee on 

Indian Affairs to Senator Hecht and Senator Reid, it appears that the Western Shoshone 

National Council requested a Congressional hearing to discuss the Western Shoshone 

judgment claims. Senator Inouye stated in his letter that “I do not believe that a hearing 

will lead to any immediate solution to this problem,” but, that such a hearing could at least 

establish “a basis for a fair resolution of this matter.” 
41

There also was disagreement within the government as to how to proceed with 

negotiations with the Western Shoshone National Council. The Chairman and ViceChairman of the United States Senate Select Indian Committee on Indian Affairs believed 

that future negotiations were dependent on the Western Shoshone National Council 

receiving sufficient funding for their requested “study to develop an inventory of the 

aboriginal lands and other natural resources which were the subject of the 1863 Treaty 

of Ruby Valley and the judgment of the Indian Claims Commission in Docket No. 326-K.” 

According to a July 28, 1987 letter from the Chairman and Vice-Chairman of the United 

States Senate Select Indian Committee on Indian Affairs to the Assistant Secretary of 

Indian Affairs with the Bureau of Indian Affairs at the Department of the Interior, “[t]he 

project that the Western Shoshone National Council now proposes would appear to be 

essential in order to establish a frame-work for future negotiations,” and “we strongly urge 

that the Bureau of Indian Affairs join with ANA [Administration for Native Americans] to 

assure sufficient funds are made available to complete this project in a timely fashion.”

The Assistant Secretary of Indian Affairs with the Bureau of Indian Affairs, however, 

disagreed with the Chairman and Vice-Chairman, and responded to the letter on August 

12, 1987, stating:

[T]he Western Shoshone have been compensated in the ‘usual practice’ for 

the loss of their aboriginal title and there is no further legal claim against the 

United States. Consequently, we do not perceive a need to survey their 

entire historical use area as that matter was addressed at length in the 

[Indian Claims] Commission and Court of Claims proceedings.

(brackets added). 

As of August 1988, negotiations with the Western Shoshone National Council were 

still suspended, with no known date for re-opening negotiations. According to an August 

3, 1988 BIA Phoenix Area briefing paper prepared for the Secretary of Interior, 

“negotiations have been suspended indefinitely” and “subsequent communication had not 

changed the situation.”

Despite the lack of negotiations between the government and the Western 

Shoshone National Council, on September 28, 1989, Congresswoman Vucanovich 

proposed H.R. 3384, a distribution plan of the 326-K Fund. The Western Shoshone tribal 

governments strongly objected to the introduction of the bill. The Te-Moak Tribe of 

Western Shoshone Indians were “extremely angry” that H.R. 3384 was introduced without 

“consultation with the Western Shoshone National Council and without the approval of 

any of the nine Western Shoshone tribal governments.” H.R. 3384 also was opposed by 

the staff at the Department of the Interior. According to an October 13, 1989 document 

from the BIA Acting Phoenix Area Director to the Assistant Secretary of the Interior 

commenting on H.R. 3384, “we [Phoenix Area Office] strongly recommend the proposal 

be opposed by the Department.” According to the April 26, 1990 statement of Walter R. 

Mills, Deputy to the Assistant Secretary for Indian Affairs with the Bureau of Indian Affairs

at the Department of the Interior, before the United States House of Representatives’ 
42

Congressional Committee on Interior and Insular Affairs, Mr. Mills indicated, on behalf of 

the Department of the Interior, “[w]e strongly oppose enactment of H.R. 3384” for several 

reasons. For example, according to Mr. Mills, “[t]he timeframes cited in the bill for 

publication of regulations, the time allotted for applications to enroll, and the time cited for 

the preparation of the Final Judgment Roll, are unrealistically short.” According to H.R. 

3384, as introduced, the Secretary of Interior had one hundred and twenty days from the 

enactment of the Act to complete a proposed judgment roll, sixty days from the disposition 

of appeals from individuals denied inclusion on the judgment roll to publish the final 

judgment roll, and sixty days from publication of the final roll to distribute the 326-K Fund 

on a per capita basis. The bill was not passed.

Thereafter, the Department of the Interior sent a letter, dated November 14, 1990, 

to the Western Shoshone National Council, stating: 

Our understanding is that the Nevada Congressional delegation and the 

Senate Select Committee are willing to act on the distribution of the funds 

in Docket 326-K and develop a settlement of outstanding land issues as 

they relate to Western Shoshone lands. Neither the Department of the 

Interior nor the Bureau of Indian Affairs have any immediate solutions to 

these exceedingly complex issues. However, when a new Congress 

convenes in January we certainly will be available to work with the Congress 

in developing a resolution of these issues.

(capitalization in original). 

On November 22, 1991, Congresswoman Vucanovich introduced a second bill, 

H.R. 3897, to distribute the 326-K Fund. Denis Homer, the acting BIA director of Tribal 

Services testified before Congress on behalf of the Department of the Interior, and stated 

that the Department had concerns about the “tight timeframes specified in the legislation 

[H.R. 3897] in which the Secretary is to fulfill certain administrative responsibilities,” 

similar to the concerns the Department of the Interior had with H.R. 3384. Mr. Homer 

stated that “[s]ome of these timeframes would be impossible to meet.” Mr. Homer 

explained:

While the process of updating the tribal rolls may be completed in a 

relatively short period of time, the overall technical process of bringing the 

supplemental rolls into final form could take far longer than the timeframes 

allotted in the bill. lf the supplemental roll is considered a lineal descendancy 

roll, regulations necessary for its implementation will require considerable 

time to formulate, approve, and publish. The 90-day timeframe in section 5

to develop regulations to implement the provisions of the legislation and the 

11-month period to publish the final judgment roll provided in section 2(c) 

do not provide adequate time to prepare a lineal descendancy roll in light of 

Administrative Procedures Act requirements.
43

In 1992, H.R. 3897 was not voted out of committee. According to a June 19, 1992 

letter from Congressman George Miller, Chairman of the United States House of 

Representatives Committee on Interior and Insular Affairs, to Congresswoman 

Vucanovich regarding H.R. 3897, 

[i]n reviewing the record, there still appears to be a wide diversity of opinions 

and suggested approaches regarding the distribution of the Docket 

Funds[19] and resolution of other issues.

While I believe we are closer to a resolution of this issue than we were in 

the 101st Congress, the Committee will not consider the measure until there 

is more of a consensus among the tribal governments.

(capitalization in original).

By mid-1992, the government was attempting to re-open negotiations with the 

Western Shoshone. According to a July 27, 1992 letter from the Department of the Interior 

to the Chairman of the United States Senate Select Committee on Indian Affairs, the 

Department of the Interior was contacting individuals to participate in an interagency 

negotiating team to assist the Chairman “in the development of a legislative solution to 

the claims of the Western Shoshone tribal governments against the United States.”

According to a June 22, 1992 letter from the Chairman of the United States Senate Select 

Committee on Indian Affairs to the Department of the Interior, “[i]t appears that there is a 

consensus growing among leaders of Shoshone tribal governments and other interested 

parties toward a comprehensive solution to the Western Shoshone claims.” By June of 

1993, the government was still working towards opening negotiations with the Western 

Shoshone. According to a June 6, 1993 letter from Secretary of the Interior, Bill Babbitt, 

to Senator Inouye, “we will be contacting representatives of the Western Shoshone Bands 

for preliminary discussions in the near future.” 

Also, during this time, certain governmental actors were not in favor of a 100% per 

capita distribution of the funds, as was proposed in prior bills which had not been passed 

by Congress. According to a January 7, 1994 letter from Congressman William 

Richardson, Chairman of the United States House of Representatives Subcommittee of 

Native American Affairs, which was part of the United States House of Representatives 

Committee on Natural Resources, to Secretary of the Interior Babbitt, “[t]he 

Subcommittee on Native American Affairs generally would frown on any plan that does 

not include provisions for tribal economic development and long range economic 

planning.” Further, Congressman Richardson stated that, “I feel it is of paramount 

19 The 326-A-1 Fund were deposited into the United States Treasury for investment by 

the government on March 25, 1992. At the time that Congressman Miller wrote the June 

19, 1992 letter, the Department of Interior was holding in trust the 326-K Fund and the 

326-A-1 Fund. The 326-A-3 Fund, the third and last of the tribal trust funds at issue in this 

case, was not deposited into the United States Treasury to be held in trust by the 

Department of Interior until September 15, 1995. 
44

importance that the docket funds of the Western Shoshone should not merely be divided 

up on a per capita basis and distributed.” He also stated that “[i]n hearings before this 

Committee, Members have commented that the Western Shoshone should be provided 

with some land base.” (capitalization in original). On September 15, 1995, the 326-A-3 

Funds, the last of plaintiffs’ three tribal trust funds, were deposited into the United States 

Treasury for investment by the government. 

In early 1997, consensus among the Te-Moak Bands of Western Shoshone 

Indians, one of the four Western Shoshone tribes recognized by the BIA as a beneficiary

of the 326-K Fund in the BIA’s January 22, 1982 amended research report, began to 

emerge. The Te-Moak Bands of Western Shoshone Indians was comprised of the Elko, 

Battle Mountain, South Fork, and Wells bands. The other three Western Shoshone tribes 

recognized by the BIA as beneficiaries of the 326-K Fund in the January 22, 1982 

amended research report were the Duckwater Shoshone Tribe, the Yomba Shoshone 

Tribe, and the Ely Indian Colony. According to a March 3, 1997 internal BIA 

memorandum, the Te-Moak Tribal Council, the governing group for the Te-Moak Bands 

of Western Shoshone Indians, was planning to “pursue 100% distribution to 1/4 degree 

of Docket 326-K.” The March 3, 1997 BIA memorandum also noted that the Te-Moak 

Tribal Council would pursue “a separate or companion proposal to seek restoration of 

land in Western Shoshone country,” and that both proposals, “could run concurrently and 

not necessarily have to be tied together.” The March 3, 1997 BIA memorandum also 

discussed a March 1, 1997 meeting between the BIA and two hundred members of 

Western Shoshone tribes. According to the March 3, 1997 BIA memorandum, after the 

March 1, 1997 meeting was over, “several people came up to tell us [the BIA] that they 

support the proposed Te-Moak plan but did not want to stand up in front of the audience 

and express themselves.” 

Also, according to a March 7, 1997 internal BIA memorandum from the 

Superintendent of the Eastern Nevada Agency to the Phoenix Area Director, other 

Western Shoshone tribes, apart from the Te-Moak Bands of Western Shoshone Indians, 

would potentially be introducing to the BIA their own version of a potential distribution plan 

for the 326-K Fund. According to the March 7, 1997 internal BIA memorandum:

The Te-Moak Tribe will be sending a copy of their plan to the other three 

tribes named in the results of research. The purpose is to try and get the 

four proposed plans submitted about the same time so resolution could be 

achieved quickly. Duckwater has already presented their plan to the federal 

negotiating team. Ely will be supporting the Te-Moak Plan. We do not know 

what Yomba will do, rumors are they will parallel the Duckwater plan.

(capitalization in original). Despite the Te-Moak Tribal Council’s emerging consensus in 

favor of a distribution plan for the 326-K Fund, the BIA was not optimistic that distribution 

plan legislation would be passed by Congress for the 326-K Fund in the near-term. On 

May 15, 1998, Donna Peterson, BIA Branch Chief of the Tribal Government Services sent 

a memorandum to the BIA Phoenix Area Director, stating that the BIA did “not anticipate 

a final distribution plan being presented to Congress by the end of this year.” Ms. Peterson 
45

also noted that, “we do anticipate the development of a payment roll will be a tremendous

and expensive task once the distribution plan is approved. Both the Eastern and Western 

Nevada Agencies have been very cognizant of this fact and are working along with the 

tribes in maintaining current tribal rolls.” (capitalization in original).

Beginning in 1998, support from various Western Shoshone tribes in favor of a 

monetary distribution of the 326-K Fund and the setting aside of the 326-A-1 and 326-A3 Funds as educational trust funds began to increase. In 1998, the BIA attended two 

public hearings held by the Western Shoshone Steering Committee, a “group of individual 

Western Shoshones that have organized to try and prepare a distribution plan,” for a vote 

of approval a draft distribution proposal, in which the 326-K Fund would be fully distributed 

on a 100% per capita basis and the 326-A-1 and 326-A-3 Funds would be placed into a 

permanent education trust fund. The vote at the two meetings was that 1230 Western 

Shoshones were in favor of the draft proposal, while 53 were against the proposal. 

On December 1, 1998, the BIA Phoenix Area Director wrote to the Deputy 

Commissioner for Indian Affairs at the BIA, noting that “an overwhelming majority of adult 

Western Shoshones favor distribution.” In addition, according to a 1999 letter from Elko 

Band representatives to Bruce Babbitt, the Secretary of Interior at that time, the Elko Band 

representatives, co-chairmen of the Western Shoshone Claims Steering Committee, the 

committee that voted in favor of a distribution plan at two public hearings in 1998, noted 

that “at this point we feel it is both reasonable and prudent to move forward,” and “we 

would be most appreciative of the Department of Interior’s assistance in promoting the 

‘Western Shoshone Claims Distribution Act’[20] as the ‘Act’ enters and progresses through 

the congressional process.” The Elko Band representatives further stated that they are 

the “largest number (approx. 1500) of Western Shoshone enrollees,” and, therefore, 

wrote to the Secretary “on behalf of the ‘majority’ of Western Shoshone people.” 

(emphasis in original). Also, between February and March of 1999, the Fallon Paiute 

Shoshone Tribe, “the second largest band of Shoshones in the state of Nevada,” 

numbering approximately 601 eligible Western Shoshone beneficiaries of the 326-K

docket, the Elko Band Council, the “largest Band of Western Shoshone in the State of 

Nevada,” and the Western Shoshone of the Duck Valley Reservation, numbering 

“approximately 400 direct descendants of eligible Western Shoshone who are possible 

beneficiaries of Docket 326-K,” each passed resolutions in favor of Congress passing the 

Western Shoshone Claims Distribution Act.

By June 7, 1999, the BIA was drafting proposed legislation as requested by various 

groups of Western Shoshone. According to a June 7, 1999 email from Daisy West, a BIA 

Tribal Relations Officer, to Pat Gerard, whose specific employment position is not 

identified in the email, but who appears to be another BIA employee, Ms. West was 

20 The “Western Shoshone Claims Distribution Act,” was the act that the Western 

Shoshones voted in favor of during the two public hearings in 1998 and which proposed 

to distribute the 326-K Fund on a 100% per capita basis to individuals of 1⁄4 Western 

Shoshone blood.
46

“working on the draft legislation for the Western Shoshone Judgment Funds” and 

requested from Pat Gerard the “current balances” of plaintiffs’ three tribal trust funds. 

During the early 2000s, Senator Reid, Senator John Ensign, and Congressman 

James Gibbons, members of the Nevada Congressional delegation, introduced 

legislation for the distribution of plaintiffs’ three tribal trust funds. On May 9, 2000, the

Assistant Secretary of Indian Affairs with the Bureau of Indian Affairs at the Department 

of the Interior submitted proposed draft legislation to “‘authorize the Use and Distribution 

of the Western Shoshone Judgment Funds in Docket Nos. 326-K, 326-A-1 and 326-A-3’” 

to the Speaker of the House. (capitalization in original). The Assistant Secretary stated in 

the letter to the Speaker of the House:

Although the governing bodies of three of the four successor tribes, due to 

the dynamics of tribal politics, have changed their position, or been silent 

until recently concerning the legislative proposal for the use of these funds, 

the individual Western Shoshone have been anxious for quite some time to 

have these funds distributed.

The Assistant Secretary of Indian Affairs with the Bureau of Indian Affairs at the 

Department of the Interior also stated:

We are confident that the Western Shoshone want these funds distributed 

as quickly as possible. We also believe that the best interests of the 

Western Shoshone will not be served by providing additional time for 

successor tribes to reach a consensus on the division and distribution of the 

land claims funds in Docket 326-K.

On June 27, 2000, Senator Reid introduced S. 2795, Western Shoshone Claims 

Distribution Act, which, however, did not pass during the 106th Congress. On September 

6, 2001, Congressman Gibbons introduced H.R. 2851, Western Shoshone Claims 

Distribution Act in the United States House of Representatives Committee on Natural 

Resources, which, however, also did not pass. On November 14, 2002, Senator Reid 

tried again and introduced S. 958, Western Shoshone Claims Distribution Act, which was 

passed by the United States Senate, but later died before the United States House of 

Representatives Committee on Natural Resources.

On April 29, 2003, the BIA Office of Trust Funds Management met to discuss the 

investment performance of plaintiffs’ three tribal trust funds at issue in the abovecaptioned case. The meeting was memorialized in a one-page document, dated April 29, 

2003, which stated, in part, “[a]s the securities mature, reinvest the principal and interest 

not to exceed two year [sic]. The tribes at some point in the future may settle and distribute 

the funds.” The above document also stated under the “Comments” section:

The four successor Western Shoshone Tribes eligible to share in this award 

include Te-Moak, Ely, Duckwater, and Yomba. Also tribes with a significant 

number of tribal members of Western Shoshone descent eligible to share 
47

in the distribution are Duck Valley, Fallon and Fort McDermitt. The proposed 

use of Docket 326-K is 100% per capita distribution, however, at least one 

of the successor tribes still opposes acceptance of the award for land sale. 

The proposed use of Dockets 326-A-1 and 326-A-3 are principal restriction 

[sic] of the award, with income to be used for educational grants and other 

forms of educational assistance to tribal members and descendants.

In 2003, Congressman Gibbons of Nevada introduced H.R. 884 in the United 

States House of Representatives. Also, in 2003, Senator Reid and Senator Ensign of 

Nevada introduced S. 618 in the United States Senate. Congress passed both H.R. 884 

and S. 618, which were almost identical bills, were reconciled, and became law on July 

7, 2004, when President George W. Bush signed the Claims Distribution Act of 2004. 

According to the Claims Distribution Act of 2004, the 326-K Fund was to be paid out on a 

100% per capita distribution, whereas the 326-A-1 and 326-A-3 Funds were to be used 

as education trust funds, from which individuals selected by the Western Shoshone 

Educational Committee would receive educational grants. The principals of the 326-A-1 

and 326-A-3 Funds were to be held in perpetual trust and the interest of those funds 

would be distributed to selected individuals meeting certain eligibility criteria. 

On May 19, 2005, the BIA published a proposed rule regarding the process for 

individuals to enroll in the judgment roll, as required under the Claims Distribution Act of 

2004. See Preparation of Rolls of Indians, 72 Fed. Reg. 9,836 (Mar. 5, 2007) (to be 

codified at 25 C.F.R. pt. 61). The comment period for the proposed rule was open for 162 

days, from May 19, 2005 to October 28, 2005. Id. Copies of the proposed rule were mailed 

to approximately 2,300 individuals and the BIA held two public meetings for the purpose 

of discussing the proposal. Id. The first meeting was held on August 20, 2005 in Elko, 

Nevada, which approximately 500 individuals attended. Id. The second meeting was held 

one week later, on August 27, 2005, in Reno, Nevada, which approximately 600 

individuals attended. Id. The BIA also received written comments from 36 individuals 

regarding the proposed rule. Id.

On October 25, 2005, the Office of Trust Funds Management at the BIA met again 

to discuss the 326-K, 326-A-1, and 326-A-3 Funds, and documented the meeting, noting, 

“JA.9087.691 Funds [326-A Funds] are invested in short, intermediate and long 

securities. JA.9334.697 Receipt of award: as the securities mature, reinvest the principal 

and interest not to exceed 2008 [i.e., not to exceed a maturity of three years]. Settlement 

of docket 326-K is in the horizon.” (capitalization in original). 

On February 12, 2007, approximately two and a half years after the enactment of 

the Claims Distribution Act of 2004, Daisy West, BIA Chief, Division of Tribal Government 

Services, wrote an email to Robert Craff, BIA Regional Trust Administrator within the 

Western and Navajo Office of the Special Trustee for American Indians, and one of 

defendant’s fact witness at trial, stating:

The final enrollment regulations are with Mike Olsen for his signature. Once 

the regulations are signed they will be published in the Federal Register and 
48

become effective 30 days after the date of publication. The first distribution 

of funds will be in approximately 2 to 3 years when the application period 

closes. At that time we will make a partial per capita to approximately 2,500 

individuals. . . . The balance of Docket 326-K funds will be distributed in 6 

to 10 years. 

On March 5, 2007, a little less than three years after the Claims Distribution Act of 

2004 was enacted, the BIA published the final rule that established the process for 

enrolling in the judgment roll. The final rule establishing the judgment roll enrollment 

process was codified at 25 C.F.R. § 61.4(k) (2007). See Preparation of Rolls of Indians, 

72 Fed. Reg. 9,836 (Mar. 5, 2007) (to be codified at 25 C.F.R. pt. 61).

According to 25 C.F.R. § 61.4(k), 

(1) Under section 3(b)(1) of the Act of July 7, 2004, Pub. L. 108–270, 118 

Stat. 805, the Secretary will prepare a roll of all individuals who meet the 

eligibility criteria established under the Act and who file timely applications 

prior to a date that will be established by a notice published in the Federal 

Register. The roll will be used as the basis for distributing the judgment 

funds awarded by the Indian Claims Commission to the Western Shoshone 

Identifiable Group of Indians in Docket No. 326–K. To be eligible a person 

must:

(i) Have at least 1⁄4 degree of Western Shoshone blood;

(ii) Be living on July 7, 2004;

(iii) Be a citizen of the United States; and

(iv) Not be certified by the Secretary to be eligible to receive a per 

capita payment from any other judgment fund based on an aboriginal 

land claim awarded by the Indian Claims Commission, the United 

States Claims Court, or the United States Court of Federal Claims, 

that was appropriated on or before July 7, 2004.

(2) Indian census rolls prepared by the Agents or Superintendents at 

Carson or Western Shoshone Agencies between the years of 1885 and 

1940, and other documents acceptable to the Secretary will be used in 

establishing proof of eligibility of an individual to:

(i) Be listed on the judgment roll; and

(ii) Receive a per capita payment under the Western Shoshone 

Claims Distribution Act.

(3) Application forms for enrollment must be mailed to Tribal Government 

Services, BIA–Western Shoshone, Post Office Box 3838, Phoenix, Arizona 

85030–3838.
49

(4) The application period will remain open until further notice.

25 C.F.R. § 61.4(k). An individual who was denied eligibility for enrollment in the judgment 

roll could appeal the decision pursuant to the administrative appeal process set forth in 

25 C.F.R. § 62. See 25 C.F.R. § 62.4 (2007) (“A person who is the subject of an adverse 

enrollment action may file or have filed on his/her behalf an appeal.”). 

On April 5, 2007, the BIA began to send applications to individuals to enroll in the 

judgment roll. By October 5, 2007, ninety days after the BIA began to send out 

applications, the BIA had received 5,265 applications. Approximately two years later, 

according to the BIA’s September 30, 2009 progress report, BIA had received 2,819 more 

applications, for a total of 8,084 applications received as of September 2009. The 

progress report also stated that as of September 2009, 341 applications were reviewed 

and determined to be ineligible. The BIA also stated in that same update that “[t]he final 

deadline [for receiving applications] will be published in the Federal Register.” 

On October 19, 2009, the BIA was in the process of establishing the Educational 

Committee pursuant to section 4(a) of the Claims Distribution Act of 2004. The 

Educational Committee was the group of Western Shoshone tribal leaders who would 

select the winning individuals of educational grants to be paid from the interest earned on 

the 326-A-1 and 326-A-3 Funds. According to the BIA’s October 19, 2009 update, “[f]ive 

of the six groups have identified their representative and are providing the documentation 

to confirm the appointments.” The update also stated that, “[o]nce the Educational 

Committee is established, it will begin to develop the rules and procedures for approval 

by the Secretary.” 

On May 20, 2010, the BIA published the deadline for receiving applications for 

eligibility in the Federal Register. The notice stated that “[a]pplications must be received 

by close of business (5 p.m. Mountain Time) August 2, 2010.” Deadline for Submission 

of Applications To Be Included on the Roll of Western Shoshone Identifiable Group of 

Indians for Judgment Fund Distribution, 75 Fed. Reg. 28,280 (May 20, 2010). The BIA 

also had sent by mail notice to potential applicants of the deadline for receiving 

applications. Some individuals, however, did not receive notice by mail, and, therefore 

the BIA extended the deadline for submitting applications for these individuals to 

December 31, 2010.

According to a November 30, 2010 BIA progress report, introduced by both parties 

as a joint exhibit at trial in the above-captioned case, the BIA had received 9,108 

applications. Of these applications, 4,023 were determined eligible, 2,201 were 

determined ineligible, and 2,576 were pending review. The BIA also stated that 308 

appeals had been filed and that it had “begun the quality control review process for the 

proposed partial payment targeted for February 2011.” On March 6, 2011, the first partial 

distributions of the 326-K Fund were made to 3,187 individuals. The partial payment to 

each individual was $22,013.00. On September 28, 2012, the BIA completed the final 

judgment roll for the 326-K Fund, which contained a total of 5,415 individuals. Final 

distributions from the 326-K Fund were made to eligible recipients via direct deposit to 
50

individuals’ bank accounts on September 29, 2012, and via check on October 2, 2012. 

The individuals who received an initial partial payment, received a second payment of 

$13,124.93, for a total of $35,137.93. The individuals who did not receive an initial partial 

payment received a one-time, final payment of $35,137.93.

History after the Case was filed in the United States Court of Federal Claims

On December 26, 2006, plaintiff Yomba Shoshone Tribe, one of the Western 

Shoshone tribes recognized by the Department of the Interior as a member of the Western 

Shoshone Identifiable Group, filed a complaint in the United States Court of Federal 

Claims against the United States, resulting in the above-captioned case. The complaint 

alleged that the government’s “mismanagement of Plaintiff’s trust funds and other trust 

assets in Defendants’ custody and control,” caused plaintiff Yomba Shoshone Tribe

“damages not sounding in tort.” Since the filing of the complaint, more plaintiffs have

joined the case and plaintiffs have narrowed the time frame at issue in this case, seeking 

damages from December 1979, when the 326-K Fund was deposited into the United 

States Treasury, until September 2013, the last month for which there is available data of 

the government’s investment of the three tribal trust funds at issue. On that same day,

the case was assigned to Judge Edward Damich. On February 22, 2007, Judge Damich 

ordered a stay of the proceedings in light of ongoing settlement discussions between the 

parties. On March 12, 2008, the complaint was amended adding individual plaintiffs 

Maurice Frank-Churchill, Jerry Millet, and Virginia Sanchez, on behalf of the Western 

Shoshone Identifiable Group. 

On March 28, 2008, defendant filed a motion to dismiss plaintiffs’ amended 

complaint, arguing that plaintiff Yomba Shoshone Tribe cannot state a claim for relief that 

would entitle it to money damages for “inadequate interest earnings to the tribe,” because 

“[t]he Tribe has no right to any part of the distribution or interest that was earned during 

the time the funds reside[d] in Government accounts.” (emphasis in original). Defendant 

argued that according to the Claims Distribution Act of 2004, “Congress expressly 

contemplated and directed that the entire fund [the 326-K Fund] be distributed per capita” 

on an individualized basis and not to any tribe. (emphasis in original). Defendant also 

argued that the Claims Distribution Act of 2004 similarly required that any interest earned 

on the 326-A-1 and 326-A-3 Funds be distributed not to any tribe but to “individual 

Shoshone members” for “the specific purpose of education-related assistance.”

Defendant argued that, in the alternative, all of the other Western Shoshone tribes were 

necessary parties under Rule 19(a) of the Rules for United States Court of Federal Claims 

(RCFC) (2008) and indispensable parties under RCFC 19(b), requiring dismissal, 

pursuant to RCFC 12(b)(7) (2008) and RCFC 19, for failure to join all of the other Western 

Shoshone tribes as necessary parties. 

On June 25, 2008, the complaint was amended for a second time, before Judge 

Damich ruled on defendant’s March 28, 2008 motion to dismiss, adding tribal plaintiffs 

Timbisha Shoshone Tribe and the Duckwater Shoshone Tribe, two additional Western 

Shoshone Tribes recognized by the Department of the Interior as members of the 

Western Shoshone Identifiable Group, bringing the total number of plaintiffs to six. The 
51

six plaintiffs, according to the June 25, 2008 amended complaint, were (1) tribal plaintiff 

Yomba Shoshone Tribe, (2) tribal plaintiff Timbisha Shoshone Tribe, (3) tribal plaintiff 

Duckwater Shoshone Tribe, (4) individual plaintiff Maurice Frank-Churchill, (5) individual 

plaintiff Jerry Millet, and (6) individual plaintiff Virginia Sanchez, the current six plaintiffs 

at issue in the above-captioned case. 

