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DELAWARE (Pacific Island Times) – From $60 million to just $89,000 in five years, from $59.1 million to just $28.7 million in six years.
The funds, which were supposed to be used as a trust for Pacific Islanders displaced by early nuclear testing on Bikini Atoll, were quickly depleted, and now the company that was supposed to guarantee the security and sustainability of those funds is embroiled in a lawsuit.
Representatives of the original inhabitants of Bikini Atoll, displaced by early nuclear testing in the Marshall Islands, are suing the Arden Trust, alleging mismanagement by the company that quickly squandered tens of millions of dollars in aid approved by Congress after years of careful stewardship.
The five-count lawsuit was filed Monday in Delaware Chancery Court by the Keeley/Bikini/Edgett Local Government Council on behalf of Bikini residents and four individuals.
“Under Arden’s egregious mismanagement, the settlement trust was destroyed and the claims trust was emptied,” the lawsuit states.
It added that Ardern’s actions had “caused the bikini community to suffer severe financial distress and enduring hardship”.
The plaintiffs are asking Arden to return all fees it received for managing the two trust funds and to conduct a full accounting of those funds.
Arden served as trustee of the Claims Trust from May 31, 2018, until October 6, 2023, when it transferred the Claims Trust assets to its designated successor, Comerica. The Company became trustee of the Settlement Trust on November 30, 2018, and remains in that role to date.
The indictment alleges that soon after Arden took over the two trusts, he began disbursing large amounts of trust funds — far exceeding amounts permitted or prudent under the trust instruments or U.S. laws establishing the trusts.
Arden was only allowed to pay Bikini people $1.59 million from the claims trust in 2018. “Instead, it paid almost 10 times that amount, about $15.7 million,” the plaintiffs said.
According to the lawsuit, the market value of the settlement trust has fallen more than 99% from about $60 million when Arden was trustee to $89,002 as of June 30. During Arden’s tenure as trustee, the market value of the claims trust fell more than 50% from about $59.1 million to about $28.7 million.
The indictment alleges that the funds grew over a 32-year period from 1986 to 2018 under the careful supervision of previous trust managers, but that it was not until Ardern’s watch that the trusts fell into dismal condition – largely due to the unreserved release of large amounts of funds.
The lawsuit alleges that trust beneficiaries “often want to take more from the trust than they are allowed to take, but the trustee’s job is to follow and enforce the terms of the trust, which sometimes means saying ‘no.'”
The lawsuit alleges Ardern “flagrantly violated” trust requirements and congressional regulations by making “lavish” expenditures and never questioning withdrawal requests.
The company allegedly never sought accountability or documentation for the use of the withdrawals, nor did it impose any restrictions on distribution requests.
The resettlement and rehabilitation fund was established in the 1980s for the thousands of residents who were forced to leave their homes on Bikini Atoll in the 1940s as a result of nuclear weapons testing.
To preserve funding, former trustees repeatedly rejected requests for spending beyond what was legally permitted, causing congressional appropriations to surge from $39 million to $60 million.
However, the complaint states that when Ardern took over as trustee of the two trusts in 2018, “it placed no restrictions on requests for distributions and had never refused one in five years.”
“Arden believed its job was to take tens of millions of dollars from the two trusts, asking no questions, exercising no oversight, assuming no accountability and with absolutely no concern for the prudence of its actions or the rules of the trust vehicles,” while collecting fees, the filing said.
The lawsuit also accuses Arden of taking advantage of Bikini Council’s urgent need for funds in 2023 and its desire to replace trustees, using underhanded tactics to get Bikini Council to sign “a so-called liability waiver in Arden’s service” and waive account refund and compensation terms.
This occurred because Arden suddenly froze all payouts from the claims trust on January 7, 2023, without any explanation, even though the fund balance at the time was approximately $28.7 million.
Members of parliament said they tried to seek an explanation for such actions, but Ardern refused to meet with them or respond to emails.
The move subsequently led to a mass exodus of Kili residents, with hundreds of residents facing erratic and insufficient electricity supply and a damaged ecosystem that could not provide adequate food supply, the lawsuit said.
The complaint alleges that Ardern provided members of Parliament with a trust statement covering the period from January 1, 2018 to June 30, 2023 only after Parliament agreed to a waiver of liability.
“Arden’s gross mismanagement of the Resettlement Trust Fund has left Bikini Islanders without adequate resources to meet basic needs, including the purchase of supplemental food, health care, student scholarships, and maintenance of critical infrastructure on Bikini, Kili, and Ejit, undermining the Trust’s original purpose of ensuring their resettlement and rehabilitation,” the lawsuit states.
Arden, a subsidiary of Texas-based Kestra Financial Inc., did not immediately respond to a request for comment from Law360, which published the lawsuit.
The Kiley/Bikini/Edgett Local Government Council and individual plaintiffs are represented by Michael L. Vild and Christopher P. Simon of Cross & Simon LLC, Robert K. Huffman, Qijia Yu, Madeline Pruhs and Christine Nelson and Jonathan M. Weisgall of Covington & Burling LLP.
Counsel information for Arden Trust Company was not immediately released… PACNEWS
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