The Securities and Exchange Commission warned Native Americans on Friday against scammers who may be coming after their share of a $3.4 billion settlement with the U.S. government.
U.S. District Judge Thomas Hogan on Wednesday gave final approval to the settlement, 15 years in the making and meant to compensate for more than a century of government mismanagement of Native American land royalties.
The first payments are expected to go out to between 300,000 and 550,000 plaintiffs after a 60-day appeals period due to end Sept. 26.
The SEC issued an alert Friday to warn those plaintiffs to watch out for investment scams. Affinity fraud _ scams that target particular ethnic or religious groups _ usually involves somebody pretending to be part of that ethnic group, or enlists somebody from the ethnic group to help dupe the victim, according to the SEC.
"Anytime there's a lump-sum payout to a particular group, that can be a fairly attractive target for fraudsters," said Owen Donley, chief counsel in the SEC's Office of Investor Education and Advocacy.
One clue of a scam is the use of high-pressure sales tactics, such as being approached by a person who says he has a great investment but that a decision has to be made immediately. Another is the promise of inordinately high returns on an investment, like 20 percent a month.
"That's a red flag," Donley said. "Anything that sort of sounds too good to be true, it usually is."
The settlement is the result of a class-action lawsuit brought by Browning, Mont., resident and Blackfeet tribal member Elouise Cobell. She claimed the government squandered billions of dollars in land trust royalties owed to hundreds of thousands of individual account holders across Indian country.
Hogan OK'd the settlement at a fairness hearing in June, but his order granting final approval was not issued until Wednesday.
The settlement breaks the recipients into two classes. The first is a "historical accounting class" of people identified by the Department of Interior since 1994, just before the lawsuit was filed. The second, a still-undefined number of people in a "trust administration class," includes Indians with U.S. government accounts dating back to 1985 and those who can prove they owned land that was held in trust, regardless of the existence of an account.
The first settlement checks of $1,000 each will go to the 337,000 plaintiffs in the historical class.
It will take an undetermined amount of time to figure out who is in the trust administration class.
Those plaintiffs, who can also include Indians from the first class, could each receive between $500 to $1 million, depending on the estimated value of their trust accounts.
Cobell was awarded $2 million, and the plaintiffs' attorneys will receive $99 million.