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Judicial Watch • NARA Whitewater OIC report pg 175-246

NARA Whitewater OIC report pg 175-246

NARA Whitewater OIC report pg 175-246

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that you would really concerned that people involved the
investigation, whomever they are, whether people Arkansas,
whether confidants the President, whomever, that they would
not know that the statute limitations was going to. toll, and that that
presented situation where you had advise somebody. just not
think anybody involved this would not have known that.
..--
Well, Senator, also would agree with you. cannot say for sure.
cannot say what was their minds. doubt very much that they did not
know about the statute limitations.
Right.
What was saying was not that. What was saying did not know
they knew, and, frankly, impression is, result that meeting, that
they had not previously known what procedures the RTC would
following. that mean that you have choose between you have reach
conclusion whether there claim there not, and then
determine what you have you reach conclusion that there is.
---
Altman, Senate Hearing, Feb. 24, 1994, 70-72.
Altman testified that emphasized Domenici that was referring one
substantive meaningful contact stress again that was only talking about meetings
regarding the substance the case, and that did not associate himself and his recusal with any
aspect the case. Altman claims that while was sitting there testifying did not think about
his conversation with Mclarty and his February meeting with Ickes and decide that they were
not substantive. Ratber, thought the Senators were asking about only contacts with the White
House about the case. According Altman his staff had already prepared QA about the
Ickes meeting stating that the contact was not substf ltive, but was rather incidental. 324
.--.
324. discussed above, Altman consistently defends his testimony the grounds that
did not prepare the contacts QA and that his staff chose the descriptive terms substantive and
137
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claims excluded his telephone conversation with Mclarty because viewed even less
than incidental. further defining what incidental contact would hallway
conversation about what had appeared the press that morning Altman explained that
might have chosen bad example, but that was simply meaning say was not talking
about incidental contacts.
Steiner recorded his diary entry dated February 27, 1994 (covering the period
February through February 27): the hearing, the recusal amazingly did not come up. The GOP did hammer
away whether had had any mtgs. the WH. admitted having had
one brief them the statute deadline. They also asked staff had met, but
gracefully ducked the question and did not refer phone calls had had.
010-DC-00000014. Steiner testified that his gracefully ducked language was unfortunate
_,,--.....
choice words. Steiner said that when wrote ducked, was referring his ov.n
conversation with Stephanopoulos February 16. Steiner remembered having told Altman
about his conversation with Stephanopoulos, either Altman had forgotten about had
gracefully ducked the question defining meetings such that need not disclose this or.
other contacts. Steiner assumed was the latter. 325 Steiner testified that left the hearing
was concerned only about Altmans use the term heads-up and Altmans failure mention
Steiners February meeting with Stephanopoulos.
The evidence does not indicate that anyone expressed Altman immediately
incidental.
325. Steiner testified that when wrote this entry still had recollection the October
14meeting.
138
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FOIA(b)3 Rule 6(e), Federal Rules Criminal Procedure
after his testimony any concerns about the accuracy completeness that testimony.
10.
Altman Recuses February 25. February 25, The New York Ti~es published front page article about
AJtmans testimony that was highly critical the fact that the February meeting had taken
pl~ce, implying that the White House had received update the underlying facts the case.
Altman testified that was shaken the story and its allegations impropriety and had
de.cide4 10:00 a.m. that would recuse himself limit any appearance conflict
interest.
When.he got work, did have several conversations with DeVore (who had since retired and
was wofking Texas) get his advice how make the recusal announcement way that
would mi,nimize further negative press stories. DeVores advice was stay flexible the issue not pour kerosene the fire, possibiy waiting couple days before making the
announcem~t.
.Altman testified that had statement prepared announcing his recusal.
some point th~ mid- late-afternoon, Altman spoke with Howell Raines, editorial page editor The New York rimes, who told Altman that was writing very harsh editorial about the
February meeting
......
~~~~~~~~~~~~~~~~~~~~
.Altman attempted
explain what had taken place the meeting, but Raines apparently had already made his mind the editorial. some point the conversation, Altman told Raines that had decided
recuse himself. Within minutes after the call,
Altm.~
had the Treasury public affairs office
release the recusal statement that had already been drafted announcing Altmans recusal.
Steiners diary dated February 27, 1994 (covering the period February through
,--
139
NW: 15416 Docld: 70001585 Page 177
Feb~
27) records:
The next day, the NYT ran front page story the mtg. The heat was on.
spent tortured day trying decide should recuse himself. spoke
Podesta let him know our deliberations. Very frustrating that was the
chosen point contact since clearly was not the complete confidence
George and Harold. After Howell Rains [sic] from the NYT called say that
they were going write brutal editorial, decided recuse himself.
O1O-DC-00000014.
FOIA (b) Rule 6(e),
Fede Rules Criminal Procedu was only
during his telephone call with Raines that Altman decided and announced that would fact
recuse. Immediately after Altman got off the phone with Raines, Steiner called Podesta let
him know Altmans announcement.
FOIA(b) Rule (e),
Federal Rule Criminal Procedure
-------~~----------------....J Podesta believes
then told Stephanopoulos and Ickes. A(b) Rule (e),
Fed les Criminal Pro dure
Stem remembers similar conversation with Steiner February 25. testified
that Steiner called him say that Altman was seriously considering recusing himself from
140
NW: 15416 Docld: 70001585 Page 178
..--
Madison but would not consulting with the White House the issue.
According Altman, was unaware any effort anyone the Treasut)
inform the White House that was again considering recusal. Altman put it, such efforts
took place, they were not very effective given the angry call received soon after his
announcement from Ickes and Stephanopoulos.
11. Egglestons February Memorandum Regarding The Madison Civil Investigation. February 28, 1994, Eggleston sent Ickes memorandum regarding
Whitewater-- FDIC and RTC Rose Law Firm Issues. 006-DC-00000014. The memorandum
discussed issues raised the FDIC and RTC reports addressing the question possible
conflicts interest the Rose Law firm its representation Madison. the memorandum,
Eggleston discussed the findings both the FDIC and the RTC their reports and noted that
the February hearing, the Chairman the FDIC and Altman had both agreed have the
FDIC and RTC Inspectors General review the conflicts issue. Eggleston then reviewed the
sanctions that could imposed the FDIC the RTC they determined the Rose Law Firm
had conflict interest. Next, explained the status the RTCs Madison civil investigation
and provided some background information Ryan and Kulka, the decisionmakers
light Altmans recusal. The FDIC and RTC reports were attached the memorandum. March 1994 memorandum addressed from Ickes Mrs. Clinton with the
February Eggleston memorandum attached was produced the OIC. 006-DC.00000013.
Ickes memorandum stated:
Attached copy ofW. Neil Egglestons February 1994 memorandum regarding certain issues involving the RTC and the Rose Law Firm
(Rose). Attached that memo are copies the FDIC report, dated
141
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..--.
February 1994, concerning possible conflicts interest regarding Roses
representation the FDIC against Madison Guaranty, and the RTCs February
1994 report concerning the same subject.
his understanding that shortly after Roger Altman met with Bernie
Nussbaum, and others concerning the RTC statute limitations, received opinion from ethics officer the Treasury Department that he, the acting
head RTC, dig not have recuse himself from matters involving
Rose/Madison Guaranty. will confirm this situation.
Please let know you want discuss the attached.
006-DC-00000013.
Eggleston testified that Ickes called him and asked him draft memorandwn
giving report where things stood with respect the conflicts issue, whether there was
conflict .who was investigating what the question, and what could happen the FDIC found
conflict. Eggleston wrote this memorandwn Ickes, and only later learned (in the course the
public hearings) that Ickes had forwarded Mrs. Clinton.
Ickes testified that the format his March cover note Mrs. Clinton the fact
that was not letterhead stationary and not initialed Ickes indicates that may not have
been sent Mrs. Clinton, but not positive. Ickes claims does not recall asking
Eggleston prepare-the February memorandum! but certain that did. There had been
considerable discussion about the Rose Law Finns possible conflict interest representing
Madison, and Ickes asked Eggleston write discussion the intricate issues that were
involved that question, and Ickes believes the February memorandum may that
memorandum.
According Mrs. Clinton, she has vague memory Ickes asking her she
wanted know more about the RTC and the Rose Law Firm, and she said she did not.
142
NW: 15416 Docld: 70001585 Page 180 may
..-
have either had this memorandum with him tried hand her, and she was not interested it. She does not believe she looked through this memorandwn until she was fater.prepared for
questioning the
ore.
Ickes testified that does not remember handing Mrs. Clinton this document,
asking her she wanted learn more about the Rose Law Firm/RTC issues, and her responding
that she did not want so. discussed above, the White House has produced notes taken Sherburne and
Cheston the summer 1994 conversation they had with Ickes private counsel, Arny
Sabrin. These notes suggest that Sabrin conveyed the White House Counsel additional
information that she had received from I~kes regarding the preparation both the February.28
and the March niemoranda. Sherburnes notes state (with modest expansions abbreviations):
...--.
Late Feb (2/26 27), has conversation WJC which WJC asks
lots RIC procedures, whether [in margins: whether Rose cld held
liable) HRC WJC exposed. asked draft memo which did
12.hours. lil minor revisions. Sends HRC 3/1. discussing.
HRC asked few questions. Think> received memo.
442-DC-00006540-6541. Chestons notes similarly read (again with modest expansions
abbreviations):
2/27-3/l Memos.
Late Feb, 2/26 probly, conv Pres had read WSJ article, -asks sever procedure RTC; can Rose; HRC, held liable asked write memo.
Did w/in hrs. asked couple qs, follow pts.
143
NW: 15416 Docld: 70001585 Page 181
3/1 HRC only. recall discg her [in margins: other than her
asking cple qs. Bef? Aft? Assume aft.] sending Pres.
442-DC-00006543.
These notes provide level detail surrounding the preparation and
dissemination the February and March memoranda that Ickes never provided his sworn
testimony. Wheri confronted with these notes, Ickes testified that while remembers having
spoken with the President and Mrs. Clinton about the statute oflimitations issue (as discussed
above), does not recall having the conversation with Clinton that recounted these notes
regarding the potential liability the President and Mrs. Clinton the Rose Law Firm. The
notes did prompt him reveal some further information surrounding the preparation
Egglestons memorandum, however. Ickes testified that the FDIC and RTC had issued reports
dealing with the possible conflict interest with the Rose Law Finn and Madison and that there
had been article editorial the Wall Street Journal some time later February that
Ickes read. Ickes acknowledged that Clinton may have read the same article editorial and may
have asked Ickes some questions about it, but Ickes claims not recall. Ickes did testify quite
firmly that based those reports and that either editorial newspaper article, had asked Mr.