On October 31, 2008, Judge Damich issued an unpublished Opinion denying 

defendant’s motion to dismiss, the first of two Opinions he issued in this case. Judge 

Damich rejected defendant’s March 28, 2008 argument that tribal plaintiff Yomba

Shoshone Tribe 21 had no right to the distribution of the three tribal funds at issue because 

the funds were to be distributed on an individualized basis, not a tribal basis. Judge 

Damich found that “all three Tribal Plaintiffs—Yomba, Timbisha, and Duckwater 

(collectively ‘the Tribes’)—are federally-recognized tribes with interests in the tribal trust 

funds of the Western Shoshone Identifiable Group to which the Tribal Plaintiffs belong.” 

W. Shoshone Identifiable Grp. v. United States, 2008 WL 9697144, at *1. Judge Damich 

explained that:

As owners of tribal trust funds, the Tribes have the right to pursue their 

breach of trust claims against the Government for mismanagement of the 

tribal trust funds. The pro rata distribution mechanism in the Distribution Act 

is irrelevant because the Distribution Act does not divest the Tribes of any 

ownership interest in the trust funds and because the Tribes are not, in this 

case, challenging the distribution mechanism set forth in the Distribution 

Act.

Id. Judge Damich then stated that defendant “failed to show that the other Western 

Shoshone tribes are necessary parties, because, under 28 U.S.C. § 1505 (2006), any 

tribe may represent the Western Shoshone without joinder,” and that defendant

failed to show that either complete relief could not be granted to the Western 

Shoshone in the absence of all the Western Shoshone tribes or that any of 

the parties to the litigation are subject to a substantial risk of incurring 

double, multiple, or otherwise inconsistent obligations by reason of the 

Tribes’ interest.

Id.

On August 7, 2009, defendant filed its motion for reconsideration of Judge 

Damich’s Opinion denying its motion to dismiss. Defendant repeated its allegation that 

21 At the time that defendant filed its motion to dismiss, tribal plaintiff Yomba Shoshone 

Tribe was the only tribal plaintiff involved in this case. As previously discussed, following 

the filing of defendant’s motion to dismiss and before Judge Damich issued his Opinion 

on defendant’s motion to dismiss, the plaintiffs amended their complaint for a second 

time, adding two additional tribal plaintiffs, the Timbisha Shoshone Tribe and the 

Duckwater Shoshone Tribe. 
52

the tribal plaintiffs were not the beneficial owners of the 326-K, 326-A-1 and 326-A-3 

Funds and that the beneficial owners were “individuals” who qualified to receive a prorata share of the 326-K Fund and an educational grant of the 326-A-1 and 326-A-3 Funds 

under the Claims Distribution Act of 2004. Defendant also argued that the tribal plaintiffs 

failed to establish the requisite money-mandating duty owed to them in order to sustain 

their breach of trust claims.

On November 24, 2009, Judge Damich denied defendant’s motion for 

reconsideration in an unpublished Opinion. See W. Shoshone Identifiable Grp. v. United 

States, 2009 WL 9389765, at *11. The court stated once again that the tribal plaintiffs are 

the beneficial owners of the 326-K, 326-A-1 and 326-A-3 Funds. See id. at *6. The court 

also explained that “insofar as the Tribal Plaintiffs are members of, and assert that they 

are representatives of, the Western Shoshone Identifiable Group and are advancing its 

claims under the Indian Tucker Act,” there was “no basis” for “Defendant’s argument that 

the Tribal Plaintiffs do not have a money-mandating basis for jurisdiction in this Court or 

otherwise lack standing to bring this action on behalf of the Western Shoshone Identifiable 

Group.” Id. at *10.

Judge Damich extended discovery in the case until May 11, 2012. Then, on June 

7, 2012, the case was stayed, including expert discovery, pending the parties’ then 

current settlement negotiations. Judge Damich subsequently lifted the stay on April 21, 

2014, and the parties continued with expert discovery. On August 26, 2015, this case was 

re-assigned to the undersigned, who set the case on a course to trial. 

For the liability trial, the parties submitted several pre-trial filings, including a joint 

exhibit list of 433 joint exhibits, and various demonstrative exhibits. The court held a fiveday trial in Washington, D.C. Plaintiffs did not offer any fact witnesses at trial, but offered 

two experts: Mr. Kevin Nunes, of Rocky Hill Advisors, as an expert on liability and 

damages, and, Dr. Michael Goldstein, as a rebuttal expert to defendant’s liability expert 

and defendant’s damages expert. For the liability trial plaintiffs also submitted as joint 

exhibits an expert report addressing both liability and damages, co-authored by Mr. 

Nunes and Peter Ferriero of Rocky Hill Advisors, and a rebuttal expert report, also coauthored by Mr. Nunes and Mr. Ferriero. Plaintiffs’ expert report stated that the 

“government breached its duty to invest prudently to maximize return” on the 326-K and 

326-A Funds “through its failure to properly align the maturity capacity of WSIG’s 

[Western Shoshone Identifiable Group’s] funds with the maturity structures of WSIG’s 

investment portfolios.” 

According to the damages portion of plaintiffs’ expert report by Rocky Hill Advisors, 

plaintiffs suffered $216,386,589.83 in damages due to the government’s mismanagement 

of the 326-K Fund and $1,592,822.43 in damages due to the government’s 

mismanagement of the 326-A Funds. The damages portion of plaintiffs’ expert report 

stated that it employed the Barclays United States Treasury Index, a “passive benchmark” 

index, “to compute the returns that reasonably should have been obtained through 

prudent investment of WSIG’s trust funds.” The damages portion of plaintiffs’ expert report 

based its damages model on its opinion that the 326-K Fund had an investment horizon 
53

of about fifteen years from 1980 to 2004, that it shortened to about seven and a half years 

after the passage of Claims Distribution Act of 2004, and that it became very short-term 

at the start of 2011, once the enrollment process for the judgment award was nearly 

complete.

For the liability trial, plaintiffs also submitted the rebuttal expert report of Dr. 

Goldstein, which responded to the expert reports of the government’s liability expert, Dr. 

Starks, and the government’s damages report, prepared by defendant’s expert, Dr. 

Gordon J. Alexander. Dr. Goldstein’s report disagreed with defendant’s liability expert 

report by Dr. Starks, which concluded that the government did not breach a fiduciary duty.

According to Dr. Goldstein’s report, the BIA “knew” that distribution process for plaintiffs’ 

three tribal trust funds at issue “would take a long time,” and, thus, a “prudent portfolio” 

for plaintiffs’ three tribal trust funds “would have held more long-term investments.” Dr. 

Goldstein’s report also disagreed with the government’s damages expert report submitted 

by Dr. Alexander, which argued that plaintiffs’ damages request is “driven by 

unprecedented and unexpected drops in interest rates,” and is “flawed and misleading” 

because plaintiffs’ damages included the unexpected “capital gains,” the gains earned on 

a bond from the unexpected decrease in interest rates. According to Dr. Goldstein, the 

decrease in interest rates during the investment period at issue in the above-captioned 

case, 1979-2013, “were not unexpected in the early 1980s,” based on “yield curve data” 

and “contemporaneous discussions by the Federal Reserve.” In addition, Dr. Goldstein 

argued that “it is important to recognize that there is no economic principle that asserts 

one must strip out the impact of unexpected interest rate movements when calculating 

damages.” 

At the liability trial, defendant offered two fact witnesses: Mr. Robert Winter, the 

then-current Director of Trust Operations within the Office of Special Trustee for American 

Indians, Department of the Interior, and Mr. Robert Craff, the Regional Fiduciary Trust 

Administrator for the Eastern Oklahoma and Southern Plains Region at the Department 

of the Interior, Office of the Special Trustee. Defendant also offered two experts at the 

liability trial: Dr. Starks, as an expert on liability, and Mr. Justin Mclean,22 as an expert on 

damages. 

Defendant submitted as two separate exhibits at the liability trial the expert report 

and a supplemental expert report prepared by Dr. Starks regarding the government’s 

alleged liability, but only in regard to the 326-K Fund. Dr. Starks’ expert report argued that 

the “government acted prudently” when it invested the 326-K Fund during the entire 

investment period at issue. Dr. Starks stated in her liability expert report:

22 At the liability trial, Dr. Alexander was originally scheduled to testify regarding the 

government’s alleged damages. He was the author of the government’s expert reports 

regarding damages. Dr. Alexander, however, became unavailable to testify at the liability 

trial due to illness and, thus, Mr. Mclean became a substitute testifying expert. Mr. Mclean 

had assisted Dr. Alexander in preparing the expert and supplemental reports, and as 

stated at the liability trial, Mr. Mclean fully endorsed the opinions expressed in Dr. 

Alexander’s expert and supplemental reports. 
54

While it is my opinion that the Government would not have acted 

imprudently had it maintained the WSIG funds in shorter-term investments 

(due to the continued uncertainty, and unclear timeline of eventual 

disbursements), I also believe that moving the funds into securities with a 

somewhat longer WADTM [weighted average days to maturity] at this stage 

of the period [beginning around 1993] was within the range of prudence. 

Indeed, such a move could be seen as more desirable at this time (i.e., 

relative to the beginning of the period) – both from an information 

perspective and also based on the available investment.

(emphasis in original). For the “balance of the period at issue,” i.e., mid 1990s to 2013, 

Dr. Starks stated in her liability expert report:

[I]t may have been optimal for the Government to target a slightly longer 

WADTM if it had reason to believe that a significant portion of the 

distributions would not be occurring at the front end of the anticipated 

distribution window. I have not seen evidence indicating that the 

Government had this understanding or the ability to forecast it based on the 

information at hand.

(emphasis in original) (footnote omitted). Dr. Starks concluded that “the investments 

made by the Government for the WSIG portfolio were prudent given the totality of 

information available to the Government a priori, and that the Government fulfilled its 

fiduciary duty by making independent investment decisions to maximize return given 

prudent investments.” (emphasis in original). Dr. Starks also indicated in her report that 

“only hindsight suggests a portion of the WSIG’s trust funds could have safely been 

invested longer-term.” 

Defendant also submitted as two separate joint exhibits at the liability trial the 

expert report and supplemental expert report by Dr. Alexander, regarding the 

government’s alleged damages in the above-captioned case. Dr. Alexander’s report 

stated that the plaintiffs’ damages calculations for the 326-K Fund of approximately $216 

million “is due to historical circumstances present during the damages period that were, 

in part, unique and unknowable ex ante.” (emphasis in original). According to Dr. 

Alexander’s expert report: 

[T]he major driver of the damages [in the damages portion of plaintiffs’ 

expert report by Rocky Hill Advisors] is the unprecedented decline in 

interest rates over a period of three decades. That decline caused longerterm bonds to increase in value and earn returns in excess of their yields. 

Rocky Hill’s Investment Model [created by Mr. Nunes and Mr. Ferriero] 

would not necessarily have produced better earnings if interest rates had 

moved differently or circumstances had differed for the WSJF.
55

Dr. Alexander also proposed twelve alternative damages models that are “based on the 

assumption that the BIA should have used a ‘but-for’ portfolio different from what it 

actually chose, but more reasonable than that suggested by RHA [Rocky Hill Advisors].” 

The highest amount of damages proposed by Dr. Alexander’s alternative models was 

$34,589,957.00. The lowest amount was zero dollars.

At the liability trial, the parties’ liability experts each presented their analyses of the 

investment horizon for the 326-K Fund during the thirty-three-year period at issue. 

Plaintiffs’ liability expert, Mr. Nunes, presented an analysis of the investment horizon for 

the 326-K Fund divided into roughly ten-year increments, and during direct-examination, 

Mr. Nunes first discussed the evidence regarding the government’s investment of the 326-

K Fund from “‘79, when the funds were awarded,” and “all through this time period,” 

referring to the 1980s. Mr. Nunes then discussed the government’s investment of the 326-

K Fund during the “1990s.” Mr. Nunes then testified about the “2000s” up until distribution 

legislation was passed in July 2004. Following the enactment of distribution legislation in 

July 2004, Mr. Nunes discussed the government’s investment of the 326-K Fund from 

mid-2004 “up until 2011,” when the first distribution of the 326-K Fund occurred. Mr. 

Nunes then discussed the final years of the thirty-three-year period at issue, which, 

according to Mr. Nunes, began in 2011, with the first partial distribution made to qualifying 

Western Shoshone members, and ended in September 2013.

Similar to Mr. Nunes, at the liability trial, Dr. Starks, defendant’s liability expert,

presented an analysis of the investment horizon for the 326-K Fund by dividing the thirtythree-year period into sub-periods which did not specifically identify a start or end date. 

Dr. Starks first discussed the government’s investment of the 326-K Fund during the 

“1980s,” and up through “1991,” when Congresswoman Vucanovich attempted for the 

second time to pass distribution legislation for the 326-K Fund. Dr. Starks then discussed 

the government’s investment of the 326-K Fund during the “mid-1990s,” which 

defendant’s counsel tried to clarify during Dr. Starks’ direct examination as “about ’92 and 

on for the next few years.” Dr. Starks then discussed the government’s investment of the 

326-K Fund between 2000 and 2004. The next time period discussed by Dr. Starks at 

trial was between 2004 and a “point in 2010,” although the exact date was not identified, 

when the government, according to Dr. Starks, began to shorten the 326-K Fund for 

distribution. The final time period discussed by Dr. Starks at trial was from “2011,” when 

the distribution of the 326-K Fund began, until September 2013, the end of the investment 

period at issue.

The Court’s June 13, 2019 Liability Opinion

Regarding the liability Opinion issued by the court, the following statement was 

included:

The issue in the above-captioned case is whether the government prudently 

invested plaintiffs’ three tribal trust funds. Neither the statute, the applicable 

regulations, nor the Department of the Interior’s policies introduced at trial, 

however, attempt to offer a definition or examples of a “prudent” investment, 
56

recognizing, of course, that the particular factual circumstances and market 

conditions at the time of the investment decision change what can be 

considered a prudent investment at any given time. For example, 25 C.F.R. 

§ 115.809, promulgated in 2001 following the creation of the Office of the 

Special Trustee, the office within the Department of the Interior which took 

over the responsibility of investing tribal trust funds from the BIA in 1996, 

consistent with the statute, states that the government must prudently invest 

tribal trust funds, but does not give further guidance. See 25 C.F.R. § 

115.809 (“Tribes may recommend certain investments to OTFM, but the 

recommendations must be in accordance with the statutory requirements 

set forth in 25 U.S.C. §§ 161a and 162a. The OTFM will make the final 

investment decision based on prudent investment practices.”). 

In addition, as the trial record indicates, the Department of the Interior 

issued various policies regarding the investment of tribal trust funds over 

the investment period in question, but the policies did not give much 

direction on which investment practices and investments might be 

considered prudent or imprudent. Beginning with the first investment policy 

issued by the BIA in 1966, the BIA noted that “[e]ach Area Office is 

requested to review the amount of tribal trust funds each tribe in the 

respective Areas has on deposit in the Treasury,” and that “[w]herever it 

appears that the amount is in excess of foreseeable cash needs of the tribe, 

discussions should be held with the tribal council and its wishes regarding 

investment of the funds ascertained.” The 1966 policy statement also noted 

that “[g]overnment-backed securities, while basically safe, can result in 

losses unless held to maturity.” The 1966 policy, however, did not discuss 

which types of investments were considered prudent for tribal trust funds. 

The next policy issued by the BIA was in a 1974 internal BIA 

memorandum, which indicated that the BIA should “maximize returns on all 

tribal, as well as individual, trust funds.” The 1974 policy memorandum also 

noted that “[e]ach Area Director has the responsibility for determining if 

surplus funds are available for investment purposes and notifying the 

Branch of Investments, Albuquerque, to take the necessary action to invest 

the funds.” The 1974 policy memorandum, however, did not explain under 

what circumstances the government’s investment of a tribal trust fund might 

satisfy the government’s goal to maximize returns or what constituted 

prudent investment of tribal trust funds. 

The government also issued a further policy statement within its 

report of its investments for tribal trust funds for fiscal years 1986 and 1987.

The report recognized that the government has the authority to invest tribal 

trust funds pursuant to 25 U.S.C. § 162a and that the BIA should, “through 

knowing the amounts required and when disbursements are necessary,” 

“plan the timing of investment maturities to maximize interest rates and 

earnings and also have the funds available when needed.” The report for 
57

1986 and 1987, however, like past BIA investment policies, did not provide 

more specific guidance as to when the government’s investment of tribal 

trust funds might satisfy the duty of prudence. 

Next, the trial record includes a 1997 internal policy memorandum released 

by the Office of the Special Trustee, the office which took over the BIA’s 

investment of tribal trust funds in the 1996. The 1997 policy was updated 

with policy amendments by the Office of the Special Trustee in 1999, 2000, 

and 2005, and took its final form for the purposes of this case in 2005. The 

2005 policy was the policy in place up through the disbursement of the tribal 

trust funds at issue. According to the 2005 policy, an acceptable investment 

practice was to “purchase securities with the intent to hold each security 

until maturity,” i.e., a buy and hold strategy, as opposed to frequent trading 

of securities. The 2005 policy also indicated that unacceptable portfolio 

investments and practices included investing in any “corporate stock,” the 

purchase of “commercial mutual funds,” and “overtrading, adjusted trades 

or bond swapping.” In sum, the Department of the Interior’s investment 

policies issued throughout the years acknowledged the Department’s role 

as the trustee and investor of tribal trust funds and attempted to provide 

broad guidance to government officials as to what investment practices 

were prohibited by agency policy, what investment practices were 

encouraged, and offered general investment goals, including to maximize 

investment returns. Given the fluctuating market conditions and changing 

events regarding the timing of distribution for plaintiffs’ tribal trust funds, 

including the required actions the BIA would need to take in order pay-out 

the 326-K Fund, however, specific, formulaic guidance as to what practices 

constituted a “prudent” investment practice would have been very difficult 

to establish by the Department of the Interior or any other governmental 

body.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 622-23.

Following the liability trial in the above captioned case and after a careful review 

of the record, including the testimony, expert reports, and exhibits before the court, the 

court divided its analysis of whether the government breached its fiduciary duty for the 

326-K Fund over the approximately thirty-three-year investment period at issue into three 

major sub-periods, December 1979 to November 1992, December 1992 to June 2004, 

and July 2004 to September 2013. At times, the court further divided the three periods 

into even smaller sub-periods in order to account for identifiable shifts in the government’s 

investment approach for the 326-K Fund.23

23 As explained in the June 13, 2019 liability Opinion: “Daily, weekly, monthly, or even 

yearly analysis of the investment horizon for government’s investment of the 326-K Fund 

was not undertaken by any of the experts and would have proven an expensive and 
58

Initially, the court determined after the liability trial that the evidence before the 

court indicates that defendant could have, and should have, become aware that the 326-

K Fund had a longer-term investment horizon between August 4, 1980 and November 

1992, and, thus, should have at least partially invested the 326-K Fund in longer-term 

securities. Defendant, however, consistently invested the 326-K Fund in short-term 

securities between August 4, 1980 and November 1992, which prevented the fund from 

obtaining higher returns and, therefore, breached the agency’s fiduciary duty to prudently 

invest the 326-K Fund during that time.

The court explained:

Beginning in December 1992, the government significantly increased the 

average weighted maturity years to call of the 326-K Fund, reaching a peak 

of a little less than ten years by September 1993. Following the September 

1993 peak, the maturity structure of the 326-K Fund steadily declined to 

about an average weighted maturity years to call of a little less than five 

years by March 1997. Also, by March 1997, the 326-K Fund was no longer 

invested in any CDs, and instead invested in a mixture of agency, Treasury, 

and mortgage-backed securities. At trial, plaintiffs acknowledged that the 

government invested the 326-K Fund in longer-term securities between 

December 1992 and March 1997 than it had previously done during the 

1980s and early 1990s. Plaintiffs’ liability expert, Mr. Nunes, however, 

testified at trial that government should have invested the 326-K Fund in 

even longer-term investments than those selected by the government, with 

an average weighted maturity of approximately fifteen years, due to the 

uncertainty surrounding when distribution plan legislation would be enacted 

by Congress and the time intensive process of compiling descendancy rolls 

and distributing the monies to qualifying Western Shoshone members. 

Defendant’s liability expert, Dr. Starks, however, testified at trial that the 

government’s investment of the 326-K Fund during this time, the “mid1990s,” was within a range of prudence. 

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 639. Additionally, the court determined:

Although the government could have possibly invested the 326-K Fund in 

more longer-term securities following the approximate ten-year peak of the 

average weighted maturity years to call in September 1993, the 

government’s decision to decrease the 326-K Fund to an approximate 

average weighted maturity years to call of a little less than five years by 

March 1997, is arguably within the range of prudence. As discussed above, 

both parties’ experts agreed that there is a range of investments that an 

unwieldly task due to the lengthy investment period at issue in this case.” W. Shoshone 

Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. at 628.
59

investor may select and still maintain a prudent portfolio. The record does 

not indicate that getting distribution legislation for the 326-K Fund passed 

through Congress or that getting the money distributed to plaintiffs would 

necessarily take longer than five to ten years, despite plaintiffs’ argument to 

the contrary. In addition, the government’s investment of the 326-K Fund

between December 1992 and March 1997 stands in stark contrast to the 

government’s far less prudent investment of the 326-K Fund during the 

1980s and early 1990s. As previously discussed, during the 1980s and early 

1990s, the government employed a stagnant investment approach of 

investing the 326-K Fund in ultra-short-term CDs with an average weighted 

maturity years to call of approximately two years or less. Between 

December 1992 and March 1997, however, the government diversified the 

types of securities in which the 326-K Fund was invested, and also invested 

the fund in significantly longer-term securities, with an average weighted 

maturity years to call ranging from approximately five to ten years. As 

previously noted, “reasonably sound diversification” of a portfolio is part of 

a trustee’s duty to prudently invest. See Restatement (Third) of Trusts § 90 

cmt. e(1). 

Also, the government’s investment of the 326-K Fund between December 

1992 and March 1997 was in line with Mr. Kellerup’s[

24] October 1992 

guidance provided in the Office of Trust Funds Management quarterly 

journal “TRUST,” which announced to the public that the government should 

invest tribal trust funds in government bonds ranging from three to seven 

years. (capitalization in original). Furthermore, when pushed at trial on 

cross-examination, plaintiffs’ liability expert, Mr. Nunes, conceded that the 

government’s lengthening of the maturity structure of the 326-K Fund in late 

1992 and early 1993 was “reasonable.” When specifically asked whether 

the “portfolio they [defendant] had built at this period in time was a 

reasonable portfolio,” Mr. Nunes testified at trial that “‘reasonable’ is 

accurate.” Thus, the government’s decision to maintain the 326-K Fund in 

an intermediate-term portfolio between December 1992 and March 1997, 

with an average weighted maturity years to call ranging between 

approximately five to ten years does not appear to violate the range of 

prudence so as to be too short-term. 

As stated previously, the court recognizes that there is no scientific or 

formulaic way to decide a correct range of prudence. The record before the 

court, with its many gaps, and the expert reports and testimony of the 

experts in roughly ten-year blocks, as well as the trial testimony of 

defendant’s fact witnesses, leaves many unanswered questions. The 

burden of proof, however, rests on plaintiffs to prove their claim that 

defendant imprudently invested the 326-K Fund between December 1992 

24 As indicated above, Fred Kellerup was the Branch of Investments Chief at the 

Department of the Interior.
60

and March 1997 in too short-term securities, which the plaintiffs have not 

done for this time period, and, in fact, plaintiff’s liability expert, Mr. Nunes, 

conceded at trial that the government’s investment of the 326-K Fund during 

part of this time period was “reasonable.”

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 640-41 (capitalization in original; brackets in original). The court next found the 

government did breach its fiduciary duty to prudently invest the 326-K Fund during the 

next three timeframes the court considered, spanning April 1997 to September 2006. For 

the remaining two timeframes spanning October 2006 to September 2013, the court found

a breach of the fiduciary duty to prudently invest the 326-K Fund occurred.

Regarding the 326-A Funds, the court found a breach by the government of the 

fiduciary duty to prudently invest between March 1992 and January 2012, spanning three 

timeframes. The court, however, found the government did not breach its fiduciary duty 

between February 2012 to September 2013. 

Therefore, as noted above, on June 13, 2019, after careful review the lengthy 

record in this case, including the documents and expert reports in evidence, the liability 

trial testimony, and the post-trial filings, the court concluded that there were “various times

during the investment periods at issue for both the 326-K Fund and for the 326-A Funds 

when the government's investment of all three tribal trust funds fell below the required 

standard of prudence.” W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v.

United States, 143 Fed. Cl. at 658. To summarize, in the liability Opinion the court found:

For the 326-K Fund:

1. Between December 19, 1979 and August 3, 1980, the government did not 

breach its fiduciary duty. During this time, the BIA was actively working 

towards getting a distribution plan passed within the statutory 180-day 

period required under the Use and Distribution Act of 1973, and, therefore, 

reasonably maintained the 326-K Fund in short-term securities in the event 

that a distribution plan could be negotiated with the Western Shoshone 

tribes and timely considered by and accepted by Congress. 

2. Between August 4, 1980 and November 1992, the government breached 

its fiduciary duty when Congress did not act on the BIA’s request for an 

extension to submit a distribution plan for the 326-K Fund and no distribution 

legislation was forthcoming. During this twelve-year period, the government 

invested the 326-K Fund primarily in short-term CDs with an average 

weighted maturity years to call of approximately two years or less, even 

though the government knew or should have known during that time that 

there was a low probability that distribution legislation could be passed in 

the near-term. The short-term nature of the 326-K Fund portfolio, therefore, 

was not prudently aligned with the fund’s longer-term investment horizon. 
61

3. Between December 1992 and March 1997, the government did not breach 

its fiduciary duty. During this time, when the enactment of distribution 

legislation for the 326-K Fund still remained unlikely to occur in the nearterm, the government began to shift the 326-K Fund into different types of 

securities, including agency and Treasury bonds, and to decrease its 

reliance on short-term CDs. The government also lengthened the maturity 

structure of the 326-K Fund into longer-term securities, with an average 

weighted maturity years to call ranging from approximately five to ten years. 

Therefore, the government’s lengthening of the maturity structure of the 

326-K Fund portfolio during this time was within the range of prudence, 

given the longer-term investment horizon of the fund. 

4. Between April 1997 and December 1997, the government, however, 

breached its fiduciary duty when the government shortened the maturity of 

326-K Fund into securities with an average weighted maturity years to call 

ranging from three years to approximately three years and eight months. 

During this time, although there was emerging consensus for a distribution 

plan among the Te-moak Tribal Council, which represented one of the four 

beneficiary tribes of the 326-K Fund, the BIA was awaiting approval of a 

distribution plan from the remaining three Western Shoshone beneficiary 

tribes, and, thus, the enactment of distribution legislation for the 326-K Fund 

likely was not imminent. Further, even with distribution legislation enacted, 

the BIA would still need additional time to organize for and pay-out the 326-

K Fund to qualifying Western Shoshone members. Therefore, the 

government’s decrease of the maturity structure of the 326-K Fund during 

this time did not prudently corresponded with the investment horizon of the 

326-K Fund, which was not likely to be distributed in the nearer-term. 

5. Between January 1998 and April 2002, the government continued to breach 

its fiduciary duty by placing the 326-K Fund in even shorter-term securities 

with an average weighted maturity years to call ranging from approximately 

one to two and a half years. The government then continued to breach its 

fiduciary duty between May 2002 and June 2004, when the average 

weighted maturity years to call of the 326-K Fund dropped still further to 

approximately ten months or less. Although the likelihood for distribution 

legislation to be passed was increasing during the late-1990s and early 

2000s, even after distribution legislation was enacted, the government 

would still have to distribute the 326-K Fund monies to qualifying Western 

Shoshone members, which probably would not get accomplished within two 

and a half years and was even less likely to be completed within ten months 

or less. Therefore, from January 1998 to June 2004, the government 

imprudently invested the 326-K Fund by continually and steadily decreasing 

the maturity structure of the 326-K Fund, resulting in an ultra-short-term 

portfolio, which did not align with the fund’s investment horizon. 
62

6. Between July 2004 to September 2006,[

25] the government breached its 

fiduciary duty by continuing to maintain the 326-K Fund in short-term 

portfolio with an average weighted maturity years to call ranging from 

approximately six months to one year. Although Congress passed the 

Claims Distribution Act of 2004 on July 7, 2004, the government still had to 

develop its plan to distribute payment of the 326-K Fund to Western 

Shoshone members, which would have likely taken longer than six months 

to one year to accomplish at that time. 

