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Judicial Watch • NARA Whitewater OIC report pg 39-77

NARA Whitewater OIC report pg 39-77

NARA Whitewater OIC report pg 39-77

Page 1: NARA Whitewater OIC report pg 39-77


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Date Created:January 27, 2016

Date Uploaded to the Library:January 27, 2016

Tags:Latham, Moles, Henley, Giroir, Massey, McDougals, Castle, NARA Whitewater OIC Verdict, docld, OIC, mcdougal, Mitchell, NARA, hubbell, remember, Whitewater, Madison, Tucker, senate, Bill Clinton, hillary, Hillary Clinton, clinton, White House, FBI, Supreme Court, FOIA

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Office the Independent Counsel
All OIC Attorneys
HRC Team
Summary Evidence
Hillary Rodham Clinton and Webb Hubbell
This memorandum summarizes the evidence available LS which relates the
....__ __.l-:lillary Clinton and Webster Lee
Section contai
detailed summary the evidence broken d~Wh intp the following subsections:
Castle Grande
Other Facts Relating RLF Work for MGSL
1987-1992: RLF Conflicts/Ward Madison/U .S. McDou gal
1992 Campaign
Foster Documents
The White House and RTC Contacts
Billing Records
Support for Webb Hubbell
FOi A(!J)6
FOl/(h)7 (C)
Section contains chronological background and contextual summary the investi g~ti
that cts relating possible obstruction can placed the context the ongoing
investigation OIC. .:-)
should read conjunction with our
introduction/outline memorandwn April 10th which, for convenience, also included. almost all instances our summary the evidence derivative and relies pon
other, earlier work done OIC attorneys. those instances, did our earlier
memorandum April 10th, refer you the underlying memorandum for additional
background and information, should you wish delve further into the evidence. [You rece ived
binder with copies significant portions these memorandum .Monday, the 20th].
NW: 15416 Docld: 70001585 Page
The memo also reflects our best assessment some the contrary evidence and theories
likely presented the defendants the event indictmcntis returned and trial takes
place, well evidentiary considerations. recognize the task set for all attorneys this memorandum. Tom Dawson has
said: The strength this case its weakness, and vice versa:. other words, this would
mostly (though not exclusively) circumstantial case which gains strength through the repeated
concatenation events and circumstances. But detailing each and every one those, and
linking them together would difficult, indeed daunting, task introduction might
suitable first reread the April 10th memorandum. also note the outset that other options exist which might justice the evidence
presented. you all know, the Dreiband/Heaton/Myers team have drafted!.._:___ -_-::_-_,
ased upon small subset this evidence. Evidence
.____~----~-- __J
Because this memorandum has been pr~pared the HRC team, yo!1 will f!O some
stylistic differences the various sections see these evidence the .collaborntive nature
ofour endeavor.
NW: 15416 Docld: 700015 Page
FOIA(b)7 (C)
FOl1(b)7 (C) _,_J
The case would the story how
that happened. Here summary the evidence developed the investigation: Castle Grande [The facts relating the Castle Grande transaction are detailed
Section Bittman OBrien, Clinton Finance, June 1997.]
Can say that crimes were committed connection with the Castle Grande
-transactions? Yes.
Grande refers 1,050 acre development south Little Rock, Arkansas which
was purchased Madison Financial Corporation (MFC) and Seth Ward from the Industrial
Development Corporation (JDC) October 1985. The statement that Castle Grande was
crime true several respects. First, the initial sale the property MFC and Ward was
accomplished fraudulent way that violated federal law governing savings and loans well Arkansas State law. Second, subsequent transactions involving parcels the property during
the development Castle Grande involved inflated appraisals and fraudulent financing and have
themselves resulted multiple investigations, indictments, and convictions.
The initial purchase the property Seth Ward and MFC violated federal
and Arkans,as state law.