Eggleston write memo. Ickes, Senate Hearing, Feb. 22, 1996, 180. the preparation Egglestons memorandum, Ickes testified that does not
recall Eggleston wrote the memorandum twelve hours, described these notes. also
testified that does not recall making any revisions Egglestons memorandum, although
may well have. the question whether sent his own March memorandum Mrs. Clinton
(with the Eggleston mem.orandwn attached), Ickes again testified that may well have done so,
144
NW: 15416 Docld: 70001585 Page 182
.--
but does not recall. Contrary the White House Counsels notes, Ickes also claims does
not recall Mrs. Clintons asking questions about the memorandum.
Ickes only explanation the discrepancies between his testimony and the
Sherburne and Cheston notes that was not present for the Sabrin conversation and has
way knowing what was ~d, whether what Sabrin said was accurate, and whether Sherburne
and Cheston accurately transcribed what Sabrin said. Sherburne similarly stated the Senate
Special Committee that she had reason believe that the interview Sabrin was providing
information she had collected from variety sources, and that she does not know the source
Sabrins information these points. Ickes, Senate Hearing, Feb. 22, 1996, 187 (~tatement
Sherburne).
After Sherburnes and Chestons conversation with Sabrin, they interviewed Ickes
personally. Ickes, Senate Hearing, Feb. 22, 1996, 186 (statement Sherburne). Pursuant
our arrangement with the White House, portions the notes both Sherburne and Cheston
from this interview were read OIC attorneys. The portions relating the February and
March memoranda were not read because prior the disclosure the notes the Sabrin
conversation those issues were not central focus the investigation. Depending the
outcome the OICs litigation against the White House the Eastern District Arkansas, the
OIC should consider pursuing the notes Sherburne and Cheston from their interview with
Ickes. Those notes will help determining whether the statements attributed Sabrin the
Sherburne and Cheston notes accurately reflect w~J Ickes may have been confiding his
145
NW: 15416 Docld: 70001585 Page 183
private counsel and the White House Counsels Office the summer 1994.
326 Billing Records [The facts relating the discovery the billing records the
White House are detailed Colloton Azar, Rose Law Finn billing records, September
1996.]
The basic facts and circumstances surrounding the disclosure January 1996, that
Rose Law Firm billing records were the residence portion the White House, are well known
and ably set forth the Colloton/Azar memo September 1996. Also well known the
conclusion which Steve and Alex come that4
FOIA(b)7
-----~~~~~~~~..;_~--
(C) they doubt that the admissible evidence probably
sufficient establish guilt proof beyond reasonable doubt before unbiased jury.
(Colloton Az.ar, 32-33).
Initially, point out two important factors, series factors, not considered
September 1996:
FOIA(b)
(C)
326. addition, the OIC should consider questioning Sabrin, Sherburne, and Cheston about
their conversation. The OICs position would that Sabrin waived her private attorney-client
privilege communicating with Sherburne and Cheston and that, any event, any official
private privileges were waived the White Houses disclosure the notes Sherburne and
Cheston.
146
NW: 15416 Docld: 70001585 Page 184
FOIA(b)
(C)
FOIA(b)7
(C)
Carolyn Huber, Hillary Clintons personal executive assistant says that the billing records
were first found table the Book Room, Room 319A, just outside Hillary Clintons
office August 1995. According Ms. Huber, she did not recognize what they were, boxed
them and put them away and did not re-discover them and recognize their significance until
,,--
147
NW: 15416 Docld: 70001585 Page 185
January 1996. January 1996, her office was being rearranged and the table covering the box
was moved. When she emptied the box, Ms. Huber says she discovered the records and
immediately called her attorney, Henry Schuelke.
FOI!l.(b)7.-
(C)
She the only individual the White House who had significant interest them and she
one only people known have had them her possession since their creation February
1992 (the other two were Vince Foster, who was dead the time the records discovery, and
Hubbell, who was jail). Moreover, the late July/early August time-period, Mrs. Clinton had
reason review the records. Relevant events that time include: OIC interview July 22,
1995; release ofRTC and FDIC-OIG reports RLF and MGSL July and August 1995;
and public testimony the FDIC, RTC and Hubbell before Congress August 10, 1995.
Immediately thereafter the Clintons left their August vacation Wyoming. addition there some slight direct evidence that Hillary Clinton possessed the billing
records. Three individuals (two construction worken4_
__.I have all
testified that they observed Hillary Clinton carrying cardboard box the Residence about
I_________.~~ also t~stified that the box contained documents that July 8-9, 1995 ...
looked like technical documents blueprlnt.. schematics the same size andishape the
billing records. could not, however, conclusively. identify the billing records .as the
documents saw, but when shown copy the billing -r~cords said they w~re consistent
with the documents saw Mrs. Clintons possession.
Finally, have comprehensively interviewed almost every c;>.ther individual who had
access Room August 1995. None appear have any motive tc;:i have placed the
148
NW: 15416 Docld: 70001585 Page 186
FOI.i(b)
(D)
billing records there and none recalls having seen the billing records the room. might
reasonably anticipate the possibility bringing~ witness the trial for brief questioning;
the effect would certainly compelling. 327
FOIA(b)
(C)
Also significant pointed out the Azar/Colloton memo the fact that Vinces
handwriting well fingerprints appear the billing records. His handwriting says various
places, HRC and circles various entries the billing records. clear that the handwritten
notations are directing HRC various events the billing records. The billing records were
under subpoena since June 1994. 328
FOIA(b)7
(C)
328 have been asked our view how the billing records came into Mrs. Clintons
possession. The Azar/Colloton memo offers couple theories how HRC came into
possession the billing records.f
FOIA(b)
149
NW: 15416 Docld: 70001585 Page 187
(C)
FOIA(b)
(C)
the time they were discovered, Associate White House Counsel Jane Sherburne raised the
forensic question fingerprints with Mrs. Clintons attorney, David Kendall, and Mrs. Hubers
attorney, Henry Schuelke. Kendall cavalierly dismissed the concerns and has since said just
didnt consider forensic issue. Sherburne and Huber then took the billing records color
copier the White House and made copies Sherburne kept one and Kendall the other
copy and the originals his law firm. the law firm, Kendall gave the original and the copies paralegal named Mark
Rolfe and directed him not let the records out his sight because they were highly
confidential. did not ask Rolfe take any special forensic precautions (i.e. wear gloves).
Rolfe affixed Bates numbers the original and the copy and then compared the two sets
documents insure that the copies were complete. several instances determined they were
not complete (as the Post-It notes had not been copied) and recopied the original. Most
remarkable, after completing the comparison, Rolfe made additional copies from the first copy
(principally for distribution the Senate Whitewater Committee) but when the copies were incomplete went ~ack the original make copies thus the original documents were
handled extensively before they were turned over OIC ______
FOIA(b)
(C)
_______.
For example, September 1996, Messrs Colloton and Azar speak the information
contained the records which show indicates Mrs. Clintons role suspicious transactions,
~Castle Grande. now have retained expert the operation regulatory agencies, who
150
NW: 15416 Docld: 70001585 Page 188
681 ~iiBd ~8~1000l :ppoa 91-V~l :MN
will testify that the events surrounding Castle Grande, such the cross loans, were criminal acts.
FOIA(b)
(C)
FOIA(b)7
(C)
FOI/l.(b)
(Cl
,--
151
FOIA(b)
(C)
FOIA(b)
(C)
152
NW: 15416 Docld: 70001585 Page 190.
(C)
FOIA(b)
(D)
153
NW: 15416 Docld: 70001585 Page 191
._,,.-...,
FOIA(b)
(C) Support/or Webb Hubbell BACKGROUND
--- March 14, 1994, Webster Hubbell announced his resignation from his position
Associate Attorney General, the number three position the Department Justice. Hubbells
resignation was effective approximately three weeks later. His last day DOJ was April
1994. The stated reason for Mr. Hubbells resignation was that needed devote time
resolve billing dispute with his former employer, the Rose Law Firm Little Rock, Arkansas. the time his resignation, had been reported the press that Hubbells billing dispute was subject being examined Specia1 Prosecutor Robert Fiske (title reported the press).
FOIA(b) P.ul (e),
Federal Rules iminal Procedure
154
NW: 15416 Docld: 70001585 Page 192
,.,.- ...
FOI 6(e),
Fed ral Rules Ci:iminai Proceclui:e
During the April through Novembe~, 1994, time frame, Hubbell was retained
consultant different persons/entities. Hubbell collected $450,010.00 from consulting
work 1994. Hubbell collected $91,750.00 consulting fees calendar year 1995 (not
including 7,500.30 publishing income from William Morris 1995). December 1994, Hubbell pled guilty two felonies Mail Fraud and Tax Evasion
based $482,000.00 improperly billed fees and expenses associated with his representation Rose Law Firm clients. part his plea agreement, Hubbell agreed cooperate with the
OIC, and provide complete and truthful information. Hubbell was sentenced U.S. District Court Judge George Howard June 29, 1995.
Hubbell received sentence incarceration months. was designated serve this
sentence the Federal Correctional Institution Cumberland, Maryland. Hubbell reported
that institution August 1995. was released from fCI Cumberland halfway house
Washington, D.C. November, 1996. completed his sentence February, 1997:
II. EFFORTS ASSIST HUBBELL March 13, 1994, the day prior Hubbells announcement his resignation from
DOJ, there were least two meetings held the White House discuss Whitewater related
matters. According the grand jury testimony then White House Chief Staff Thomas
Mack Mclarty, there was meeting scheduled the residence the White House discuss
with the President and First Lady organizational structure deal with Whitewater related
matters. Prior that meeting, there was pre-meeting, approximately 8:00 a.m., attended
155
NW: 15416 Docld: 70001585 Page 193
,,-.,, McLarty, Harold Ickes, David Kendall and Bob Bamett. 330 According McLarty, during this
pre-meeting, Mclarty, Ickes, Kendall and Barnett discussed the agenda for the upcoming
meeting the residence. approximately 8:30 9:00 a.m., the full meeting was held the
residence with Mclarty, Ickes, Mrs. Clinton, President Clinton, Maggie Williams, Kendall and
Barnett. 331 Following the completion the agenda items (reflected McLartys notes that were
produced OIC May 1997), there was conversation approximately minutes with
the entire group that dealt with Hubbell. Mclarty testified that:
another matter that was topical and pressing nature was raised this meeting. And
thats how remember the Webb Hubbell resignation situation possible resignation
being raised this meeting. 332
Mclarty refused say who said what during the discussion (based upon his instructions
assert executive privilege) but did say that they discussed the facts surrounding Hubbells
..-.
resignation. Mclarty made the general statement that:
given the fact that there had been apparently discussions with him [Hubbell] Blair and
Kantor .it seemed growing possibility that would not able continue
effectively serve Associate Attorney General. Thats how remember the matter
coming and generally what the tone the discussion was. 333 least the feeling that had, and think was shared certainly others, that Mr.
Hubbell would have resign ... closure was not reached whether not Mr. Hubbell
would asked resign [but Hubbell had informed McLarty that would willing
330
Mclarty, 4/17/97 GJT, 114-117.