7. Between October 2006 and December 2010, the government did not breach 

its fiduciary duty. During this time, the average weighted maturity years to 

call of the 326-K Fund ranged from approximately one year and seven 

months to a little less than three years.[

26] The record indicates that 

distribution legislation for the 326-K Fund had been enacted in July 2004 

and that government officials reasonably believed that a pay-out of the 326-

K Fund would occur within a couple of years and invested the 326-K Fund 

in accordance with such information. Therefore, the government’s decision 

to place the 326-K Fund in shorter-term securities during this time prudently 

corresponded with the shortening investment horizon of the fund.

25 In a footnote, the court noted: 

[T]here was a brief five-month period between January 2005 and May 2005 

that the average weighted maturity years to call hovered around 

approximately one year and eight months before dropping back down to an 

average weighted maturity years to call of approximately one year in June 

2005, where it remained until September 2006, the end of this sub-period. 

This slight increase in the maturity structure of the 326-K Fund between 

January 2005 and May 2005, however, was still too short-term and too 

short-lived to be considered prudent.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658 n.52.

26 In a footnote, the court noted: 

[T]he government’s investment of the 326-K Fund in a portfolio with an 

average weighted maturity years to call of approximately one year and 

seven months lasted during a brief two-month period in 2007, which was 

immediately followed by the government’s decision to increase the average 

weighted maturity years to call of the 326-K Fund to two years or more for 

the next, approximately, two and half years.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658 n.53. 
63

8. Between January 2011 to September 2013, the government did not breach 

its fiduciary duty, nor did plaintiffs appear to argue that the government’s 

investment of the 326-K Fund was imprudent. During this time, the 

government began the distribution of the 326-K Fund monies to qualifying 

Western Shoshone members and, therefore, transitioned the entire fund 

into ultra-short-term overnight securities in order to liquidate the fund for 

distribution. Thus, the government’s placement of the 326-K Fund in ultraliquid securities during this time was prudent.

For the 326-A Funds:

1. Between March 1992 and August 1995, the government breached its 

fiduciary duty to prudently invest the 326-A-1 Fund, and also between 

September 1995 and November 1998 to prudently invest both the 326-A-1 

and 326-A-3 Funds, by placing both of these funds in short-term securities 

with an average weighted maturity years to call of approximately two years 

or less. During this time, it was unlikely that distribution legislation for the 

326-A Funds was going to pass in the near-term, and, therefore, the 

government knew or should have known that the investment horizon for the 

326-A Funds should have been longer than two years. 

2. Between December 1998 and June 2004, the government also breached 

its fiduciary duty by primarily investing the 326-A Funds in short-term 

securities with an average weighted maturity years to call of approximately 

two years or less.[

27] During this time, the government became aware that 

various members of the Western Shoshone tribes were supportive or 

becoming supportive of placing the 326-A Funds into a permanent 

education trust fund, the principal of which was not to be invaded. The 

27 In a footnote, the court explained: 

The government increased the maturity structure of the 326-A Funds for a 

brief period between mid-1999 and mid-2001 to an average weighted 

maturity years to call of approximately five to seven years. This increase, 

however, was still too short-term given the fact that the principal of the A 

Funds were likely not to be invaded, but were to be set-aside as permanent 

education trust funds. Also, this increase in maturity was short-lived. The 

government proceeded to decrease the average weighted maturity years to 

call of the A Funds to approximately eight months by late 2001, and the 

average weighted maturity years to call never exceed three years for the

next, approximately, eight years.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658 n.54.
64

government even acknowledged in its 2003 internal investment report for

the 326-A Funds that these funds likely would be set-aside as permanent 

education trust funds. Therefore, the government should have begun to 

transition the 326-A Funds into longer-term securities because the principal 

of the funds was not intended to be distributed. 

3. Between July 2004 and January 2012, the government breached its 

fiduciary duty by maintaining the 326-A Funds in shorter-term securities 

even though the government had certainty that the principal of the 326-A 

Funds was not to be invaded as of July 7, 2004, when distribution legislation 

for the A Funds was passed. Between July 2004 and February 2009, the 

average weighted maturity years to call for the A Funds was approximately 

two and a half years or less. From April 2009 to January 2012,[

28] the 

average weighted maturity years to call ranged between approximately five 

years to a little over eight years, which was still too short-term, given the 

fact that the principal of the 326-A Funds was not to be invaded. The 

government, therefore, imprudently maintained the 326-A Funds in too 

short-term securities even though the 326-A Funds had a long-term 

investment horizon between July 2004 and January 2012. 

4. Between February 2012 to September 2013, the government did not breach 

its fiduciary duty when it lengthened the maturity structure of the 326-A 

Funds into investments with an average weighted maturity years to call of 

eleven to fourteen years. Plaintiffs’ liability expert, Mr. Nunes, 

acknowledged at trial that the government began to finally shift the 326-A 

Funds into longer-term securities during this time and testified that this shift 

was “good news.” Therefore, in light of the fact that the 326-A Funds’ 

principal was not to be invaded and was to be perpetually held in trust, the 

government’s decision to lengthen the maturity structure of the 326-A Funds 

during this time was prudent and consistent with the long-term nature of the 

funds.

28 In a footnote, the court explained: 

In March 2009, the average weighted maturity years to call of the A Funds 

spiked to ten years, but then, without any apparent reason, rapidly 

decreased back down to approximately eight years in April 2009 and 

hovered between eight to five years for the next approximately three years. 

The government’s random and short-lived one-month increase of the 

maturity of the 326-A Funds in March 2009 is not sufficient to make the 

government’s investment of the 326-A Funds between July 2004 and 

January 2012 prudent.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658 n.55.
65

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658 (emphasis and capitalization in original).

Proceedings after the Liability Opinion was issued

After the court issued the June 13, 2019 liability Opinion, the court held a hearing 

with the parties to discuss how to proceed on the remaining damages issues. At the 

hearing, the court set a schedule for expert discovery and explained that “the parties are 

free to use their existing experts for expert discovery, expert reports and depositions, but 

may use additional experts to help assist the court in reaching a decision on damages.” 

The court continued: “Regardless of the experts selected, the expert reports shall be 

responsive to the decision on liability issued by the court on June 13, 2019.” 

After expert discovery closed, the court set a damages trial schedule. For the

damages trial, the parties submitted several pre-trial filings, including a joint exhibit list, 

and various demonstrative exhibits. The court held a four-day trial on the sole issue of 

damages. Plaintiffs offered one expert witness, Mr. Kevin Nunes, of Rocky Hill Advisors, 

who had testified at the liability trial. For the damages trial, plaintiffs also submitted as 

joint exhibits an expert report addressing damages, authored by Mr. Nunes of Rocky Hill 

Advisors, and a rebuttal expert report, also authored by Mr. Nunes.

Defendant offered two expert witnesses at the damages trial, Dr. Laura Starks, 

who had testified at the liability trial, and Dr. Francis Longstaff, a “professor of finance at 

UCLA, Anderson School of Management.” At the damages trial, Dr. Longstaff was 

qualified “as an expert in financial economics, including the subdisciplines of investments 

and risk management.” For the damages trial, defendant also submitted as joint exhibits 

an expert report addressing damages authored by Dr. Starks and an expert report 

addressing damages, authored by Dr. Longstaff. Defendant also submitted rebuttal expert 

reports by both Dr. Starks and Dr. Longstaff, and Dr. Starks filed a surrebuttal declaration.

Neither party offered any fact witnesses at the damages trial. The expert reports prepared 

for the damages phase of the trial arrived at different calculations of damages than the 

expert reports prepared for in advance of the liability trial, as the experts for both parties 

prepared their damages models consistent with the court’s findings in the June 13, 2019 

liability Opinion.

Plaintiffs have noted that “[t]here was a potential issue about how to calculate the 

growth of accrued damages during the non-breach periods,” but explained: 

The experts agreed that the growth rate for the non-breach periods should 

be based on the Government’s actual investment performance. Initially, 

they used different methods to measure this growth rate but RHA [Rocky 

Hill Advisors] accepted Dr. Starks’ approach, which simply divides the 

ending balance by the starting balance to calculate the growth rate. Thus, 

all of the damages calculations presented at trial use the same growth rate 
66

for the non-breach periods. The divergence between the damages figures 

presented by RHA and Dr. Starks are attributable to the different ways in 

which they calculate damages during the breach periods.[

29]

Consistent with Mr. Nunes’ expert report and his testimony at the damages trial, plaintiffs 

argue that “RHA determined the appropriate maturity structure of the 326-K Fund for the 

initial breach period (August 1980 – November 1992) by using the same maturity structure 

that the Court found to be appropriate during the following non-breach period (December 

1992 – March 1997),” and contend that “[b]ased on the Court’s findings, RHA concluded 

that a maturity structure in this 5-10 year ‘range of prudence’ would also have been 

appropriate for the earlier breach period.” Plaintiffs also argue “[f]or the next two breach 

periods, from April 1997 – June 2004, RHA took a similar approach, keyed to the Court’s 

finding that a maturity structure in the range between 5-10 years was prudent during 1992-

1997. RHA reasoned that this same range remained prudent during the following 

periods.” Plaintiffs also claimed that “[f]or the final breach period, from July 2004 to 

September 2006, a shorter maturity structure was needed because the Distribution Act 

had now been enacted. To establish this new maturity structure, RHA relied on the Court’s 

finding that the Government had invested the 326-K Fund prudently during the following 

period, October 2006 – December 2010, when the average maturity was 2.97 years.” 

Regarding the 326-A Funds, plaintiffs argued 

[t]he first breach period for the 326-A Funds was from March 1992 –

November 1998. To determine the appropriate maturity structure, RHA 

started from the Court’s finding that the 326-A Funds had the same 

investment horizon as the 326-K Fund during this period. . . in a portfolio 

whose maturity ranged between 5-10 years. Thus, RHA reasoned that a 

maturity structure in that same range would also have been prudent for the 

326-A Funds during this period.

Plaintiffs indicated that for the second breach period with respect to the 326-A Funds, 

December 1998 to June 2004, “RHA transitioned the 326-A Funds over the first six 

months of 1999 to a long-term portfolio, reflecting the unlimited investment horizon for 

these funds.” Plaintiffs noted that for the final breach period with respect to the 326-A 

Funds, from July 2004 to January 2012, “RHA continued to use the same long-term 

maturity structure for these funds.”

29 Plaintiffs’ counsel noted at the closing argument:

And so as we sit here today, the differences between the experts’

calculations relate solely to how they determined damages during the 

breach periods, how that, being brought forward during the nonbreach 

periods, has some impact, because there was obviously an increase there, 

but the methodology for the nonbreach periods is exactly the same.
67

Regarding Mr. Nunes’ methodology, plaintiffs argue “[i]nstead of making a 

subjective decision about exactly how the Docket 326 Funds should have been invested 

by the Government, RHA used benchmarks which reflect the market-average rate of 

return for a diversified portfolio with the appropriate maturity structure. This approach is 

neutral and objective.” (emphasis in original). Plaintiffs noted that “[t]o develop these 

market-average benchmarks, RHA used the Barclays U.S. Treasury indexes,” and “RHA 

used transition periods in its investment model when significant changes were made to 

the maturity structure of the Docket 326 Funds.” 

Plaintiffs were critical of Dr. Starks’ expert report and testimony at the damages 

trial.30 Plaintiffs argue that 

the investment horizons that Dr. Starks uses are inappropriate because they 

are based on her new opinions rather than the Court’s findings and because 

her new opinions lack credibility. Further, her contention that constructing a 

damages model also requires selecting an appropriate investment 

methodology (strategy) is incorrect. And the particular methodology she 

selects is not plausible.

In sum, plaintiffs stated:

RHA offered two alternative calculations of damages, depending on 

whether the legal presumption in Confederated Tribes of Warm Springs 

Reservation of Or. v. United States, 248 F.3d 1365, 1371 (Fed. Cir. 2001) 

(Warm Springs) is applied to select the maturity structure of the “but for” 

damages model. RHA calculated damages of $133,125,302 if the Warm 

Springs presumption is used, and $113,830,811 if it is not used.

(emphasis in original; footnote omitted).31 As discussed in greater detail below, the United 

States Court of Appeals for Federal Circuit in Confederated Tribes of Warm Springs 

Reservation of Oregon v. United States, 248 F.3d 1365 (Fed. Cir. 2001) (Warm Springs)

held: “Where several alternative investment strategies would have been equally plausible, 

the court should presume that the funds would have been used in the most profitable of 

these.” Warm Springs, 248 F.3d at 1371.

30 Regarding Dr. Longstaff, plaintiffs argue that “Dr. Longstaff did not offer an opinion on 

the amount of damages in this case. His role was simply to criticize RHA’s damages 

computations.” 

31 Plaintiffs also indicate that “[t]here is no basis in the evidence for awarding WSIG 

[plaintiffs] less than the amount of damages that Dr. Starks opines is due, or more than 

the amount of damages that RHA opines is due.” 
68

By contrast, defendant argues:

In accordance with the Court’s opinion, Dr. Starks selected alternative 

prudent investments that were longer-term in character, and reflect an 

investment time horizon consistent with the investments the Court found 

prudent during the non-breach periods. Dr. Starks also selected a buy-andhold alternative investment strategy consistent with the Interior 

Department’s policies and practices, which require Interior to balance

investment returns against the risk of capital losses and prohibit frequent 

trading. The portfolio she proposes is based on a buy-and-hold ladder of 

bonds with a broad range of maturities. This approach mitigates interest 

rate risk, while also taking advantage of higher-yielding longer-term bonds. 

Dr. Starks’s model also offers Interior flexibility to adapt its portfolio —

replacing maturing bonds with longer or shorter-term bonds as the 

circumstances warrant. 

Defendant explains:

Dr. Starks calculated the additional income that Interior would have earned 

using her proposed alternative investment portfolio for each breach period. 

She then compared the investment income generated during each breach 

period to the actual balance of the Fund at the end of that breach period. 

For non-breach periods, Dr. Starks applied the actual growth rate of the 

Fund during those periods to the but-for portfolio balance resulting from the 

breach periods.

(emphasis in original). In sum, defendant argues “Dr. Starks’s calculations present a fair 

approximation of damages grounded in a prudent and achievable investment strategy 

that Interior could have executed in the real world, in accordance with its policies and 

practices and in light of contemporaneous facts.” 

Defendant is critical of plaintiffs’ damages model, arguing that “[i]n contrast to Dr. 

Starks’s reasonable and realistic calculation of damages, Plaintiffs have presented the 

Court with a damages estimate that contradicts the Court’s Liability Opinion, ignores 

Interior Department policy, relies upon hindsight, and fails to acknowledge the risks 

inherent in the active trading approach that would have been required to achieve the 

investment gains Plaintiffs seek.” Defendant also argues “Mr. Nunes’ model lacks 

credibility because it was designed to inflate damages.” 

Ultimately, defendant contends that, consistent with the court’s findings during the 

liability phase of trial, “the Court should award damages of no more than $73,816,515 for 

the breaches of trust associated with the Interior Department’s management of the Docket 

326-K Fund, and damages of $987,920 for the breaches of trust associated with the 

Interior Department’s management of the Docket 326-A-1 and Docket 326-A-3 Funds.” 

(emphasis in original). 
69

DISCUSSION

As determined in the court’s June 13, 2019 liability Opinion, and as noted above, 

the government breached its fiduciary duty to prudently invest the 326-K Fund for the 

plaintiffs between August 4, 1980 and November 1992, and again between April 1997 

and September 2006. Additionally, the government breached its fiduciary duty to 

prudently invest the 326-A-1 Fund for the plaintiffs between December 1998 and January 

2012. See W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 

143 Fed. Cl. at 658-61. Therefore, with breach established, the court must determine the 

proper measure of damages.

“[O]nce the beneficiary has shown a breach of the trustee’s duty,” the “risk of 

uncertainty as to the amount of the loss” falls on the government. See Warm Springs, 248 

F.3d at 1371; see also Bear v. United States, 147 Fed. Cl. 54, 87 (2020). “‘The 

ascertainment of damages is not an exact science,’ the Federal Circuit has warned, and 

‘where responsibility for damages is clear, it is not essential that the amount thereof be 

ascertainable with absolute exactness or mathematical precision.’” Jicarilla Apache 

Nation v. United States, 112 Fed. Cl. 274, 304-05 (2013) (Jicarilla III) (quoting Bluebonnet 

Sav. Bank, F.S.B. v. United States, 266 F.3d 1348, 1355 (Fed. Cir. 2001)).32 As a Judge 

of this court recognized, the Federal Circuit’s decision in Warm Springs, under certain 

circumstances, allows for “inferences” to be “drawn” as to the amount of damages to be 

32 As noted in the court’s June 13, 2019 liability Opinion, there are three separate, relevant

Jicarilla decisions, all stemming from the same Native American breach of trust case 

regarding allegations of mismanagement of tribal trust funds pursuant to 25 U.S.C. § 

162a, the statute at issue in the above-captioned case. In United States v. Jicarilla Apache 

Nation, 564 U.S. 162 (2011) (Jicarilla I), the United States Supreme Court was tasked 

with determining whether the common-law “fiduciary” exception to the attorney-client 

privilege, which prevents a trustee from withholding from trust beneficiaries attorney-client 

communications relating to the administration of the trust, applies to 25 U.S.C. § 162a. 

See Jicarilla I, 564 U.S. at 170. The Supreme Court held that the common-law fiduciary 

exception to the attorney-client privilege did not apply within the context of 25 U.S.C. § 

162a and reversed and remanded the case back to the United States Court of Federal 

Claims. See Jicarilla I, 564 U.S. at 165-66, 186. In United States v. Jicarilla Apache 

Nation, 100 Fed. Cl. 726 (2011) (Jicarilla II), following the Supreme Court’s remand in 

Jicarilla I, the Court of Federal Claims held that the court had jurisdiction over the tribe’s 

breach of trust claim pursuant to the Indian Tucker Act, and that the Department of Interior 

had a fiduciary duty to “‘maximize the trust income by prudent investment,’” pursuant to 

25 U.S.C. § 162a. See Jicarilla II, 100 Fed. Cl. at 738-39 (quoting Cheyenne-Arapaho, 

206 Ct. Cl. at 348, 512 F.2d at 1394). In Jicarilla III, cited above, the United States Court 

of Federal Claims found that the government had breached its fiduciary duty to invest the 

plaintiff’s funds due to the “BIA’s heavy reliance on short-term investments” for “nearly 

two decades,” which “reduced the yield on Jicarilla’s portfolios by failing to take 

appropriate advantage of the higher yields on longer-term investments.” Jicarilla III, 112 

Fed. Cl. at 290-92.
70

awarded in the beneficiaries’ favor, once liability has been established. Osage Tribe of 

Indians of Okla. v. United States, 97 Fed. Cl. 542, 544 (2011) (quoting Osage Tribe of 

Indians of Okla. v. United States, 93 Fed. Cl. 1, 22 (2010) (citing Warm Springs, 248 F.3d 

at 1371)).

Even if a potential inference is appropriate, however, a beneficiary will only be 

“‘entitled to a reasonable estimate of the damages it is due.’” Osage Tribe of Indians of 

Okla. v. United States, 97 Fed. Cl. at 544 (quoting Osage Tribe of Indians of Okla. v. 

United States, 96 Fed. Cl. 390, 409 (2010)); see also Warm Springs, 248 F.3d at 137 

(noting that plaintiffs only are entitled to the amount of damages that would place them 

“in the position in which [they] would have been absent a breach”); Jicarilla III, 112 Fed. 

Cl. at 304 (“Courts determine the amount of damages for such a breach by attempting to 

put the beneficiary in the position in which it would have been absent the breach.”). 

Defendant, as the trustee, always has the opportunity to disprove plaintiffs’ alleged 

damages amount. See Warm Springs, 248 F.3d at 1371 (“The burden of proving that the 

funds would have earned less than the amount is on the fiduciaries found to be in breach 

of their duty.” (quoting Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2d Cir. 1985)); see

also Bear v. United States, 147 Fed. Cl. at 87. While “approximations certainly are 

appropriate,” damages “awards may not be speculative.” Jicarilla III, 112 Fed. Cl. at 307 

n.52 (citing Franconia Assocs. v. United States, 61 Fed. Cl. 718, 746 (2004) (“[C]are must 

be taken lest the calculation of damages become a quixotic quest for delusive precision 

or worse, an insurmountable barrier to any recovery.”)). Furthermore, as indicated by the 

Federal Circuit in Warm Springs, it would be inappropriate to apply an inference when 

“the issue of damages” is based entirely on “unguided speculation.” Warm Springs, 248 

F.3d at 1372. 

As in the liability trial, in the damages phase of this case, plaintiffs rely heavily on 

the decision in Jicarilla III. Despite some similarities between Jicarilla III and the facts of 

this case, as this court noted during the liability phase of trial, the specifics presented for 

review in the case currently before the court are different from Jicarilla case, and, 

moreover, Jicarilla III is not binding on this court.

33 As discussed in greater detail below, 

the procedural posture and approach the Judge took in Jicarilla III differs from the above 

captioned case. In addition, the model presented by Rocky Hill Advisors to the court in 

Jicarilla III differs from the model assembled by plaintiffs in this case.

33 This court is only bound by precedent from the United States Supreme Court, the United 

States Court of Appeals for the Federal Circuit, and its predecessor, the United States 

Court of Claims. See Dellew Corp. v. United States, 855 F.3d 1375, 1382 (Fed. Cir. 2017) 

(noting that “the Court of Federal Claims must follow relevant decisions of the Supreme 

Court and the Federal Circuit”); see also Coltec Indus., Inc. v. United States, 454 F.3d 

1340, 1353 (Fed. Cir.) (“There can be no question that the Court of Federal Claims is 

required to follow the precedent of the Supreme Court, our court, and our predecessor 

court, the Court of Claims.”), reh’g denied (Fed. Cir. 2006), cert. denied (2007).
71

Moreover, the plaintiff in Jicarilla III raised, and prevailed on, claims that are not 

before this court in the above captioned case. In Jicarilla III, the Judge of the United States 

Court of Federal Claims determined that the government was responsible for the 

unauthorized disbursement of the Jicarilla Tribe's trust funds. See Jicarilla III, 112 Fed. 

Cl. at 303. Additionally, the Judge found the government’s failure to timely process 

deposits of oil and gas royalties “amounted to a breach of trust that entitles the Nation to 

damages.” Id. at 304. As evidenced by the lengthy recitation of facts above, neither the

unauthorized disbursement of the plaintiffs’ trust funds, nor the failure to timely process 

deposits of oil and gas royalties are at issue in the case currently before the court. 

The comments to the Restatement (Third) of Trusts § 100 has indicated 

Determining amount of loss. If a breach of trust causes a loss, including any 

failure to realize income, capital gain, or appreciation that would have 

resulted from proper administration of the trust, the trustee is subject to 

surcharge for the amount necessary to compensate fully for the breach.

Occasionally a situation arises that offers an essentially objective means of 

ascertaining the loss for which a trustee is liable. . . .

Illustrative of more difficult “loss” determinations is the determination of the 

recovery from a trustee for imprudent or otherwise improper investments. 

The recovery in such a case ordinarily would be the difference between (1) 

the value of those investments and their income and other product at the 

time of surcharge and (2) the amount of funds expended in making the 

improper investments, increased (or decreased) by a projected amount of 

total return (or negative total return) that would have accrued to the trust 

and its beneficiaries if the funds had been properly invested. (A return 

projection for “properly invested” funds should reflect the standards of 

prudent investment in § 90(a), and should not rely on hindsight (cf. § 77, 

Comment a) in selecting a benchmark (below) for hypothetical 

performance.).

Restatement (Third) of Trusts § 100 (emphasis in original). 

The court acknowledges that there is no scientific method or modeling that can be 

applied to calculate damages in the current, above captioned case as is reflected in the 

models proposed by both the plaintiffs and the defendant. The parties and their respective 

experts have been tested to reconstruct what the investment strategy of the government 

should have been dating back to the 1970s and continuing until 2013. After the parties’ 

reconstruction, which differ greatly between the parties, and is the subject of this court’s 

decision, the parties next applied a calculation of damages based on their models. 

Assumptions and projections are inherent to any model that could have been developed 

in the above captioned case given the limitations on investment by the government during 

the investment period in the above captioned case, as well as the fluctuating interest rates 

and evolving market conditions. Noting the limitations of any model that could have been

presented to the court in the above captioned case, and based on the information 
72

provided to the court, the court considers each of the parties’ models prepared for the 

damages trial.

Plaintiffs’ Damages Model

As indicated above, plaintiffs did not call any fact witnesses for its case at the 

damages trial, but plaintiffs did call one expert witness, Kevin Nunes of Rocky Hill 

Advisors. Mr. Nunes had prepared expert reports for plaintiffs in advance of both the 

liability trial and damages trial, and testified at both the liability and damages phases of 

trial. In his expert reports for the damages portion of the trial, Mr. Nunes noted that, in 

light of the court’s liability decision he “utilized the returns of the Government’s extant 

investment portfolios for those periods in which the Court found no breach of trust,” and 

additionally, “utilized investment horizons and matured structures consistent with the 

Court's analysis for those periods which the Court didn't find a breach.” At the damages 

trial, Mr. Nunes admitted there was an error in his calculations for his original expert report 

on damages.34 Mr. Nunes had the following exchange on cross-examination with counsel 

for the United States:

Q. What you had done in your original report was you had inadvertently 

imposed damages for a period in which the Court found the Government 

was not in breach.

A. By applying the manner in which returns of a portfolio are typically 

calculated in the investment world, yes. That did end up resulting in a larger 

growth rate in the non-breach period than was realized by the Government.

Q. And the net result of that mistake was to increase your damage 

calculation between 45 and 50 million dollars in both Scenario A and 

Scenario B.

A. That’s correct, yes, in round numbers.

In creating his model for the damages trial, plaintiffs’ expert Mr. Nunes explained

that he had relied on the court’s determination that “the government’s decision to maintain 

the 326-K Fund in an intermediate-term portfolio between December 1992 and March 

1997, with an average weighted maturity years to call ranging between approximately five 

to ten years does not appear to violate the range of prudence so as to be too short-term,”

see W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. 

Cl. at 640, and determined “that a maturity structure in this 5-10 year ‘range of prudence’ 

would also have been appropriate for the earlier breach period.” Therefore, Mr. Nunes 

concluded in his damages expert report:

34 As discussed in greater detail below, Dr. Starks first identified the error in Mr. Nunes’ 

original expert report.
73

The investment horizon of the 326-K Fund during the 12-year period from 

August 5, 1980 through November 1992 was at least as long as the horizon 

during the subsequent 4.3 years. Thus, prudent investment during the 

earlier period required a maturity structure at least as long as during the 

later period, or somewhere in the range between five to ten years.

At the damages trial, Mr. Nunes testified that 

logic says that if in a subsequent period, the immediate subsequent period, 

the Court had found the Government to be prudent, then the portfolio in the 

period preceding that would have to be -- would be at least as long as the 

period following it. So that’s the lesson of how the later period informed us 

on the period prior to that[.]

On direct examination, Mr. Nunes responded to the following questions proposed by 

plaintiff’s counsel:

Q. So with respect to this five- to ten-year range, you testified that you 

looked to see if there was any specific point within that range that was 

consistently used by the Government during this nonbreach period. Is that 

correct?

A. That's correct.

Q. And did you see anything in the record that would indicate one specific 

point in that five- to ten-year range was more likely than another specific 

point?

A. None whatsoever. It was a period where almost overnight -- it certainly 

happened rather quickly -- the Government lengthened the portfolio to about 

11 years, and then it immediately began to shorten somewhat substantially 

through roughly four years of this nonbreach period, shedding about 6 1/2 

or so years of weighted average maturity in a roughly four-year period, as 

well -- so no clear pattern there whatsoever except that the Government 

was reverting back to its old ways. The other thing we looked at was the 

types of -- when we had done our analytics and reported this in our first 

report, we also provided a lot of transactional information so we could look 

at purchases and sales and things like that. So we took a look also at

purchase activity to see if there was any kind of a pattern there, and it was 

absolutely nothing. It roams all over the map. So clearly, to us, there is no 

consistency, again, in spite of the fact that they had found that this was a 

period where the Government was operating prudently.

Plaintiffs’ counsel followed up with Mr. Nunes about the five to ten year range and the 

government’s investing strategy, asking
74

[Q.] [T]he five- to ten-year maturity structure that Rocky Hill determined was 

applicable during this breach period, how did you decide within that range 

what particular structure within the five- to ten-year range to use?