Seth Ward and Jim McDougal negotiated arrangement whereby Ward agreed act
NW: 15416 Docld: 70001585 Page straw purchaser andtake title portion the IDC property Madison wanted uire
War took tlt the property get aroun the d1rect investment
1m1tat1on, 1mposeo
Arkansas law, which limited the amount money Madison Guaranty Savings Loan
(MGSL) could invest the developments the service corporation, Madison Financial
Corporation (MFC).4 Jim McDougal confinned this early December 11, 1986, when
told Jeff Gerrish Borod Huggins that:
the reason ~at Seth Ward was broug~t purc~ase th~ pr~perty no_rth 45th
Street was simply because the service corporation hm1tat1ons would ha1 been
exceeded the service corporation had bought the entire property.
The investment limitation restricted the amounts MGSL could loan its affiliate MFC, did not limit the amount MGSL could loan private party such Ward. avo the ,,,--.
limitation, McDougal and Ward agreed that Ward would take title all the IDC property
north 145th Street nominee purchaser for MFC. Ward and McDougal1agreed that
MGSL would loan Ward the entire amount the purchao;e price nonrecoursc bas the time federal law applicable federally chartered savings and loank had direct investment limitation. States were allowed greater latitude the regulation their
own institutions. McDougal Interview, 12/! 1/86, Madison Guaranty Savings Loan sociation
Special Counsel Investigative Report January 1987, Report Date March 1987, Section (hereinafter Borod Huggins Report, J/1187).
There are, however, limitations the amounts loans institution insiders. employee MFC, Ward was considered insider. make
Memorandum from Jim McD oug Seth Ward, September 1985 (396.--
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Nonrecourse means that MGSL could look only to. the property for repayment. the event the
loan went into default, Ward had personal liability for deficiency the proceeds fro1 the
sale the land were insufficient pay off the loan.
Ward also agreed grant MFC option the entire parcel was purchasing.i this
way, MFC could purchase port.ions Wards property needed sell them third parties.
Ward asswned absolutely risk the deal. did not invest any his own money. was
not required make any down payment.. MFC agreed reimburse him for any additioJaJ taxes rriay have pay virtue his holding the property. MFC also agreed handle all the
administrative duties associated with the property such collecting rents, and the like. 1In
return for his role the transactions, Ward was receive approximately $300,000
commissions the subsequent sales the property third parties even had nothing with arranging the sales. these terms Wlder which Ward received significant compensation, but assumed
risk responsibility that have led Ward being characterized straw man Jminee
purchaser. This characterization supported the fact that did not have anyJng
earn his
commis~ions and had none the traditional indicia ownership the pJperty
Memo from Jim McDougal Seth Ward, September 1985, (396-00001130);
Letter from Seth Ward Jim McDougal, September 23, 1985; Letter from Seth Ward Jim
McDougal, September 24, 1985 (99-00035000-1 Letter from Seth Ward Jim McDobgal,
September 24, 1985 05-00007181-83).
Id.; Schaufele deposition (~diwl), 5/27/8~,;:1t9;I
.1...----. ....
.... ---
_____ ... -----
....... ....
FOIA(b)3 Rule 6(e). Fecleral Rules Crirni11al Prncedure
NW: 15416 Docld: 70001585 Page
such responsibility for ta.Xes and collecting rents. Moreover, unlike ~ost owners, Wards only
source compensation was his commission did not benefit directly from any
appreciation the value ofthe property.
This conclusion has been reached nwnerous investigative bodies. The examiners
MGSL 1986 criticized Castle Grande. The May 1986 interim report stated:
Ward apparently warehoused this land reduce Madison Financials investment
and the attendant borrowing from Madison Guaranty. this way, limitatibns
Madison Guararitys investment its service corporation are avoided. using
this circuitous route, additional Madison Guaranty investment Madison
financial was disguised loan Ward.