331 12-37;
114-117. 32.
333 31.
156
NW: 15416 Docld: 70001585 Page 194
resign] the President felt was necessary. 314
According McLarty, the meeting was breaking up, initiated comment the First Lady
and told her: Were going supportive Webb. And her response me, remember it,
was, Thank You Mack. appreciate that very much.
FOIA(b)3 Rule 6(e),
Federal Rul Crimi Procedure
FolloWing this meeting, McLarty spoke Truman Arnold and Vernon Jordan about
a5sisting Hubbell finding clients. addition hiring Hubbell himself, Truman Arnold
recommended Hubbell least four others that eventually hired him: John Moores, Wayne
Reaud, Bernard Rapoport, and C.W. Conn. Vernon Jordan recommended Hubbell least one
entity, McAndrews .and Forbes (Revlon), that eventually hired him A(b) Rule (e),
Federal les Crimina Proc dure
Within the first couple weeks Hubbells announced resignation, Bill Burton, McLartys
staff director, telephoned Brad Keithley the Jones, Day law firm Dallas, Hubbells
behalf. Burton called Keithley McLartys direction his own initiative following
discussion with McLarty about Hubbell. short time later, Burton reported back Mclarty
that Keithley had bee_ courteous, but had indicated that would not work out for Hubbell
ill 32.
33S
li1at35
336
lit 37.
157
NW: l5416 Docld: 70001585 Page 195
Jones, Day, other traditional law firms for that matter, long this billing dispute was
outstanding with Rose Law Finn. 337
Erskine Bowles, then the head the Small Business Association, received telephone
call from Mickey Kantor around the time that Hubbell announced his resignation. Kantor was
good friend Bowles. Kantor said that was concerned about the plight Hubbells family
and especially the Hubbell children. Although Kantor did not ask him anything and was
not personally close friend Hubbells, Bowles decided try help Hubbell because was guy who was Rule 6(e),
Federal Rules Criminal Procedure ___..
owles telephoned Hubbell and offered help him
calling few friends with conta.Cts Washington. Hubbell indicated Bowles that was
interested remaining Washington, D.C.
FOIA(b)3 Rule 6(e),
337
Federal Rules Criminal Procedure 50-52.
338
FOIA(b) Rule (e),
Federal Rules Criminal Procedure
......-...
158
NW: 15416 Docld: 70001585 Page 196
FOIA(Si3 Rul 6(e), Federal Rules Criminal Procedure
III. liUBBELLS CLIENTS
The following description several Hubbells consulting clients which fall most
strongly within the hushmoney allegation. The clients are discussed the chronological order
which they hired Hubbell. Truman Arnold
Arnold paid HubQell $18,000.00 April 20, 1994. The $18,000.00 represented six
month contract $3,000.00 per month. Arnold has testified before the grand jury that
received call from Mack McLarty late March early April, 1994, requesting Arnold keep eye out for opportunities for Mr. Hubbell and spread the word among his business
associates that Hubbell was available for work Washington,
D.C,
FOIA(b)3 Rule 6(e Federal Criminal Proced ure
,,-...
FOIJl.(b) Rul Feder Rules Proc edure
159
NW: 15416 Docld: 70001585 Page 197
FOIA (b)3 Rule 6(eJ, Federal Rules Criminal Procedure
Arnold further testified that when the six month contract expired
--------------~~
October, 1994, did not renew the contract because was disappointed with Hubbells
performance. Hubbell had not approached him with any i~vestment ideas opportunities during
the six months was retainer. Arnold told the grand jury that had known the true
340
FOIA(b) Rule (e), Federal Rule Criminal Procedure
341
160
NW: 15416 Docid: 70001585 Page 198
.-.
nature Hubbells situation and the fact that would later plead guilty the two felony
counts, never would have hired Hubbell and would not have recommended him his friends
and associates (Bernard Rapoport, John Moores, Wayne Reaud, and C.W~ Conn).
FOIA(b) Rule (e),
Federal Rules Criminal Procedure McAndrews and Forbes/Revlon
Prior Hubbells resignation from OOJ, March 12, 1994, Vernon Jordan met with
Webb Hubbell 8:00 a.m., the Melrose room the Park Hyatt Hotel Washington, D.C.
Hubbell had called Jordan for breakfast. Jordan has testified that Hubbell said effect that
was leaving DOJ and: would like life after that, and will you helpful me? And said, happy
helpful you ... Hubbell said would like continue doing what was doing before came into government. That was practice law, have clients. And said, Ill
what can said, Webb, like help you and will think about and will back touch. 343
FOIA(b) Rule (e),
:?FOIA(b) Rule (e), .,---..
343
Federal Rules Criminal Procedure
Federal Rules Criminal Procedure
Jordan, House Testimony 7/24/97, 29-34
161
NW: 15416 Docld: 70001585 Page 199
FOIA(b)3 6(e) Fede ral Rules Criminal Proced~
Jordan says its entirely conceivable that Mclarty called him about Hubbell and that
Jordan told McLarty that was trying help Hubbell but, not recollect that.
345
McAndrews and Forbes holding company established maintain and operate the
personal investment holdings Ronald Perelman. The General Counsel McAndrews and
Forbes Barry Schwartz. Schwartz testified that April, 1994, received recommendation
from Vernon Jordan that Webb Hubbell was available for work Washington, D.C. Schwartz
testified that sp0ke with two other employees ofMcAndrews and Forbes, Howard Gittes and
Richard Halperin about the p0ssibility hiring Hubbell. Shortly after this first telephone call
....-....
with Vernon Jordan, Jordan brought Hubbell the New York offices ofMcAndrews an. Forbes introduce Hubbell.
This consistent with Jordans testimony which has stated that think some
point after that went New York and took him client mine and introduced him.
Jordan says introduced Hubbell Howard Gittes, vice chairman ofMcAridrews Forbes
and others April 1994 :30 p.m.
What did was make introductions. Introductions introduce Hubbell Howard
Gittes. member the Revlon Inc. board. one many counsel Revlon and McAndrews Forbes. Ive had long relationship there. Howard friend mine.
Webb friend mine. introduced them and left them talk. ~(GJ 6(e),
,,-....
345
Federal Criminal Procedure
Jordan, House Testimony 7/24/97,
162
NW: 15416 Docld: 70001585 Page 200
Jordan says had discussions with Hubbell about any post-employment restrictions may have been under: did not ask questions about the appropriateness this the appropriateness that. was friend trouble. could some help him, and did it. Proudly.
Jordan knows nothing about the details Hubbells retainer with MF. Jordan believes that,
some point, spoke Perelman regarding Hubbell being hired. Jordan first said was certain
Perelman had stopped that initial meeting with Hubbell Jordan then backed off and said that was entirely possible that Perelman stopped in. 346
Jordan further testified that told the President that was helping Hubbell. ..I told the
President informal setting that doing what can for Webb Hubbell. The President said,
Thanks. End conversation. was sometime the spring sure, and suspicion
.-..
that the forum was the golf course. 347
Eventually, Schwartz scheduled interview with Hubbell for April 29, 1994. During
that meeting, Hubbell assured Schwartz that there was nothing about his personal situation that
would become embarrassing for McAndrews and Forbes the future. Following the meetirig,
Schwartz retained Hubbell the rate $25,000.00 per quarter.
During his grand jury testimony Schwartz could not describe with any particularity the
types items anticipated that Hubbell might work on. Hubbell was paid $25,000.00 April
1994 and second $25,000.00 July, 1994.
FOIA( 6(e),
346
,,---.
l.d 35-38.
347
Federal Criminal Procedu 46.
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FOIA (b) Rule imin Procedur
...______....ii Telephone messages indicate that Hubbell had~ series conversations.
and least one meeting with Schwartz. late October and early November, 1994. Schwartz
testified that was during this period that Hubbell was consulted one legal matter involving
McAndrews and Forbes. Schwartz refused answer questions about the substance the matter
based attorney/client privilege. Hubbell never produced any written work product during this
consultation.
Eventually, Hubbell was paid additional $12,775.00 iri December, 1994. Schwartz
testifj.ed that approximately December 1994; Hubbell called inform that was pleading
guilty. Schwartz testified that was surprised this phone call and that until that time
had idea that Hubbell was facing criminal charges. Schwartz terminated Hubbell .in letter
dated December 12, 1994, which indicated that given Hubbells decision plead guilty,
.---.
was obvious that Hubbell would longer able work for McAndrews and Forbes. The
final $12, 775.00 payment represented pro rata payment from the invoice date October 28,
1994, until December 1994, when McAndrews and Forbes was notified Hubbell that
would pleading guilty. American Income Life
American Income Life life insurance company owned Bernard Rapoport Waco,
Texas. Rapoport major Democratic contributor and supporter President Clinton.
Rapoport received telephone call from Truman Arnold April early May; 1994.
,--..
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FOIA (b) (e), Fede ral Criminal Procedur
.--..: ___.I Arnold indicated that had hired him for $18,000.00 $3,000.00 month
for six months. Rapoport indicated would the same thing.
American Income Life paid Hubbell $18,000.00 over six months beginning May 23,
JRapoport was not
aware any particular work tl)at Hubbell did. Rapoport testified that had been aware-of
Hubbells criminal activity would never had hired him. Upon expiration the six month
period, Rapoport did not renew the contract but later did contribute $6,000.00 the Hubbell
Children Education Trust Fund.1 Hong Kong China Limited (Lippo/Riadys) June 27, 1994, $100,000.00 was wired into the account Webster Hubbell from
Lippo/Riady controlled entity, Hong Kong China Limited. Hong Kong China Limited
foreign corporation based Hong Kong. have been unable interview anyone from that
corporation anyone that works for the Riadys.
According documents produced Hubbell, appears was hired consultant
Hong Kong China Limited. June 27, 1994, letter the Director Hong Kong China
rLimited, Mr. David Yeh, Hubbell stated: pleased provide consultant services your company. you know, provide broad range consultant services including extensive expertise capital markets, U.S.
placements, A.D.R. and investments. From our previous dealing. you are also aware that have extensive legal experience banking, insurance, corporate organizations and
securities. pleased confirm that will providing the full range services for
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$100,000.00 per year payable quarterly installments beginning July 1994 ...
The retention Mr. Hubbell Hong Kong China Limited followed series visits
the White House James Riady and John Huang during the week June 20, 1994.
May 19, 1994
Hubbell writes letter Juhn Huang Lippo Bank Los
Angeles, was good see you last evening. apologize
that did not have any business cards with me. enclosing one
and hope you will call if! can service you would just like visit. Please give James best and tell him would love see
him when comes Washington June.
June 21, 1994
2:27p.m.
telephone call charged Hubbells calling card from the
White House
4:45 p.m.
James Riady and John Huang enter West Wing according WAVES records
4:51 p.m.
Mickey Kantor,entcrs White House complex according
EPASS records
6:30p.m.