A. Again, as I described before, since there was no pattern in the way in 

which the Government was, again, using the baseline, if you will, the first –

the nonbreach period, there was no consistent pattern in the data that we 

could tease out that would reflect that the Government had any plan 

whatsoever, and so we are then using the five to ten bounds as the range 

of prudence and applying the Warm Springs presumption. We determined 

that for these two periods, as well as how we used it in the first period, that 

the ten-year targeted term structure used in the Warm Springs presumption 

would be prudent. And, of course, then we looked at the actual investment 

of the funds from the first nonbreach period, the 7.86-year maturity or term 

structure, and we used that to inform us for our Alternative B calculations.

Specifically, regarding the government’s investing strategy for the 325-K Fund, counsel 

for plaintiffs asked Mr. Nunes: 

Q. Did the Government ever use a particular methodology in investing the 

326K funds?

A. Not that we can discern -- well, let me retract that. Certainly in its very 

infancy, the methodology that the Government employed across 75, 85 

percent of native trust funds was the CD program, and, of course, the 326-

K was no exception to that, but once that program was wound down and 

sort of conventional investing of the portfolio was happening, we could not 

discern any pattern, any strategy throughout the entire life of these funds.

At the damages trial, Mr. Nunes discussed his decision to create two different 

damages calculations and the ranges for the two calculations, first with what the parties 

refer to as the Warm Springs presumption:35

[Q.] on the Warm Springs presumption, what maturity structure within this 

five- to ten-year range did Rocky Hill apply for the ‘80 to ‘92 breach period?

A. The ten-year.

Q. And under the Warm Springs presumption, why was ten years the 

maturity structure chosen?

35 As discussed in greater detail below, plaintiffs base the “Warm Springs presumption” 

on the language of the Federal Circuit’s decision in Warm Springs, in which the Federal 

Circuit indicated, “[w]here several alternative investment strategies would have been 

equally plausible, the court should presume that the funds would have been used in the 

most profitable of these.” Warm Springs, 248 F.3d at 1371.
75

A. Again, when -- as we had been advised on Warm Springs, when there 

are several alternative, equally plausible scenarios, the courts have found 

in favor of the Plaintiffs for a profitable, generally speaking -- and this is a 

generalization, I will admit -- but when interest rates are -- irregardless of 

level, but normalized, meaning longer rates are higher than shorter rates, 

more often than not, as long as the maturity picture is in alignment, the 

longer will outperform the shorter. And so in this particular case, the tenyear, you know, meets -- sort of matches the Warm Springs presumption as 

we understand it.

Q. Now, did Rocky Hill also prepare an alternative calculation in the event 

the Court finds the Warm Springs presumption inapplicable?

A. We did.

Q. And how did you go about doing that?

A. Well, again, using the subsequent period to inform us on the period 

where they were not in breach, we looked at simply what was the average 

of the term structure over that roughly four years and three or four months, 

and it turns out that is 7.86 years’ maturity, and so we used that for our 

alternative B calculations.

Plaintiffs reasoned that “[f]or the next two breach periods, from April 1997 – June 

2004, RHA took a similar approach, keyed to the Court’s finding that a maturity structure 

in the range between 5-10 years was prudent during 1992-1997. RHA reasoned that this 

same range remained prudent during the following periods.” Mr. Nunes expert report 

reflected, therefore, that “there was no development prior to July 2004 that required any 

shortening of the maturity structure of the 326-K portfolio to mitigate the interest rate risk.”

At the damages trial, Mr. Nunes testified, regarding this time frame:

There’s several things that are kind of going on here, so I will kind of work 

through our analysis and thought processes as we looked at this. It’s a 

period that ultimately ends with the distribution legislation, but for this length 

of time from ‘97 to ‘04, It’s largely a continuation of all the things that we had 

read and analyzed and explained in our original work that suggested that 

the funds were of a long-term nature. There is still a lack of consensus. 

There is still at least a reckoning of the period or the early parts of the period. 

There is still a faction of Western Shoshone that wanted land back. This 

was a period where, as I recall, at least Senator Reid had presented maybe 

two or three distribution plans to Congress that had been rejected. So, 

although, as the Court points out in its decision, there was a building of a 

consensus, there -- this period of time for us, as we understand it, is really 

a continuation of all of the stuff that had been going on prior to this period. 

So that's kind of part one.
76

The second thing that we see -- and it’s also described in the Court’s 

decision -- is that this is an ever-larger pool of funds that has a very sort of 

a complex distribution facing it, a lot of different tribal entities, and that this 

was going to be a very difficult distribution, and folks in the Government 

were also -- understood that the task of developing roles was going to be a 

tremendous one. I think there was one thing I read that they called it 

tremendous and highly expensive, they anticipated. So -- as well -- and this 

I know was discussed at [the liability] trial by Dr. Goldstein. We have 

experience and the Government has significant experience with the length 

of time it takes for distributions that are highly complex and involve a 

significant amount of funds, that they can sometimes take literally decades, 

but in the end what we relied on was the Court’s opinion that references a 

minimum of at least 2 1/2 years. That was a reasonable expectation of how 

long it would take for the development of -- in a “post-distribution plan having 

been accepted” environment, how long it would take, at minimum, to effect 

the distribution of these funds. So we have those two things informing us 

about sort of the conditions on the ground.

For the final breach period for the 326-K Fund, from July 2004 to September 2006, 

Mr. Nunes determined that

a shorter maturity structure was needed because the Distribution Act had 

now been enacted. To establish this new maturity structure, RHA relied on 

the Court’s finding that the Government had invested the 326-K Fund

prudently during the following period, October 2006 – December 2010, 

when the average maturity was 2.97 years. Once again, RHA reasoned that 

the investment horizon of the Fund was at least as long during the earlier 

breach period as during the non-breach period that followed. Therefore, it 

used 2.97 years as the maturity structure for the breach period.

On direct examination, plaintiffs’ counsel and Mr. Nunes had the following exchange:

Q. I want to ask you about subperiod 6 in your chart [included below], which 

is July 2004 to September 2006. Now, this is the last breach period for the 

K funds, correct?

A. That’s correct.

Q. How did you determine what maturity structure to apply for this breach 

period?

A. So we now know that the distribution legislation has passed, and, again, 

this is a restructuring moment, and so we recognize, of course, that the 

portfolio needs to be shortened. Similarly to the earlier period, in the next 

adjacent subperiod, the October of ‘06 to December of 2010, the Court had 
77

found that the Government was not in breach. Now, this is a period that is 

later than the period that we're talking about here. During that period, we 

looked at the actual investment of the funds in that nonbreach period and 

saw that the average term structure was 2.97 years, and so, again, applying 

the same logic for the period -- the logic being the later period had a term 

structure deemed to be prudent of 2.97 years -- then logic indicates and it’s 

reasonable to assume that the period prior to that -- so further back in time 

-- would have a prudent term structure at least as long, and so we went with 

the 2.97 from the next nonbreach period.

Q. The July 2004 to September 2006 period?

A. For the July 2004 to September 2006, using the term structure of the 

October ‘06 to December 2010.

Plaintiffs provided, on a cumulative, period-by-period basis, two damages calculations for 

the 325-K Fund, one if the Warm Springs presumption is applied, and another one if the 

Warm Springs presumption is not applied, which was referenced in plaintiffs’ counsel’s 

questions of Mr. Nunes. First, Mr. Nunes’ cumulative damages calculations with the Warm 

Springs presumption, is depicted below:

36 The court removed from the chart the references to other spreadsheets. 

326-K Alternative A

Gov't in 

Breach?

Period Sub-Period Citation to RHA Model Calculated 

Amount[

36]

Model Calculated 

Balance - Period End

Date

Balance per 

Statement

Difference 

(Cumulative

Damages)

No

Period 1: December 1979 to

November 1992

Sub-period 1: 12/1979 to 8/4/1980 N/A N/A N/A N/A

Yes Sub-period 2: 8/5/1980 to 11/1992 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 111,846,793.00 $ 79,012,301.00 $ 32,834,492.00

No Period 2: December 1992 to

June 2004

Sub-period 3: 12/1992 to 03/1997 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 138,690,023.00 $ 99,701,405.00 $ 38,988,618.00

Yes Sub-period 4: 04/1997 to 12/1997 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 154,675,356.00 $ 104,314,686.00 $ 50,360,670.00

Yes Sub-period 5: 01/1998 to 06/2004 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 230,305,882.00 $ 145,440,296.00 $ 84,865,586.00

Yes

Period 3: July 2004 to

September 2013

Sub-period 6: 07/2004 to 09/2006 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 247,682,272.00 $ 155,739,419.00 $ 91,942,853.00

No Sub-periods 7 & 8: 10/2006 to 09/2013 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 113,847,294.00 $ 36,707.00 $ 113,810,587.00

Balance at 6/30/2020

JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production” $ 130,588,757.00 N/A $ 130,588,757.00
78

(all capitalization and emphasis in original).

Next, Mr. Nunes’ cumulative damages calculations without the Warm Springs

presumption, is depicted next as:

(all capitalization and emphasis in original).

For the 326-A Funds and the first breach period from March 1992 to November 

1998, to determine the appropriate maturity structure, “Mr. Nunes started from the Court’s 

finding that the 326-A Funds had the same investment horizon as the 326-K Fund during 

this period.” Plaintiffs explain:

This means that a maturity structure that was prudent for one fund would 

also have been prudent for the other. The Court found that the Government 

had prudently invested the 326-K Fund during most of this period in a 

portfolio whose maturity ranged between 5-10 years. Thus, RHA reasoned 

that a maturity structure in that same range would also have been prudent 

for the 326-A Funds during this period.

For the second breach period, between December 1998 and June 2004, Mr. Nunes’ 

model “transitioned the 326-A Funds over the first six months of 1999 to a long-term 

326-K Alternative B

Gov't in 

Breach?

Period SubPeriodCitation to RHA Model Calculated 

Amount

Model Calculated 

Balance - Period End

Date

Balance per 

Statement

Difference 

(Cumulative

Damages)

No

Period 1: December 1979 to

November 1992

Sub-period 1: 12/1979 to 8/4/1980 N

/

A

N/A N/A N/A

Yes Sub-period 2: 8/5/1980 to 11/1992 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 108,643,569.00 $ 79,012,301.00 $ 29,631,268.00

No Period 2: December 1992 to

June 2004

Sub-period 3: 12/1992 to 03/1997 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 134,718,026.00 $ 99,701,405.00 $ 35,016,621.00

Yes Sub-period 4: 04/1997 to 12/1997 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 148,450,258.00 $ 104,314,686.00 $ 44,135,572.00

Yes Sub-period 5: 01/1998 to 06/2004 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 218,499,659.00 $ 145,440,296.00 $ 73,059,363.00

Yes

Period 3: July 2004 to

September 2013

Sub-period 6: 07/2004 to 09/2006 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 234,019,604.00 $ 155,739,419.00 $ 78,280,185.00

No Sub-periods 7 & 8: 10/2006 to 09/2013 JX-443, WSIG-TRIAL-10825, located electronically at “JX-443-

Rocky Hill Data", "June 29-2020 Production”

$ 97,178,838.00 $ 36,707.00 $ 97,142,131.00

Balance at 6/30/2020

JX-443, WSIG-TRIAL-10825, located electronically at “JX443- Rocky Hill Data", "June 29-2020 Production”

.

$ 111,463,006.00 N/A $ 111,463,006.00
79

portfolio, reflecting the unlimited investment horizon for these funds,” relying on the court’s

earlier finding, described above, that

[b]etween December 1998 and June 2004, the government also breached 

its fiduciary duty by primarily investing the 326-A Funds in short-term 

securities with an average weighted maturity years to call of approximately

two years or less. During this time, the government became aware that 

various members of the Western Shoshone tribes were supportive or 

becoming supportive of placing the 326-A Funds into a permanent 

education trust fund, the principal of which was not to be invaded. The 

government even acknowledged in its 2003 internal investment report for 

the 326-A Funds that these funds likely would be set-aside as permanent 

education trust funds. Therefore, the government should have begun to 

transition the 326-A Funds into longer-term securities because the principal 

of the funds was not intended to be distributed.

According to plaintiffs’ post-trial brief, for the last breach period between July 2004 

to January 2012, in order to try and reach a damages conclusion, Mr. Nunes “continued 

to use the same long-term maturity structure for these funds.” At the damages trial, Mr. 

Nunes and plaintiffs’ counsel discussed Mr. Nunes evaluation of the 326-A Funds:

[Q.] [F]or the A funds, how did you determine what maturity structure to 

apply for the first breach period, which is labeled subperiod 1, March 1992 

to November 1998?

A. Well, this -- for this period of time, it predates the moment of the -- when 

the conversation around converting the 326A funds into a permanent

education fund, and so at this point we see that there’s no difference --

although in a different account, of course, and a much lesser amount -- that 

there is no real difference between these funds than there are from the K 

funds, because they have not been designated for anything yet. And so 

looking at the K funds to inform us about the A funds, the -- almost the 

entirety of this period aligns with the -- for the K funds the first nonbreach 

period found by the Court, and as we’ve explained, that’s the -- the Warm 

Springs presumption, ten years, with the non-Warm Springs, 7.86 years. 

And so -- seeing no difference in the funds, we used the same term 

structure, and we recognized the Government did not coordinate the 

investment of these funds, but the nature of the funds and the investment 

horizon to us were in alignment.

Q. Now, for subperiod 2, which is December 1998 to June 2004, what did 

Rocky Hill determine for the maturity structure for this breach period?

A. In the Court’s decision, it was noted that by this point, December -- the 

start of this period, the Government essentially knew that these were going 

to be earmarked for permanent funds, although officially they became 
80

permanent funds when the Distribution Act was passed, but the Court’s

decision makes it very clear that the Government knew this at that point, 

and it would be like any other permanent fund where you are never allowed 

to invade the principal, and at that point you almost have an instant 

investment horizon. And so we began -- we transitioned over six months the 

funds into a long-term -- a true long-term structure.

Q. Now, for the next subperiod, July 2004 to January 2012, what approach 

did Rocky Hill take with respect to maturity structure?

A. So once the Distribution Act was passed, it made it final that these were 

going to be -- that these now were permanent funds, and so we just 

continued to use the long-term term structure.

After establishing the parameters of the model and the maturity structure, Mr. 

Nunes determined the rate of return for a portfolio with the maturity structure he identified. 

When asked by plaintiffs’ counsel: “How many possible strategies could have been used 

to invest the WSIG funds?” Mr. Nunes responded: “I hesitate to say infinite, but certainly 

there could be hundreds of different portfolios, you know, and a portfolio, by definition, is 

the result of a strategy, and there could have been hundreds of different variations, all --

all still properly aligned, you know, with the investment horizon of the funds.”

Mr. Nunes, in his rebuttal expert report, concluded 

the Government’s investment methodology was essentially ad hoc, with no 

apparent consistency, both during the 1992-1997 period when the court 

found it prudently invested the 326-K Fund and during the periods when it 

imprudently invested the 326-K and 326-A Funds. The Government’s ad 

hoc, inconsistent methodology is highlighted by the disparity between its 

investment of the 326-K Fund and its investment of the 326-A Funds in the 

period before December 1998.

Upon reaching this conclusion, Mr. Nunes decided to use a benchmarks, which 

plaintiffs argue “provide a neutral and objective measure of market average returns,” and 

which reflects “the market-average rate of return for a diversified portfolio with the 

appropriate maturity structure. This approach is neutral and objective.” (emphasis in 

original). During his direct testimony, in response to plaintiffs’ counsel’s question, 

“regarding your use of recorded benchmarks to establish the rates of return, why is that 

the approach that Rocky Hill takes to determine rates of return for purposes of damages?”

Mr. Nunes explained:

Well, it’s a couple of reasons. They're passive and rules-based, and so 

there’s no – we’re not using a portfolio that somebody else is managing and 

claiming that that is, you know, what the Government should have attained. 

We are strategy- and portfolio-agnostic, and we want to be strategy- and 

portfolio-agnostic because we recognize that to achieve a certain term 
81

structure of a portfolio, it could be done any number of ways, and so the 

indexes are plain vanilla in that regard, and they provide us, again, with a 

sort of baseline. It’s the market average performance based on the rules of 

the index, without any subjectivity whatsoever, and so, you know, we’ve 

always considered that to be, let’s say, the lowest common denominator, 

but we take our -- we take our lead from the investment world itself. Indices, 

benchmarks are an invaluable measurement tool, because if your portfolio 

gets 4 percent in a given quarter and mine gets 4 1/2, I may feel pretty good 

about having beat you, but if both of our returns are substandard and what 

we both should have gotten was 7, the only way you know that is to have a 

measurement tool, and that’s what the index is, because it’s just reporting, 

if you will, the market average performance for whatever market it is trying 

to define.

Mr. Nunes’ expert report for the damages phase of trial reflected that the benchmarks set 

are “passive and unbiased measures of the returns that could be achieved through 

prudent investment, regardless of the particular investment methodology that was 

employed.” (emphasis in original).

Plaintiffs argue that “RHA’s approach assumes that prudent investment in a correct 

maturity structure would have achieved results that match the market-average 

performance. No more and no less,” and further allege that

RHA’s benchmark approach to calculating damages does not specify how 

the funds should have been invested during the period at issue. It does not 

specify an active or a passive investment strategy. It does not specify what 

securities should have been purchased or how long they should have been 

held. Instead, its benchmarks reflect the market-average investment return 

for a diversified portfolio with the appropriate maturity structure. RHA’s 

benchmark approach assumes that prudent investment in a correct maturity 

structure would have achieved results that match the market-average 

performance.

(emphasis in original). At the damages trial, Mr. Nunes explained the benchmarks used 

by plaintiffs’ model:

[Q.] [W]hat indices did Rocky Hill use?

A. We used a family of indices from Barclays. It’s the U.S. -- not the whole 

family, but pieces of their U.S. Treasury Index family, and we used those 

primarily because way back when we were researching the various

Barclays indices, they were the only ones that at all times we felt confident 

were fully compliant with U.S. -- 25 USC 162, which governs the types of 

securities that the United States is allowed to invest Indian funds in.
82

Q. So how does Rocky Hill develop a benchmark for a particular maturity 

structure using the Barclays indices?

A. So what the Barclays indices are a -- so each one of them has their own 

set of rules, and they describe a piece of the Treasury index. In the broadest 

sense, the Barclays U.S. Treasury is all treasuries with maturities from 1 to 

30 years, so that’s almost the whole Treasury market without the T-bills. 

Other indices strip that down, but regardless of which index we're talking 

about -- and we did these three of them, which we can explain in a moment 

-- what these indices do is provide an objective, neutral measure of market 

average performance.

Mr. Nunes and plaintiffs’ counsel later continued this line of questioning, with plaintiffs’ 

counsel asking Mr. Nunes:

[Q.] Why -- first of all, what do the indices include and what is the reason 

that the decision was made to use certain Barclays Indices?

A. So way back when we first started doing this work and became aware of 

the USC -- 25 USC 162, where it very specifically defines what are allowable 

investments that BIA may purchase for investing Native American funds, 

that provided us with sort of the marching order of what we had to be careful 

not to be in violation of in anything that we would present in a model. And 

so we knew that we would use indices as the neutral and objective way to 

measure market average performance, but we had to look at what indices 

included, and in the case of then Lehman Brothers, we looked at -- they 

have a gazillion different indices, the U.S. Aggregate and subindices below 

it and some below that, and it’s a really complicated grouping of indices, but 

in all of the indices that we looked at that also incorporated agencies, 

through taking a pretty deep dive, we found that they could include agency 

securities that we could not tie back to the constructs of 25 USC 162. But 

the Treasury indices were always clean, and so we ended up using 

Treasury indices because at least we could never be challenged on having 

unauthorized securities in the index that we’re using.

As reflected in Mr. Nunes’ expert report, Rocky Hill Advisors used three Barclays 

indices to develop the benchmarks for its revised damages calculations:

• the Barclays U.S. Treasury (UST) index, which includes all Treasury notes/ 

bonds with maturities between 1-30 years.

• the Barclays Long-Term U.S. Treasury (LT UST) index, which includes all 

Treasury notes/bonds with maturities between 10-30 years.

• the Barclays 1-5 Year U.S. Treasury (1-5 UST) index, which includes all 

Treasury notes with maturities between 1-5 years.
83

Based on the Barclays indexes used by Mr. Nunes to develop the benchmarks, at the 

damages trial, Mr. Nunes explained on direct testimony with plaintiffs’ counsel:

[Q.] Now, based on the Court’s liability decision, as you testified earlier, you 

established maturity structures of ten years or, alternatively, 7.86 years and 

then 2.97 years, for the various breach periods. How did you create 

benchmarks for those maturities from the various Barclays indices?

A. Each one of the indices that Barclays produces has a host of data points 

that they provide, and, of course, the weighted average maturity is one of 

them. So at any given point in time, we can see what the term structure of 

the index is, and so using -- to marry up the term structure of our model to 

the investment horizon of the funds as they changed based on the Court’s 

decision, we used allocations between three of the Barclays indices to 

achieve the term structure targets that we were looking for.

Q. And how did you determine what proportion of each of the three indices 

to use as a benchmark for these specific maturity structures?

A. Well, in addition to proper alignment of term structure with investment 

horizon, one of the other basic tenets of prudent investment management 

is diversification, and so the most broadly diversified index that Barclays 

produces in the Treasury sector is the 1 to 30 year Treasury, and so that is 

always the starting point for us where we need to do allocations, because 

we always want to maintain the broadest amount of diversity --

diversification as possible to make sure that we’re remaining in a prudent 

portfolio. And so just using round numbers, if, for example, if the Barclays 

UST [United States Treasury] for a given timeline, on average, was seven 

years to maturity and we were looking for a target maturity of eight, we 

would take out some of the Barclays UST, the shorter one, and we would 

plug in a little bit of the longer one, which is the Barclays Long-Term, so that 

the weighted average of the -- based on the allocations was as close as we 

could get to that target 8 percent -- eight-year term structure. Conversely, if 

we’re looking for a shorter term structure than the Barclays UST is, by 

allocating, we would swap out some of the Barclays UST and bring in the 

shorter index, again, such that we could attain the targeted maturity that 

made sense based on the nature of the funds.

In his testimony at the damages trial, Mr. Nunes explained how plaintiffs’ expert 

blend indices together to reach a specific maturity structure:

[O]ne of the key concepts of prudent investment, of course, is 

diversification. This actually sort of anecdotally supports that argument. So

we always, where we can -- so if the UST is not a -- so, for example, in our 

roll-forward period, we used the 1-5, so the UST is not even part of the mix, 

but wherever the UST is a viable part of any kind of an allocation, we will 
84

always attempt to stay in the highest allocation percentage of the UST 

because it is clearly, of the indices we use, the broadest and most diverse, 

and anecdotally, in that it returns a better number than most of her other 

scenarios, supports the fact that diversification matters. And so we 

concentrate on being the most diverse in our model constructs as we 

possibly can be.

Q. And so, then, when you needed maturity -- needed to meet a maturity 

structure, how did you then blend in either a shorter index or a longer index? 

Did you run a hundred different scenarios or how did you blend in either a 

longer or shorter index?

A. So the answer to did we run a hundred scenarios is, God, no. So we 

would start with the -- you know, obviously we know what 100 percent of 

the UST would return in terms of an average maturity, and so we would look 

at it and say, okay, let’s just -- I think this is the example I used in my 

testimony -- let's just say that the UST at a point in time we’re looking at has 

a term structure of eight years, and we need to be at ten years. We would 

simply begin sort of ratably -- and that’s a bit of a guess at first, how much 

of the UST do I need to take out and how much of the UST Long do I need 

to bring in to maintain maximum diversification and still hit the ten-year 

targeted structure. And so, you know, it may have gone something like this. 

Okay, let’s see what happens if I do 10 percent of an allocation --

reallocation from UST to long-term of 10 percent. What's that look like? 

That’s 9.7, all right. So maybe we’ve got to shave it a little bit or add a little 

bit. So it's a little bit trial and error, but it’s once we get to the targeted 

maturity that we need to be at at the maximum amount of diversification, 

that's the allocation.

Plaintiffs explain in their brief that “[w]hen RHA combines two Barclays indexes to develop 

a benchmark, it starts with the Barclays UST, which is the broadest-based and most 

diversified because it includes all maturities from 1-30 years. Then RHA adds in as much

of the longer or shorter index as necessary to achieve the desired weighted average 

maturity.” (citation omitted). In the above captioned case, plaintiffs’ post-trial brief and Mr. 

Nunes’ expert report for the damages phase of trial reflects that various benchmarks are 

composed as:

Benchmark Period Composition

10-year 1980-1992 86.05% Barclays UST; 13.95% Barclays LT

7.86-year 1980-1992 97.90% Barclays UST; 2.10% Barclays 1-5 UST

10-year Apr. – Dec. 1997 88.35% Barclays UST; 11.65% Barclays LT

7.86-year Apr. – Dec. 1997 90.20% Barclays UST; 9.80% Barclays 1-5 UST
85

10-year 1998-2004 91.60% Barclays UST; 8.40% Barclays LT

7.86-year 1998-2004 81.25% Barclays UST; 18.75% Barclays 1-5 UST

2.97-year 2004-2006 6.75% Barclays UST; 93.25% Barclays 1-5 UST

As plaintiffs indicate in their post-trial briefs, the expert report

used transition periods in its investment model when significant changes 

were made to the maturity structure of the Docket 326 Funds. It used a 

transition period of one-year in 1980-1981 to shift the 326-K Fund from cash 

equivalents into a diversified portfolio with a weighted average maturity of 

either 10 years or 7.86 years. It used a transition period of six months in

1999 to shift the 326-A Funds into a long-term portfolio. And it used a 

transition period of six months in 2004 to shorten the maturity structure of 

the 326-K Fund (from either 10 years or 7.86 years) to a weighted average 

maturity of 2.97 years.

(footnotes omitted). On direct testimony, plaintiffs’ counsel and Mr. Nunes discussed the 

purpose of the transition periods:

Q. Now, did Rocky Hill also include a transition period as of August 1980 in 

order to transition the fund from short-term into these maturity structures 

that you've just discussed?

A. We did.

Q. And what was the reason to include this transition period?

A. Well, as I pointed out at trial, there is not --well, there isn’t an investment 

manager in the world, nor would there be a client in the world, that would 

want a portfolio of approximately $28 million that is for all intents and 

purposes in cash. Even though some of it was in very short-term CDs, it 

would be absolutely imprudent to convert that in another portfolio and 

essentially overnight. I mean, an example we used at trial, it’s done 

rhetorically, through the Government and its witnesses, that if any of them 

had hit -- at that point we were talking about the original 26 million -- if any 

of them had hit a $26 million net lottery jackpot, would any of them show up 

the next morning at their investment manager’s office, ask them to have a 

fully structured portfolio, seven or eight or ten years, by 4:00 the next -- the 

same business day? And, of course, it was a rhetorical question because I 

know the answer. It would just never be done. So you have to -- to be 

prudent, you need to have -- when you’re doing something significant, like 

building a portfolio of this size out of cash or cash equivalents, you must do 

it over some length of time and not just like flipping a light switch and all of 

a sudden the portfolio is built.
86

Later during the damages trial, plaintiffs’ counsel and Mr. Nunes revisited the transition 

periods with the following exchange on direct examination:

Q. Now, I know you’ve – you’ve provided testimony on this earlier, but, 

again, why does Rocky Hill include transition periods?

A. Well, no prudent investment approach is ever going to flip a switch and 

go from zero to a hundred with a portfolio overnight. You know, again, I 

use the example, which one of the experts that the Government uses would 

take $26 million to their investment advisor and say, hey, can you have my 

portfolio built by 4:00? I've got a tee time at 5:00. It just doesn’t work that 

way, and they would not want that, and honestly I think it’s disingenuous 

for them to say that that's the way this should be calculated. Now, it’s a 

great story because interest rates are rising. That's not our fault that the 

funds were awarded in 1979, late in ‘79, at or near the cyclical high in 

interest rates that the world had never seen before, but nevertheless, that’s 

when they were awarded. And one year later, when the Court says the first 

breach period happens, the discipline is the discipline. Regardless of 

where interest rates are and what direction they’re heading, you are not 

going to convert an entire portfolio from nothing to something overnight. So 

there has to be a transition period of some length.

Finally, regarding the calculation of damages based on plaintiffs’ model, Mr. Nunes 

testified on direct examination:

So at any given point in time, the real term structure of the portfolio is 

somewhere in between, and, yeah, we do know that -- I don’t remember the 

exact number, but around 83, 84, 85 percent of the Government’s callables 

did get called, not always on the first call date but fairly close to it. And so 

from a liability standpoint -- and we agree with the Court’s decision -- the 

proper bound to use is the lower one because that's much closer to the real 

term structure of the portfolio. So, in other words, the portfolio was even 

shorter than one might think it was based on maturity structure, but -- so, 

you know, that informs the liability decision. In calculating damages, though, 

if because the real maturity structure is somewhere above that lower bound, 

if we were to use a term structure based on the weighted average years to 

the call for the purpose of calculating damages, then we would be 

understating damages somewhat. Conversely, by using the weighted 

average years to maturity, which is what we did for the purpose of 

calculating damages, we recognized someone could make the argument 

we’re overstating damages, but, again, as we understand trust law and as 

we understand Western Shoshone, where there is any ambiguity or doubts 

regarding potential investment earnings, that they’re resolved against the 

trustee. So in the -- the choice, I guess, between understating damages or 

overstating damages, we felt that the guidance was clear and that we 
87

should use weighted average years to maturity with a purpose of calculating 

damages, even though weighted average year to call was used for the 

purpose of calculating -- for determining liability.

