Tribal Court Hears Case About Individual Council Members Dispersing Funds

By Joe Morey

News Editor

The LCO Tribal Court heard arguments on Wednesday, May 31, regarding the constitutionality of individual tribal governing board members dispersing tribal funds. Chief Judge Elaine Smith heard from both sides of the case, LCO Tribal Chairman Louis Taylor and LCO Attorney General James Schlender Jr.

Smith’s decision in the case hasn’t been published yet.

The case stems from a request the Chairman made to the Attorney General (AG) on February 28, in which he asks for the AG's interpretation of the constitutional authority granted to Tribal Governing Board Members regarding tribal funds.

Chairman Taylor said he believes that the power to make decisions regarding expenditures is due to the authority of the Governing Board as a body and not some implied power of its individual members, but AG Schlender wrote in a response memo to Taylor that The Tribal Governing Board is comprised of seven (7) members, each member as a councilmember and the members of the Tribal Governing Board each exercise constitutional authority by virtue of their elected office. The memo states examples of TGB authority include, but limited to, directives by council members to staff or departments; consensus action of TGB; by motion of the TGB in regularly scheduled TGB meetings with approved minutes of the meeting; and by formal resolution of the TGB which is published.

“I differ with the opinions of Attorney General Schlender in his memo regarding Constitutional Authority,” Taylor stated in his response to the Court.

Under Government Authority the AG cites numerous authorities the TGB can exercise under the Constitution and Bylaws. Taylor explained the AG highlights Article 1 §4 "It shall be the duty of the Board members to promote the general welfare to the Band and to carry out the provisions and purposes of this Constitution and Bylaws" under "Power of the Purse" and that Schlender also highlights two provisions under Article V- Powers of the Governing Board; Article V §1 (i). "To borrow money from the Federal Government or other lenders for Band use and to make loans to Band members in accordance with the regulations of the Secretary of the Interior, this Constitution and other applicable laws;” Article V §1 0). "All expenditures by the Governing Board shall be in accord with the previously approved budget, and the amount so paid shall be a matter of public record at all times."

In the Chairman’s response, he cites Article III-Governing Body, Section 1, The governing body of the band shall be the Governing Board composed of seven (7) members.

He also cites Article V- Powers of the Governing Board.

“I am not contesting decisions made under the TGB consensus but would argue that the AG's interpretation of individual TGB members authorities is not very presumptive, since its clear a consensus is required to conduct any of the activities listed under (Section I (a-u)). Nowhere does it imply or expressly state in the Constitution or Bylaws that individual Council Members have the right to arbitrarily dispose of tribal monetary resources or assets at their discretion. Based on the AG's analysis, this means each TGB Member could theoretically enact any of the powers listed under Section I independently and without consequence,” Chairman Taylor stated.

Taylor, as Chairman of the Lac Courte Oreilles Band of Lake Superior Chippewa, along with LCO Secretary-Treasurer Tweed Shuman, requested LCO Tribal Court's authoritative opinion regarding the "Powers of the Governing Board" and supplementary injunctive remedies that (1) uphold the duties of Secretary/Treasurer, (2) protect the general welfare of ALL Lac Courte Oreilles Band Members, and (3) prevents any further political malfeasance of individual TGB Members through unrestrained expenditures.

The AG’s conclusions stated, “The constitutional authority for spending tribal funds is vested with the dually elected council members comprising of the Tribal Governing Board. While one council member is authorized to transact business on behalf of the tribe, the ultimate responsibility and accountability of the fiduciary rests with the seven elected council members. The Secretary Treasurer has a duty to provide reports on spending and account balances and ensuring the compliance with TGB spending directives. The limits on a council member's conduct is limited to the full Tribal Governing Board. All council members have a constitutional duty to make financial decisions that are in the best interest of the Tribe and decisions that ensure the Tribe's future.”

Chairman Taylor responded to the AG’s conclusion stating, “Based on my reading of the LCO Constitution/Bylaws, and the Tribal Government Code of Conduct, I disagree with AG belief that individual TGB members have inalienable fiduciary rights. This notion that any one Council Member has unlimited powers to obligate or utilize tribal monetary resources and assets at their own discretion subjects the Tribe to financial disparities, financial vulnerability, and political malfeasance. I find it also concerning that individual Council Members are contributing to the Secretary/Treasurer's inability to remain compliant with his oath of office. Article I- Officers of the Governing Board Section 3 Secretary/Treasurer "All expenditures by the Governing Board shall be in accord with a previously approved budget."