Mack McLarty receives telephone message from Marsha
Scott: Tomorrow fine. Seeing President oclock and
Webb this evening, well have more report
6:50 p.m.
James Riady, John Huang, James Lewin (Sprint), Bernard
Rapoport, and Wayne Reaud visit POTIJS South Lawn
according WAVES records
...--..
7:00 p.m. Hubbell calendar lists appointment Marsha Scott
June 22, 1994
2:57 p.m.
James Riady and John Huang visit Mark Middleton West
Wing
3:27 p.m.
Mickey Kantor enters White House complex according ASS records
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4:33 p.m.
Kantor exits White House complex according EPASS
records
12:05 p.m.
John Huang visits Middleton West Wing according
WAVES records
12:56 p.m.
James Riady visits Middleton West Wing according
WAVES records
5:00 p.m.
Hubbell calendar shows appointment with Riady
June 27, 1994
Hubbell writes letter David Yeh, Director, Hong Kong
China Ltd. pleased confirm that will
providing the full range services for fee
$100,000 per year payable q~erly installments
beginning July 1994 ...
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$100,000 (the entire years amount) wired from Hong
Kong China Ltd Hubbells NationsBank account
Washington, D.C. through Bank New York for any work that Hubbell did for Hong Kong China Limited, the documents provided Mr. Hubbell indicate that his only contact with Mr. Yeh was the June 27, 1994, retention
letter and subsequent letter acknowledging the lwnp sum payment $100,000.00. Hubbells
docwnents show contact with other employees ofLippo entities, mainly related Hubbell
assisting them with getting hotel rooms and travel arrangements. Other than assisting with some
travel arrangements, there are .no docwnents that indicate any substantive work that Hubbell
performed for any the Lippo entities.
Webb and Suzy Hubbell discussed Lippo September 1996 telephone call from FCI
...-.
Cumberland. Webb describes how the WallStreet Journa1 after him again. ran article
referring his book and the Jane Sherburne memo refering monitoring Hubbell cooperation.
Webb then says that addition, the Journal article also bring[s] out Riady again...
Webb: And said the Senate was unable find out what did for em. Hello?
Suzy: Yeah, cause you didnt anything for em.
Webb: Yeah. Alright. March 1995 (after Hubbells guilty plea), Hubbell had dinner with Bernard Rapoport
and Mark Middleton, former aide Mack McLarty. Hubbell asked Middleton the Riadys
intended continue pay him. Middleton responded that didnt know and that Hubbell
should talk John Huang the Riadys directly. SunAmerica Corporation
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....- ....
SunAmerica Inc. insurance and investment company based Los Angeles,
California, owned and controlled Eli Broad. Broad has known Hubbell since the mid-1980s
when was introduced Hubbell and the Rose Law firm Mickey Kantor. Hubbell did
legal work Little Rock, for SunAmerica 1985 and 1986. Since that time, Broad has
maintained periodic personal and telephonic contact with Hubbell. Broad did not recall any
contact with Hubbell during the period when Hubbell was the Department Justice.
Broad became aware that Hubbell was doing consulting work about April 14, 1994,
while attending donor reception dinner the home Peter Norton. Hillary Clinton was the
guest honor and there were approximately 150 guests. After the dinner, Mrs. Clinton was
table hopping shaking hands with all the guests. During the short time Broad spoke with Mrs.
Clinton, Broad inquired about how Hubbell was doing. Mrs._Clinton informed Broad that
Hubbell was doing consulting work the Washington area. Broad says has clear
recollection, but during this brief conversation, Broad either told Mrs. Clinton was going
give Hubbell telephone call Mrs. Clinton suggested that Broad give Hubbell call.
Broad subsequently did telephone Hubbell Hubbells Washington office. Over the next
few months, Broad and Hubbell discussed SunAmerica and its interest National Savings
policy.
Such policy would likely include certain incentives such tax deferment, encourage
people save more money. SunAmerica planned offer financial products that took advantage the plan. May 25, 1994, Broad retained Hubbell rate $5,000.00 per month. Broad
has told investigators that hired Hubbell assist SunAmerica promoting National
Savings policy that would supported the administration and advocate get
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something moving regarding this issue: Broad also expected Hubbell remain alert and advise
SunAmerica anything going political circles regarding National Savings policy.
should noted that Broad personal friend President Clinton and has access directly
him. September 19, 1994, Hubbell sent Broad letter outlining number specific effcirts would make behalf SunArnerica. These included making certain presentations and
contacts with specific members the Clinton Administration, including the President. There evidence that Hubbell completed any these items.
SwtAmerica paid Hubbell total $35,000.00 1994. Hubbell was terminated shortly after pleading guilty the criminal charges December 1994. Broad felt that after his guilty
plea, Hubbell was longer value SunAmerica.
Employees the company, including
...-.--
former General Counsel, Karen Hedlund, and Loren Fife, current Co-General Counsel with
Susan Harris, have stated that they felt that Hubbell had been paid appropriate amount and
that SunAmerica had received the fair value his services until the time plead guilty
December, 1994. John Moores (JMI Inc., Sugarland, Texas)
John Moores entrepreneur and major Democratic donor who made his fortune
computer software. Moores testified that hired Hubbell July, 1994, upon the
recommendation Truman Arnold. Moores paid Hubbell $18,000. lump sum which
said represented six month contract $3,000.00 per month. Moores testified that his primary
focus retaining Hubbell was have him work airplane hangar project was trying
develop Carmel, California. Moores wanted Hubbell make contact with the FAA about
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getting approval for his project. Moores also indicated that later contemplated ~aving Hubbell
work real estate project which was attempting purchase some property which was
held by.the RTC. Moores not aware any contacts that Hubbell made the FAA RTC.
Moores did not renew his contract after the six month period expired and indicated that had
known about Hubbells criminal problem beforehand, never would have hired Hubbell. C.W. Conn (Conn Appliance, Beaumont, Texas)
C.W. Conn the founder Conn Appliance Corporation and multi-millionaire and
major Democratic donor. Conn hired Hubbell upon the recommendation Truman .Arnold.
Conn first met Hubbell and retained him during July 28, 1994, meeting Washington, D.C.
Hubbells office. Also attendance the meeting were Truman Arnold, Wayne Reaud, Bernard
Rapoport, John Moores and Gil Morgan law partner Wayne Reaud). The meeting was
arranged Truman Arnold discuss the possibility Hubbell looking for joint investment
opportunities for the group.
Conn paid Hubbell $18,000.00 July 28, 1994 lump sum representing six month
contract $3,000.00 per month. Conns primary interest was securing presidential
appointment ambassador. Hubbell indicated that could help him that process.
FOII>.( 6(e
Federa i:oc -edure
--~~~~~~~~~--~~~~~~~~~--~~~~~~~~~__,/conn has evidence that Hubbell did anything help him get ambassadorship. Conn not
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ambassador today. Conn has stated that had known the true nature Hubbells personal
problems, would never have hired him. Wayne Reaud
Wayne Reaud plaintiffs class action attorney Beaumont, Texas. Reaud retained
Hubbell July 28, 1994, the meeting Hubbells office Washington, D.C. Reaud paid
Hubbell $18,000.00 lump sum check dated July 28, 1994. Reaud has not yet been the
grand jury. Reaud was interested looking for joint investment opportunities for the group
the July 28, 1994, meeting and/or possibility establishing Washington office with Hubbell.
IV. PRISON TAPES various occasions, Hubbell spoke from prison with his wife Suzanna. While large
volume the tapes provides moderately useful evidence, appropriate end the evidentiary
.--..
presentation with the two most telling excerpts.
The first call occurred March 25, 1996. The context that Hubbell believes will sued the Rose Law Firm civilly recoup its damages from his bill padding. Hubbell
considering counter-suit which would, seems, allege like billing practices -his Rose
partners. His wife has been talking about Hubbells plan with Marsha Scott, who employee the White House and close personal confidant the Clintons. She relays Scotts concern
with Webbs plan:
SWH:
FOIA(b)
WLH:
SWH:
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(C)
----
FOIA(b)7
(C)
L-~~~~~~~~~~~~~~~~~~~~~/Andshe
said that one the biggest sticking points that you never apologized, that there
has been expression remorse whatsoever your part, and that suing, only made look lie you really dont give shit. And.that, its, that you are
openio2 Hillary all this.
WLH:
Well, honey, keep telling you, sometimes you have fight battles alone. You
know, you just cant worry about other people. know what doing,. OK?
Now, you dont want wont.
SWH:
No, want you to, just want, the one that bears the brunt this stuff here. the one that has try and talk people. the one that has try and
explain Marsha. saying, Marsha. She said, Youre not 2oin~ ~et any
public support for this pwsuit you open Hillax:y. Well, public support,
lcnow exactly what she means. not srupid,
WLH:
And sat there and spent Saturday with you saying would not that. wont, raised those allegations, mi2ht open Hillazy. And you lcnow that.
talked abQut that.
SWH:
Yes, but then, get all this back from Marsha, whos racheting and making
sound like, you know, Webb ioes ahead and sues the fion back. then any
support have the White House 2one.
WLH:
Well.
SWH: mean, thats what hearing. hearing the squeeze play.
WLR:
So. need roll Qver one more time. 348
FOIA(b)7
348
(C)
Tape #27.a, March 25, 1996, 18:39 (emphasis supplied)
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FOIA(b)
(C)
... ..--..,, short, many the people and entities that hired Hubbell following his resignation
form DOJ can traced high administration officials advisors. Mack McLarty and former
DNC Chairman Truman Arnold were responsible for five ofHubbells seventeen clients. Vernon
Jordan was responsible for least one client. The First Lady was the direct impetus for least
349
F_or_A_1b_l_7_-_1_c1_
._I_
___.stemphasis supplied).
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.-.
one client, SW1America insurance company. Then SBA Chainnan Erskine Bowles and United
States Trade Representative Mickey Kantor also made efforts behalf Hubbell following his
resignation. All this took place time where there was widespread public knowledge
criminal investigation into Hubbells billing practices while the Rose Law Firm.
II.
Chronological Background and Context January 12, 1994, President William Jefferson Clinton asked Attorney General Reno appoint Special Counsel takeover the so~called Whitewater and Madison investigation.
The U.S. attorney Little Rock had recused herself November 1993, and the prosecution David Hale, the investigation Madison, and the investigation the RTC criminal
referrals had been turned over Don MacKay, career Justice Department prosecutor.
Attorney General Reno appointed Bob Fiske the Special Counsel January 20, 1994. June 30, 1994, the President signed into law the reauthorized Independent Counsel Act. The
Special Division appointed Ken Starr the Independent Counsel August 1994.
This Office was given jurisdiction investigate whether any individuals entities
violated any criminal law, relating any way James McDougals, President William
Jefferson Clintons, and Mrs. Hillary Rodharn Clintons relationships with Madison Guaranty
Savings Loan association, Whitewater Development Corporation, Capital Management
Services, Inc.