The report prepared for the RTC Pillsbury, Madison Sutro was also critical Castle
Grande. addition, the FDIC Inspector General, after lengthy and quite thorough investigation,
concluded that Ward was straw purchaser. its Supplemental Report Rose Law
Conflicts oflnterest dated September 20, 1996 the FDIC Office oflnspector General stated:
However, entries the billing materials and other
suggest that former Rose Firm
partners Hillary Rodham Clinton and Webster Hubbell performed work that appears have
facilitated the payment substantial commissions Ward, who acted straw buy~r for
Madison Financial the IDC transaction. Ward Hubbells father-in-law. The m~tbod
payment the commissions evaded regulations designed protect the safety and
soundness the institution, and violated the integrity iti books and records. Fufher,
Madison Guaranty used document drafted Clinton deceive Federal Bank examiners
Some have argued that Ward earned his commissions, least part, playing
critical role putting together the IDC deal because his relationship with Everett Tucker and
officials ofIDCs lenders, Bob Wilson Union National B~, who was closejfriend Wards. Contemporaneo documents, however, indicate that !DC was under severe financial
pressure from its lenders, and that this was widely known around town. IDCs attorne~, Darrell
Dover, left the impression during his interview that IDC would have entertained any serious offer the IDC property and that the final selling price $1. 75M would have been accepted from
any qualified ouyer. Dover 302, 7/18/96.
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the true nature the payments Ward.
Not only was the initial transaction illegal, but the subsequent payment
Wards commissions was also illegal.
Ward was paid his commissions through series loans involving MFC and MGSL.
When Ward demanded his commissions paid March 1986, MFC did not have the cash
hand. order satisfy Ward, the savings and loan, MGSL, made $300,000 loan Ward.
MFC signed loan note the same day stating that owed Ward $300,000. Wards obligation
repay the MGSL loan was thus set-off against the corresponding note from MFC Ward.
This transaction was illegal because further violated the rule because MGSL was putting
another $300,000 into MFC (by virtue paying MFCs commission Ward); and MGSLs
accounting records and the corporate records MFC never properly reflected the loans and their
purposes. Moreover, when the bank examiners who were the institution March 1986
questioned the Joans, Madison officials deceived the examiners about the true nature the loans
and their connection the payment Wards commissions.
Transactions Castle Grande have been the subject criminal
investigations, indictments and convictions.
Transactions related the Castle Grande development have been the subject several
criminal investigations the FBI, RTC, FDIC, and OIC. These investigations resulted the
first McDougal criminal trial 1990, and the recent trial Jim and Susan McDougal and Jim
Guy Tucker (825 trial), which resulted all three defendants being convicted various
charges related fraudulent loans made during the course the Castle Grande project.
FDIC Office Inspector General Supplemental Report Rose Law Firm
Conflicts Interest September 20, 1996 ii-iii (emphasis added).
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According the official FBI file, Special Agent Gary Aaron received information from
confidential source January 1987, which alluded insider transactions and land flips
involving Jim McDougal, Senator William Fulbrigh~ and Jim Guy Tucker. The information
among other things, that Jim Guy Tucker had received insider loan from MGSL for
the Castle Grande project. Special Agent In-Charge Don Pettus notified the United States
Attorney for the Eastern District Arkansas, George Proctor, the opening the case
January 1987Y March 19, 1987, The FBI received criminal referral from MGSL
employee Sarah Hawkins which attached copy the investigative report prepared Borod Huggins .17 Hawkins sent the identical information the FHLBB. Apnl 1987 meeting,
which included personnel from the FHLBB, federal investigators determined thatthe focus the
investigation would the Castle Grande .and Maple Creek Farms projects. October 1987, investigators further narrowed the focus the investigation, deciding
concentrate transactions related Robert Palmer, David. Hale, Dean Paul, and Davis
FBI Madison case file, 29A-2459, Serial
ld... Serial
ld... Serial
ld.. Serials and 10.
105-0007I012. The bates number this document indicated was produced
pursuant subpoena served upon the Rose Law Firm.
FBI Madison case file 29A-2459, Serial 13.