Defendant’s Damages Model

Similar to plaintiffs, defendant did not call any fact witnesses at the damages trial. 

Instead, defendant called two experts, Dr. Starks and Dr. Longstaff. Although both Dr. 

Starks and Dr. Longstaff submitted expert reports and rebuttal expert reports for the 

damages trial, only Dr. Starks created a damages model for the court to evaluate, and 

offered testimony about her approach.

37

Defendant contends that “Dr. Starks’s calculations present a fair approximation of

damages grounded in a prudent and achievable investment strategy that Interior could 

have executed in the real world, in accordance with its policies and practices and in light 

of contemporaneous facts.”38 In the post-trial briefing, defendant explains: 

Dr. Starks selected alternative prudent investments that were longer-term 

in character, and reflect an investment time horizon consistent with the 

investments the Court found prudent during the non-breach periods. Dr. 

Starks also selected a buy-and-hold alternative investment strategy

consistent with the Interior Department’s policies and practices, which 

require Interior to balance investment returns against the risk of capital 

losses and prohibit frequent trading. The portfolio she proposes is based on 

37 As noted above, regarding Dr. Longstaff, plaintiffs argue that “Dr. Longstaff did not offer 

an opinion on the amount of damages in this case.”

38 At trial, defendant’s counsel asked: “Dr. Starks, what types of data did you use to 

calculate damages?” Dr. Starks responded:

A. I used data on Treasury securities from the Center for Research Security 

Price, CRSP, which is maintained by the University of Chicago, Booth 

School of Business.

Q. And what types of information does that data set contain?

A. It has information on Treasury prices. It has information on Treasury 

issues. It has information on prices, information on the bid price, the ask 

price, the maturity of the Treasury bonds. It has detailed information on 

Treasury bonds.

Q. What time period did you look at for those data?

A. From 1980 to 2013.
88

a buy-and-hold ladder of bonds with a broad range of maturities. This

approach mitigates interest rate risk, while also taking advantage of higheryielding longer-term bonds. Dr. Starks’s model also offers Interior flexibility 

to adapt its portfolio — replacing maturing bonds with longer or shorter-term 

bonds as the circumstances warrant.

Defendant continues:

Dr. Starks’ calculated the additional income that Interior would have earned 

using her proposed alternative investment portfolio for each breach period. 

She then compared the investment income generated during each breach 

period to the actual balance of the Fund at the end of that breach period. 

For non-breach periods, Dr. Starks applied the actual growth rate of the 

Fund during those periods to the but-for portfolio balance resulting from the

breach periods. So, for example, for the Docket 326-K Fund for the breach 

period August 1980 to November 1992, Dr. Starks calculated that her 

proposed alternative investment portfolio would have generated an 

additional $21,382,643. Dr. Starks effectively added that additional

investment income to the balance of the Fund in December 1992, and 

assumed that it would have grown at the actual rate that the Fund grew 

during the December 1992 to March 1997 prudent period, growing the 

damages amount from $21,382,643 to $26,505,699 by April 1997. Dr. 

Starks’s total calculations of damages therefore included not only the

amounts of income Interior would have earned for the Funds during the 

breach periods, but also additional income that would have been earned on 

breach period damages during non-breach periods if Interior had invested 

prudently during the breach periods.

(emphasis in original; internal citation and footnote omitted). 

At the damages trial, defendant’s counsel asked Dr. Starks on direct examination 

about the relationship between the actual average maturity of the 326-K Fund and the 

buy-and-hold policy. Dr. Starks indicated:

[A.] Well, I think what you’re seeing here is the effects on maturity of a buyand-hold policy, because -- because once purchased -- or in the eighties, 

longer term CDs were purchased, and then they come down. Longer term 

securities are purchased and then it -- as time goes by, they go down, and 

then they're purchased again. 

Q. Does the shape of the maturity structure of the 326-K fund over the 

period reflect a buy-and-hold strategy?

A. It does to me, yes.
89

Q. And is it your opinion, based on your review of the record in this case 

and the record of the Government’s investments in this case, that the 

Government, indeed, followed a buy-and-hold strategy at all times in its 

management of this fund?

A. It appears that they -- that they were consistently following a buy-andhold strategy.

Dr. Starks also used a chart as a demonstrative, which was admitted into evidence at the 

damages trial, to illustrate the actual average maturity of the 326-K Fund:

The court notes the similarities between this and the chart that Dr. Starks prepared 

as Demonstrative Exhibit 10 at the liability trial, and included above in the findings of fact. 

The above chart, however, does not include the representation of WSJF Years to Call 

with mortgage-backed securities which was included in Demonstrative Exhibit 10 at the 

liability trial.

To describe her model, Dr. Starks and defendant’s counsel had the following 

discussion on direct examination at the damages trial:

Q. What types of information did you consider in conducting your damages 

analysis?
90

A. I looked at the Court’s [liability] opinion. I looked at a number of 

documents in this case with regard to the Government. I looked at -- I also 

looked at a number of documents and research studies that I would use in 

my field and also considered other kinds of information to come up with 

what kind of model I thought would be appropriate for this.

Q. Okay. And, generally speaking, how did you go about calculating 

damages?

A. I -- just from the general perspective, I constructed a but-for ladder 

portfolio, and then I took the difference between the performance on that 

ladder portfolio over the time period and the actual performance, and the 

difference was -- were my damages.

Q. All right. Now, Dr. Starks, did you -- did you attempt to create a but-for 

portfolio that you felt was plausible?

A. Yes. That was very important, that it be plausible.

Q. What considerations did you -- did you make to suggest that your 

investment selections were plausible?

A. Well, again, I looked at the Court’s [liability] opinion, I looked at what the 

Government could have done given their objectives, their policies, and their 

practices, and I also considered, given a buy-and-hold model, what would 

be the most logical buy-and-hold model to use to calculate damages.

Q. What were the Government’s investment objectives?

A. To earn an acceptable return while preserving tribal capital and taking 

into account the needs of the tribes.

As indicated in Dr. Starks’ expert report prepared for the damages phase of trial: 

The BIA’s investment decisions were constrained by a set of specific 

investment objectives guiding its management of the tribal trust funds. 

These objectives, which were specified by BIA policy, reflect the Bureau’s 

practice with respect to managing the tradeoff between risk and return 

inherent in financial markets. In particular, the BIA’s investment objectives 

reflect the Government’s priority of earning an acceptable rate of return on

the trust funds at issue while simultaneously mitigating the risk of loss, 

preserving capital, and having funds available for timely distribution when 

needed.

(footnotes omitted). At the damages trial, defendant’s counsel asked Dr. Starks on direct 

examination:
91

Q. [W]hat were the Government’s investment constraints?

A. As I’ve talked about before, one was this holding-versus-trading policy, 

the buy-and-hold policy that existed, and the other was the concern, the 

scrutiny that was given to bonds that were longer term.

Q. Now, are buy-and-hold strategies risk-free?

A. No, they’re not. Buy-and-hold strategies -- again, you know, if we’re just 

looking at treasuries, we don’t really need to worry about the quality, don’t 

have to worry as much about the liquidity risk, but we still have interest rate 

risk, and we have reinvestment risk. And so a buy-and-hold strategy, as I 

said earlier, you don’t have the effects of interest rate risk while you are 

holding that bond because you’re going to get back the principal since it’s a 

government bond.

Q. Now, are there other types of risk beyond interest rate risk -- you say 

buy-and-hold strategies account for interest rate risk. Are there other kinds 

of risk that the Government might face in executing a buy-and-hold 

strategy?

A. One particular reinvestment rate risk. So you have the reinvestment rate 

risk when you’re reinvesting the coupons, that you might not receive the 

same return that you were receiving on the bond when you bought it, and 

then you also -- when you -- when that bond matures, you have to reinvest 

those proceeds in another bond.

Q. Are there some -- are some buy-and-hold strategies better than others 

at managing reinvestment risk?

A. Yes. The ladder strategy -- the ladder portfolio is very useful for mitigating 

reinvestment risk.

Q. All right. Let’s look at Demonstrative 60, please, and I'd just like for you 

to describe to the Court what a ladder strategy is.

A. It’s -- a ladder strategy is that you set up your portfolio as if it’s a ladder, 

so in this case this would be a ten-year ladder portfolio. You take one-tenth 

of the principal that you have to invest and you put it in that top rung in the 

ladder, and then you take another one-tenth and you put it in – I’m sorry, I 

should have been more clear. The top rung of the ladder is a bond with a 

maturity of ten years. Then you take one-tenth and put it in the second rung 

of the ladder, in effect a bond that has a maturity of nine years, and so forth. 

You do this for -- you put one-tenth in bonds of different maturities for each 

year all the way down to one year left of maturity.
92

Q. How does a ladder strategy operate to mitigate reinvestment risk?

A. Because when you are reinvesting either the coupons or you’re 

reinvesting the principal, because you have the bonds maturing at different 

points in time, you’re reinvesting at different interest rates if interest rates 

are changing, so you are mitigating that reinvestment risk.

Dr. Starks expanded on the benefits of the ladder approach during her direct examination, 

indicating 

a ladder portfolio conforms to the buy-and-hold policy. It mitigates interest 

rate risk because you’re holding the bonds to maturity. It mitigates 

reinvestment risk from those maturing securities, as I had talked about 

earlier, and -- and I think this is also important -- the average time to maturity 

and the duration of the portfolio remains stable over time, and so you have 

-- you have this stability in the risk of this portfolio over time. I would also 

say that ladder portfolios are particularly used with – they’ve been used a 

lot with government securities. They’ve been used a lot with pension funds, 

with endowments, with foundations. It's a very common thing.

In response to defendant’s counsel’s question: “Did you use a ladder strategy for 

your but-for portfolios for the 326-K fund and the 326-A funds?” Dr. Starks responded:

“Yes, I did.” Regarding her modeling, during direct examination, defendant’s counsel and

Dr. Starks had the following exchange: 

[Q.] [W]hat did you look at it in terms of plausibility when selecting an 

investment horizon for your portfolio?

A. When selecting the investment horizon, I thought about the concern that 

the Government had -- and like I said earlier, that I saw throughout -- of 

being careful with the long-term bonds, and so I also thought about the 

degree of uncertainty there was and the amount of interest rate there was 

during the time period, particularly the early time period. And so I decided 

that ten years would be the appropriate ladder in terms of -- so the bonds 

ranged from ten years to one year in maturity.

Q. What is your understanding of the Court’s findings [in the liability Opinion] 

as it relates to a prudent investment horizon?

A. I looked at the time period between 199 --December 1992 and March 

1997, which is the time period that the Court found that the Government 

had invested prudently, and I looked at that time period, and as we looked 

at earlier, most of the months had maturities, weighted years to call, less 

than six years, and, in fact, less than 5.5 years, and so I took that time period 
93

and looked at what was most plausible in terms of the weighted average 

years to call for this portfolio 

Q. Now, Mr. Nunes testified that he based his investment horizons and 

maturity structures consistent -- in a way that's consistent with the Court’s 

analysis for the periods in which the Court found no breach. Is that what you 

did, too?

A. Well, I would say that I took into account what the weighted average 

years to call really looked like in that period, because they took the high 

points, but I don’t think you can base an investment strategy just on one 

month or two months when it was higher, because then it was going down. 

And so I took into account, in terms of plausibility, the frequency of the 

weighted average years to call, the months that had the different – I’m not 

being very articulate with this -- the months that had five years versus six 

years, seven years, eight years, and 9.7.[

39]

Q. And, Dr. Starks, did you attempt to select an investment horizon that was 

consistent with the way in which the Government most frequently invested 

in that ‘92 to ‘97 period?

A. Yes, I did.

Q. Now -- and, I’m sorry, what was the investment horizon that you selected 

for your but-for portfolio?

A. I selected five years. So, again, with an average of five years, the average 

portfolio would be a ten-year ladder.

Q. Does that mean –

39 As closing argument in the damages trial, defendant’s counsel argued

the evidence actually is that although the weighted average years to call --

and that’s the metric the Court used in its liability opinion for reasons it 

stated in that opinion -- but the facts are that the weighted average years to 

call of the portfolio during the prudent period, it did range between 4.7 years 

and 9.7 years, which in shorthand we have said, you know, we have kind of 

estimated about five to ten years, but, in fact, 80 percent of the time, those 

investments were in a portfolio that had a weighted average years to call of 

7 1/2 years or less. So that information we know from the prudent period 

that can be brought to bear on what a reasonable alternative portfolio should 

be in this case and, you know, what information we can look to to damages 

during the breach periods.
94

A. They have bonds from ten years in maturity down to one year in maturity.

Q. And is that true for every -- every point in time during the breach periods, 

the ladder would hold bonds between -- ranging in maturities from 1 to 10 

years?

A. Well, in the -- in -- when -- in 2004, when the Claims Distribution Act 

passed, I lowered -- I started reinvesting the one-year bond. Instead of 

reinvesting in another ten-year bond, I reinvested in a one-year bond, so 

the maturity started going down. I would also say that for the 326-A fund, 

when it became clear that the Government was going to be investing this 

money for the long term, I moved -- I put those funds from a ten-year ladder 

into a 28-year ladder, with an average maturity of 14 years, which was 

consistent with the Court’s [liability] opinion about the 2012, 2013 period.

Q. All right. What -- which government policies inform your selection of five 

years for the average portfolio maturity?

A. Well, the trading versus holding as well as -- or I should say the holdingversus-trading policy, as well as the practice and policy of not -- of not going 

long term unless there was a particular reason for doing it.

Q. What aspects of finance theory inform your selection of five years as the 

average portfolio maturity?

A. Interest rate risk is also an important component of my decision because 

the longer term bonds -- and we’ve talked about them -- they have much 

higher interest rates, and given the uncertainty during the 1980s, I felt that 

interest rate was also an important consideration.

On direct examination with Dr. Starks, defendant’s counsel asked “how does the 

investment time horizon change over time in your portfolio for the 326-K fund?” Dr. Starks 

answered: “The 326-K fund is -- I had a ten-year ladder until -- for the 1980 to 1992 period, 

and then – and then in the April 1997, I go back to a ten-year ladder, and until 2004, it 

stays with a ten-year ladder, and then it starts reducing in maturity.” Dr. Starks continued: 

So starting in August 1980, I invest everything, and like I said, I put onetenth in each -- in bonds of each of these different maturities that are shown 

on the left-hand side. So it starts out with the ten-year ladder, has one-tenth 

in each of these bonds, and then a year later, when the one-year bond 

matures, that gets reinvested into a new ten-year bond. And then if you . . .

look across time, you can see how these bonds mature. So the ten-year 

bond becomes a nine-year bond, becomes an eight-year bond, a sevenyear bond, and a six-year bond, and each year as you reinvest, you're 

getting a new ten-year bond as the one-year bond is maturing. 
95

Q. And when you transition in 2004 to a shorter investment time horizon 

based on the passage of the Distribution Act . . . how does the model 

perform that shortening of portfolio maturity.

A. Instead of buying a -- so in 2004, instead of buying a another ten-year 

bond, as you’re continuing the ladder, you buy an additional one-year bond, 

and then you do that again in 2005. So you’re shortening the maturity. That's 

one thing a ladder can do, it gives you flexibility to be able to shorten 

maturity.

For the 326-A Funds, Dr. Starks testified, 

for 2004, I had a ten-year ladder, and then -- and then I moved the money 

into -- when it became clear from the Claims Distribution Act that it would -

- it would be long term -- and, again, I used the Court’s saying that the 11-

to 14-year yield to call during the -- during the 2012-2013 period was 

prudent for the 326-A funds, I used that and I moved into a 28-year ladder, 

which has an average maturity of 14 years for the A funds. And I do this in 

two different ways. I do it in 2004, because that’s when the Government 

knew for sure, but I also included in my rebuttal report calculations in case 

it would be useful for the Court if it -- if it’s decided that the Government 

should have known this in 1998, and I -- because in the decision it said this 

became probable that it would become permanent, and so I moved it -- for 

my secondary calculations, I changed it from -- from going in 2004 to a 28-

year ladder to going to the 28-year ladder in 1998.

After explaining the methodology of her model at the damages trial, Dr. Starks also 

provided a calculation of damages owed plaintiffs. As defendant explains:

With respect to the 326-K Fund, Dr. Starks started with the balance of the 

Fund at the beginning of the first breach period on August 4, 1980 and 

calculated the amount of additional income that Interior could have earned 

using a ten-year ladder portfolio between August 1980 and November 1992, 

instead of investing in the CD program the Court found imprudent. This

calculation resulted in additional investment income of $21,382,643 over 

and above the income that Interior actually earned during the period. Dr. 

Starks then assumed that, in a but-for world, this additional $21,382,643 

would have been part of the 326-K Fund during the December 1992 to 

March 1997 non-breach period, and calculated the amount of additional

income that the 326-K Fund would have earned during that period — using 

the rate of actual growth for the 326-K Fund during that period. This 

calculation resulted in $5,123,056 in additional income during the 

December 1992 to March 1997 non-breach period. Dr. Starks then carried 

forward the balance of her calculations to determine how much additional

income Interior would have earned had it invested the 326-K Fund in a oneto-ten-year ladder portfolio from April 1997 through June 2004. That
96

calculation resulted in additional investment income of $29,507,915. Dr. 

Starks then calculated the additional investment income that would have 

been earned between July 2004 and September 2006 if Interior had 

continued a ladder portfolio approach, but had begun replacing retiring 

bonds with one-year bonds to shorten the overall portfolio maturity in 2005 

and 2006. That calculation resulted in additional investment income of 

$4,684,779. Finally, Dr. Starks calculated the amount of additional 

investment income that the 326-K would have earned during the 

non-breach period from October 2006 through September 2013 

when the 326-K Fund was fully distributed to its beneficiaries. As 

she did for the damages during the October 1992 to March 1997 

non-breach period, Dr. Starks assumed the balance of the Fund 

would have included the additional investment income earned 

during the previous breach periods and that the Fund would have

grown at the same rate it actually grew from October 2006 to 

September 2013. That calculation resulted in additional 

investment income of $13,118,123. In total, Dr. Starks calculated 

that a prudent portfolio throughout the life of the 326-K Fund 

would have resulted in investment income of $262,606,465 

million, instead of the $188,789,950 million that Interior actually 

earned over the life of the Fund. Thus, Dr. Starks calculated 

damages of $73,816,515 — the difference between what Interior 

actually earned and what a prudent investment approach would 

have earned over the life of the 326-K Fund.

(emphasis in original; internal citations omitted). Dr. Starks also used a chart 

as a demonstrative, which was admitted into evidence, which the court 

reproduces below: 
97

For the 326-A Funds, defendant explains in the post-trial briefing:

Dr. Starks’s calculations of damages for the 326-A Funds follow the same 

methodology. Dr. Starks began with the actual balances of the 326-A-1 

Fund at its inception in 1992 and the 326-A-3 Fund at its inception in 1995, 

and determined the additional investment income these combined Funds 

would have earned, had they been invested in accordance with Dr. Starks’s 

one-to-ten year ladder approach from March 1992 to November 1998. That 

calculation resulted in additional investment income of $165,782. Dr. Starks 

then carried forward the balance of the Funds as of December 1998 and 

calculated how much additional investment income the 326-A Funds would 

have earned between December 1998 and January 2012, had Interior 

invested the Funds in accordance the twenty-eight year ladder portfolio Dr. 

Starks adopted in her analysis. That calculation resulted in additional 

investment income of $1,010,314. Dr. Starks then took the balance of the 

326-A Funds at the end of January 2012, and calculated the growth of the 

Funds at the same rate the Funds actually grew from February 2012 to the 

September 2013 end date of Plaintiffs’ claims. The final calculation of 

damages totaled $987,920.
98

(emphasis in original; internal citations omitted). Dr. Starks also used the same 

demonstrative chart for the 326-A Funds which the court reproduces below: 

Dr. Starks, in addition to testifying on direct examination about her model and her 

calculations of damages, offered a number of challenges to Mr. Nunes’ modeling, both in 

her expert reports and her testimony at the damages trial. As noted above, the Mr. Nunes 

admitted there was an error in his calculations for his original expert report on damages, 

which was identified by Dr. Starks. Dr. Starks, in her rebuttal expert report for the 

damages trial, noted: 

The RHA Damages Report purports to “utilize the returns of the 326-K Fund 

portfolio as it was constructed by the Government in calculating how the 

Fund should have grown” during the period from the start of December 1992 

through the end of March 1997, when the Court found the Government was 

not in breach of its trust responsibilities. This should be a straightforward 

exercise: all one needs to do is divide the March 1997 amount by the 

December 1992 amount. But RHA does this incorrectly.

(emphasis in original; footnotes omitted). As indicated in her expert rebuttal report, once 

the error is corrected, “ultimately RHA’s damages for the 326-K Fund by $47.7 million for 

RHA’s 10-year model, which is 26.8 percent of the total estimated damages, and by $45.0 

million for RHA’s 7.86-year model, which is 28.8 percent of the total estimated damages 

using that model.” (footnote omitted).
99

As indicated in Dr. Starks’ rebuttal expert report:

RHA manipulates the damages it calculates by selecting an arbitrary

transition period that avoids realizing market declines in the original period. 

Throughout its analysis, RHA employs “transition” periods for the Funds at 

various points in time “to adjust the maturity structure of the portfolio” to the 

benchmark structure selected by RHA for its analyses. That is, RHA makes 

the assumption that the counterfactual portfolio changes would have taken 

some months to implement. The first transition period in RHA’s models for 

the 326-K Fund begins at the start of the investment period in August 1980 

and occurs over twelve months, with 8.33 percent of value of the total 326-

K portfolio transitioning every month from the assets actually held at that 

time to RHA’s synthetic index. The second transition in RHA’s models for 

the 326-K Fund begins in July 2004 and occurs over six months (not 12 

months, as RHA assumed for the first transition period), with 16.67 percent 

of the value of the total 326-K portfolio transitioning every month to a 

maturity structure of 2.97 years. RHA also includes a transition period in its

analysis of the 326-A-1/A-3 Funds; in that case it is assumed that the new 

investment strategy would take six months to implement.

RHA’s transition periods are problematic for several reasons. First, the use 

of the transition periods does not comport with the Court’s [Liability] Opinion

as to the timing of the damages periods. The Court found, for example, that 

the 326-K Fund was imprudently managed starting in August 1980, not one 

year later, when RHA’s transition period for the 326-K Fund concludes. 

Second, setting aside for now my disagreement about the need for a 

transition period, RHA does not explain why the timing of the transition it 

selected does not match the maturity schedules of the securities actually 

held in the 326-K Fund as of the start of the relevant period. . . . Third, RHA’s 

transition periods also are arbitrary. . . . Finally, RHA appears to have 

improperly implemented the six-month transition period it claims to have

applied to the 326-A-1/A-3 Funds over the course of the first six months of 

1999.

(footnotes omitted). At the damages trial, Dr. Starks responded to defendant’s counsel’s 

question during direct examination, what “would have happened if the Government had

immediately executed Mr. Nunes’ investment strategy from day one instead of just 

keeping the Government’s portfolio in CDs and cash?” by explaining:

So as of August 4th, 1980, the fund was about $28 million, and it would 

have immediately started losing money, and within just the first couple of 

months, it would have lost about a million dollars, and it -- as you can see, 

it still stayed where it was -- where it was in a loss from the 28 million 

throughout the entire transition period, had they not had a transition period. 

So the bottom line shows a ten-year model without any transition period.
100

Q. All right. And what impact does this 2. – would this $2.6 million loss in 

the very beginning of the breach period in 1980, what impact would that 

have had over the course of Mr. Nunes’ damages model if he had employed 

it from the start?

A. If he did not have this transition period, then -- then because this $2 

million would have accumulated, it would have resulted in damages being 

lowered by about $36 million.

Q. All right. And have you put together a demonstrative that demonstrates 

your effort to quantify the impact of the loss shielding transition period or 

loss shielding transition periods that Mr. Nunes uses in his model?

A. Yes. If you look at -- if you look at slide 42, it shows for the ten-year 

model, the transition period, if you took it away or corrected for it, it would -

- it would have lowered damages by 36.7 million; and for the 7.86-year 

model, it would have lowered damages by 30 million.[40]

Plaintiffs respond that “RHA properly uses transition periods,” and “Dr. Starks’ contention 

that transition periods are unwarranted is belied by her own damages model.” 

At the damages trial, Dr. Starks also questioned the logistics of plaintiffs’ model, 

explaining in an exchange with defendant’s counsel: 

[A.] Selecting the Barclays Index, in my opinion, is a choice of investment 

strategy; selecting the -- which indices to combine with which weights is an 

investment strategy decision.

Q. Now, could the Government have simply invested in Barclays Indices?

40 At the damages trial, Dr. Starks was also critical of building a portfolio slowly with 

Treasury securities, noting “I haven’t seen where, with Treasury securities, somebody 

waits a year to -- to invest slowly over time with this idea of, oh, I have reinvestment risk. 

What I see is portfolio managers that are trying to get in as quickly as possible, and they 

will even take used futures in order to be fully invested.” Defendant’s second expert, Dr. 

Longstaff, similarly commented at the damages trial, that “the Treasury bond market is 

incredibly liquid, even back in the 1980 era, you know, it was – daily trading volume was 

in the billions, and it’s so liquid that it's very -- you know, very easy, straightforward, lowcost to put on large positions and do those within minutes, literally,” and, therefore, “the 

idea that, you know, that a portfolio that’s on the magnitude of a hundred million or 26 

million, that it might take 18 months to transition it into a portfolio is just kind of astonishing. 

That’s just not consistent with the realities. In liquid markets, you could turn those kind of 

portfolios around literally in days, weeks at the worst.” 
101

A. No, not back in -- in the beginning. It would have required investing in a 

very large number of different bonds, and you need to -- again, as the 

composition is changing, because the Treasury is constantly issuing new 

bonds and other bonds are maturing, as this -- as you have these changes, 

the Government would have had to have been changing the index.

Just to explain a little bit more about it, a bond index is very different from a 

stock index. The S&P 500 isn’t as difficult because you -- and let’s just act 

as if the 500 stocks don't change. You invest in the 500 stocks. As the prices 

go up or down, your index naturally goes up or down, and you don’t have to 

be selling or buying new shares because you have your portfolio 

constructed of the S&P 500. So it’s – it’s not that difficult. A bond index, as 

I said, is much more difficult because you have bonds that are maturing, 

you have new bonds that are consistently coming in, and so your -- your --

and this index is market valuated. So you have to be reproportioning every 

bond in the index. Mr. Nunes gave an example with just two bonds and how 

it wouldn’t be that much or he made a comment it wouldn’t be that much, 

but you have hundreds of bond securities. If you want to emulate that index, 

you would have to be buying some, selling some, and to make sure that 

you're keeping up with the market value as new bonds are being issued by 

the Treasury.

After hearing testimony at the damages trial from Dr. Starks, court heard testimony 

from Dr. Longstaff. As explained by Dr. Longstaff on his direct testimony, prompted by a 

question from defendant’s counsel:

[Q.] have you conducted any analysis in this case to demonstrate the fallacy 

of reaching for yield as it applies to investing in Treasury securities?

A. Yes. I conducted kind of a simulation exercise to try to illustrate the point 

that if you invest in a longer term bond, you don’t necessarily get higher 

returns than investing in shorter maturity bonds. And I’ll try to, kind of in a 

bit of a pedantic way, just use a simple simulation exercise to kind of 

illustrate this concept in as simple way as I can.

Q. So if you could just describe these three simulated strategies that you 

looked at.

A. Okay. Well, what we would do as a simple simulation exercise, we are 

going to imagine that we were standing back there at August of 1980, 

looking at the term structure that existed in the market at that date, and we 

are going to basically explore just what would happen if I had invested $1 

in each of three different strategies.

In the first strategy, we are going to basically simulate what would happen 

if I bought a one-year zero-coupon bond and then, you know, a year later it 
102

matures, and roll it over into a new one-year bond, and we do that each 

year for ten years and keep track of what happens to the value of that 

portfolio over ten years.