Bob Fiske and his staff had been investigating these matters prior the appointment
Judge Starr under the Independent Counsel Act.
Within the scope the investigation, was important determine what the relationship
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,,-..,
was the Clintons and the McDougals, and the relationship both President Clinton and Mrs.
Clinton with each the three named entities within the jurisdictional grant.
Two grand juries have been utilized the Office the Independent Counsel the
Eastern District Arkansas. The first grand jury was empaneled March~ 1994 and expired
March 23, 1996. Another grandjury was empaneled Little Rock May 1996, and its tenn
expires May 1998. addition the investigation the Independent counsels Office, the FBI, the IRS, and
the Little Rock and Washington grand juries, investigations have been conducted criminal
investigators from both FDIC and the RTC. Civil investigations have taken place RTCs
outside counsel, Pillsbury, Madison Sutro. Also, the House Representatives and the U.S.
Senate have conducted investigations
..--..
Each these investigations was entitled under the law conduct their respective
investigations free from activities which would fall into the general category obstruction
the due administration justice.
Indeed, the jurisdictional grant this Independent Counsel, shall also have jurisdiction investigate any obstruction the due administration justice, any material false
testimony statement violation Federal criminal law, connection with any investigation the matters. [within its jurisdiction] described above.
[See the Introduction the Clinton-Finance memorandum June 1997, pages 1-10]. order understand how there may have been obstruction justice, false testimony,
and false statements, which may have affected the Independent Counsels investigation, and the
investigation other duly authorized investigators, important understand the chronology
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...---., events involved the different investigations. also important understand the
relationships between the Clintons and the McDougals and the institutions within our
jurisdictional grant.
Madison Guaranty
.Mrs. Clinton, and the Rose Firm represented Madison Guaranty Savings Loan
(MGSL) during the last months Jim McDougals stewardship that savings and loan
association. was during this April 1985 July 1986 time frame that number questionable
and criminal transactions took place, number which were the RTC criminal referrals);
those which have been the subject our investigations and our prosecution Jjm
McDou2aI. Jim Guy Tucker. and Susan McDou~al.
Madison had regulatory net worth problems from the time McDougal acquired
January 1982 through the time was ousted July 1986. Both federal and state regulators
monitored the condition MGSL and were concerned about it. Savings and loans associations
were required under federal regulation have net worth; that is, the assets the institution
had exceed the liabilities least 3%.
The institution was required make regular reports, often monthly, the Federal Home
Loan Bank Board, with copy going the state regulators. [FBI Financial ana1ystLJ
lwas tasked with compiling documentation related ~oses ~~-worth the years
1982 1988 demonstrate MGSL compli~ce or.~on-compliance with the FHLBBs
net worth schedule for these years has been prepared.]
regulatory net worth requireme11~. A.. Janll43J}; 198:2, ~hen the McDougals purchased the Woodruff County SL, had
,:-
.assets $3,899,434 and liabilities $3,817,955 for net worth 2.09 /o. McDougal grew the
FOIA(b)7
(C)
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177
...-..
institution very fa5t rate. the end December, 1984, had assets $48.5 million and
liabilities $47.9 million, with net worth 1.25%. result federal examination 1984, Madison was placed under supervisory
agreement the Federal Home Loan Bank Board July 1984. April, 1985, MGSL had
assets $67 million and liabilities $66.2 million, with net worth 1.32%.
Bill Black, former FHLBB official, who has testified expert witness before high
profile cases, has consulted with this office. has reviewed the various records MGSL.
his opinion, was absolutely essential that McDougal, goose the net worth the institution
prior the next federal examination wanted the institution survive.
Beginning early 1983, Madison had utilized the law firm Mitchell, Selig, Williams Tucker. Jim Guy Tucker was long-time political friend Jim McDougals, and John Selig
was the former Arkansas Securities Commissioner, who speciali:zed securities law and
banking matters.
The Mitchell, Williams Firm, where Beverly Bassett was employed associate the
early 1980s, opened and handled number matters for MGSL. February, 1985, the Firm
opened. matter no.9, entitled, sale stock. Matter no. 10, the Firm was entitled,
broker/dealer. was MGSLs plan the spring 1985 issue preferred stock the amount
million order raise capital and help comply with the Federal requirements concerning net
worth. April 1985, Charles Handley, career employee the Arkansas Securities
Department (ASD), advised Davis Fitzhugh, MGSL employee, that did not think that there
was any authority under Arkansas law for savings and loan association issue preferred stock,
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.-- proposed MGSL. the next day, April 1985, Jim McDougal held fund raiser MGSL heip retire
the campaign debt Governor Clinton, ihcurred the Governors race from the fall before.
Some $33,000 was raised retire that debt, primarily the fonn contributions from insiders
and persons affiliated with MGSL. April 23, 1985, the Rose Law Firm opened its first ever matter for MGSL. MGSL
Matter no. the Rose Law Firm was styled, stock offering. Ori April 29, 1985, Mrs.
Clinton had telephone conference with Beverly Bassett, the new Arkansas Securities
Commissioner, who had been appointed some three months previously her husband,
Governor Clinton, partially upon the recommendation Jim McDougal. the next day, April 30, 1985, the Rose Law Firm sent letter the ASD the
,.,..-,,
question whether SL could issue preferred stock. This letter indicated that the ASD was contact Hillary Clinton Rick Massey there were any questions. May 14, 1985,
Beverly Bassett wrote letter beginning, Dear Hillary, agreeing with the Rose Law Finn
proposal. May 23, 1985, Mrs. Clintori sent copy Bassetts letter Jim McDougal,
adding that, look forward working with you your plans for growth.
President and Mrs. Clinton had personal and business relationship with Jim McDougal
and his wife Susan dating back the 970s. They were joint participants the Whitewater
development beginning 1978, and were joint participants the Whitewater corporation
beginning 1979. Jim McDougal served Bill Clintons firSt gubernatorial administration
1979 and part 1980. assisted the governor with his legislative program 1983.
Thereafter, the Rose Law Finn opened five other matters for MGSL over the next
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.,,,,,,,.-.
months. The Firm receiv~ $2,000 month retainer, more accurately described advance against fees. Mrs. Clinton was the billing attorney the responsible attorney for
this client. that capacity, she would have reviewed all the work done attorneys the
Rose Law Firm representing MGSL prior any invoice statement going out the client.
She normally would write cover letter transmitting the RLF invoice MGSL. The backup
data for the information contained the actual bill MGSL was contained computer
generated billing memorandum, which tum, had come from the time sheet entries for each
attorney working that representation.
Matter no. opened the Rose Law Firm, dealt with the matter limited
partnerships and broker-dealer licenses, which MGSL wanted involved way raise
capital. Rick Massey, who was young associate the Firm, the securities department,
worked this with other securities partners, but Mrs. Clinton remained the responsible attorney review all the work and sent the bill the client.
The preferred stock was never issued, although MGSL had been given until the end
December 1985 which accomplish this. Instead MGSL got involved land transaction
south Little Rock, which generated nearly million profits, which would have goosed
their net worth, prior the next federal examination.
Matter no. was labeled general. The first entry that matter being June 19,
1985, wherein Massey recorded conference with John Latham, president ofMGSL, regarding
capital plans. Massey recorded time July and 12, 1985 for telephone conferences with
Sarah Hawkins ofMGSL regarding MGSLs business plan, and the proposed conference with
the FHLBB supervisor. Mrs. Clinton was the billing attorney matter no. and also recorded
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time that matter beginning September 1985.
The JDC/Castle Grande Matter
Mattei no. for MGSL the Rose Law Firm was entitled, IDC. According the
internal records the Rose Law Firm, this matter was opened August4, 1985, not Mrs.
Clinton, but Webb Hubbell. Mrs. Clinton, however, was the billing attorney this matter
she had been the others. Rose attorney, Tom llrrash, has time sheets and billing entries
MGSL early-August through the first part October 1985 for multiple meetings and
conferences with Seth Ward and others involved the acquisition the 100-acre IDC
property, and the sewer and water utility its subsidiary, ISC, from the Industrial Development
Corporation Little Rock. [Section II. and 11.2 this memo, give more detail concerning the
matters occurring before the Arkansas Securities Department, and the acquisition the IDC
..-
property, which was renamed Castle Grande MGSL.]
The JDC property originally was acquired total Madison Financial
Corporation, the subsidiary ofMGSL. All the resolutions draWn Rose attorney Thrash
indicate this. However, shortly before the closing, was determined that MFC could not acquire
the entire property because would violation Arkansas state regulation which would
not allow savings and loan association invest more than its investments its
subsidiary.
Therefore, Seth Ward, employee ofMFC, agreed have certain the property placed his name. There much evidence and testimony that Ward was nominee straw man this transaction. was risk and had put none his own money. The entire
purchase price was financed MGSL Ward the father-in-law Webb Hubbell, Mrs
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Clintons Rose Law Firm partner. summary, the IDC property, with its associated utility, was purchased MFC and
Ward for $1.75 million. February 28, 1986, the property and the.associated utility, had been
sold third parties (most whom were insiders affiliated persons) for excess
million. These purchases involved, most instances, inflated appraisals Robert Palmer and
[rnrn( b)7 (c1 February 17, 1986, Sarah Hawkins MGSL learned that the federal examination was
going begin about Monday, March 1986, and would examine all transactions through
Friday, February 28, 1986. February 28, 1986, nwnber transactions closed. MFC, which Ward had
transferred most the property held his name, sold large tract fonner U.S. Senator
William Fulbright, who was mentor for Jim McDougal.
MFC, upon transfer from Ward, sold the assets the sewer and water utility recently
fonned corporation, Castle Sewer Water, which was controlled Jim Guy Tucker. The
utility had been purchased for $400,000 the name Seth Ward October 1985, and was
resold Castle Sewer Water for $1.2 million.
MGSL loaned Castle Sewer Water $1.05 million non-recourse basis, with the
$150,000 down payment coming from David Hales company, Capital Management Services. addition, that day, MGSL loaned Dean Paul, nominee for David Hale, $825,000.
This money was used purchase three tracts land from Hale, which generated roughly
$500,000 profit for Hale, which then injected into his small business investment company.
The SBA then matched this investment 3-1 basis.
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According Hale, return for this loan, then funded loans through CMS for
designees Jim McDougal: Larry Kuca lawyer with whom McDougal was silent
partner); Steve Smith, d/b/a/ The Communications Company (the funds being used pay off
adebt owed Smith, Tucker and McDougal); the down payment for.the Castle Sewer
Water purchase the utility; and the $300,000 CMS loan Susan McDougal, d/b/a/ Master
Marketing. [These transactions were the essence the McDou~al. Tucker and McDou2al
trial.)