Taylor also stated with the Tribal Governing Board election very near, this excessive spending could be construed by individuals as votes being bought with tribal funds.

Taylor also responded to Schlender’s citing of the rights of members, claiming the Tribal Governing is vested with the singular authority in making financial decisions that help promote the Tribe and ensure the Tribes future. Taylor said Article VII of the Amended Constitution and Bylaws Rights of Members clearly addresses LCO members equal political rights, and the equal right to seek opportunity to participate in the economic resources and assets.

“If one Council Member can approve or deny a member's services at their own will, I would assert many members are not receiving equal opportunities to participate in the economic resources of the Tribe. In fact, I believe one Council Member could theoretically give a majority of monetary resources away to family, friends and favorable associates (even nonmembers) at the expense of the remaining membership,” Taylor explained.

Chairman Taylor submitted a statement with his petition to the LCO Tribal Court and in it he explained some of his position on the powers of the Tribal Governing Board. Taylor said the execution of Governing Board powers in tribal operations and duties sometimes require a minimum number of votes for validity by the Board, but generally, valid decisions of the Governing Board are expressed by a majority vote of members of the Governing Board as a body.

“Simply stated, the Governing Board by majority vote makes decisions,” Taylor wrote.

He further supported this statement by adding, “The Constitution consistently, and in clear language, speaks about the Tribal Governing Board as a body and not as individuals except in certain limited and defined cases. Note the language used throughout the Constitution:

• Article II - Membership, Section 2. "The Governing Board shall enact the ordinance..."

• Article III - Governing Body, Section 6. "The Governing Board, by resolution, shall determine its own procedures..."

• Article IV - Elections Section, 3. "The Governing Board shall prescribe rules and regulations conducting all subsequent elections... "

• Article V - Powers of the Governing Board, Section1. "The Governing Board shall exercise the following powers... "

Chairman Taylor also wrote in the petition, the AG asserts that "one council member is authorized to transact business on behalf of the tribe" after stating that the "authority for spending" is vested in "the Tribal Governing Board.”

“The implication of the AGs opinion here is that individual board members have an implied individual right or power to distribute tribal funds at their own discretion,” Taylor stated. “This assertion is inconsistent with the Constitution as nowhere does it state any authorization for ‘one council member’ to transact business beyond the prescribed duty of the Secretary/Treasurer. [see Bylaws Article 1 - Duties of the Officers of the Governing Board, Section 3. Secretary/Treasurer]. The Secretary/Treasurer ‘shall receive, receipt for, deposit, disburse and account for all funds handled through the Governing Board.’ Note that the Secretary/Treasurer is the only ‘council member’ who is authorized to ‘disburse’ ... ‘all funds’ under the Constitution.”

Taylor went on, “The Constitution clearly states the minimum requirements for expenditures and disbursements. Provided these constitutional requirements are met, the Governing Board has the authority to determine how to allocate resources for the Band. However, nowhere is it stated that funds can be expended because of an implied individual fiduciary right of an individual Governing Board member. If the Governing Board wishes to delegate such a power to individual board members to ‘administer’ or spend money on behalf of the tribe, they may possibly do so in a limited fashion as long as it does not violate the Constitution and the Bylaws Article I Section 3. duties of the Secretary/Treasurer. However, the Governing Board has not done so.”

In closing, the Chairman’s Statement pointed out remedies sought:

“Because of this current situation, this declaratory judgment is necessary so that the duties and responsibilities regarding expenditures in the Constitution and the Tribal Codes of Law are clear and adhered to by Governing Board members. Also, the declaratory judgment will hopefully assist in preventing further violations of tribal fund expenditures by Governing Board members while also potentially preventing further legal action regarding such expenditures.

“In addition to providing clarity regarding the legal status of these expenditures, we ask the court to provide legal guidance that ensures that this situation does not continue. Because of the real concern that federal laws are currently being violated, a stay on the issuance of gas and hotel vouchers (and any similar expenditures) should be issued until such time as acceptable proof is provided to the court that such expenditures comply with tribal, state, and federal law.

“Although the court recently ruled in Case No. 23-EL-288 on the proper remedy for resolving disputes arising from violations of the Code of Conduct, which is a component of this dispute, the extraordinary circumstances surrounding this current situation requires extraordinary action. Unfortunately, the timeline involved for resolving any disputes under the Code would not have any potential effect until well past the current election is concluded. In addition, there is little expectation that the incumbent Governing Board members would act in a timely manner to address or adhere to the provisions in the Constitution or the Code of Conduct regarding expenditures. Therefore, any actions by the court to grant the requested relief is greatly welcomed.”