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Fitzhugh.1 August 18, 1988, the agents and AUSAs Stoll and Cherry decided focus the
investigation on, among other things: falsification Madison records (alluding the alteration MGSL board minutes with John Latham the potential target); David Hales loans with
MG.S which were allegedly obtained with false information; 1308 Main Street land flip
involving Jim Guy Tucker; and Castle Grande, include Davis Fitzhughs purchase the Levi
Strauss building, Jim Guy Tuckers purchase acres, Fulbrights purchase property, and
the acquisition Castle Sewer and Water Tucker, R.D. Randolph, Palmer, Hale and
Paul. November 14, 1989, Latham agreed plead guilty one count false entry
violation U.S.C. 1006 based upon his falsification ofboaid director minutes.21 was
eventually sentenced years probation and ordered pay $10,000 restitution. Jim
McDougal was indicted about November 20, 1989, along with Jim and Bill Henley (Susan
McDougals brothers), based upon their conduct surrounding the sale the Levi Strauss building
Grande Davis Fitzhugh
Jim McDougal was charged with counts misapplication (18 U.S.C. 657), one
count false entry U.S.C. 1006), one count bank fraud (18 .S.C. 1344), three counts false statements (18 U.S.C. 1014), and conspiracy commit bank fraud and false statements
(18 U.S .C. 371). McDougal and the Henleys was acquitted jury June 1990.
FBI Madison case file, 29A-2459, Serial 52.
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825 case a.result the $825,000 Joan Dean Paul Ltd., from Madison Guaranty, David Hale
netted approximately $500,000. part the scheme between McDougal, Hale and Tucker,
David Hale, tuin, made different loans McDougal and his associates. One those loans,
was $150,000 Castle Sewer and Water which was corporation which Jim Guy Tucker had
interest in. Castle Sewer and Water used those proceed make the down payment the
purchase the sewer and water utility from Madison Financial Corporation, who had received
the property the purchase from Industrial Services Corporation. The balance the purchase
price ($1.05 million) was funded directly the form two loans Castle Sewer and Water
from Madison Guaranty.
Jim McDougal was charged the counts the indictment. was convicted
_,~. the counts for conspiracy, misapplication, false statement, false entry, bank fraud,
wire fraud, and mail fraud.
Susan McDougal was initially charged counts the count indictment. Four
the counts were dismissed Judge Howard. Susan McDougal was convicted the four
remaining counts which related the Master Marketing loan (misapplication, false entry, false
statement, and mail fraud). Susan McDougal was sentenced August 20, 1996 and received
Jim Guy Tucker was initially charged counts the count indictment. Four
the counts were dismissed Judge Howard. Tucker was convicted the remaining seven
counts (conspiracy and mail fraud) related the $150,000 Joan from CMS. Tucker was
sentenced August 19, 1996 and received sentence months home detention (including
NW: 15416 Docld: 70001585 Page
writing and speaking assignments family and education), ordered pay restitution
$150,000 the SBA, and fine $25,000.
Possible Defenses
Ward was not straw man
Even the Minority Report from the Senate Whitewater Committee did not conclude that
Ward was not straw man instead focused whether not could proven that anyone RLF was aware that was straw. (They conclude, course that one RLF knew, with
the possible exception Hubbell, and even did know, there evidence told anyone
The only testimony the report cites for the proposition that Ward was not nominee
buyer Wards denial and some testimony from John Lathams Senate deposition. Latham
testified that the IDC transaction was structured with Ward purchasing everything north 145th
street for two reasons: MFC was against its investment limitation and would have e~ceeded
the limitation had purchased the entire property; and everyone viewed the transaction
good deal and Ward and McDougal both wanted make much money possible they
decided split up. Even Ward, while denying that was straw man, admits all the
factual predicates that make him straw non-recourse loan, personal investment,
responsibility for truces collecting rents.
McDougal was acquitted the first case, therefore Castle Grande was not
John Latham, 5/15/96 Senate Deposition, 36-37.
Seth Ward, 1/17/96 GJT, (page}.
NW: .15416 Docld: 70001585 Page
This unpersuasive because the structure the purchase from IDC and Wards role
were not issues the first case against McDougal, and course, McDougal was convicted
the second case (the 825 case).