The examiners came the institution about March 1986. Within short time,
they focused the transactions involving the purchase the IDC property and subsequent
sales within rather short period time. Both the eXallliners, and later, outside law finn
brought into the institution examine the transactions, detennined that there were possibly
.---..
fraudulent practices. Ultimately, there evidence show that indeed, crimes were being
committed relative this property.
Prior the sale 1986 what was originally the IDC property, Mrs. Clinton had many
conferences and telephone conferences with Seth Ward.
Mrs. Clinton, for example, billed for conferences with Seth Ward November and
November 26, 1985, and also then had conference with Webb Hubbell. month earlier,
October 18, 1985, associate Davis Thomas the Firm, indicated that spent 3.5 hours
researching what approvals, permits, etc., were necessary operate sewer and water facilities,
having multiple telephone conferences with state agencies. Thomas indicates that wrote
memo not Mrs. Clinton, but Webb Hubbell.
Mrs. Clinton billed Madison for. some conferences telephone conferences with Seth
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Ward. Some appears have been connection with proposed brewery located
the property, and other entries seem pertain research the sewer and water utility.
However, some the entries not appear corutected either these projects.
The Federal Exam March 1986
During the federal examination, which began early March 1986, Seth Ward became
worried about receiving commissions that were owed him for his role nominee. Ward
threatened sue MGSL. stave this off, Ward received $400,000 the form loan from
MGSL, and executed document baek MGSL which indicated that had loaned money
MFC although had not. These cross loans are discussed more detail Section 11.1 this
memo.
The examiners questioned these cross loans, and were told that they were not corutected each other. about May 1986, option agreement was prepared and put place
the non-funded loan from Ward MFC. The bank examiners would later testify that based
this option agreement, they stopped their pursuit what appeared them possible
fraudulent activity.
The federal exam turned many problems, and June 19, 1986, the FHLBB wrote the
MGSL Board Directors directing them cease and desist from certain practices until there
could meeting Dallas. Beverly Bassett, the Securities Commissioner, who also served
the Savings Loan Supervisor, advised the Governors office, attaching
acopy the FHLBB
letter.
The meeting took place Friday, July 11, 1986, Dallas, the conclusion which,
.-.
the Board was directed that Jim McDougal had out any kind control and/or
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management MGSL MFC, and John Latham, who had served president MGSL, had out.
Governor and Mrs. Clinton apparently were Miami over the weekend July 12-13,
1986 attending Mrs. Clintons brothers wedding. the next business day, Monday, July 14, 1986, Betsey Wright, the Governors Chief
Staff, and main political advisor, sent the Governor hand written note: Whitewater stock
(McDougals company). you still have? (pursuant Jims current problems). so,
worried about it. that same day, Mrs. Clinton and Seth Ward both attended meeting the Little Rock
Municipal Airport Commission. Ward was Commissioner, and Mrs. Clinton was the attorney
for the Airport Commission. that same day, Ward came into Madison, displaying unsigned document,
representing that this was the agreement had with Jim McDougal concerning the payment
commissions him. appears that this document was backdated, and was prepared Webb
Hubbells secretary, Martha Patton. Patton has testified that she never prepared any documents
handed directly her Seth Ward, but would have only done only Webb Hubbell gave her. that same Monday, July 14, 1986, Mrs. Clinton signed letter Jim McDougal and
John Latham, which indicates was hand-delivered. returning the retainer money the Finn had
accumulated, and indicating that the Rose representation had not been continuous
significant. ,--..
Within few days, McDougal himself was the hospital with str~ke. The MGSL
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Board brought outside accounting firm and outside law firm from Memphis
investigation within the institution. The law firm Borod Huggins, principally the person Jeff Gerrish, issued its report about March 1987, concluding that the McDougals had
run MGSL for the benefit family and
fri~nds.
They listed number suspect transactions,
which not only would actionable from civil standpoint, but also would constitute possible
crimes. March 19, 1987, the MGSL Board forwarded the Borod Huggins report the FBI
and Attorneys office, and the criminal investigation involving Jim McDougal and Madison
began earnest.
McDougal was ultimately indicted 1989 and acquitted trial June 1990. Much
came out about his bad stewardship ofMGSL during the course the investigation.and his trial.
,.-.,
Public reports appeared the Arkansas media, including references Castle Grande.
Further, 1987, the Fffi..BB was taldng
its own action. response subpoena from
the FHLBB, Seth Ward fiJed lawsuit against MGSL claiming that had not been paid the
commissions owed him, even though had received the $400,000 loan. MGSL was
represented Tuckers firm the trial late August 1988, and the jury returned verdict
favor Ward. was later settled after removal federal court, with Ward relinquishing his
judgement completely.
MGSL was put into conservatorship the federal regulators February 28, 1989.
Prior that time, Gerrishs law firm had filed lawsuit against the Frost accounting firm,
alleging accounting malpractice. The FDIC Legal Division determined that the Gerrish firm had conflict, and requested the Rose Law Finn represent the interests the Government and
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Madison against Frost. The principal attorney the Rose Law Firm handling this was Webb
Hubbell. now clear that did not reveal number things which potentially would have
disqualified the Rose Finn from representing the Government. (See Section Il.3].
1992 Campai.m
The Clintons relationship with Whitewater and Madison, including Mrs. Clintons roll,
and that the Rose Law Firm the representation Madison, was raised February 1992
during the Presidential campaign. came time shortly after there had been much media
coverage about then Governor Clintons alleged womanizing and his actions regarding the draft
during the Vietnam War. The Whitewater-Madison allegations were serious problem. was
important the campaign that the best possible spin put their involvement with the
McDougals, Whitewater, and Madison. [See Section II.4].
Prior February 11, 1992, Jim McDougal, had talked reporter about the Whitewater
investment, and Hillary Clintons representation Madison the mid-80s. McDougal told the
reporter that the representation originally came about result conversation had with
Governor Clinton when jogged Madiso.n. February 11, overt inquiries began
concerning Mrs. Clintons having represented Madison before the Arkansas Securities
Department, state agency headed Clintons then recent appointee Beverly Bassett. story the New York Times March 1992, featured the failure Madison, the
business relationship the Clintons and McDougals, and Mrs. Clintons having represented
Madison before the Securities Commissioner, who answered Governor Clinton.
This article did not mention the roJe Governor Clinton getting the Madison business
for Mrs. Clinton and Rose part because there were public, other documents reflecting
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Bill Clintons allegedly having asked McDougal hire Mrs. Clinton. The Clinton campaign
responded writing the reporters question, Did you discuss with Jim McDougal
1984 1985 the hiring her [Hillary] and the finn Madison Guaranty?.
There were some subsequent stories after the New York Times broke the story initially. little over week later, debate, Jerry Brown, another candidate for the Democratic
presidential nomination, referring news artiCle, accused Clinton funneling money his
wifes law firm. Clinton strongly defended Mrs. Clinton, stating, You ought ashamed for
jumping wife. Youre not worth being the same platform with wife.
The next day, March 16, 1992, Mrs. Clinton stated that you cant lawyer you dont
represent banks, and made her widely publicized suppose could have stayed home and
baked cookies and had teas comment. Clinton won several key primaries that week; and for the
most part the stories and inquiries about Whitewater and Madison faded away.
Actions were taken within the campaign and Rose Law Firm later 1992, including
during the transition period after the President was elected, bearing the Rose Law Firm/Mrs.
Clinton representation Madison issue. This included the comprehensive review and removal certain Rose Law Firm files, and involved Webster Hubbell and Vincent Foster, Jr. Foster
joined the Presidents administration Deputy White House Counsel. Hubbell was assigned
the Department Justice. began with the title Special Assistant the Attorney General. then was nominated President Clinton and confirmed Associate Attorney General.
RIC Criminal Referrals
The RIC sent criminal investigators Little Rock April 1992, and about
September 1992, the RIC sent the FBI and the u~s. Attorney Little Rock criminal
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referral relating Madison, naming Jim and McDougal suspects, and the Clintons
witnesses. This referral, designated C-0004, primarily focused overdrafts the Whitewater
Development bank account Madison, and the -utilization various other McDougal-controlled
accounts Madison replenish the Whitewater account. .[This referral, designated C-0004,
languished until September 1993. The handling this and later referrals was the subject our
DOJ Handling Referrals investigation.] late September 1993 the RTCs Kansas City office sentnine additional criminal
referrals concerning Madison the RTC Washington. [Jean Lewis and other investigators
had begun work these Arkansas late May, 1993]. After scrutiny the Washington
RTC, these referrals were sent the U.S. Attorney and FBI Little Rock October 1993.
.-.
All the nine new referrals involved Madison Guaranty and named Jim McDougal
suspect. Four these criminal referrals related the Castle Grande/IDC property and related
loans and selloffs, made reference Governor Clinton: CR-0190 CR-0192 CR-0195 CR-0196 $260,000 loan Jim Guy Tucker 10-25-85 [34 acres acquired
from JDC MFC].
$30,000 Whitewater check McDougal .4-19-85, endorsed
Earth Movers, Inc., whose principal was J.W. Fulbright; with MFC resolution pay McDougal $30,000 bonus. [Both Bill and
Hillary Clinton are listed witnesses this referral]; and another
check for $20,000 5-20-85 J.W. Fulbright.
Madison Financial Corporation
Loan Peacock; Bill Clinton Politica1 Committee Fund
The other referrals related McDougal, but not directly the Castle Grande/IDC
property. There were media inquiries relative the referrals beginning late September, and
during all October 1993. The first public story these referrals appeared the Washington
Post Sunday, October 31, 1993.
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RIC Referral CR-0196
One ofthe .RTC criminal referrals (CR-0196) [dated August 18, 1993; and signed out
-the RTC Kansas City 9-24-93) named suspects Jim McDougal, Charles Peacock III, and
the Bill Clinton Political Committee Fund.
This referral contains reference Madison having made two loans Charles Peacock
III, Madison director. The referral stated that part the proceeds these loans were diverted the benefit McDougal some for down payment the 145th Street property [!DC/Castle
Grande], and some for the .Clinton campaign.
The narrative the suspected violation discusses the April 1985 fundraiser for
Governor Clinton held Madison Guaranty, where number persons inside and affiliated
with Madison contributed money help the governor retire his 1984 campaign debt. focused $J2,000 contributions made McDougal, others, about the time loans from
MGSL other transactions involving MGSL took place. [The total amount raised for the
campaign result this fundraiser was approximately $33,000.]
Referral CR-0196 made reference the Whitewater Development Company account
Madison, identifying Whitewater partnership consisting Jim Susan McDougal, and
Bill and Hillary Rod.ham Clinton. (pp:7-8). also referred back criminal referral C-0004
submitted year earlier involving the Whitewater Development Company, which had not been
acted .on.
This referral also stated that during the same April 1985 time frame which the.fund
raiser was held, Hillary Clinton the Rose Law Firm was acting COl;lllSCl Madison
representations the Securities Department. According the referral, Ms. Clinton was
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.-- ...
soliciting approval for the thrift authorize and issue class preferred stock, which would
provide badly needed capital for the thrift ... The thrift was significantly below the required
FHLBB capitalization limits.