In the second strategy -- so that’s the rollover strategy, the first one. The 

second one is we are going to conduct that same exercise but this time we 

are going to assume that you start off in 1980 and you buy a ten-year zerocoupon bond, and we hold that bond to maturity. So we have a buy-andhold strategy here, and we hold that bond to maturity for ten years.

And then the third variation on this, we are going to simulate what happens 

if we follow kind of a targeted maturity strategy. The idea here is that at the 

beginning of the ten-year period, we buy a ten-year zero-coupon bond, but 

this time we hold it for a year, and then we go into the market, sell it at 

whatever its new price is, reinvest the proceeds into a brand new ten-year 

bond, and we just keep doing that every year. So you’re kind of zig-zagging 

between the, you know, ten-year maturity, nine-year, back and forth, kind 

of in a targeted maturity, similar, as I understand, to kind of the -- well, the 

Rocky Hill approach here.

Defendant’s counsel then asked Dr. Longstaff to further describe his analysis:

A. Yes. What we do is -- again, as I mentioned, we go back, looked at the 

term structure that existed in 1980, August 1980, used kind of a simple 

model to generate paths of the interest rate over time, and just modeled 

what the value of each of these three strategies would have been at each 

point in time, each year over the next ten years, and we kind of then take a 

look at the over a million simulations and kind of try to get some 

understanding of what the range of possibilities are.

Q. All right. Turning to your Demonstrative Number 7, would you describe 

for the Court the results of your simulation with respect to strategy number

1?

A. Yes. So there are way too many to show on one piece of paper, so we 

first break out the first, I think, hundred, and it shows here what happens if 

you invest $1 in Strategy 1, just rolling over a one-year zero-coupon bond 

each year for ten years, start off with $1, and, you know, depending on 

whether -- you know, if rates go up, the strategy will do better, and if rates 

go down, it will do less well, and just keep track over time what some of the 

possibilities are. This is just one of a hundred paths that we’re looking at, 

but you’ll see that over time the value tends to grow, but there is risk about 

what the value of the portfolio will be at any point in time, and that's true 

even over ten years. We don’t know what’s going to happen. It depends on 

reinvestment rates, and you can see that there's a wide range of 

possibilities. I think, very significantly, the fact that because of its nature, 
103

rollover strategy, we never end up in a situation, for example, where we will 

have a principal loss. The value of the portfolio will always be greater than 

one. The strategy, even though we don’t know exactly what the outcome 

will be, we do know it has the nice feature that it's not going to produce any 

capital losses. This would be important if, for example, there was 

uncertainty about the investment horizon. It might take us ten years, but 

what if it's only three or five or something happens? It shows that there will 

be some randomness in the value of the portfolio, but we would never have 

a principal loss with this strategy.

Q. Thank you. Let's turn to Demonstrative Number 8, and could you 

describe for the Court the results of your simulation with respect to Strategy 

2?

A. Okay. Just a reminder to the Court, what we’re doing here is we're 

starting off with buying a ten-year zero-coupon bond, and we're buying and 

holding that -- buying and holding it for ten years. And as you can see, there 

are situations here where, after one year, let's say if interest rates go up, 

the value of that bond could actually go down. It could actually have a 

principal loss. Vice versa, the rates could go down and the bond price could 

go up, but there’s, you know, considerable risk about the value of that 

portfolio after one year. Going forward, even out to five years, there's a --

there is a substantial probability that if you had to liquidate that portfolio 

early or, you know, had to pull the plug on the strategy after five years, you 

could actually do that where you have lost money and have less than one 

dollar. That occurs approximately about 8.7 percent. Now, because of the 

strategy, because in ten years the bond is going to mature, and you are 

assuming that there's no default risk, the bond will then actually convert to 

a value of 2.69, guaranteed. So with this strategy, over -- if you hold it for 

ten years, there’s no risk. Now, there is risk, however, if you have to liquidate 

at an earlier point, but this strategy then, after we get past the about six- or 

seven-year point, it’s sufficiently short term that we wouldn’t have losses if 

we had to liquidate in, let's say, year eight or year nine. But it does illustrate 

that this portfolio has a very different risk and return characteristics and that 

a longer maturity bond doesn't necessarily guarantee that you will have 

more returns than a shorter maturity bond.

After Dr. Longstaff outlined the three strategies in his analysis, defendant’s counsel asked 

Dr. Longstaff to compare the three strategies “in terms of risk and return.” Dr. Longstaff 

explained:

Just keeping track of what is the probability of having a principal loss, which 

is one metric of maybe underperformance, and that's a dramatic measure 

of underperformance, but we can see, for example, that Strategy 1 will 

never lose principal. It's of a short-term nature. It does well when rates go 

up. The other strategies do poorly when rates go up, a kind of the opposite 
104

type of risk there. With Strategy 2, we can see that in the first year, if you 

have to liquidate after one year, suddenly there's like a 36 percent chance 

you would be under water, where you would actually have lost money over 

the first year. As you go farther into the future, that probability declines, and 

by the time you get to about seven years, then the chances of having a 

principal loss are pretty much gone. So that has a little more risk than 

Strategy 1 in that sense. Strategy 3, again, which is much more like a 

targeted maturity strategy like Rocky Hill, you can see that that strategy has 

a positive probability of loss over all investment horizons. It's more 

pronounced at the beginning because of the way that the term structures 

evolve. It starts out with about a 36 percent chance of a principal loss after 

one year, but it's still substantial after seven, eight, nine, ten years.

Q. And let’s turn to your Demonstrative Number 11. What did the simulation 

tell you about the expected magnitude of a loss when a principal loss did 

occur?

A. Yes, this was kind of interesting. It’s not just that the loss can happen. 

It's that the loss could actually, when it does happen, could be very, very 

severe. This demonstrates -- of course, Strategy 1 never has a loss. There’s

no graph on this chart for Strategy 1. But for Strategy 2, if you had to, let’s 

say, liquidate after one year, after one year, Strategy 2 -- remember, this 

can happen with a 36 percent chance -- if there is a loss, the average loss 

is somewhere between 15 and 20 percent. That means that you’ve lost 

almost 20 percent of the initial funds. That's a severe, severe shortfall. 

Strategy number 2 I think after about two years is probably the worst 

scenario, about 20 percent, starts coming down, but the losses, when they 

can occur, on average could be very severe losses, in the range of 5, 10, 

20 percent. Things are even more dramatic for the third strategy, because 

when you do -- when the loss does occur, it’s on average a very bad loss. 

Even after three, four, five years, some of those losses are on the order of 

20, 25 percent. Even going out to ten years, if there’s a loss, it, on average, 

would be somewhere between 15 to 20 percent. These are significant --

significant from the perspective of managing funds. This would be a huge 

hit to the value of the portfolio. People who were expecting positive returns 

could end up in scenarios where they have actually lost money and have 

less than they initially started with.

With regard to the demonstrative exhibit 11, created by Dr. Longstaff, and 

referenced above, the demonstrative shows:
105

Therefore, defendant argues,

the two buy-and-hold strategies performed similarly to or even offered

higher expected returns than Strategy 3 depending on how long the portfolio 

is maintained but exposed the portfolio to a substantially lower risk of 

losses, and a much lower risk of significant losses. Dr. Longstaff’s 

simulation demonstrates that, at least by comparison to the type of frequent 

trading strategy Plaintiffs’ expert Mr. Nunes advocates, Dr. Starks’s buyand-hold ladder portfolio both mitigates risk and ensures competitive 

returns on investment.

During his direct examination, Dr. Longstaff was asked the following questions by 

defendant’s counsel about Mr. Nunes’ model:

[Q.] Now, as a part of your assignment, did you prepare a damages 

calculation in response to Rocky Hill's damages calculation?

A. Yes. I was asked to do kind of a sensitivity analysis, and so, yes, I did 

that analysis.

Q. All right. Let’s turn to Demonstrative 15, and, Dr. Longstaff, could you 

describe for the Court sort of how you set up your sensitivity analysis, what 

you took from Rocky Hill’s approach, and then how you sort of modified it 

to perform your sensitivity analysis.
106

A. Yes. What I wanted to do is basically use their framework, their modeling 

approach, their infrastructure, architecture, and preserve as much of that as 

possible to be consistent with this period and what they were doing, but I 

wanted to sort of get at the issue of how much are they relying on these two 

assumptions, as I had mentioned, the assumption that everything in the fiveto ten-year range was equally plausible and that you would reliably do better 

by always picking the longest maturity in available range. So I wanted to 

relax those two assumptions just to because their damages estimate 

change when you just change those two assumptions. I'm trying to keep 

everything else as much the same as possible.

Q. And how did you go about doing that?

A. So, again, what I wanted to do is adopt their assumptions, so what we 

preserved -- as you know, they're focusing only on Treasury bonds, not the 

agencies or the CDs. We're doing the same thing. They used an indexbased approach. I think they have three different indexes. We said let's do 

the same thing. Let's just pick three indexes, just parallel what they're doing, 

picked three indexes. So that was the approach. We are going to use the 

same periods over which, you know, they're doing their analysis and try to 

keep everything the same, other than kind of maybe relaxing those two 

objectionable assumptions.

Q. Are you -- just to clarify -- and at the top here for the Court -- are you 

testifying that the sensitivity analysis -- excuse me, that the sensitivity 

analysis that you performed is your affirmative damages opinion?

A. No, no. This is – we’re simply evaluating the impact of those assumptions 

made by Rocky Hill on their damages estimates. It’s in no way an 

independent, stand-alone damages estimate. I’m just simply taking their 

framework and testing the sensitivity of their damage estimates to be what 

I view as their cornerstone or foundational assumptions that underlies their 

investment strategy.

Q. All right. Let’s talk about the mechanics of how you correct Rocky Hill’s 

damages’ approach in your exercise.

A. Yes. You know, this demonstrative -- the key things we wanted to focus 

on is we wanted to avoid this possibility of hindsight bias. We don’t know 

ahead of time what’s going to happen. And so we wanted to use an 

approach, you know, within their context that is basing portfolio construction 

on the information that is known at the time. Furthermore, it's important to 

recognize that, as we've seen in some of these demonstratives, that the risk 

and return characteristics of different bonds change over time. This was a 

dramatic periods where rates are going up, they’re very volatile, and they're 
107

lower in different periods. It's important to sort of reflect that circumstances, 

the economics of the markets, can be changing.

In response to Dr. Longstaff’s critiques, plaintiffs argue that “Dr. Longstaff used 

financial theory to criticize RHA’s conclusion that no particular maturity structure in the 

range of 5-10 years was more plausible than another,” and contend that “Dr. Longstaff 

either misapprehends or ignores what RHA actually did. He criticizes RHA’s approach 

based on theoretical analyses about how a maturity structure should be chosen on an ex 

ante basis.” (emphasis in original).

Moreover, although noting that Dr. Longstaff did not create a model for damages 

in the above captioned case, plaintiffs and Mr. Nunes were still critical of Dr. Longstaff’s 

role in the case.41 Plaintiffs argue that Dr. Longstaff’s “critiques are utterly irrelevant

because RHA did not purport to select its 10-year and 7.86-year maturity structures on 

an ex ante basis; to the contrary, it explicitly relied on hindsight.” (emphasis in original). 

Plaintiffs conclude by alleging “Dr. Longstaff criticizes RHA’s choices of maturity structure 

based on academic exercises that have no relation to RHA’s evidence-based 

determination. Moreover, Dr. Longstaff bases his criticism on an alternative investment 

model that is unrealistic and imprudent. Accordingly, his testimony is irrelevant to the 

issues before the Court.” On direct examination, Mr. Nunes and plaintiffs’ counsel 

discussed Dr. Longstaff approach: 

[Q.] I want to ask you about Dr. Longstaff's financial theory that he offers 

regarding choosing an optimal maturity structure within that five- to ten-year 

range. What is your response to Dr. Longstaff's use of this financial theory 

for choosing this optimal maturity?

A. I mean, for starters, it -- I think it disregards the Court’s decision and 

instead -- I don’t know what the proper term is -- it kind of runs this million 

iteration mostly like game theory or something that reminded me of -- oh, I 

41 In defendant’s post-trial reply brief, defendant responded to the criticism of Dr. Longstaff 

by indicating

it is noteworthy that Plaintiffs’ Reply Brief studiously avoids any discussion 

of Dr. Longstaff’s testimony, which among other things, supports Dr. 

Starks’s selection of a one-to-ten year bond ladder portfolio with a 5-year 

weighted average maturity. The sensitivity analysis that Dr. Longstaff 

prepared and presented at trial showed that, viewing each investment 

contemporaneously and without the benefit of hindsight, and accounting for 

the risk-return tradeoff, a portfolio with a weighted average years-tomaturity of 5.7 years would have been optimal for the 1980-1992 and 1997-

2004 breach periods.

(internal reference omitted; capitalization in original).
108

can't think of the right term, but in any event, it's -- it's a simulation of a 

bunch of iterations that tries to -- and then purports to come up with some 

optimal structure. 

In addition to the criticism of Dr. Longstaff, plaintiffs were critical of Dr. Starks and 

her model. Plaintiffs criticized Dr. Starks changing her model from the liability phase of 

the trial to the damages phase of the trial. Furthermore, plaintiffs argued that Dr. Starks 

did not properly articulated her reasons for making the adjustments. Plaintiffs point to the 

following exchange on cross-examination between Dr. Longstaff and plaintiffs’ counsel at 

the damages trial:

[Q.] Dr. Starks, when you formulated your opinion that you're now giving 

about five years being the appropriate structure, you knew that the Court 

had said that from 1992 to 1997, five to ten years was the appropriate range, 

and you had also opined that the Government was appropriate within that 

range, correct?

A. I had -- I think as I’ve said, I had said that -- I had given my opinion that 

as they changed their maturities – there’s a range of prudence, and as they 

changed their maturities over that time period, I thought that they had been 

investing prudently.

Q. All right. Now, knowing all of that, you now say that in your opinion five 

years was the appropriate investment horizon or maturity structure for the 

period from 1980 to 1992, correct?

A. I believe that five years -- given, again, the Court’s opinion, given the 

Government's policies, practices, and investment objectives, given the

conditions at the time, and given the financial and economic theory -- that 

five years was the most plausible portfolio -- maturity. 

Q. During the liability trial, you testified that you weren't clear on whether 

five years would have been a prudent maturity structure during the 1980s, 

didn't you?

A. I -- I may have. I said that there was a range of prudence. There's a lot 

of interest rate uncertainty. I may have said I wasn’t clear on the five years.

Q. Well, then, my question becomes, Dr. Starks, when is it that you became 

clear on the five years?

A. Well, in order to -- I haven’t changed my opinion, but in order to meet 

with the decision that the Court has made, I had to -- I had to consider a 

wider range of prudence. But I hadn’t said that five years wasn’t prudent, 

only that –
109

Q. So you –

A. -- the only thing I said was that 15 years wasn't prudent over that time 

period.

Q. I asked you whether five years would be prudent, and you said you 

weren’t clear on that, didn’t you?

A. I did, but I didn’t say it wasn’t prudent.

Q. So you reached the opinion that it was prudent after you knew the Court’s 

decision that a range between five to ten years was prudent between 1992 

and 1997. You took the Court’s decision into account, did you?

A. I took the Court’s decision into account. I also took into account, again, 

the government constraints, the government policies, practices, and the 

financial conditions at the time, and the other -- and the other -- what was 

going on with the tribe at the time.

Q. Now -- and on that basis, you chose the maturity that was at the low end 

of the range that the Court had said in its opinion was prudent, right?

A. I chose -- it wasn’t the most conservative portfolio, but it was a 

conservative portfolio, again, as I testified yesterday, because of the great 

deal of uncertainty in both interest rates as well as in what was going to 

happen with these funds -- the tribal funds.

Q. My question didn’t go to the portfolio, Doctor; it went to the maturity 

structure. You chose the maturity structure at the bottom end of the range 

that the Court had said was prudent from 1992 to 1997, right?

A. And when you – I’m very confusing -- confused by your having corrected 

me on this, because the maturity structure is embedded in the portfolio, so 

I think my answer is the same.

Additionally, plaintiffs argue that “Dr. Starks’ damages model is not credible because its 

maturity structure is based solely on her own ipse dixit opinions, and it produces a return 

far below the market-average returns calculated by RHA. It is not plausible because the 

Government never used her proposed investment methodology (bond ladders) to invest 

the Docket 326 Funds.” (emphasis in original). Responding to plaintiffs’ contentions 

regarding Dr. Starks, defendant argues “Dr. Starks’s plausible and substantial damages 

estimate is supported by the evidence, complies with this Court’s Liability Opinion, and 

offers the only reasonable basis for a damages award in this case.” 
110

As described above, Mr. Nunes, in his expert report, concluded 

the Government’s investment methodology was essentially ad hoc, with no 

apparent consistency, both during the 1992-1997 period when the court 

found it prudently invested the 326-K Fund and during the periods when it 

imprudently invested the 326-K and 326-A Funds. The Government’s ad 

hoc, inconsistent methodology is highlighted by the disparity between its 

investment of the 326-K Fund and its investment of the 326-A Funds in the 

period before December 1998.

Upon reaching this conclusion, Mr. Nunes decided to use benchmarks, which plaintiffs 

argue, “provide a neutral and objective measure of market average returns,” and which 

“reflect the market-average rate of return for a diversified portfolio with the appropriate 

maturity structure. This approach is neutral and objective.” (emphasis in original). In 

addition, in their post-trial briefs, plaintiffs argue that “the evidence does not indicate that 

the Government would have used a particular investment methodology or strategy had it 

invested the Docket 326 Funds prudently. The Government’s investment policies do not 

mandate any particular investment methodology.” Citing to the court’s June 13, 2019 

liability Opinion, plaintiffs claim the Department of the Interior “policies ‘give very limited 

guidance and set almost no rules regarding what would or would not be a prudent

investment of tribal trust funds.’ Nor did the Government follow any consistent investment 

methodology in practice.” (quoting W. Shoshone Identifiable Grp. by Yomba Shoshone 

Tribe v. United States, 143 Fed. Cl. at 624).

In the June 13, 2019 liability Opinion, and as described above, the court explained 

that the Department of the Interior issued various policies regarding the investment of 

tribal trust funds over the investment period in question, but the policies did not give much 

direction on which investment practices and investments might be considered prudent or 

imprudent. Beginning with the first investment policy issued by the BIA in 1966, the BIA 

noted that “[e]ach Area Office is requested to review the amount of tribal trust funds each 

tribe in the respective Areas has on deposit in the Treasury,” and that “[w]herever it 

appears that the amount is in excess of foreseeable cash needs of the tribe, discussions 

should be held with the tribal council and its wishes regarding investment of the funds 

ascertained.” The 1966 policy statement also noted that “[g]overnment-backed securities, 

while basically safe, can result in losses unless held to maturity.” The 1966 policy, 

however, did not discuss which types of investments were considered prudent for tribal 

trust funds. As indicated in the June 13, 2019 liability Opinion:

The next policy issued by the BIA was in a 1974 internal BIA memorandum, 

which indicated that the BIA should “maximize returns on all tribal, as well 

as individual, trust funds.” The 1974 policy memorandum also noted that 

“[e]ach Area Director has the responsibility for determining if surplus funds 

are available for investment purposes and notifying the Branch of 

Investments, Albuquerque, to take the necessary action to invest the funds.” 

The 1974 policy memorandum, however, did not explain under what 

circumstances the government’s investment of a tribal trust fund might
111

satisfy the government’s goal to maximize returns or what constituted 

prudent investment of tribal trust funds. 

The government also issued a further policy statement within its report of 

its investments for tribal trust funds for fiscal years 1986 and 1987. The 

report recognized that the government has the authority to invest tribal trust 

funds pursuant to 25 U.S.C. § 162a and that the BIA should, “through 

knowing the amounts required and when disbursements are necessary,” 

“plan the timing of investment maturities to maximize interest rates and 

earnings and also have the funds available when needed.” The report for 

1986 and 1987, however, like past BIA investment policies, did not provide 

more specific guidance as to when the government’s investment of tribal 

trust funds might satisfy the duty of prudence. 

Next, the trial record includes a 1997 internal policy memorandum released 

by the Office of the Special Trustee, the office which took over the BIA’s 

investment of tribal trust funds in the 1996. The 1997 policy was updated 

with policy amendments by the Office of the Special Trustee in 1999, 2000, 

and 2005, and took its final form for the purposes of this case in 2005. The 

2005 policy was the policy in place up through the disbursement of the tribal 

trust funds at issue. According to the 2005 policy, an acceptable investment 

practice was to “purchase securities with the intent to hold each security 

until maturity,” i.e., a buy and hold strategy, as opposed to frequent trading 

of securities. The 2005 policy also indicated that unacceptable portfolio

investments and practices included investing in any “corporate stock,” the 

purchase of “commercial mutual funds,” and “overtrading, adjusted trades 

or bond swapping.” In sum, the Department of the Interior’s investment 

policies issued throughout the years acknowledged the Department’s role 

as the trustee and investor of tribal trust funds and attempted to provide 

broad guidance to government officials as to what investment practices 

were prohibited by agency policy, what investment practices were 

encouraged, and offered general investment goals, including to maximize 

investment returns.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 622-23. The court noted, however,

[g]iven the fluctuating market conditions and changing events regarding the 

timing of distribution for plaintiffs’ tribal trust funds, including the required 

actions the BIA would need to take in order pay-out the 326-K Fund, 

however, specific, formulaic guidance as to what practices constituted a 

“prudent” investment practice would have been very difficult to establish by 

the Department of the Interior or any other governmental body.

Id. at 623.
112

In addition, as described above, in 1997 the Office of the Special Trustee adopted 

the 1997 Office of the Special Trustee Policy. The 1997 Office of the Special Trustee 

Policy also listed “ACCEPTABLE PORTFOLIO INVESTMENTS AND PRACTICES,” 

which explained, among other practices, the Office of the Special Trustee’s “‘Holding’ 

versus ‘Trading’” practice. (capitalization and emphasis in original). According to the 

section of the 1997 Office of the Special Trustee Policy discussing “Holding versus 

Trading,” 

OTFM intends to manage its Indian trust portfolios in a manner that protects 

the integrity of the primary function of the portfolio, which is to provide 

maximum income for the tribes while conforming to prescribed statutory 

limitations and prudent fiduciary investment principles.

Because OTFM has a small number of investment managers responsible 

for the investment management of over 1450 separate portfolios, OTFM will 

purchase securities with the intent to hold each security until maturity, while 

realizing that sales can and may occur prior to maturity form some of the 

following reasons: 

1. When account review presents obvious opportunity for portfolio 

enhancement from the reinvestment of sales proceeds into 

comparable maturities thereby improving yield or quality without 

adversely affecting overall quality, mix or maturity of the 

investment portfolio.

2. The need to improve or increase portfolio liquidity.

3. The need to invest the proceeds of a security maturing 

within one year because of an interest-rate scenario that 

would be detrimental to the performance of the portfolio if 

held to maturity before investing, i.e., a rapidly falling 

interest rate period. 

4. A reduced credit rating of the issuing Agency renders the 

security to be of less than acceptable quality to remain in 

the portfolio. 

The 1997 Office of the Special Trustee’s “Holding versus Trading” section also 

noted that “[i]nfrequent investment portfolio restructuring carried out in conjunction with a 

prudent overall risk-management plan that does not result in a pattern of gains being 

taken and losses deferred will generally be viewed as an acceptable practice within the 

context of an investment portfolio.” According to the testimony of defendant’s fact witness, 

Mr. Winter, at the liability trial, the 1997 Office of the Special Trustee’s “Holding versus 

Trading” practice meant that,

that we need to purchase securities with the intent and ability to hold to 

maturity; and that, secondly, we’re permitted infrequent investment 

restructuring if the market conditions present themselves as such, but we 
113

can’t be doing so by establishing a pattern of buying and selling, reaping 

gains and losses on any sort of frequency. 

Mr. Winter also testified at the liability trial that the 1997 Office of the Special Trustee 

Policy was the “first formal policy adopted by the Office of the Special Trustee.” Mr. Winter 

further testified at liability trial that the Office of the Special Trustee issued amendments 

to the 1997 Office of the Special Trustee Policy in 1999, 2000, and 2005, but that these 

policy amendments, apart from extending the maturity limits of certain governmentbacked securities from an “average life” of ten to fifteen years, were not “material” 

changes to the 1997 Office of the Special Trust Policy. Moreover, Mr. Winter testified that 

the 2005 policy amendment was the policy in place up until the distribution of the 326-K 

Fund. Mr. Winter further testified at the liability trial that the 1966 policy, the 1974 policy

and the 1986 and 1987 report were consistent with the 1997 Office of the Special Trust 

Policy, and the later 2005 policy to “purchase securities with the intent to hold each 

security until maturity,” i.e., a buy and hold strategy, as opposed to frequent trading of 

securities.

42

42 At the liability trial, Mr. Winter and defendant’s counsel had the following exchange:

Q. So let me point you to paragraph four, Mr. Winter, and it states here in 

paragraph four, “Preparatory to undertaking any investment program with 

surplus trust funds, a tribe necessarily would have to make a careful 

analysis of its current and future cash needs.” My question to you, Mr. 

Winter, is, is there a corollary between this statement here in the 1966 policy 

and the Office of the Special Trustee policies we were just discussing?

A. Yes, there is.

Q. Okay. What is that?

A. Well, this -- the corollary is to our current -- in the policies we were just 

reviewing, to the objective of liquidity.

Q. Okay. And what do you mean by that?

A. Meaning that we have to identify the cash flow needs of the tribe in order 

to adequately invest in maturities suitable to the needs of the tribe in order 

to discern the most advantageous rates for those maturities.

The questioning between defendant’s counsel and Mr. Winter continued: 

[Q.] Is this a statement of policy by the Bureau of Indian Affairs in and 

around 1974?

A. Yes, it is.
114

As noted in the findings of facts above, during the early 1990s, the Department of 

the Interior transitioned from its program of pooling together and investing tribal trust 

funds in short-term jumbo CDs to primarily investing tribal trust funds into other securities 

with varying maturities, such as agency and Treasury securities. Mr. Nunes testified at 

the liability trial that around the early 1990s, the BIA made “a wholesale transition away 

from the CD program, which ultimately went away completely, and monies now were 

being invested in agency securities, mortgage-backeds, callable bonds, and things like 

that.” Defendant’s liability expert, Dr. Starks, testified at the liability trial that after about 

1991, the BIA made a “programmatic” switch from investing tribal trust funds in jumbo 

CDs into “agency securities in particular and a little bit longer term U.S. Treasuries.” Dr. 

Starks discussed the change in type of securities held by the government at the liability 

trial noting that 

[A.] Well, I think what you’re seeing here is the effects on maturity of a buyand-hold policy, because -- because once purchased -- or in the eighties, 

longer term CDs were purchased, and then they come down. Longer term 

securities are purchased and then it -- as time goes by, they go down, and 

then they're purchased again. 

Q. All right. Turn with me, please, to the second page of this document at 

Bates page 259, and, in particular, I want to draw your attention to the 

second paragraph that appears on that page, and, in particular, just let me 

read the first few lines. “Investments can be made for a period of one day 

or for as much as 25 years or longer. Therefore, all funds except the funds 

for immediate needs can be invested to provide a greater income to the 

tribe. The maturity dates can be arranged to coincide with the needs for the 

funds.” Do you see that, Mr. Winter?

A. Yes.

Q. Okay. And, again, without belaboring it, does this statement of policy in 

1974 have a relationship/corollary to statements of policy that we were 

discussing with respect to those policies of the Office of the Special 

Trustee?

A. Yes, it definitely relates directly to the liquidity, the rate of return, and the 

holding versus trading aspects.

Finally, in response to defendant’s counsel question “this document is in the form of a 

‘Report of Investment of Indian Trust Funds for the Fiscal Years 1986 and 1987’ . . . is 

there a corollary between this statement of policy and those that appear in the Office of 

the Special Trustee formal policies we were discussing earlier?” Mr. Winter testified: “Yes, 

it definitely does. The corollary would be to the liquidity aspect and the rate of return 

objective.” 
115

Q. Does the shape of the maturity structure of the 326-K fund over the 

period reflect a buy-and-hold strategy?

A. It does to me, yes.

Q. And is it your opinion, based on your review of the record in this case 

and the record of the Government's investments in this case, that the 

Government, indeed, followed a buy-and-hold strategy at all times in its 

management of this fund?