Order Proof Jim Clark- re: 1986 examination MGSL; loans Ward; deceptive explanation;
violation investment limitation and regulations regarding accuracy the institutions
books and records. Fred Gibson re: loans Ward; deceptive explanation; violation investment
limitation and regulations regarding accuracy the institutions books and records. Bill Black expert testimony re: regulations applicable MGSL and MFC and how
sale Ward and loans violated same. Don Denton circumstances surrounding initial purchase oflDC MFC and Ward;
purpose cross loans was pay Wai:d his c9mmissions. Gary Aaron first investigation into Castle Grande and summary testimony re:
charges and disposition first McDougal case. Mike Patkus/ Steve Irons summary testimony re: 825 case: investigation,
charges, and disposition. Other Facts Relating RLF Work for MGSL-- [The facts relating RLFs
retention MGSL and work before the Arkansas Securities Oepartment (ASD) are detailed
Sections and III Bittman OBrien, Clinton Finance, Jurie 1997.]
The other significant area where appears that proof exists Hillary Clintons false
NW: 15416 Docld: 70001585 Page
statements investigators lies her statements regarding the manner which Rose Law Finn
came hired Madison Guaranty Savings Loan. There are, essence, two competing
versions. One Mrs. Clintons unpaid bill story (which she first made public during the 1992
campaign see the discussion below for how that came abOut). essence she claims that John
Latham MGSL and Rick Massey Rose wanted business together, that her partners
would not accept MGSL client because unpaid bill and that she interceded with
McDougal get the bill paid, the request Massey. The other version Jim McDougals
jogging incident story that Bill Clinton came his office while jogging one morning, sat
his new leather chair, staining with sweat and asked McDougal send some business HRC
because she could use the work.
Baclq:round Madisons Le2al Representation
,.,,,,..-.. important understand the background Madisons legal representation for
two reasons. First, Mrs. Clinton claims that 1985 Rose partners conditioned Roses agreement represent Madison Madisons first paying overdue bill owed Madisons sister
institution, Madison Bank Trust (MBT). Unequivocal evidence shows, however, that the
old bill was paid 1984 and thus could not have been condition the representation Mrs.
Clinton claims. Second, Mrs. Clinton claims Madisons business was initially brought Rose young associate Rose, Rick Massey However, the evidence shows that Madison had long
and competently been represented another finn and there was reason other than perhaps personal favor for the Governor for Madison switch counsel and have Rose represent matter where Rose had little expertise.
Bank Kin2ston (Madison Bank Trust)
NW: 15416 Docld: 70001585 Page
Roses first representation McDougal-controlled institution began 1981 when
represented the Bank Kingston (BOK) single matter involving McDougals moving the
banks principal office different city Arkansas.24 MBT lost the case the trial court and
approved appeal, Carol Arnold, young associate Rose~ argued the case before the
Arkansas Supreme Court, which upheld the Chancery Court arid ruled against BOK.26 Roses
fees for the appeal totaled $5,000 plus $893 .63 expenses, and July 30, 1982, Giroir mailed
McDougal Roses bill, writing that the statement is, course, subject your approval.
McDougal wrote note the outside the envelope: Carla: NOT PAY KEEP FILE.
Roses July 1982 bill remained outstanding for several years. McDougal says refused
The first aspect the Rose representation involved petitioning the Arkansas Bank
Departn).ent move BOKs principal office Huntsville, Arkansas. The First National Bank .of
Huntsville, competing bank affiliated with the. former owners BOK, learned BOK
proposal and objected the move based non-compete clause BOKs purchase agreement. letter the president First National Bank Huntsville, Jim Guy Tucker, behalf
BOK, threatened litigation: representatives the minority stockholders the Bank
Kingston, are considering litigation declare this non-competition provision void. Letter
James Hargis, Chairman, Bank Huntsville, from Jim Guy Tucker, Feb. 13, 1981 (RIC120734 735). August 1981, First National Bank Huntsville sued BOK enforce the purchase
agreement and enjoin BOK from moving Huntsville RIC 120653 656. August 1981
Vincent Foster and Rose answered behalf BOK. RIC 120648 651.
