Re­leased files re­veal prose­cu­tors weighed in­dict­ing first lady

The Washington Times Weekly - - Front Page - By Jerry Seper

A decade be­fore Sen. Hil­lary Rod­ham Clin­ton ad­mit­ted fudg­ing the truth dur­ing the pres­i­den­tial cam­paign, fed­eral prose­cu­tors qui­etly as­sem­bled hun­dreds of pages of ev­i­dence sug­gest­ing she con­cealed in­for­ma­tion and mis­led a fed­eral grand jury about her work for a fail­ing Arkansas sav­ings and loan at the heart of the White­wa­ter probe, ac­cord­ing to once-se­cret doc­u­ments that de­tail the in­ter­nal de­bates over whether she should have faced crim­i­nal charges.

Or­di­nar­ily, such files con­tain­ing grand jury ev­i­dence and prose­cu­tors’ de­lib­er­a­tions are never made pub­lic. But the es­tate of Sam Dash, a life­long Demo­crat who served as the ethics ad­viser to White­wa­ter In­de­pen­dent Coun­sel Ken­neth W. Starr, do­nated his doc­u­ments from the in­fa­mous 1990s in­ves­ti­ga­tion to the Li­brary of Congress af­ter his 2004 death, un­wit­tingly in­ject­ing into the pub­lic do­main much of the tes­ti­mony and ev­i­dence gath­ered against Mrs. Clin­ton from for­mer law part­ners, White House aides and other wit­nesses.

The doc­u­ments, re­viewed by The Wash­ing­ton Times, iden­tify nu­mer­ous in­stances in which prose­cu­tors ques­tioned Mrs. Clin­ton’s hon­esty, an is­sue that con­tin­ues to dog her on the cam­paign trail af­ter she was forced to ac­knowl­edge ear­lier this year ex­ag­ger­at­ing a story about com­ing un­der sniper fire as first lady dur­ing a visit to Bos­nia in 1996.

For in­stance, the pa­pers say prose­cu­tors thought Mrs. Clin­ton first con­cealed her le­gal rep­re­sen­ta­tion of Madi­son Guar­anty Sav­ings and Loan As­so­ci­a­tion — and the money she made do­ing it — dur­ing the 1992 pres­i­den­tial cam­paign when she and her hus­band, then-Arkansas Gov. Bill Clin­ton, came un­der fire in a ques­tion­able Arkansas real es­tate project known as White­wa­ter.

Be­gin­ning in March 1992 and con­tin­u­ing over the next sev­eral years, Mrs. Clin­ton stead­fastly de­nied that she ever “earned a penny” in rep­re­sent­ing her Rose Law Firm clients, in­clud­ing the fail­ing thrift’s own­ers, James and

Susan McDou­gal — the Clin­tons’ part­ners in the White­wa­ter De­vel­op­ment Corp. project.

But the newly dis­cov­ered records, more than 1,100 pages in 30 sep­a­rate doc­u­ments, tell a dif­fer­ent story.

A June 1998 draft in­dict­ment of Mrs. Clin­ton’s Rose firm part­ner Web­ster L. Hubbell, who fol­lowed the Clin­tons to Wash­ing­ton in 1993 as as­so­ci­ate at­tor­ney gen­eral, said Mrs. Clin­ton did le­gal work for Madi­son “con­tin­u­ously” from April 1985 to July 1986. It also said she rep­re­sented the thrift be­fore the Arkansas Se­cu­ri­ties De­part­ment for ap­proval to is­sue pre­ferred stock, helped Madi­son ob­tain a ques­tion­able bro­ker-dealer li­cense to sell the stock and was ac­tively in­volved in a failed Madi­son project known as Cas­tle Grande.

The draft in­dict­ment clearly as­serts that Mrs. Clin­ton, de­spite her de­nials, rep­re­sented Madi­son and its projects “in a se­ries of real es­tate and fi­nan­cial trans­ac­tions.” A sep­a­rate 183-page re­port in­cluded in the Dash doc­u­ments said Mr. Hubbell and Mrs. Clin­ton “con­cealed from fed­eral in­ves­ti­ga­tors the true na­ture of their work” with Madi­son and its var­i­ous en­ti­ties.

Clin­ton cam­paign spokesman Jay Car­son dis­puted the al­le­ga­tions.

“This is a base­less ac­cu­sa­tion which was looked into over a decade ago in an in­ves­ti­ga­tion that took $71.5 mil­lion and eight years to de­ter­mine there was no case,” he said.