A. It appears that they -- that they were consistently following a buy-andhold strategy.

The demonstrative chart prepared by Dr. Starks, included above, shows that the 

government generally followed a buy-and-hold strategy during the time periods at issue 

in the above captioned case. This approach adopted by the government is consistent with 

the approach adopted by Dr. Starks in constructing her model for this case. Although the 

plaintiffs and Mr. Nunes repeatedly claim the government’s “investment methodology was 

essentially ad hoc, with no apparent consistency,” the court disagrees. Nor does the court 

agree with plaintiffs contention that the government did not follow “any consistent 

investment methodology in practice.” Although the court concluded that, at times, the 

government did not prudently invest the tribal trust funds, the court did not reach this 

decision because it found that the government did not have a consistent investment 

strategy or that it was operating in an ad hoc fashion. Rather the court found the 

government was in breach because the government was investing the tribal trust funds 

in shorter term securities with an average weighted maturity years to call that did not align 

with the investment horizon of the funds.

On cross-examination with defendant’s counsel, Mr. Nunes discussed the 

consistency of the buy-and-hold approach by the government. 

[Q.] [I]n looking at BIA’s investment practices, you discerned no patterns 

whatsoever that would guide you in deciding where, within this five- to tenyear range, you should set your benchmark. Have I -- have I characterized 

your opinion correctly?

A. Close. I would -- we could not discern anything in this time period that 

indicated the BIA had any kind of a consistent investment approach.

Q. Okay. Now, they did have a consistent investment approach in that their 

policy that they wrote and adhered to was a buy-and-hold policy, right?

A. In the -- it does state that in the policy, but that was not a consistent 

practice, as we know from the data.
116

Q. Okay. But, in fact, you looked at this and you found that in 85 percent of 

the time or more, BIA adhered to a hold until maturity policy, right?

A. Based on the number of sales that we saw in the data, assuming they 

were properly classified, that’s approximately correct, yes.

Q. Okay. And, in fact, you did an analysis of this subject and you found that 

between 1997 and 2011, there were only 60 instances in which BIA sold 

WSIG securities before maturity, right?

A. I think in the broader timeline, it’s 74, but I think that's right for the 

narrower timeline.

Q. And the broader timeline is what? Help me here.

A. Life of the fund, but really insignificant until the CD -- you don’t buy and 

sell -- well, you buy them, but you don’t sell them.

Q. So by the life of the fund, you're talking about 1980 until 2013?

A. Yes, but from a practical standpoint it’s not until the CD program is wound 

down, so really the first sale in advance of maturities, probably ‘92-ish, but

don’t hold me to it. Again, I would have to look at the data.

Q. Okay. So the time period you’re talking about is, since it’s post-CD 

period, is 1992 to 2013? 

A. It’s something like that.

Q. Okay. And you’re telling me that in that period, 1992 to 2013, you found 

that there were approximately 74 instances in which BIA sold the WSIG 

security before maturity?

A. I think that’s right, correct.

Q. Okay. In 20 years? 30 years? No, 20 years?

A. Well, really up until -- and that doesn’t include any activity around the 

liquidation of the fund to do the disbursement, so say through 2010.

Q. Sure. Well, that wouldn’t -- including the liquidation for the disbursement 

period would skew the numbers, wouldn’t it?

A. It would.

Q. Especially for this analysis?
117

A. Right.

Q. So 74 instances where the security was sold before maturity between 

1992 and 2013?

A. 2010.

Q. That’s what you found?

A. 2010.

Q. Out of how many hundreds of -- how many securities did BIA hold on 

behalf of Western Shoshone between 1992 and 2010?

A. Oh, I don’t know. Over the life of the – you know, as they rolled in and 

out? I don’t know. A fair number.

Q. Several hundred, right?

A. That’s reasonable.

Q. So 85 percent or more of the securities that WSIG that BIA purchased 

on behalf of the Western Shoshone were held until maturity.

A. Again, roughly, or to the call. . . .

Q. Do you recall Dr. Goldstein’s testifying as an expert on behalf of Plaintiffs 

in this case at the liability phase?

A. I do.

Q. Do you recall him testifying in the case that the Government actually did 

adhere to a buy-and-hold policy and they didn't turn over the bond portfolio 

regularly?

A. Well, as I said in my deposition, there is no such thing as a little bit

pregnant. If you’re buy and hold, you’re buy and hold. If you’re only 85 

percent or 72 percent or 91 percent buy and hold, you’re not buy and hold.

. . . 

Q. But in your opinion, adhering to a buy-and-hold policy 85 percent of the 

time is not adhering to a buy-and-hold policy?

A. Well, it doesn’t -- it means you're adhering to a buy-and-hold concept 85 

percent of the time.
118

The court disagrees with Mr. Nunes’ conclusion about the buy-and-hold approach 

adopted by the government over the thirty three year timeframe. Therefore, the court 

disagrees with plaintiffs’ conclusion that “the evidence does not support the use of any 

particular investment strategy to calculate damages because the Government never

consistently followed a particular strategy when it did prudently invest the Docket 326 

Funds. Since the Government’s actual investment practices do not provide a template for

measuring damages, it is necessary to turn elsewhere.” The court believes the trial 

exhibits and testimony from the liability phase of the trial as well as the trial exhibits and 

testimony from the damages phase of the trial demonstrated when the government 

invested the tribal funds, it did so consistent with the government’s policy objections and 

statutory requirements. 

Even if the court agreed with plaintiffs’ conclusion that the government had not 

provided a template to calculate damages, the court would not necessarily follow the 

model created by plaintiffs’ expert Mr. Nunes. In defendant’s post trial brief, defendant 

argues that Mr. Nunes’ model is 

not realistic. Mr. Nunes’s damages model does not fairly measure income 

that could have been earned by investing in a manner consistent with sound 

principles of finance and real-world constraints, including the Interior 

Department’s statutory obligations, policies and practices. Plaintiffs 

continue to repeat that Mr. Nunes’s model is based on “objective, verifiable 

data” and “market averages” but ignore that Mr. Nunes’s synthetic indices 

reflect subjective decisionmaking in almost every way, and mimic an 

inappropriate and risky investment strategy that the Interior Department 

simply could not execute in the real world. Plaintiffs’ mantra that its proffered 

“benchmarks” do not reflect specific investment strategies defies reality, 

and Plaintiffs do not explain how the Interior Department could have 

possibly achieved the investment gains measured by Barclay’s indices 

without undertaking the kinds of portfolio management that Barclay’s uses 

to generate its results.

Although Mr. Nunes suggested that this model would be “strategy- and portfolioagnostic, and we want to be strategy- and portfolio-agnostic because we recognize that 

to achieve a certain term structure of a portfolio, it could be done any number of ways, 

and so the indexes are plain vanilla in that regard, and they provide us, again, with a sort 

of baseline. It’s the market average performance based on the rules of the index,” the 

defendant argues “plaintiffs’ bond index approach is not ‘neutral’ but instead reflects a 

specific and risky investment strategy.” Dr. Longstaff’s analysis of Mr. Nunes approach 

likened it to a “targeted maturity strategy like Rocky Hill, you can see that that strategy 

has a positive probability of loss over all investment horizons. It's more pronounced at the 

beginning because of the way that the term structures evolve. It starts out with about a

36 percent chance of a principal loss after one year, but it's still substantial after seven, 

eight, nine, ten years.” 
119

Furthermore, in Dr. Starks’ expert report prepared for the damages phase of trial, 

Dr. Starks indicated that 

investment strategies involving regularly trading securities prior to their 

maturities would be inconsistent with the Government’s objective of 

preserving capital and holding-versus-trading policies and general practice. 

In addition, from a financial economics perspective, strategies involving 

regularly trading securities prior to their maturities generally offer no obvious 

ex ante comparative benefit, and involve additional costs and risks.

(emphasis in original; footnotes omitted).

In addition, plaintiffs explain in the post-trial briefing, “[w]hen RHA combines two 

Barclays indexes to develop a benchmark, it starts with the Barclays UST, which is the 

broadest-based and most diversified because it includes all maturities from 1-30 years. 

Then RHA adds in as much of the longer or shorter index as necessary to achieve the 

desired weighted average maturity.” (citation omitted). As noted above, Mr. Nunes’ expert 

report prepared for the damages phase of trial reflects that various benchmarks are 

composed as follows:

Benchmark Period Composition

10-year 1980-1992 86.05% Barclays UST; 13.95% Barclays LT

7.86-year 1980-1992 97.90% Barclays UST; 2.10% Barclays 1-5 UST

10-year Apr. – Dec. 1997 88.35% Barclays UST; 11.65% Barclays LT

7.86-year Apr. – Dec. 1997 90.20% Barclays UST; 9.80% Barclays 1-5 UST

10-year 1998-2004 91.60% Barclays UST; 8.40% Barclays LT

7.86-year 1998-2004 81.25% Barclays UST; 18.75% Barclays 1-5 UST

2.97-year 2004-2006 6.75% Barclays UST; 93.25% Barclays 1-5 UST

Defendant argues that 

the bond indices that Plaintiffs’ expert Mr. Nunes adopts to calculate

damages are not standard off-the-shelf Barclays indices but instead reflect 

Mr. Nunes’s own curated data, mixed and matched to create a “market 

measure” that Mr. Nunes has crafted to maximize Plaintiffs’ damages 

claims. Thus, rather than presenting the Court with a “neutral” benchmark, 

Plaintiffs have calculated damages based on a specific investment strategy, 

and one that is not only far less plausible than the one offered by Dr. Starks, 

but is also inconsistent with Interior’s practices and policies.
120

As noted above, Mr. Nunes testified on redirect with plaintiffs’ counsel about his approach:

[O]ne of the key concepts of prudent investment, of course, is 

diversification. This actually sort of anecdotally supports that argument. So 

we always, where we can -- so if the UST is not a -- so, for example, in our 

roll-forward period, we used the 1-5, so the UST is not even part of the mix, 

but wherever the UST is a viable part of any kind of an allocation, we will 

always attempt to stay in the highest allocation percentage of the UST 

because it is clearly, of the indices we use, the broadest and most diverse, 

and anecdotally, in that it returns a better number than most of her other 

scenarios, supports the fact that diversification matters. And so we 

concentrate on being the most diverse in our model constructs as we 

possibly can be.

Q. And so, then, when you needed maturity -- needed to meet a maturity 

structure, how did you then blend in either a shorter index or a longer index? 

Did you run a hundred different scenarios or how did you blend in either a 

longer or shorter index?

A. So the answer to did we run a hundred scenarios is, God, no. So we 

would start with the -- you know, obviously we know what 100 percent of 

the UST would return in terms of an average maturity, and so we would look 

at it and say, okay, let's just -- I think this is the example I used in my 

testimony – let’s just say that the UST at a point in time we're looking at has 

a term structure of eight years, and we need to be at ten years. We would 

simply begin sort of ratably – and that’s a bit of a guess at first, how much 

of the UST do I need to take out and how much of the UST Long do I need 

to bring in to maintain maximum diversification and still hit the ten-year 

targeted structure. And so, you know, it may have gone something like this. 

Okay, let’s see what happens if I do 10 percent of an allocation --

reallocation from UST to long-term of 10 percent. What’s that look like? 

That’s 9.7, all right. So maybe we’ve got to shave it a little bit or add a little 

bit. So it’s a little bit trial and error, but it’s once we get to the targeted 

maturity that we need to be at at the maximum amount of diversification, 

that’s the allocation.

Despite Mr. Nunes’ testimony that his aim was “[t]o determine what the earnings 

rate should be if the Government had properly aligned the term structure of the portfolio 

with the investor horizon, we simply use market average returns for a plain vanilla, 

nonsubjective, nonhuman intervention index that says here’s what the market did,” it 

appears from the above testimony, and from Mr. Nunes’ expert reports, that the model 

was designed to achieve an outcome. Regarding Mr. Nunes’ approach, defendant’s 

counsel and Dr. Starks had the following exchange at the damages trial:

Q. Now, did you analyze whether it was possible to construct other 

investment benchmarks with the same maturity horizon, the ten-year 
121

horizon or 7.86-year horizon that Rocky Hill targets, and use these same 

indices, but that lead to different returns by weighting the industries 

differently?

A. Yes. If you use different proportions of the indices, you can come up with 

different damages estimates.

Q. All right. Let's turn now to Demonstrative 19. What did your analysis of 

the different ways in which you could weight the Barclays Indices to create 

an index, what did your analysis of that process show in terms of the 

different returns that might be generated if you weighed things a little 

differently?

A. Well, if you weighted them differently -- so the far right bar shows Rocky 

Hill’s weights, which, as I said before, was 86.05 percent UST and 13.95 

percent UST Long. Much of their period, that was the weights that were 

used. But if you go all the way to the left and you had 62.3 percent in the 

UST 1-5 Index and 37.7 percent in the UST Long Index, you would have 

again had an average target ten-year maturity over the time period, but the 

damages would have been substantially less, 169.5 million rather than their 

177.6 million. The middle one shows if you used all three indices how you 

could have weighted them again to come up with a target maturity that was 

-- that was an average over the time period of ten years, and it would have 

been 173.8 million.

Q. All right. So -- and I just want to pare that down a little more specifically 

as to each bar. So the bar on the far right of this demonstrative, which is 

labeled RHA’s weights, Rocky Hill’s weights, Dr. Starks, is that the 

combination of the UST Long, UST Treasury Index, and UST Long Index -

- or UST 1-5 Index that Mr. Nunes used to create his benchmark?

A. It's a com -- out of those three indices, it’s a combination of two of the 

indices with zero percent and the UST 1 -5.

Q. And was that a choice that Mr. Nunes made in putting together his index?

A. Yes, it was.

Q. Okay. And that -- am I reading this demonstrative correctly that that 

resulted in 177.6 million in damages?

A. Yes.

Q. Okay. But there were -- there were other ways -- were there other ways 

to put together these three bond indices that would also reach a ten-year 

weighted average maturity target for the benchmark?
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A. I think there are limitless ways that you could have combined those --

those indices.

In addition, defendant suggests “[t]o replicate the performance of Mr. Nunes’s bond 

indices the Interior Department would have to buy and sell huge volumes of bonds and 

realize gains and losses from those transactions.” Defendant continues: 

Mr. Nunes’s synthetic indices, which reflect combinations of different 

Barclays indices, must rebalance each month to reflect the changes in each 

of the Barclays indices it contains. In practical terms this means that any 

investor trying to emulate the performance of the Barclays indices, or Mr. 

Nunes’s synthetic indices, would have to buy and sell bonds each month to 

match the index.

Plaintiffs note that defendant argued 

“[i]n practical terms this means that any investor trying to emulate the 

performance of the Barclays indices, would have to buy and sell bonds each 

month to match the index.” This statement is true but it is irrelevant and 

misleading. RHA does not propose to emulate the Barclays indexes, like an 

index mutual fund would do. Instead, it uses the Barclays indexes as a 

measure of the market-average performance of a diverse portfolio of 

Treasury bonds with a particular maturity structure.

(emphasis in original). The court finds this argument to be a distinction without a 

difference. The court is unclear how the government would have been able to replicate 

the return on investment achieved by the Barclays indexes without adopting an approach 

of frequent buying and selling securities. Nor is it clear from Mr. Nunes’ model or his 

testimony at the damages trial how the government was to achieve such a rate of return 

if the government was operating under the general restrictions of a buy-and-hold 

approach to the investments held in trust for the plaintiffs. 

Plaintiffs also cite to the Jicarilla III decision dozens of times in their post-trial 

submissions, as well as numerous references by Mr. Nunes at the damages trial. One 

reason for the numerous references of the Jicarilla III opinion was that the Judge in 

Jicarilla III accepted the Barclay’s index approach developed by Rocky Hill Advisors to 

calculate damages. See generally Jicarilla III, 112 Fed. Cl. 274. In a succinct decision, 

the Judge in Jicarilla III explained, 

plaintiff seeks to calculate damages by using a market index as a 

benchmark for determining the performance of a properly invested portfolio. 

Plaintiff's Rocky Hill investment model uses, for this purpose, a Barclay’s 

index of U.S. Treasury instruments, specifically the Barclays UST, which is 

part of the Barclays U.S. Government Index. That index captures all public 

obligations of the U.S. Treasury with a remaining maturity of at least one 
123

year, and includes Treasury obligations with maturities ranging from one to 

30 years. Under this index, the allocation as between short-, medium-, and 

long-term bonds at any point reflects market forces (i.e., all relevant 

obligations outstanding) rather than any judgment by plaintiff's experts or 

others regarding what that mix should have been. Put another way, the 

Barclays UST is a passive, mechanical representation of market 

performance for a defined debt instrument market. In measuring 

performance, the Barclays index also includes, on a quarterly basis, the 

gains and losses on the bonds being tracked, thereby providing for the 

further accretion of principal.

In selecting this index, the Rocky Hill experts carefully considered the 

maturity structure of the Barclays UST to make sure that it aligned with what 

would have been a prudent investment of Jicarilla’s funds. They ascertained 

that the Barclays UST had an aggregate average maturity that grew from 

3.8 years to 9.1 years over the period in question, but observed that during 

this entire period, approximately 60 percent of the index was comprised of 

maturities ranging between one and five years, with an average maturity for 

this component of less than 2.5 years. In their view, the maturity structure 

of the Barclays UST aligned well with the maturity capacity of the funds in 

the Nation's trust accounts. They viewed their choice of the Barclays UST 

as somewhat conservative, as it was based neither upon the notion that 

there would be active management of the tribal trust funds nor upon any 

assumption that the funds would have been invested so as to generate an 

extraordinary performance that beat the market. In their view, the use of this 

index was also consistent with Jicarilla’s demonstrated liquidity needs—a 

view that this court has confirmed in concluding that the BIA's short-term 

investment practices constituted a breach of trust.

In challenging plaintiff’s investment model, defendant reiterates many of the 

claims that this court has already rejected. Echoing assertions made by its 

experts (or vice-versa), defendant’s banner claim thus is that the short-term 

investment strategy employed by the BIA was prudent and particularly 

attuned to the Nation's liquidity needs. Based on the evidence discussed 

above, however, the court has rejected both prongs of this claim. And these 

arguments are no more persuasive the second time around, in this 

damages context, even if they now take on a somewhat different cast. As 

such, based upon the strength of its liability findings, the court cannot 

remotely accept Dr. Alexander's damages model, which, in relying upon 

those rejected propositions, produces damages of at most approximately 

$50,000.

That said, in talking about damages, defendant takes a somewhat different 

tack regarding liquidity. It claims that even if a significant portion of the 

portfolio should be treated as having been invested in longer-term 

securities, some portion of the portfolio needed to be kept in short-term 
124

instruments, to provide some opportunity for the Nation to make withdrawals 

without having to liquidate investments. Based on this proposition, 

defendant claims that, at most, plaintiff is entitled to the damages 

associated with a hypothetical used by plaintiff’s witness, Dr. Goldstein, who 

examined the performance of a portfolio invested eighty percent in five-year 

Treasury notes and twenty percent in three-month CDs—the approach that, 

in the chart above, the court references as “Defendant (High).” But, there 

are several major flaws with this claim.

First, defendant’s claim hinges on an unproven proposition, namely, that the 

Nation’s trust funds needed to maintain a certain balance of cash or cash 

equivalents in order to meet periodic withdrawal needs. The record simply 

does not support this factual claim. While the record suggests that the BIA 

often invested in very short-term obligations, there is no evidence that this 

was necessary to meet the Nation’s true liquidity needs. Even assuming 

arguendo that there was a periodic need for the BIA to have cash on hand, 

there is no reason to believe that the BIA could not have produced that cash 

by selling longer-term securities—that, for example, the U.S. debt 

instruments in the Barclays UST were any less marketable or liquid than the 

three-month CDs used in Dr. Goldstein’s hypothetical portfolio. To the 

extent that the sale of such instruments might have produced gain or loss, 

this was accounted for in the Barclays UST, which presumed that there 

would be periodic sales of the instruments in that index. Lastly, plaintiff was, 

in the court's view, entitled to assume in its model that the special debt 

certificates made available by the Treasury to the BIA—which offered the 

BIA the ability to shift in and out of investments without transaction costs or 

penalties—still would have been available if the BIA had employed an 

investment strategy using maturities like those in the Barclays UST. For all 

these reasons, the court credits the testimony of plaintiff's experts that a 

portfolio patterned after the Barclays UST represented a reasonable proxy 

for how the trust funds in question should have been invested. And, on that 

basis, the court concludes that the model proposed by plaintiff provides a 

reasonable and appropriate basis for calculating the damages owed here.

Jicarilla III, 112 Fed. Cl. at 307–10 (emphasis in original; footnotes omitted). As noted in 

both the June 13, 2019 liability Opinion and this Opinion, Jicarilla III is not binding on this 

court, and, although there are some similarities between the two cases, the facts in both 

cases are different. Moreover, as noted above, the plaintiff in Jicarilla III raised, and 

prevailed on, claims that are not before this court in the above captioned case. In Jicarilla 

III, the Judge of the United States Court of Federal Claims determined that the 

government was responsible for the unauthorized disbursement of the Jicarilla Tribe’s 

trust funds and, further, that the government failed to timely process deposits of oil and 

gas royalties. See id. at 303-304. 
125

Most significantly, in the above captioned case, and which was not true in Jicarilla 

III, the court found that there were periods of time in which the government did not breach 

its fiduciary duty. The court determined:

Between December 1992 and March 1997, the government did not breach 

its fiduciary duty. During this time, when the enactment of distribution 

legislation for the 326-K Fund still remained unlikely to occur in the nearterm, the government began to shift the 326-K Fund into different types of 

securities, including agency and Treasury bonds, and to decrease its 

reliance on short-term CDs. The government also lengthened the maturity 

structure of the 326-K Fund into longer-term securities, with an average 

weighted maturity years to call ranging from approximately five to ten years. 

Therefore, the government’s lengthening of the maturity structure of the 

326-K Fund portfolio during this time was within the range of prudence, 

given the longer-term investment horizon of the fund.

. . . 

Between October 2006 and December 2010, the government did not breach 

its fiduciary duty. During this time, the average weighted maturity years to 

call of the 326-K Fund ranged from approximately one year and seven 

months to a little less than three years. The record indicates that distribution 

legislation for the 326-K Fund had been enacted in July 2004 and that 

government officials reasonably believed that a pay-out of the 326-K Fund 

would occur within a couple of years and invested the 326-K Fund in 

accordance with such information. Therefore, the government’s decision to 

place the 326-K Fund in shorter-term securities during this time prudently 

corresponded with the shortening investment horizon of the fund.

Between January 2011 to September 2013, the government did not breach 

its fiduciary duty, nor did plaintiffs appear to argue that the government’s 

investment of the 326-K Fund was imprudent. During this time, the 

government began the distribution of the 326-K Fund monies to qualifying 

Western Shoshone members and, therefore, transitioned the entire fund 

into ultra-short-term overnight securities in order to liquidate the fund for 

distribution. Thus, the government’s placement of the 326-K Fund in ultraliquid securities during this time was prudent.

W. Shoshone Identifiable Grp. by Yomba Shoshone Tribe v. United States, 143 Fed. Cl. 

at 658–60 (footnote omitted). For the 326-A Funds, the court also concluded: 

Between February 2012 to September 2013, the government did not breach 

its fiduciary duty when it lengthened the maturity structure of the 326-A 

Funds into investments with an average weighted maturity years to call of 

eleven to fourteen years. Plaintiffs’ liability expert, Mr. Nunes, 

acknowledged at trial that the government began to finally shift the 326-A 
126

Funds into longer-term securities during this time and testified that this shift 

was “good news.” Therefore, in light of the fact that the 326-A Funds’ 

principal was not to be invaded and was to be perpetually held in trust, the 

government’s decision to lengthen the maturity structure of the 326-A Funds 

during this time was prudent and consistent with the long-term nature of the 

funds.

Id. at 661.

In addition, as noted in the June 13, 2019 liability Opinion

Beginning in December 1992, the government significantly increased the 

average weighted maturity years to call of the 326-K Fund, reaching a peak 

of a little less than ten years by September 1993. Following the September 

1993 peak, the maturity structure of the 326-K Fund steadily declined to 

about an average weighted maturity years to call of a little less than five 

years by March 1997. Also, by March 1997, the 326-K Fund was no longer 

invested in any CDs, and instead invested in a mixture of agency, Treasury, 

and mortgage-backed securities. At trial, plaintiffs acknowledged that the 

government invested the 326-K Fund in longer-term securities between 

December 1992 and March 1997 than it had previously done during the 

1980s and early 1990s. Plaintiffs’ liability expert, Mr. Nunes, however, 

testified at trial that government should have invested the 326-K Fund in 

even longer-term investments than those selected by the government, with 

an average weighted maturity of approximately fifteen years, due to the 

uncertainty surrounding when distribution plan legislation would be enacted 

by Congress and the time intensive process of compiling descendancy rolls 

and distributing the monies to qualifying Western Shoshone members. 

Defendant’s liability expert, Dr. Starks, however, testified at trial that the 

government’s investment of the 326-K Fund during this time, the “mid1990s,” was within a range of prudence. 

Id. at 639. Moreover, as noted by defendant, 

in Jicarilla, where the Court accepted a “benchmark” approach, the UST 

Index “benchmark” came much closer to representing an objective “market 

measure” for Treasuries than does the synthetic portfolio Mr. Nunes created 

for the damages trial in this case. The UST Index, used all by itself, and 

without Mr. Nunes’s ad hoc “transition periods” and ad hoc conglomeration 

of multiple indexes, at least represents the entire universe of outstanding

Treasury bonds and notes (excluding “T-bills” with maturities under one

year). Thus, when Judge Allegra looked to Mr. Nunes’s model as a 

benchmark, he was at least evaluating Interior’s investment performance 

against a “market” that Mr. Nunes had not manipulated through subjective 

decision-making for purposes of calculating damages.
127

(emphasis in original). Furthermore, defendant argues “Mr. Nunes did not use the ‘market 

measure’ here that he proffered in Jicarilla, and had he done so, his damages estimate 

would likely have resulted in tens of millions less in damages.” The different model used 

by Mr. Nunes in the above captioned case, including the blending of the indices, as well 

as the different posture of the two cases, does not compel this court to agree with the 

Jicarilla III Judge that the benchmark approach by Mr. Nunes is the proper measure for 

damages in this case.

Although the court has not found plaintiffs’ model to be plausible, it does not follow 

that the court must adopt defendant’s model. As noted above, Dr. Starks’ model uses a 

buy-and-hold ladder portfolio. The court finds this approach is consistent with the

approach previously used by the government. Plaintiffs argue, however, that Dr. Starks

“investment methodology (bond ladders) is completely implausible because the 

Government never invested the Docket 326 Funds in that manner.” The court notes that 

at trial defendant identified a number of examples of tribal trust funds that appeared to 

use a ladder approach, and discussed them with Mr. Nunes. Defendant’s counsel first 

asked,

in this policy – BIA policy document, do you see there’s a description of how 

a laddered portfolio is designed and how it can be designed -- structured so 

as to anticipate future interest rates?

A. I do.

Q. And there are specific instructions about how to design and implement a 

laddered portfolio? 

A. That appears to be what's there, correct. . . .

Q. What we were looking at before was Section 5.1 of this 2004 instruction 

-- appears to be an instruction manual . . . and do you see how in this sort 

of recipe for an initial presentation to a Tribe, that under lettered number (i), 

lettered item (i) it’s said that they should go over and describe a laddered 

portfolio strategy? Do you see that?

A. I do, I do.

Q. And on the next page . . . they also describe how in a followup meeting 

with the Tribe when discussing their investments, again, lettered item (i), 

they should go over again a laddered portfolio strategy. Do you see that?

A. I do.

Q. You’ll agree with me it does not appear that BIA was a stranger to 

laddered portfolios?
128

A. Ah, I never said that they were, only that we've never seen them actually 

do it. . . .

[Q.] Now, this is a July 1997 document involving the investment of the funds 

of the Jicarrilla [sic] Apache Tribe. Do you see that? 

A. I do.

Q. Now, Jicarilla, that's a tribe you had a lot of involvement in, isn’t it?

A. We testified on behalf of Jicarilla. I’ve never actually been involved with 

the tribe in that regard.

Q. But you were involved in studying their portfolio and their investments, 

yes?

A. That’s correct, but this is the water rights settlement fund, which we never 

looked at.

Q. You never looked at this, okay. Do you see how under investment 

objective it says, “Per tribal instruction these funds are invested in a six 

month ladder with monthly rungs.” Do you see that?

A. I do.

Q. So would you agree with me that it appears in this case that BIA used 

the laddered portfolio for trust funds -- for tribal funds held in trust?

A. Well, they’re saying that that’s what they’ve constructed, yeah, but, again, 

it’s a water rights settlement fund, was not part of the case, so we've never 

seen this.

Q. You've never analyzed that particular fund?

A. No. . . . 

Q. Okay. And this one appears to have to do with management of funds of 

the Pueblo Laguna. Do you see that?