~Letter Steven Smith from Vincent Foster, Jul. 1982, (Carol Arnold
reports that [Justice] Steele Hays asked her question oral argument (GG-00000165
Madison Bank Trusty, First National
S.W.2d 268 (1982).
Bank Huntsville, 276 Ark. 405 635
Letter James McDougal from C.J. Giroir, Jul. 30, 1982.
l.d.. After the appeal, Rose did additional legal work for MBT.
NW: 15416 Docld: 70001585 Page pay the bill because was being vastly overcharged that Rose billed him for senior
attorney like Vince Foster but sent junior attorney argue the appeal.Jo Giroir, who was the
billing partner the BOK account, testified believes asked Mrs: Clinton intercede
get the bili paid because Mrs. Clinton knew McDougal and the former president MBT, Steve
Smith.J late 1983, Mrs. Clinton spoke McDougal attempt get the bill paid.J
Following Mrs. Clintons conversation with McDougal, Giroir sent McDougal another copy
the original bill October 10, 1983. Again, the bank did not pay.
After remaining outstanding for more than two years and almost year after Giroirs
October 1983 letter requesting payment, the matter the outstanding bill was brought the McDougal GJ, r4/2/97, 77-78, 105-106.
McDougal 302, 2/19/97 (DRAFT), McDougal GJ, 4/2/97, 114. Board
Minutes from MBT corroborate some discussion about new lawyer who was assigned the
appeal. MBT Board Minutes, Sep. 25, 1984, (Board discussed the fact that new lawyer
sent argue case.); see also Letter Gary Bunch (cc: James McDougal Joe Giroir) from
Vincent Foster, Oct. 1984 (You [Bunch] mentioned something about girl lawyer doing the
work appeal.).
Giroir GJ, 7/18/96, 21-22.
Letter James McDougal from CJ. Giroir, Oct. 10, 1983 (Pursuant
your discussion with Hillary Rodham Clinton, enclosing copy our firm statement, dated
December 23, 1981.) (56-00064693). McDougal was shown copy Giroirs letter and has
recollection s~ng Mrs. Clinton about the outstanding bill. McDougal 302, 2/19/97
(DRAFT), IO.;j
Note~{of John Podesta from May 18, 1994, indicate that Mrs. Clinton has some
recollection talking Giroir: This year letter. She has some recollection Giroir
talkin~ her about the unpaid bill and may have talked McDougal about it. 2139-00000158. .r-
Letter James McDougal from CJ. Giroir, Oct. 10, 1983 (56-
NW: 15416 Db@lff:(~)dGcft~~f~i{ee51~ral Rules
Crirni11al Pmcedure
attention the MBT Board the fall 1984. Gary Bunch, then officer MB
testified that McDougal asked him board meeting September 25, 1984, settle the
outstanding bill with Rose. According October 1984; letter, Foster had been contact
with Bunch pay the bill, and Rose was going sue MBT unless payment was received
October 22, 1984: accordance with our telephone conversation last week, enclosing another
copy the statement for our services rendered connection with the appeal
the referenced litigation. mentioned you the $5,000.00 fee limitation was
established agreement between Joe Giroir and Jim McDougal before began
work the appeal. The agreement turned out the benefit the Bank
since our actual time spent exceeded the amount charged.
You mentioned something about girl lawyer doing the work appeal. was
assisted the appeal briefs and abstracting the record Carol Arnold, then year old trial lawyer, who had already done some the basic legal research for
trial. According our records approximately 75% the attorney time the
appeal was spent me. are totally baffled the continued delay the payment this statement, but
are willing allow you extension until October which Satisfy this
statement. Otherwise, directed the Firm file suit.
Bunch does not know why the payment the old bill came the fall 1984 but
recalls that shortly thereafter Rose agreed $5,000 settlement and that MBT paid the bill October 1984. Indeed, records from MBT show that October 22, 1984, MBT paid the discussed infra., this just after McDougal says Bill Clinton jogged
Madison and complained about the Clintons financial situation.