But exit polls from the May 6 North Carolina and In­di­ana pri­maries found that about half of the vot­ers in each state said they didn’t find Mrs. Clin­ton “hon­est and trust­wor­thy.”

Mrs. Clin­ton mis­spoke in March when she claimed she had come un­der sniper fire dur­ing a trip to Bos­nia in 1996. She said she and her daugh­ter, Chelsea, ran for cover un­der hos­tile fire shortly af­ter her plane landed in Tu­zla. She later ad­mit­ted to mak­ing a “mis­take.”

The Li­brary of Congress doc­u­ments have not been re­leased pub­licly. A li­brary of­fi­cial said they are still be­ing “pro­cessed.”

In April 1998, White­wa­ter prose­cu­tors, di­vided over Mrs. Clin­ton’s truth­ful­ness, ar­gued over whether to in­dict her on charges of ly­ing un­der oath about her le­gal work for Madi­son. Lawyers and oth­ers close to the probe said a draft in­dict­ment of the first lady be­came “a work in progress” af­ter Mrs. Clin­ton’s Jan­uary 1996 grand jury ap­pear­ance in U.S. Dis­trict Court in Wash­ing­ton.

Prose­cu­tors con­cluded at the time, the sources said, that she had tes­ti­fied falsely in deny­ing do­ing le­gal work in the Cas­tle Grande ven­ture.

“There is con­cern among some about how suc­cess­ful they might be in bring­ing a crim­i­nal in­dict­ment against Mrs. Clin­ton for ob­vi­ous rea­sons, but there is no lack of de­sire to do so,” one lawyer familiar with the probe said at the time. The lawyer said the de­ci­sion rested on two ma­jor points: whether there was suf­fi­cient ev­i­dence to con­tra­dict her sworn tes­ti­mony and, more im­por­tantly, whether prose­cu­tors could win the case in court.

No in­dict­ment was sought, but White­wa­ter prose­cu­tors noted at the time, ac­cord­ing to the Dash doc­u­ments, that sworn state­ments by Mrs. Clin­ton were con­tra­dic­tory and mis­lead­ing and that her in­volve­ment with Madi­son’s failed real es­tate project known as Cas­tle Grande project was only fully de­tailed with the dis­cov­ery of her Rose firm billing record sum­maries in the White House liv­ing quar­ters in Jan­uary 1996 — two years af­ter they had been sub­poe­naed.

A week be­fore the sum­maries were found, the Res­o­lu­tion Trust Corp. (RTC) said in a Dec. 28, 1995, re­port it had lit­tle in­for­ma­tion on Mrs. Clin­ton’s ties to Madi­son or Cas­tle Grande. Af­ter their dis­cov­ery, the agency con­cluded Mrs. Clin­ton was more in­volved with the two en­ti­ties than was pre­vi­ously known.

The sum­maries said Mrs. Clin­ton billed Madi­son for 60 hours of le­gal work, spoke with Madi­son of­fi­cials about the Cas­tle Grande project on 14 oc­ca­sions, dis­cussed le­gal mat­ters with Madi­son’s own­ers — the McDougals — 16 times, had 28 meet­ings with Rose firm lawyers on Madi­son, and met with state reg­u­la­tors about Madi­son at least twice.

At the time, Madi­son was seek­ing help from Mrs. Clin­ton’s Rose Law Firm in Lit­tle Rock to fend off state and fed­eral reg­u­la­tors con­cerned that the thrift was in­sol­vent. Madi­son also wanted to jump-start a ques­tion­able pre­ferred stock deal to pump much-needed cash into the op­er­a­tion and was des­per­ate to keep the gov­ern­ment from shut­ting it down.

In De­cem­ber 1995, the Se­nate White­wa­ter Com­mit­tee also made pub­lic hand­writ­ten notes of a tele­phone con­ver­sa­tion that con­tra­dicted as­ser­tions made by Mrs. Clin­ton dur­ing the 1992 pres­i­den­tial race that she had lit­tle par­tic­i­pa­tion in the le­gal rep­re­sen­ta­tion of Madi­son when state and fed­eral reg­u­la­tors were de­cid­ing whether to shut it down.

The notes, by New York lawyer Susan Thomases, one of the first lady’s clos­est ad­vis­ers, said Mrs. Clin­ton had nu­mer­ous con­fer­ences with of­fi­cials at Madi­son, that she re­viewed doc­u­ments, that she made calls to dis­cuss a pre­ferred stock plan aimed at keep­ing the fail­ing thrift afloat, and that “she did all the billing.”

