" Officials of the Cherokee Nation placed millions of
dollars of tribal fund and investments into uncollateralized bank
accounts during FY 1991, in violation of tribal statutes.
Tribal statues of the Cherokee Nation require that tribal
funds in excess of $100,000 which are deposited in financial
institutions be collateralized either by bonds with a minimum of
an AA ratinr, or by local, state, U.S.Government and Cherokee
Securities. Fund invested in excess of $1000,000 shall have
joint custody receipts secured and pledged to the Nation.
By the end of 1991, approximately $6.1 million of Cherokee
Nation's pooled and nonpooled cash and investments were on
deposit in uncollateralized bank accouts, according to the
tribe's FY 1991 financial report auditied by Coopers & Lybrand.
The report did not list the bank where the uncollateralized funds
were deposited.
Telephone calls to top officials in the Nation's accounting
department were not returned.
According to a bank official, it is not "financially
prudent" to put large sums of money in uncollaterized accounts,
and in instances involving public monies it is against the law.
The reason being, if the bank fails the money is gone and cannot
be gotten back.
Financial reports for 1990 show none of Cherokee Nation's
pooled and nonpooled funds were placed in uncollateralized
accounts. Why officials within the Nation decided to place $6.1
million of the tribe's money in unsecured bank accounts and
certificates of deposit are questions that remain unanswered.
Transferring special revenue funds, which are federal monies
that, are restricted by law or administrative action to finance
particular functions of the Nation and are earmarked for tribal
programs, into the Nation's general gund is considered
misappropriation of federal funds.
However, by the end of FY 1990, $39,265 from the Community
Health Services program, $14,103 from the Housing and Urban
Development program, and $607,621 from Other Grants program, all
listed as Special Revenue Funds, had been transferred into the
tribe's general fund.
According to a reliable source at the Nation, accounting
department executives were aware that transferring Special
Revenue Funds into the tribe's general fund ws illegal, but
continued the practice anyway. "
~END~
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Note: The TDTJ later reported that response from " DeWayne
Couch, Controller of the Nation's accounting department, denied
tribal funds were now uncollateralized. 'Tribal funds are not
being
placed in uncollateralized accounts,' Couch wrote in a statment
he issued to the Times-Journal. He would not submit to an
interview. 'All deposits made during fiscal year 1995 have been
covered by adequate collateral.' However, at least four separate
audits of the Nation's financial statements from 1991-94,
conducted by the accounting firm of Coopers & Lybrand, stated
millions of dollars in tribal assets were uncollateralized, a
situation which clearly violates tribal law. "