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CIRI stops elders payments pending outcome of lawsuit

Posted: Friday, August 04, 2000

ANCHORAGE (AP) -- Cook Inlet Region Inc. has suspended paying extra dividends to some elders because the program is targeted in a lawsuit filed by shareholders.

The new program was designed to distribute quarterly payments of $450 to original shareholders age 65 and older.

Original shareholders are defined as those who enrolled in CIRI shortly after passage of the Alaska Native Claims Settlement Act in 1971.

The board of the Anchorage-based regional Native corporation approved the elders program last spring and distributed the first and only payment in May.

Petersburg attorney Fred Triem filed a lawsuit in June on behalf of five CIRI shareholders to block the program. The lawsuit contends that the program discriminates against people who inherited shares or who fail to meet age guidelines.

''They're making a special class of stock for the elderly, which takes an amendment to the articles of incorporation. They just went ahead and did it,'' said James Grotha, one of the plaintiffs.

CIRI said it plans to continue to deposit the money in an interest-bearing account and will distribute it to the roughly 530 shareholders who qualify if the company wins the lawsuit.

Until then, the program is being halted to reduce liability.

''We believe CIRI will prevail. But everyone knows litigation is unpredictable. In the unlikely event that we lose, it's prudent not to increase the company's exposure'' to compensatory damages, CIRI attorney Mark Kroloff told the Anchorage Daily News.

Some elders who received the $450 in May and were waiting for another check this month are upset that the program has been frozen.

''I feel very sad for some of the people that really need the money. Not so much for myself but for the elders that are alone,'' said shareholder Lillian Lapp, 81.

The company maintains that the elder payments are legal under 1998 legislation sponsored by Sen. Frank Murkowski, R-Alaska, that sought to shield Native corporations from some shareholder lawsuits.

The legislation allows Native corporations to provide benefits to shareholders regardless of stock ownership. Congress passed it after a successful shareholder lawsuit brought by Triem against Kake Tribal Corp. over a life insurance policy it offered to some shareholders.

The court ordered the corporation to pay millions of dollars in damages.

Other Native corporations have elders programs, including one by Sealaska Corp., the Juneau-based regional corporation, that was challenged and upheld by the 9th U.S. Circuit Court of Appeals, CIRI's Kroloff said.

CIRI expects to file a response to the lawsuit this month, he said.



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