The com­mit­tee re­leased 350 pages of Madi­son files that said Mrs. Clin­ton, ac­cord­ing to the billing sum­maries, had made sig­nif­i­cant claims on the thrift for le­gal ser­vices, and at one point was listed ex­clu­sively as the billing at­tor­ney. The sum­mary is all that re­mains, since the orig­i­nal Rose firm billing records for Madi­son dis­ap­peared.

In May 1995, as the White­wa­ter in­ves­ti­ga­tion ex­panded into sep­a­rate probes by Se­nate and House com­mit­tees, the Fed­eral De­posit In­sur­ance Corp. (FDIC), the RTC and a fed­eral grand jury, Mrs. Clin­ton de­nied in sworn af­fi­davits any knowl­edge of a Madi­son real es­tate project known as Cas­tle Grande, say­ing she had “no rec­ol­lec­tion” of do­ing le­gal work for the 1,050-acre de­vel­op­ment.

Madi­son was closed in 1989 at a cost to tax­pay­ers of $70 mil­lion. Cas­tle Grande failed at a tax­pay­ers’ loss of $4 mil­lion.

An­other ma­jor area of con­cern, au­thor­i­ties said, was an op­tion agree­ment reg­u­la­tors said “fa­cil­i­tated” a ques­tion­able $300,000 pay­ment to Seth Ward, the Madi­son of­fi­cial to whom Mrs. Clin­ton had spo­ken about Cas­tle Grande. The agree­ment was writ­ten by Mrs. Clin­ton and Mr. Hubbell and guar­an­teed Mr. Ward a pay­off and negated his li­a­bil­ity in the project. While the op­tion was never ex­er­cised, it dis­guised the rea­son for the pay­ment and cre­ated a pa­per trail to jus­tify the out­lay to Mr. Ward, who was Mr. Hubbell’s fa­ther-in-law.

Mrs. Clin­ton told the RTC in May 1995 she had no me­mory of pro­vid­ing le­gal ser­vices for Mr. Ward and said in a sworn state­ment she did not know the Cas­tle Grande name, think­ing the project was called IDC even though the Cas­tle Grande name was widely as­so­ci­ated with the site. Not truth­ful

Ac­cord­ing to the Dash doc­u­ments on White­wa­ter, in­ves­ti­ga­tors also chal­lenged Mrs. Clin­ton’s pub­lic state­ments on what she knew at the time of Mr. Hubbell’s March 1994 Jus­tice De­part­ment res­ig­na­tion. Mrs. Clin­ton told re­porters she thought he quit over an “in­ter­nal billing dis­pute” with his for­mer Rose firm part­ners that “likely would be re­solved.”

But the records said that three months be­fore the res­ig­na­tion, Mrs. Clin­ton had been told by an­other Rose firm part­ner, Allen Bird, that Mr. Hubbell’s “billing prob­lems were very se­ri­ous” and doc­u­ments re­leased dur­ing the Se­nate White­wa­ter hear­ings in 1996 said that two weeks be­fore Mr. Hubbell re­signed, Mrs. Clin­ton was no­ti­fied for­mally that her for­mer law part­ner was in­volved in a con­flict-of-in­ter­est in­ves­ti­ga­tion and he might have lied in a sworn state­ment to fed­eral reg­u­la­tors.

The Dash records also state that Mr. Hubbell’s ex­ten­sive role in a con­flict in the Rose firm’s rep­re­sen­ta­tion of Madi­son and his tes­ti­mony un­der oath to the RTC had metic­u­lously been de­scribed in a March 1, 1994, memo writ­ten by White House As­so­ci­ate Coun­sel W. Neil Eg­gle­ston and for­warded to Mrs. Clin­ton by White House Deputy Chief of Staff Harold Ickes.

The records said Mr. Eg­gle­ston’s seven-page memo de­scribed con­cerns by the RTC and the FDIC on whether the Rose firm had dis­closed its prior le­gal rep­re­sen­ta­tion of Madi­son in an FDIC law­suit against the thrift’s for­mer au­di­tors and whether Mr. Hubbell had dis­closed his re­la­tion­ship with Mr. Ward in Cas­tle Grande.

Mr. Eg­gle­ston’s memo, ac­cord­ing to the records, said the RTC had con­cluded the Rose firm dis­closed nei­ther the prior rep­re­sen­ta­tion nor

Mr. Hubbell’s re­la­tion­ship, not­ing that an “ul­ti­mate find­ing” of nondis­clo­sure would mean that “Mr. Hubbell was not truth­ful in his rec­ol­lec­tion.” Mr. Eg­gle­ston said a find­ing against the firm would mean that it was “per­ma­nently barred from any fur­ther work for the RTC or the FDIC (and pos­si­bly other bank­ing reg­u­la­tors.)”