A. I do.

Q. Okay. And under the investment approach, it says that the approach is 

going to be to ladder the account to ten years by purchasing both bullets 

and callable bonds. Do you see that?
129

A. I do see that, yes.

Q. This looks like another example where BIA used a laddered approach to 

a Tribal Trust Fund claim, right?

A. Well, I am going to state this again. They’re saying they do. The proof in 

the pudding would be to analyze the portfolio and see if they actually did 

construct --

Q. Do you have any reason to believe they didn’t invest the Pueblo Laguna's 

funds in a ladder?

A. I can’t answer that without seeing the portfolio, and that’s a Tribe I’ve 

never worked with their data.

It appears from the exhibits introduced by defendant at both the liability trial and the 

damages trial, that the government had adopted in the past a ladder approach to 

securities for the investment of tribal trust funds. Even if the government, as it relates to 

the investment strategy for the 326-K Fund and the 326-A Funds did not specifically 

identify the investment approach as “laddered,” the buy-and-hold method, which Dr. 

Starks used to create her ladder portfolio analysis, appears consistent with the general 

buy-and-hold approach taken by the government. Moreover, as defendant notes, 

“Plaintiffs’ argument, if accepted, completely rules out Plaintiffs’ own damages 

calculations, which are premised upon a frequent trading strategy that Interior not only 

never used in managing the Funds, but which is forbidden by Interior’s policies and cannot 

be used for any tribal fund under Interior’s management.” (emphasis in original). 

As noted above, plaintiffs also contend that “Dr. Starks’ damages model is not 

credible because its maturity structure is based solely on her own ipse dixit opinion, which 

is at odds with the evidence.” Although plaintiffs argue that Dr. Starks’ model is without 

evidence, the court found her expert reports as well as her expert testimony at the 

damages trial, and at the liability trial, to be well thought out and supported. As quoted 

above, Dr. Starks was able to articulate her methodology and the basis for her opinions 

and conclusions. The court found Dr. Starks’ testimony to be credible and supportable by 

the documents in the record before the court at the liability trial, and the court again finds 

Dr. Starks’ testimony at the damages trial credible and supported by her expert reports 

and exhibits introduced at the damages trial. Again, in arguing that “Dr. Starks’ investment 

horizons are ipse dixits that lack credibility,” plaintiffs challenge the basis for Dr. Starks 

opinion that “the appropriate pre-Distribution Act investment horizon for the 326-K Fund 

was five years.” (emphasis in original). Plaintiffs also indicate that “[s]he uses this 

investment horizon for the periods from August 1980 until November 1992, and from April 

1997 until June 2004.” The court notes that for the interim period, December 1992 to 

March 1997, the timeframe the court determined in the June 13, 2019 liability Opinion to 

have been prudently invested, Dr. Starks’ expert report reflects the government “invested 

the Docket 326-K Fund in a portfolio of securities reflecting a weighted average years-tocall ranging from 4.7 years to 9.7 years.” Moreover, as explained in defendant’s post-trial 
130

reply brief, “[t]he portfolio during this prudent period never reflected a weighted average 

years-to-call of 10 years, and exceeded 7.5 years only 20% of the time. For the vast 

majority of this prudent period (80% of the time), Interior’s investments reflected a 

weighted average-years-to-call of 7.5 years or less, and about half the time (49% of the 

period) reflected a weighted average years-to-call of 6 years or less.” (emphasis in 

original). Dr. Starks’ testimony at the damages trial is consistent with her conclusions in 

her expert report, and as she explained to defendant’s counsel on direct examination that 

weighted average years to call is the better measure, because this 

difference here shows there were callable bonds in this portfolio, but then I 

also looked at the number or the percentage of months that had five years, 

5 1/2 years, six years, so forth, in terms of the weighted average years to 

call.

Q. All right. Let’s look at Demonstrative 30. What’s shown here on 

Demonstrative 30, Dr. Starks?

A. Demonstrative 30 shows the frequency in months of the different 

maturities between 4.7 years and ten years. And so, for example, the -- the 

less than five years was 19 percent of the month, and only 2 percent was 

between 9 1/2 and ten years. And as the chart shows, 80 percent of the 

months have holdings with the weighted average years to call under 7 1/2 

years, and, in fact, if you look at the first three bars, which shows the 

percentage of the months under six years, it is almost 50 percent.

The use of the investment horizon consistent with the non-breach period by Dr. Starks 

appears to the court to be reasonable. 

Further, the court is puzzled by plaintiffs’ criticism of Dr. Starks’ decision to adjust 

her models between the liability trial and the damages trial. Plaintiffs specifically identified 

Dr. Starks’ testimony on cross-examination that: “I haven’t changed my opinion, but in 

order to meet with the decision that the Court has made, I had to -- I had to consider a 

wider range of prudence.” The court notes that the parties and their experts were 

specifically instructed to “be responsive to the decision on liability issued by the court on 

June 13, 2019.” Moreover, Mr. Nunes’ expert report for the damages trial states:

Based on the this decision, [the court’s Liability Opinion] we have revised 

our investment models to recalculate damages for the 326-K Fund and the 

326-A Fund. Our revisions to the models (1) utilize the returns of the 

Government’s extant investment portfolios for those periods in which the 

Court found no breach of trust, and (2) utilize investment horizons and 

maturity structures consistent with the court’s analysis for those periods 

which the Court did find a breach.

Although the experts may have disagreed with some of the conclusions in the court’s 

June 13, 2019 liability Opinion, the experts were specifically instructed to tailor their expert 
131

reports for the damages trial phase, and, therefore, their testimony at the damages trial, 

to the framework established by the court. As indicated in the following exchange on direct 

examination between Mr. Nunes and plaintiffs’ counsel at the damages trial:

Q. Mr. Nunes, after the Court issued its liability opinion in June of 2019, was 

Rocky Hill Advisors asked to perform additional expert services for this 

case?

A. Yes, we were.

Q. And what was the scope of work that Rocky Hill was asked to perform?

A. Based on the Court’s decision on liability, we were asked to recalculate 

the damages that we had presented in the liability phase of the trial.

Q. And what was the first step that Rocky Hill took to begin this second 

phase of work?

A. Essentially, you know, reading the Court’s decision to gain an 

understanding of where the Court had found the Government to either be in 

breach or not in breach and to understand -- I'll call it the moving parts to 

the Court's decision.

Mr. Nunes additionally testified at the damages trial: “I mean, as much as I love my own 

opinions, once the Court rendered its decision, my opinion was no longer applicable.” The 

court does not take issue with the revisions to Dr. Starks’ expert reports in light of the 

court’s rulings after the liability phase of trial.

Plaintiffs also allege that Dr. Starks made a mistake in alleging that Mr. Nunes 

miscalculated his returns by incorrectly converting the Barclay indices. At the damages

trial, Dr. Starks addressed her claim with defendant’s counsel:

Q. Explain to the Court what you mean by your statement that Rocky Hill 

has improperly – improperly stated the frequency of reinvestment in its 

model.

A. So Rocky Hill has said that their reinvestment of earnings occurs 

quarterly; however, Barclays in the index reinvested monthly. . . . I’m not 

critiquing what Barclays does. Barclays is very good at transforming a 

monthly interest rate to a quarterly interest rate to an annual interest rate. 

My critique is that Rocky Hill said that they were reinvesting quarterly when, 

in fact, in their model, they are reinvesting monthly. So this difference 

between what they said they were doing and what they did in their 

spreadsheet is what I’m calling improper reinvestment frequency, because 

it doesn’t align with what they said they were doing.
132

Q. All right. So let's look at Demonstrative 49. What did Rocky Hill say in its 

expert report -- these are excerpts from -- I should say, these are excerpts 

from Rocky Hill’s report, JX420, and this is their liability phase report. What 

did they say about how the model reinvests returns?

A. Well, twice in this they said they were reinvesting the returns quarterly to 

align with the quarterly reset of the indices, and then at another point they 

said the investment earnings are reinvested quarterly.

Q. Okay. But what does their model actually do?

A. It actually reinvests monthly.

Q. And how do you know that?

A. Because I asked the people at Analysis Group to look at the model and 

see what they -- what they did, and I also know that the Barclays Index 

reinvests monthly.

Q. Let's look at Demonstrative 50. What does this indicate about how the 

Barclays model reinvests the interest income and gains that its model 

produces every month?

A. So they specifically say, for indices that rebalanced less frequently, cash 

is still reinvested pro rata at the end of each month, and cumulative returns 

over periods longer than one month still reflect monthly compounding.

In response to her testimony, plaintiffs allege, 

Dr. Starks was wrong. A review of RHA’s model demonstrates that there is 

no compounding of earnings within a quarter. Instead, the model reinvests 

earnings quarterly in accord with the Barclays data it is using – it applies the 

same earnings rate for each day of a quarter to the balance in the account 

at the beginning of the quarter. At the end of the quarter, those daily 

earnings are totaled up and added to the beginning balance to become the 

new balance for the next quarter.

Plaintiffs continue: 

[t]he Government’s entire damages case rests upon Dr. Starks. In its brief, 

the Government extols Dr. Starks and asks the Court to credit her 

testimony, and to discredit RHA based on her testimony. Yet it turns out that 

Dr. Starks made a multi-million dollar error in her testimony and a serious 

false accusation against RHA. A mistake of this magnitude seriously 

undercuts her reliability and credibility, and hence the Government’s 

position.
133

In response, defendant argues “Plaintiffs’ unfounded accusations appear to arise from 

Plaintiffs’ own failure to understand the contradictions in Mr. Nunes’s testimony, as 

explained by Dr. Starks.” Defendant claims

Mr. Nunes’s expert reports and testimony raise the question Dr. Starks

identified in her rebuttal report: because the Nunes damages model 

employs Barclays index data, does his model reflect the monthly 

compounding that the Barclays indexes incorporate into their returns? Mr.

Nunes has repeatedly insisted that his model reinvests quarterly, not 

monthly. But Dr. Starks has demonstrated that Mr. Nunes’s opinion on this 

point is, at a minimum, confused. The source of that confusion is the fact 

that Mr. Nunes’s model incorporates the returns calculated by the Barclays 

U.S. Treasury indexes, and the Barclays indexes reinvest earnings monthly.

(emphasis in original). The cross-examination testimony of Mr. Nunes demonstrates that 

the parties are discussing two separate issues, which caused confusion. In discussing 

the mechanics of Mr. Nunes’ model, defendant’s counsel asked Mr. Nunes on crossexamination:

Q. So it’s the -- the cash is invested at the -- the cash income is reinvested 

every month, and as a result, in the following month starts to make money 

on its own.

A. That’s right.

Q. Okay. Now, if instead the Barclays index reinvested the cash not monthly 

but quarterly, the actual revenue reflected in the index would be significantly 

less, would it not?

A. No, because the quarterly calculation is the return for the quarter. It’s a 

data point. There’s nothing –

Q. Okay, I think you’re answering a different question than the one I asked.

A. Okay.

Q. And if I’m wrong about that, you can correct me, but my question isn’t 

about the fact that you can report the earnings on a monthly or quarterly or 

annual basis. My question is how does the -- as a matter of mechanics, how 

does the Barclays model actually reask invest [reinvest] the income, the 

dollars coming in? And as I understand it, it reask invests [reinvests43]

43 Although the trial transcript from the damages trial repeatedly refers to “reask invest” 

and “reask invests” from the context of the cross-examination by defendant’s counsel of 

Mr. Nunes, it appears the testimony was “reinvest” and “reinvests.”
134

dollars at the end of each month. So money coming in in January is invested 

and deployed, actively deployed, at the end of January and starting in 

February.

A. Yes. What it means is for February you’re deploying more cash, but it’s 

across the same index allocation once the index resets.

Q. Fair enough. But that cash is used, in effect, to buy more Treasury bills, 

treasuries, so that cash is now earning its own coupon payment.

A. Correct.

Q. Now, if instead what Barclays did or what your model did was invest that 

cash not at the end of each month but at the end of each quarter, meaning 

the actual earnings would be significantly reduced, would they not?

A. I mean, as you’re describing it, it would likely have an impact, but you’re 

bastardizing the Barclays index.

Q. I’m describing something that the Barclays index doesn’t do.

A. That is correct.

Q. Is that your point?

A. Yes, correct.

Q. And my point is that -- well, your model, the mechanics of your model 

operates just as the Barclays index does; namely, it invests and actively 

deploys cash earned on a month-by-month basis, not on a quarter-byquarter basis.

A. No.

Q. I’m wrong about that?

A. How our model does it?

Q. Yeah.

A. No. Our model reask invests [reinvests] each quarter’s earnings at the 

end of the quarter in the same cadence as the Barclays index quarterly 

return data point resets.

Q. Okay, but I’m not -- I think we’re talking about different things again. I’m 

not talking about data points. I’m talking about how the cash earnings -- at 
135

what point the cash earnings are actually invested, okay, in treasuries, and 

my understanding is that in Barclays, the cash earnings are invested into 

new treasuries at the end of each month.

A. In the construction of the index.

Q. Okay. And then your -- your model does the same thing. It invests that 

cash on a monthly basis.

A. No.

Q. It doesn't? Your model invests it on a quarterly basis?

A. We use a data point that Barclays calculates and that we showed in 

validation that says this is the return of the index for the quarter, so meaning 

that in the quarter, the market average return of the index was -- pick a 

number, 5 percent. In our model -- and we validated that when we show 

how a monthly index produces the same result as the quarterly index 

produces the same result as an annual index -- again, all of those are data 

points that Rocky Hill is not calculating or in Dr. Starks’ parlance converting. 

We take that 5 percent, and that becomes the model market average 

earning rate for the quarter, no reinvestment month to month. At the end of 

the quarter, whatever the quarter’s earnings are based on that quarterly 

data point, they get reinvested such that day one of quarter two includes the 

prior quarter’s principal balance plus the prior quarter's earnings based on 

the quarterly market average earnings rate.

Q. Okay. So your model reask invests [reinvests] the cash earnings on a

quarterly basis.

A. Correct.

Q. Now, there would -- and my point is I think a simple one, which is that 

reinvesting the cash on a quarterly basis versus a monthly basis is going to 

have an effect on the actual returns.

A. In our model if we were to do it?

Q. No, just in the abstract. If Barclays reask invests [reinvests] the cash on 

a monthly basis or a quarterly basis, that's going to make it different as to 

what the returns will be.

A. No. We showed you in the data validation, it doesn’t make a difference, 

because the data points that they're providing are clean data points for the 

frequency period in which they're providing them.
136

The court agrees with the defendant regarding the alleged “mistake” by Dr. Starks, 

and does not find Dr, Starks made a mistake labeling Mr. Nunes’ model as reinvesting 

monthly given the Barclays index monthly reinvesting and monthly rebalancing. The court 

believes it was a fair criticism for Dr. Starks to identify, even if the confusion stems from 

the phrasing used by Mr. Nunes, and for defendant’s counsel to address with Mr. Nunes 

on cross-examination.

The court, however, does take issue with a mistake made by Mr. Nunes. As noted 

above, on cross-examination with defendant’s counsel Mr. Nunes admitted there was an 

error in his calculations in his original expert report on damages, a mistake which was 

discovered by Dr. Starks. At the damages trial, Mr. Nunes had the following exchange 

with counsel for the United States:

[Q.] [A] few minutes ago, you said that -- you acknowledged that Dr. Starks 

was right, and that was begrudgingly, and in the deposition you said you 

accepted the truth of what she said reluctantly. Why were you reluctant or 

begrudging in accepting that she had it right?

A. Because I hate giving up possible money, but, you know, you do what 

you have to do when it’s right.

Q. What you had done in your original report was you had inadvertently 

imposed damages for a period in which the Court found the Government 

was not in breach.

A. By applying the manner in which returns of a portfolio are typically 

calculated in the investment world, yes. That did end up resulting in a larger 

growth rate in the non-breach period than was realized by the Government.

Q. And the net result of that mistake was to increase your damage 

calculation between 45 and 50 million dollars in both Scenario A and 

Scenario B.

A. That’s correct, yes, in round numbers.[

44]

In addition to what appears to be a clear error, examining the expert reports of all the 

experts, the court finds that Dr. Starks was a more credible and a more supported expert 

witness than Mr. Nunes, and offered to the court a more plausible model of damages.

44 Plaintiffs complain that the “Government harps throughout its brief on a ‘$50 million 

error’ made by RHA in originally calculating the growth of the Docket 326 Funds during 

the non-breach periods, which RHA corrected well before the trial,” and note “Mr. Nunes 

addressed this issue forthrightly during his trial testimony and it played no role in the 

damages figures that RHA presented to the Court.” (footnote omitted). 
137

The court notes that, in addition to questioning the methodology and credibility of 

Dr. Starks, in their post-trial reply brief, plaintiffs also alleged, “[t]he government breached 

its duty of candor to the Court,” arguing “[t]he Government’s advocacy in its brief simply 

cannot be squared with its duty of candor to this Court.” After citing to the Model Rules of 

Professional Conduct,45 plaintiffs stated, 

the Government has a duty to candidly and accurately present the facts to 

this Court. While it is free to present those facts in the light most favorable 

to it and to argue the most favorable inferences from those facts, it cannot 

mislead the Court about those facts or permit one of its witnesses to do so, 

whether deliberately or inadvertently. Rather, the Government, like 

plaintiff’s counsel, has a paramount, affirmative duty of candor to the Court 

that requires it to correct the record to ensure that this case is decided on 

its merits. Accordingly, the Government was required to correct Dr. Starks’ 

erroneous testimony. It is not sufficient for the Government to stay silent 

and simply not respond to WSIG’s attack on this aspect of Dr. Starks’ 

testimony, without acknowledging this major chink in her armor. However 

reluctant the Government may be to undermine the credibility of its star 

witness, it has no choice. The Court has a paramount need to be accurately 

apprised of the material facts, as well as which factual issues are 

legitimately disputed and must be resolved by it. The Government owes an 

accounting to this Court for this breach of its duty of candor.

Defendant responds that “Dr. Starks’s critique is accurate, there is no ‘error’ for the United 

States to ‘acknowledge,’” and, therefore, there is “no merit in Plaintiffs’ contention that the 

United States has breached a duty of candor to the Court.” Defendant also argues that 

“[t]hese unfounded accusations are contradicted by the trial record.” Having found that 

that Dr. Starks did not make the error plaintiffs allege, the court agrees with defendant 

there the government has not breached a duty of candor to this court. Although the 

American court system is based on an adversarial relationship between the parties, the 

unnecessary allegations of breaching the duty of candor made by the plaintiffs have no 

place in the above captioned case.

45 In addition to citing the Model Rules of Professional Conduct, plaintiffs, quoting from a 

decision by the United States Court of Appeals for the Fourth Circuit note:

“While Rule 3.3 articulates the duty of candor to the tribunal as a necessary 

protection of the decision-making process, and Rule 3.4 articulates an 

analogous duty to opposing lawyers, neither of these rules nor the entire 

Code of Professional Responsibility displaces the broader general duty of 

candor and good faith required to protect the integrity of the entire judicial 

process.”

(quoting United States v. Shaffer Equip. Co., 11 F.3d 450, 457 (4th Cir. 1993)).
138

Although finding defendant offered a plausible model for the calculation of 

damages, the court remains cognizant of the Federal Circuit statement in Warm Springs:

“Where several alternative investment strategies would have been equally 

plausible, the court should presume that the funds would have been used 

in the most profitable of these. The burden of providing that the funds would 

have earned less than that amount is on the fiduciaries found to be in breach 

of their duty. Any doubt or ambiguity should be resolved against them.”

Warm Springs, 248 F.3d at 1371 (quoting Donovan v. Bierwirth, 754 F.2d at 1056); see

also Jicarilla III, 112 Fed. Cl. at 310. Additionally, as noted above, plaintiffs prepared 

different measures of damages based on whether the “Warm Springs presumption is 

used.” In Mr. Nunes’ expert reports, Mr. Nunes selected the longest possible profitable 

maturity structure and applied that term to calculate damages, without comparison to any 

of the facts of the Warm Springs case to the facts of the case currently before the court. 

Mr. Nunes’ initial expert report, for example, makes reference to the Warm Springs

presumption, but does not describe the holding of that decision or make any assessment 

of how to apply that case to the above captioned case. Mr. Nunes explained at trial that

we are then using the five to ten bounds as the range of prudence and 

applying the Warm Springs presumption. We determined that for these two 

periods, as well as how we used it in the first period, that the ten-year 

targeted term structure used in the Warm Springs presumption would be 

prudent. And, of course, then we looked at the actual investment of the 

funds from the first nonbreach period, the 7.86-year maturity or term 

structure, and we used that to inform us for our Alternative B calculations.

Plaintiffs indicated that “[h]ere, the most profitable maturity structure is the longest one –

10 years – and so RHA selected that structure as the basis for calculating damages.” At 

closing argument, plaintiffs reiterated how plaintiffs’ expert calculated the damages 

Rocky Hill didn’t want to impose its own opinion in choosing a particular 

maturity structure between five to ten years. So it came up with two 

alternative maturity structures. The first is a structure of ten years, right at 

the top of the range, and this is based on the legal presumption in Warm 

Springs that the funds would have been invested in the most profitable of 

the plausible alternatives. So there’s no question that taking that top-of-therange maturity structure would yield the most damages, and the justification 

for doing that is not because Rocky Hill says, gee, in our opinion, that’s the 

best. It's because of the Warm Springs presumption. Alternatively, in the 

event the Court concludes that the Warm Springs presumption is 

inapplicable here, Rocky Hill calculated -- used the actual weighted average 

return -- average maturity structure, pardon me, of the 326-K fund during 

the nonbreach period. So for that entire period of about five years, the actual 

weighted average maturity was 7.86 years, and so that became the second 
139

maturity structure that Rocky Hill used. And in their reports, they refer to the 

first as Alternative A and the second as Alternative B.

Even if the court had adopted plaintiffs’ model of damages, it does not necessarily follow 

that the court would have adopted the ten year time frame under the Warm Springs

presumption. Although the plaintiffs repeatedly pointed to the language used by the 

Federal Circuit in Warm Springs, the factual postures of that case and the above 

captioned case are very different. As noted above, the Federal Circuit indicated:

“Where several alternative investment strategies would have been equally 

plausible, the court should presume that the funds would have been used 

in the most profitable of these. The burden of providing that the funds would 

have earned less than that amount is on the fiduciaries found to be in breach 

of their duty. Any doubt or ambiguity should be resolved against them.”

Warm Springs, 248 F.3d at 1371 (quoting Donovan v. Bierwirth, 754 F.2d at 1056).

Immediately preceding that statement, however, the Federal Circuit noted: 

Although the trial court held that the United States breached its fiduciary 

duty by selling the green timber prematurely, the court denied the Tribes 

any recovery for that breach on two grounds: (1) the Tribes “received full 

value for the green trees cut improperly,” i.e., the Tribes received the full 

domestic price for those trees; and (2) the court could “only speculate on 

what prices in the export market might have been at some hypothetical time”

in the future. Neither of those grounds justifies refusing to award any 

damages for the improperly harvested green timber. To deny recovery on 

the ground that the Tribes recovered the full value of the trees in the 

unfavorable market in which they were sold ignores the nature of the 

breach, which consisted of harvesting and selling the trees on the domestic 

market rather than waiting to harvest and sell them for export. It also 

disregards the legal principle, recognized by the Court of Claims in the 

Mitchell case, that Indian tribes in a case of improper sales of timber assets 

are entitled to recover “the proceeds of the sales which should have been 

made under proper management—not merely the actual proceeds of actual 

sales.” 

Warm Springs, 248 F.3d at 1371 (quoting Mitchell v. United States, 229 Ct. Cl. 1, 10 664 

F.2d 265, 271 (1981), aff’d, 463 U.S. 206 (1983)). This court did not preclude any finding 

of damages for plaintiffs like the trial court in Warm Springs, to the contrary, the court 

permitted extensive expert discovery and held a second phase of the trial devoted to the 

damages owed plaintiffs after the court issued its liability Opinion. Moreover, as noted 

above, defendant conceded that pursuant to the court’s liability Opinion, plaintiffs would 

be owed $74.8 million dollars. In Warm Springs, even after finding error by the trial court 

in awarding no damages to the Warm Springs plaintiffs, the holding of the Federal Circuit 

was to 
140

vacate the judgment of the Court of Federal Claims and remand for 

determination of damages. The Court of Federal Claims should determine 

the following items in a manner consistent with this opinion: (1) the amount 

that the Tribes would have earned from the sale of the green timber that 

was improperly included in the blowdown sale; (2) the amount of timber, if 

any, that was harvested under the logging contract but is missing from the 

BIA records and did not result in payment to the Tribes; and (3) the amount 

of timber that was harvested in trespass, if any, and whether the BIA 

breached its duty to the Tribes by failing to prevent that trespass. Damages 

should be awarded to the Tribes based on these determinations.

Warm Springs, 248 F.3d at 1375–76.

46 Therefore, it does not necessarily follow that under 

Warm Springs, even with the expansive language used by the Federal Circuit, plaintiffs 

would presumptively have been entitled to the “most profitable maturity structure,” i.e.,

the 10 year calculation by Mr. Nunes. Moreover, as referenced above in Dr. Starks’ 

testimony, the use of a ten year maturity structure, which Mr. Nunes stated was “right at 

the top of the range,” may not be plausible figure. Using a demonstrative she prepared 

for the damages trial, Dr. Starks explained 

Demonstrative 30 shows the frequency in months of the different maturities 

between 4.7 years and ten years. And so, for example, the -- the less than 

five years was 19 percent of the month, and only 2 percent was between 9 

1/2 and ten years. And as the chart shows, 80 percent of the months have 

holdings with the weighted average years to call under 7 1/2 years, and, in 

fact, if you look at the first three bars, which shows the percentage of the 

months under six years, it is almost 50 percent.

Defendant’s counsel followed up with Dr. Starks:

Q. Now, what -- and I’m sorry, Dr. Starks. What percentage of the time 

during the 1992 to ‘97 prudent period did the Government hold a portfolio 

that had a weighted average years to call of 9.5 years or higher?

A. Two percent of the time.

Q. Two percent of the time. Did it ever have a weighted average years to 

call of ten years?

A. No. 9.7 is the highest, and that was only again, that was -- it was 2 

percent of the months that was even close to that.

46 As noted by the United States Court of Appeals for the Federal Circuit in a subsequent 

unpublished decision: “On remand, the Court of Federal Claims made a determination of 

the above three issues and assessed the amount of damages owed by the government 

to the Tribes for the mismanagement of the Tribes’ timber resources to be $13,805,607. 

We affirm.” Confederated Tribes of Warm Springs Rsrv. of Oregon v. United States, 101 

F. App’x 818, 819 (Fed. Cir. 2004) (emphasis in original). 
141

Q. Did Rocky Hill pick a maturity structure based on the nonbreach period 

that was actually higher than the maturity structure of the fund during the 

nonbreach period ever really was?

A. Yes, they did.

Q. All right. Is Rocky Hill’s evaluation of the plausibility of investment 

strategies as between five years or ten years reasonable in light of finance 

theory?

A. No, it is not. It is -- again, we have this -- this chart on page 30 that shows 

it wasn’t -- it was -- the -- it was an improbable over the time period. It didn’t 

happen often, but then there are also the case facts that there was a lot of 

uncertainty in the 1980 to 1992 period about what was going to happen with 

the distribution, and, arguably, there's even more uncertainty in that period 

than there was in the 1992 to 1997 period.

Therefore, in selecting a ten year maturity structure to attempt to apply the damages to 

the Warm Springs presumption, Mr. Nunes picked a figure that was never reached during 

the entire non-breach period in which the government had prudently invested. The court 

finds that, based on the model prepared by Mr. Nunes, and reviewing the plaintiffs’ expert 

reports, and the testimony at the damages trial, that the investment strategy put forth by 

plaintiffs is not equally plausible to the investment strategy offered by defendant and Dr. 

Starks. See Warm Springs, 248 F.3d at 1371. 

CONCLUSION 

From all the testimony of the multiple experts at both the liability trial and the 

damages trial, only one thing is clear: there are a multiplicity of ways to analyze the 

investment strategy of a thirty three year period, especially given economic variables, 

including varying interest rates, changing market conditions, different policies adopted by 

the government during the investment period, and the retrospective theoretical and 

alterative choices made by experts to analyze, and account for, the complex history 

surrounding the 326-K and 325-A Funds. Based on the testimony at both the liability and 

damages trials, the expert reports and trial exhibits at both the liability and damages 

phases of trial, the court concludes that plaintiffs are entitled to damages in the above 

captioned case, using the methodology put forth by defendant’s expert Dr. Starks at the 

damages trial, as Dr. Starks offered the more logical, credible, and plausible method of 

calculating damages in this case. 

IT IS SO ORDERED. 

s/Marian Blank Horn 

MARIAN BLANK HORN 

 Judge