The referral states that this was not the only time that McDougal John Latham
requested Ms. Clintons specific legal assistance addressing sensitive thrift issues (attaching
exhibits), rather than utilizing John Selig the Mitchell firm, who served general counsel
MGSL.
The referral pointed out and attached.certain documents relative conununications
between Hillary Clinton and Beverly Bassett. pointed out that Ms. Bassett had previously been
with the Mitchell firm and had done memo Jim Guy Tucker that firm Madison issues.
This referral contained chronology events, including the 4-4-85 fundraiser, 4-30-85
letter from Hillary Clinton Bassett, 14-85 letter from Bassett Mrs. Clinton, 5-23-85
letter from Mrs. Clinton McDougal, and two August Madison memos mentioning Mrs.
Clinton and moving the home office Madison. Among the suggested investigative steps
this criminal referral were: further investigation into the alleged diversion the Peacock down payment
Jim McDougal for use the Castle Grande transaction review the source deposits and accoWlt activity the Bill Clinton
Political Committee Account records the Bank Cherry Valley further investigation into the possible conflict interest re2a.rdin2 Hjllazy
Clinton represeptin2 her business partners thrift before another state a2eocy
whose department supervisor was political appointee, designated her
husband.
Witnesses listed this referral are: Ken Peacock, J.W. Fulbright, Patricia Heritage, Beverly
J,3assett Schaffer, and Hillary Rodham Clinton.
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..--.,,
Investigations, both ours and those Congress, have disclosed that persons the
Treasury Department alerted persons the White House about the RTC criminal referrals shortly
after they were received Washington late September 1993. The Clintons friend Roger
Altman was the Assistant Secretary the Treasury, and acting head the RTC. Altman
ultimately recused himself, February 1994, after much scrutiny and Administration efforts
keep him head the RTC.
[The extensive investigation done the Starr OIC summarized the White House
Treasury Contacts Memorandum and Part 11.6. The Fiske regulatory also conducted
extensive investigation this matter.]
Events leadin2 Appointment Independent Counsel July 20, 1993, the FBI obtained search wammt for the office David Hale seize
.--..
certain records CMS. The search was executed July 21, 1993. Foster committed suicide the afternoon July 20, 1993.
The federal grand jury Little Rock indicted David Hale September 23, 1993. the
day the indictment Hale made public statements that had issued one loan from his Small
Business Investment Company, Capital Management Services, Susan McDougal the behest then Governor Clinton. about November 1993, the wake the publicity about the RTC criminal
referrals, the U.S. Attorney Little Rock formally recused herself from the Hale prosecution,
the investigation the RTC Referrals MGSL, and other matters related Madison and
Capital Management Services.
[The Little Rock FBI had already identified matters worthy investigation the U.S
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...-...
Attorneys Office $825,000 loan from Madison Dean Paul, and related loans from David
Hales company others, including Susan McDougals Master Marketing loan. The 825 loan
from MGSL Paul was not the RTC criminal referrals MGSL].
Donald Mackay, the Fraud Section the Department Justice, career prosecutor,
was assigned responsibility for the pending Hale prosecution, and the investigation Madison
and McDougal, including the RTC referrals. December 1993 and early January 1994, there were calls for Independent CoWlSel.
Between Christmas and New Years, the Clintons attended Razorback basketball game
Fayetteville with Hubbell, Bruce Lindsey, Jim Blair and others. January 11, 1994, over subpoenas were issued persons and entities Mackay
for the Little Rock grand jury. Subpoena the Rose Law Firm arid Rick Massey (of the Firm)
.,,-
were served January 12, 1994. that same day, the President (who was trip Russia) announced through
spokesman that was asking Attorney General Reno appoint special prosecutor. The Rose
Law Firm subpoenas were withdrawn late that day. January 20, 1994, the Attorney General appointed Bob Fiske the regulatory
Independent Counsel. was tasked with investigating whether any criminal violations had
occurred relating the relationships President and Mrs. Clinton and Jim McDougal with the
Whitewater Development Company, Madison Guaranty, and Capital Management Services.
thus took over the prosecution David Hale, the investigation the specific RTC criminal
referrals, and other Madison-related allegations.
The Fiske Inyesti~ation
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_,...,.-..
Shortly after the arrival Bob Fiske Little Rock there were reports the .media the
shredding docwnents the Rose Law Firm. Thus, the first grand jury work the Fiske
investigation was relative the shredding allegations. Iii March 1994, additional Grand Jury
(dedicated solely Fiskes investigation) was empaneled consider all matters within the
jurisdiction Mr. Fiske.
Mr. Fiske took over the prosecution Hale, and began investigating the other allegations
and referrals. Just prior his scheduled trial, Hale pled guilty March 1994, repeating his
allegations concerning President Clinton, and implicating Jim McDougal, Susan McDougal, then
Governor Jim Guy Tucker, and others transactions involving CMS and Madison.
Arising out the shredding investigation, the OIC learned of, and began investigating,
possible crimes committed then Associate Attorney General Webster Hubbell, former Rose
...
Law Firm partner Mrs. Clinton.
Other matters arose out the investigation the core matters including: the
allegations against Jim Guy Tucker and his business partners; Chris Wade; and The Perry
County Bank.
The Fiske team also investigated the death Deputy White House Counsel Vincent
Foster Jr., and the possible removal Whitewater and Madison-related documents from his
office the wake his death July 20, 1993 [See Section II.5]
The relationship the Clintons with Madison, including Mrs. Clintons representation
Madison, was one the subjects the Fiske investigation. furtherance the investigation
Fiske issued grand jury subpoenas President and Mrs. Clinton May 1994 produce June
1994 any and all documents their possession control related Whitewater, Madison,
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.-- Capital Management Services, and other named entities. The Rose Law Firm was subpoenaed produce many documents including any and all documents related the representation
Madison the Rose Law Finn and/or Hillary Clinton.
Mrs. Clinton held televised news conference April 22, 1994, answering questions number issues, and giving her explanation how the Rose Law Firm came retained
Madison, and her role the representation. She minimized her role the MGSL representation,
making statements which were not accurate June 1994 Hubbell, through his attorney, declined produce further records.
The Starr lpyesti2ation Be~jns
After Ken Starrs appointment August 1994, built the work the Fiske team team agents, financial analysts, and attorney was place and investigating Hubbell.
They becfil!le very familiar with the inner workings the Rose Law Finn and with some its
key attorneys and staff Hubbell pled guilty December 1994 one count mail fraud and
one count tax evasion, relative his billing and expense practices the Firm.
Certain the Starr team previously dedicated the investigation and prosecution
Hubbell for his criminal acts involving the Rose Law Finn, and its clients, then began looking
Mrs. Clintons role the
Ros~
representation Madison; well the allegations that the
business had first come Rose through Governor Clintons asking Jim McDougal hire Hillary
and her Firm. Rick Massey, John Latham and others were interviewed Feb-March 1995, prior Mrs. Clintons interview that subject April 22, 1995
...--.-
Hubbell, who had agreed cooperate, was questioned about number issues, including the
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Rose Law Firms representation Madison Guaranty, and the role Mrs. Clinton obtaining
the business and what work she performed for Madison.
During the OIC investigation the Rose Law Finn, through its attorneys and managing
partner Ron Clark, responded subpoenas, including records reflecting what.work Rose and
Mrs. Clinton performed for Madison 1985 and 1986. Clark produced some files,I Rul 6(e) Fede ral Rul Cri mina Procedu
---------------------....J
The only docwnent relating how
much work any Rose attorney perfonned for Madison was 2-page fee allocation recapitulation
(and related fee allocation documents).
The FDIC/RIC-OIG lnyesti.:atioos addition the OIC investigation, both the FDIC and RIC conducted separate audits
and investigations related the Rose Law Firm the 1993-1996 time period. Both the RTC
and FDIC conducted audits the Rose Law Finn relating fees and expenses billed those
agencies, for work Rose did representing the interests the government civil actions
involving SLs placed into conservatorships.
Both the RTC and the FDIC also conducted investigations into possible conflicts
interest the Rose Law Firm representing the interests the government beginning March
1989 Madison Frost. The reports the initial investigations the FDIC Legal Division
and the RTC-OCOCS were released February 1994; They were publicized and received lot criticism. The names Webb Hubbell, Seth Ward, and Mrs. Clinto~ were prominently
mentioned most the media accounts. Webb Hubbell was interviewed the FDIC Legal
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,,,,-
....
Division January 11, 1994, lying about the 85-86 RLF representation MGSL. result Congressional criticism, the Inspector Generals the FDIC and the RTC
conducted more thorough investigations into the Rose Law Firm conflicts allegations beginning late February/early .tvfarch 1994.
The FDIC Inspector General obtained from Mrs. Clinton affidavit September, 1994
concerning part her ro]e representing Madison. .She was also interviewed two special
agents the FDIC OIG November 1994.
Webb Hubbell was interviewed the FDIC RTC OIG agents March 16, 1995 and
April 20, 1995. Two days after Hubbells RTC OIG interviews, Mrs. Clinton was interviewed under oath deposition the OIC the Wliite House April 22, 1995. the time the OIC
did not have copies the Rose Law Firm bills Madison, the backup billing memoranda,
any Mrs. Clintons time sheets for work performed for Madison. Th.is deposition was
conducted with agreement that would read the Little Rock grand jury, and was
read the grand jury May 1995. that same day the President was also deposed. said that could not remember
talking with Jim McDougal about Madison hiring Hillary Clinton and the Rose Firm. [The
campaign 1992 had replied the question about whether Bill Clinton had visited
Madison and asked McDougal have Hillary represent the Rose Law Finn.] said that
was not disputing Jim McDougals account; just couldnt remember. month later, May 1995, both President and Mrs. Clinton provided written answers
under oath certain RTC Interrogatories related Whitewater and Madison. Included were
answers questions about Mrs. Clintons representation Madison Guaranty.
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FOIA(b)3 Rul (e), ral Rules Crimin Pro cedu
Little Rock Grand Juzy Oct.. Nov,, Dec 1995
Beginning October, 1995, number present and former Rose Law Firm attorneys
and support personnel, well Arkansas Securities Department personnel, including Beverly
Bassett Schaffer, werequestioned before the Little Rock grand jury. Additionally key persons
connected the 1992 Clinton campaign were subpoenaed, including Jim Blair and Susan
Thomases. mid-November 1995 agent assigned the OIC located the Madison copies
ce~in Rose Law Firm billing statements Madison from the 1985-86 time frame. Prior that
time, tpe OIC had questioned Rose attorneys (including Mrs. Clinton) advising them that
billing ~ocuments were available except the 2-page fee recap. Several Rose attomeys(Clark,
Donov~ c:J
were questioned before the grand jury early December 1995 and were shown
copies some Rose bills Madison. The Vinson Elkins attorney representing the Rose Firm
stated that was obvious the OIC now had billing records and requested that the OIC furnish the
Firm with copy same, since the Firm had copies any billing records its possession.