Bunch Senate Hearing, 5/16/96, 17.
Letter Gary Bunch (cc: James McDougal, Joe Giroir) from Vincent Foster, Oct. 1984.
Bunch Senate Hearing, 5116/96, 39-40 (emphasis added). Bunch
speculated that reason why the matter the old bill came September 1984 was because
NW: 15416 Docld: 70001585 Page
bill issuing check Rose the amount $5,000 for Legal Fee. Statements from Rose
corroborate that Rose apparently settled for payment $5,000 full payment the ,893 bill:
Rose credited the attorneys who worked MBTs appeal $4,106.37, which equates the
$5,000 MBT paid less the expenses Rose incurred, $893.63 ,39
More significantly, the only known copy the original bill from Rose MBT was
found, years later, brief case Vince Fosters attic. The bill annotated paid and
contains hand-written notations which .refigure the allocation fees Rose attorneys based
upon the $5,000 payment. Thus, the evidence conclusive that Jong before April 1985, when
Hillary Clinton met Jim McDougal the unpaid bill had been paid. [And, indeed, the
argument that the $893.63 remained paid, the evidence equally clear that these unpaid
MBT may have had little more money that time than wed had previously. M..
Bunchs testimony that the MBT old bill was considered September 1984 and paid
October 1984 corroborated several documents. First, minutes from MBTs board meeting
from September show that Bunch will negotiate settlement with Rose concerning the MBT
bill. Minutes the Madison Bank Trust Board Meeting, Sep. 25, 1984, (Rose Law Firm owe $5,000for Huntsville move appeal, according firm. Board discussed the fact that
new lawyer sent argue case. Mr. Vaughn moved, Mr. McDougal seconded that Mr. Bunch will
negotiate settlement with Rose Firm. Approved unanimously.). Second, records from .MBT
show that October 23, 1984, debit $5,000 was made from its general ledger for legal fees.
Third, records from Rose confinn credit $5,000 MBTs account one day later
October 24, 1984. Letter Hickman Ewing from Alden Atkins, Apr. 17, 1996 ([Records from
Worthen Bank] show that Rose deposited check for $5,000 October 24, 1984. are told the bruiks representatives that the identification number for that check shows that was
written account Madison Bank Trust Kingston, Arkansas.). Fourth, minutes from
MBTs November board meeting reflect that reduction earnings was due part
payment legal fees from 1983 lawsuit. Mi.flutes Madi~on Bank Trust Board Meeting,
27, 1984, The lawsuit actually ended 1982, but Roses last letter requesting payment was
sent 1983
Letter Amy St. Eve from Ronald Clark, May 1996. See also Letter
Bruce Ericson from Alden Atkins, Oct. 1995,
NW: 15416 Docld: 70001585 Page
expenses were never paid.)
The Mitchell Firm 1982, the McDougals purchased Madison Guaranty Savings Loan (Madison).
Beginning 1982 and throughout McDougals ownership, Madisons primary counsel and lead
firm was Mitchell, Williams, Selig, Jackson Tucker (the Mitchell finn). McDougal hired
the Mitchell firm because his relationship with Jim Guy Tucker, with whom McDougal had
been friends and business partners for years. addition, Tucker had previously represented
McDougal numerous matters.
McDougal purchased Woodruff County Savings and Loan January 26,
1982 with Susan McDougal, Steve Smith, C.E. Ransom, and Julie Baldridge. 174-00012956. Its
name wa5 changed Madison Guaranty Savings Loan within afew months purchase.
FOIA( Rule 6(e), Federal Criminal Procedu McDougal 302, 2/19/97 (DRAFT), deposition the Bank Kingston litigation, Tucker described his
professfonal relationship with McDougal: Mr. McDougal and have continuing attomeyclient relationship because various business ventures that brings and act on, some
which reach fruition and some which not. ... have served personal attorney for Mr.