He also said that while it was “not clear” whether the FDIC or the RTC would re­view the ac­cu­sa­tions un­der an ac­tual con­flict stan­dard, there was the pos­si­bil­ity of sanc­tions in the case, in­clud­ing “crim­i­nal li­a­bil­ity,” the records said.

The records also said White­wa­ter in­ves­ti­ga­tors were con­cerned that Mrs. Clin­ton played a key role in help­ing Mr. Hubbell ob­tain con­sult­ing con­tracts af­ter his March 14, 1994, Jus­tice De­part­ment res­ig­na­tion.

In a re­port ti­tled “Hubbell Hush Money Sum­mary,” White­wa­ter in­ves­ti­ga­tors said that a day be­fore Mr. Hubbell quit, Mrs. Clin­ton and other top ad­min­is­tra­tion of­fi­cials met pri­vately at the White House to ar­range for him to re­ceive hun­dreds of thou­sands of dol­lars in con­sult­ing fees at a time his co­op­er­a­tion in the White­wa­ter probe could have re­sulted in charges against the then-first lady.

The records said Mrs. Clin­ton took an ac­tive role in White House ef­forts to “take care of ” Mr. Hubbell fi­nan­cially, help­ing to lo­cate cam­paign sup­port­ers who divvied up more than $450,000 over the next nine months mostly for con­sult­ing work he never did.

In 1997, Mr. Starr sub­poe­naed White House records to de­ter­mine whether the con­sult­ing fees were in­tended to guar­an­tee Mr. Hubbell’s si­lence in the White­wa­ter probe. Mr. Starr also wanted to know whether the White House had sought or di­rected the pay­ments.

An Oct. 22, 1998, re­port said Mr. Hubbell’s fees were ar­ranged through “high ad­min­is­tra­tion of­fi­cials or ad­vi­sors,” in­clud­ing Mrs. Clin­ton, whom was de­scribed as “the di­rect im­pe­tus for at least one client.” Oth­ers who helped were iden­ti­fied as White House Chief of Staff Thomas F. “Mack” McLarty; for­mer Demo­cratic Na­tional Com­mit­tee Chair­man Tru­man Arnold; Wash­ing­ton lawyer Ver­non Jor­dan; Small Busi­ness Ad­min­is­tra­tion Chair­man Ersk­ine Bowles, a for­mer White House chief of staff; and U.S. Trade Rep­re­sen­ta­tive Mickey Kan­tor, the Clin­ton-Gore cam­paign chair­man in 1992 who later served as com­merce sec­re­tary.

An April 21, 1998, re­port ques­tioned why White House of­fi­cials would choose to “sup­port Hubbell and take care of him” at a time “[Mrs. Clin­ton] was on no­tice that Hubbell en­gaged in a wide­spread pat­tern and prac­tice of cheat­ing the [Rose Law Firm].” The re­port said a “sin­is­ter rea­son” could be Mr. Hubbell knew about Mrs. Clin­ton’s role in do­ing le­gal work for Madi­son and other re­lated com­pa­nies.

A May 21, 1997, memo, noted that most of the com­pany of­fi­cials who paid him con­sult­ing fees said no work prod­uct was ever pro­duced. The re­port said one em­ployer told in­ves­ti­ga­tors the only doc­u­ment Mr. Hubbell pro­duced was “his bill.”

Mr. Hubbell pleaded guilty in De­cem­ber 1994 to mail fraud and in­come-tax eva­sion in the theft of $482,410 from his Rose firm clients and part­ners and fail­ing to pay $143,747 in taxes. He was sen­tenced to 21 months in prison, serv­ing 16 be­fore be­ing re­leased.

The White­wa­ter probe ended on March 21, 2002, when In­de­pen­dent Coun­sel Robert W. Ray, who suc­ceeded Mr. Starr, con­cluded in a fi­nal re­port there was “in­suf­fi­cient ev­i­dence” to bring charges against the Clin­tons. But the re­port also said state­ments by the Clin­tons to in­ves­ti­ga­tors were “fac­tu­ally in­ac­cu­rate” and that White House de­lays in the pro­duc­tion of ev­i­dence and the “un­mer­i­to­ri­ous lit­i­ga­tion” by its lawyers “se­verely im­peded the in­ves­ti­ga­tion’s progress.”

As­so­ci­ated Press

Fed­eral prose­cu­tors con­sid­ered in­dict­ing first lady Hil­lary Rod­ham Clin­ton, ac­cord­ing to once-se­cret doc­u­ments.

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