The OIC declined so.
The Senate
Whit~water Committee began focusing Mrs. Clintons representation
Madison December 1995. Hubbell testified before the Committee that date, and
December 18, 1995, Susan Thomases was questioned about what 1992 campaign learned
about HRC and MGSL. early December 1995 the OIC also focused the Firms prior representation the
McDougal-controlled Bank Kingston (renamed Madison Bank Trust) during the early
,,....... 980s and litigation handled the Rose Firm. That prior representation, and the failure
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McDougal pay the outstanding old bill, was relevant determining the accuracy what
Mrs. Clinton had said about how the Rose Firm came represent Madison Guaranty. December 19, 1995, Webb Hubbell testified before the Little Rock grand jury,
primarily about the work Hillary Rodham Clinton for MGSL, and the actions during the 1992
campaign accumulate and review all the RLF MGSL records. December 21, 1995, the attorneys representing the RTC its civil investigation-sent David Kendall, theClintons attorney, Supplemental Interrogatories concerning her work for
Madison. This included questions about Seth Ward, the cross loans, and the option agreement.
The RTC had just learned from Rose that the computer code the option agreement was that
ofHRC.
The RLF Billin~ Records are Produced January 1996, David Kendall, counsel for President and Mrs. Clinton notified the
OIC that certain Rose Law Finn billing records, responsive earlier grand jury subpoena,
had been found the White House Carolyn Huber. produced same, releasing copies
the media that same day. stated words the effect that the records backed what Mrs.
Clinton had said all along about her role the Madison representation: .There strong
disagreement with that characterization.
These records reflected that much more work was billed Madison Mrs. Clinton than
was previously stated her. For the first time the details what she worked and what she
billed Madison for 1985 and 1986 was made know.
FOIF.(b
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These Rose billing records disclosed work billed her Madison the IDC matter
during period fraudulent activity the institution. Especially revealing were her entries
mentioning Seth Ward, including her work issues relating the utility.IDC sold Ward and
which was later sold Jim Guy Tucker and Castle Sewer Water; and preparation the May 1986 option agreement, which regulators wowd say misled them during their 1986
examination Madison.
These particular records were covered and should have been produced pursuant the
Fiske grand jury subpoena June 1994. light the month+ delay production, and
light all the facts and circumstances, investigation was conducted this office the
RLF billing records. There were interviews almost all persons who were the White House
residence during relevant periods.
Mrs. Huber, long time friend the Clintons, had served Arkansas Governors
Mansion administrator and also office manager the Rose Law Firm. She said that
August 1995 she found the records the book room the 3rd floor the White House
residence. This was adjacent room being utiliz.ed office Mrs. Clinton part
write her book. Huber has testified that she removed these her White House office not
realizing what they were until January 1996. [See the memo the Rose Law Firm billing
records investigation, and Section 11.7.)
The book room where Huber says she found the billing records was short distance away
from closet, where documents found Vince Fosters office July 22, 1993, had been placed
pending transfer the Clintons personal attorney. This, course, raised the question
..-
whether the missing billing records had been Fosters office the time his death July
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20, 1993 and removed White House employees. The fingerprints Mrs. Clinton, Vince
Foster, and others were found the set billing records found the White House and
produced the OIC January 1996.
[The Foster Documents memo covers the events the night Fosters death July including: the possible removal records that night and the next morning, the search
Bernard Nussbaum July 22; the-taking Whitewater documents the residence, etc.]
Mrs. Clinton was questioned before the Washington grand jury January 26, 1996
the subject how the Rose billing records came located the White House. She testified
that she did not know how the records got there. She kknowledged that the records were
responsive the prior OIC subpoena issued some months previously. She was not
questioned that day her substantive work for Madison. She did identify 2-page statement
----
prepared her direction during the 1992 campaign the subject hers and Roses
representation Madison 1985 and 1986.
Within month her grand jury appearance she was questioned about the substance
her work for Madison February 14, 1996, she answered the questions ofthe RTCs outside
counsel transcribed interview, which was not under oath.
The McDouialss and Tucker
The McDougals and Jim Guy Tucker were indicted Little Rock August 17, 1995.
They were charged primarily with events relating both Madison and CMS loans occurring
the October 1985 April 1986 time They were convicted May 28, 1996. The Sale
the sewer and water system !DC/Castle Grande Tuckers company February 28, 1986
was the subject some the charges that were tried; The evidence aduced included: Madison
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loans February 28, 1986 Dean Paul and Castle Sewer Water; CMS loans Castle Sewer Water, and Susan McDougal d/b/aJ Master Marketing, and others.
President Clinton testified defense witness the trial. cross examination
stated that could not remember whether talked Jim McDougal about Madison hiring
Mrs. Clinton and the Rose Law Firm.
Jim McDougal entered cooperation agreement with the OIC August 1996. the
outset McDougal stated that some the testimony the President his trial was variance
with the truth. addition shedding light the Presidents role with Madison, Whltewater,
and David Hales loan Susan McDougal, Jim McDougal told Hillary Clintons hiring the
Governors behest, and the work she did for Madisom also shed light the role Webb
Hubbell and his father law Seth Ward, related the Rose work for Madison.
Susan McDougal refused cooperate, and defied September 1996 Court Order give
testimony the grand jury. She was jailed for civil contempt September 1996- March 1998.
Obstruction the Due Administration Justice. False Statements and
Testimony
Most the Arkansas substantive events occurred over years ago. For example, Jim
McDougal was out the Madison management July 15, 1986. was indicted result this investigation August 17, 1995, time when the statute limitations had not yet run his acts late 1985, and 1986. began cooperating August 1996, time when
most, not all, the possible substantive criminal violations involving Madison were over
years old.
Bob Fiske was appointed January 20, 1994, time when there appeared time
202
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1985-86 time period. But delays finding the truth, that from recalcitrant perjurious
witnesses, concealment destruction documents, and the time took develop cooperating
witnesses, has caused the statute limitations run the underlying transactions 1985 and
1986.
The Little Rock Grand Juey EQU2aneled May 1996
The first Whitewater-dedicated grand jury in.Little Rock expired march 23, 1996, during the McDougal, Tucker, and McDougal trial. Another grand jury (solely dedicated
Whitewater-Madison) was empaneled Little Rock May 1996. Supervisory Special
Agent Steve Irons was the first witness before them sununarizing the investigation from its
inception that point. its early months, the grand jury heard from witnesses regarding matters related the
Clintons the Whitewater investment and matters related the 825 trial.
This included
viewing the videotape the Presidents trial testimony given the White House April 28,
1996, and played the defense trial May, 1996.
Beginning late 1996 and early 1997 heard extensive testimony regarding what was
publicly characterized possible hush money paid Webb Hubbell time was under
investigation Little Rock and later while was allegedly fully cooperating with the OIC.
Most the persons involved the payments Hubbell (which were excess $400,000
occurred between May and December 1994) were questioned before the Little Rock grand jury.
.-~
[See Section 11.8]
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The grandjury heard testimony from Jim McDougal April23, 1997 including
evidence about the Madison land deals, Ward, and Mrs. Clinton late July 1997, Jim Hamilton, the attorney for Lisa Foster (Moody), contacted the OIC
stating that Vince Fosters widow had recently discovered the attic her residence Little
Rock documents which were responsive previous grand jury subpoenas. This call from
Hamilton came shortly after the OIC had issued its long awaited report the death Vince
Foster, concluding that died result suicide Ft. Marcy Park.
These documents were discovered Fosters daughter briefcase Vince Fosters
the Little Rock residen~e. They were delivered the OIC after the attorney for the Rose Law
Firm, and the attorney for the Clintons were allowed examine the documents for possible
privilege claims. The documents all appear have been compiled the 1992 Presidential
campaign. Among the more significant documents were:
Another full set the Rose Law Firm Madison billing records. This was the only other
set these records ever found produced during the .course the OIC investigation. copy the old bill, from the Rose Law Firm the Bank Kingston marked paid
10/23/84. This document was included the set the RLF MGSL billing records.
The old bill was not contained the set produced the attorney for Mrs. Clinton. Memorandum prepared for Rick Massey dated late March 1992. set forth work
done Massey for the ASD, but did not discuss how the MGSL business got the Rose
Law Firm. number documents relative work done Mrs. Clinton the Rose Law Firm
behalf Arkansas state agencies.
[See the discussion the 1992 Campaign and the obtaining the work the Rose Finn,
Section II.4.]
.~.
Beginning mid late 1997, the grand jury heard extensive testimony concerning the
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....
Rose Law Finn conflicts referrals from the FDIC and RTC. number Rose attorneys
testified before the grand jury, including those with knowledge about HRCs work for MGSL. any criminal investigation any document concealed, any misleading false
statement, had the potential delay, hinder, impede, and obstruct our investigation. Such
appears have actually happened this investigation.
There is, course, five year statute limitations perjury, false statements, and
obstruction justice. Thus, April 1998, any such statement actions oecurring since
April 1993 would still actionable.
Even though the substantive statute limitations may have run, the underlying events
occurring 1985-1986 and before are still highly probative and relevant determining whether
.--.
there has been actionable obstruction, perjury, false statements. Thus, understanding and
analyzing the events Arkansas that time period has been continuous focus the
investigation.
FOIA (b)
.--.
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(C)
FOIA(b)
(C)
.........
Conclusion look forward our discussion Monday, April 27th.
206
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WITHDRAWAL NOTICE
RG: 449
Box: 00001
Series:
Folder: 0001
Document: Starr/Ray, FRC box 464
.Copies:
ACCESS RESTRICTED
The item identified below has been withdrawn from this file:
Folder Title: HRC Meeting
Document Date: 04-22-1998
Document Type: Draft
From:
To:
Subject:
Draft document the review this file this item was removed because access
restricted. Restrictions records the National Archives are stated general and specific record group restriction statements which are available
for examination.
NND: 21049
Withdrawn: 04-19-2006
by: David Paynter
FOIA RETRIEVAL#: 21049 00001 0001
NW: 15416 Docld: 70001585 Page 245
WITHDRAWAL NOTICE
RG: 449
Box: 00001
Series:
Folder: 0001
Document: Starr/Ray, FRC box 464
Copies:
ACCESS RESTRICTED
The item identified below has been withdrawn from this file:
Folder Title: HRC Meeting
Document Date: 04-22-1998
Document Type: Draft
From: HRC Team
To: All OIC Attorneys
Subject:
Draft document the review this file this item was removed because access
restricted. Restrictions records the National Archives are stated
general and specific record group restriction statements which are available
for examination.
NND: 21049
Withdrawn: 04-19-2006
by: David Paynter
FOIA RETRIEVAL#: 21049 00001 0001
NW: 15416 Docld: 70001585 Page 246