McDougal since entered private law practice transactions ranging from timberland purchases
NW: 15416 Docld: 70001585 Page
Tirroughout its existence, Madison relied almost exclusively the Mitchell firm for
legal advice. Mitchell provided wide range legal services Madison, including extensive
regulatory work before the Arkansas Securities Department, Arkansas Bank Department, Federal
Home Loan Bank Board, and other agencies; litigation, including defending Madison Seth
Wards breach contract action against it; various real estate matters, including activities
involving D~vid Hale, Dean Paul, among others; and other general legal representation.
While Tucker was the billing partner for the Madison account, John Selig, fonner
Commissioner the Arkansas Securities Department, was the attorney the Mitchell firm who
primarily handled the Madison account. Other attorneys Mitchell who did work for Madison
included Be,..erly Bassett, who left the Mitchell firm 1985 become, with McDougals
recommendation, the Commissioner .of the Arkansas Securities Department. There was
written retainer agreement between Madison and the Mitchell firm, and the fees were charged
the normal hourly billing rate.
According records from the Mitchell firm, February 1985, Mitchell opened new
file the Madison account, file number 5615:..9. The matter was described Sale Stock,
and. the responsible attorney was listed John Selig. Almost two months later, March 27,
and sales condominium developments examination some the various banks. Tucker
Kim~ston Deposition, 9/23/81, 13-14 (RIC 120463 to. 464). Tucker represented McDougal and
his partners the purchase the Bank Kingston 1979. RIC120684.
Information concerning the scope the Mitchell firms representation Madison found the voluminous billing records produced Mitchell the OIC under subpoena.
~enerally 155-0005700
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1985, Mitchell opened another new file for Madison, file number 5615-10, entitled BrokerDealer again the responsible attorney was Selig. Both files are virtually empty, and
appears the finn did little, any, work either matter. Although.Mitchell did work
these matters, someone Madison apparently requested anticipated that Mitchell, its
regular outside counsel, would the work. described below, was these same matters that
Rose worked for Madison beginning April 1985.
Hirioa: Rose April 1985
According documents from Rose and _Madison, Roses representation Madison
;Guaranty Savings Loan began April 23, 1985, two matters: the preferred stock offering and
the limited partnership/broker-dealer matters. The stock offering was attempt Madison,
155-00001504 509. -I_ ___.I discussed infra, the time Roses retention, Madison was under
Supervisory Agreement with the FHLBB restricting its loan practices and
requiring Madison increase its net worth.
apparently the request the ASD and the FHLBB, raise capital and increase its net worth issuing new class preferred stock. Madison needed approval from the ASD issue
new class stock, and Arkansas law was unclear whether ~vings and loan couid issue
non-voting, preferred class Madison intended. Rose was hired secure approval from the
ASD for this unprecedented request. The limited partnership matter, also known the brokerdealer matter, was effort Madison establish subsidiary investment broker-dealer
through which Madison was sell real estate limited partnersrups. Both the preferred stock
and the limited partnership/broker-dealer matters required regulatory approval from the ASD.
The Rose Law Firm billing records show that Mrs. Clinton met with Jim McDougal and
John Latham April 23, 1985. Mrs. Clintons personal calendar from April reflects the
following entry: McDougal. The Rose billing records also reflect that Rose commenced
legal work for Madison earnest that the next day, April 24, 1985, Rose continued its
Rose referenced the preferred stock matter the Madison account matter
Rose referenced the limited partnership/broker-dealer matter the Madison
account matter
DEKOl4947. The entry the billing records reflect the following entry for Mrs.
Clinton: 4/23/85 Conference with McDougal and Latham. Mrs. Clinton recalls meeting
only with McDougal and says that was that meeting that they discussed Masseys and
Latharns proposal that Rose work for Madison. McDougal does not recall the meeting but
says that his last meeting with Mrs. Clinton was the fall 1984 when they set the retainer. McDougal 302, 2/19/97 (DRAFT), 10.
319-00034 730. This notation appears refer 9:00 a.m.,
morning portion the calendar. from the
DEK014947. Mrs. Clintons billing entries for April 23, 1985, reflect that after
her meeting with McDougal and Latham, she had conference with Rick Ma..sey, young
associate the securities section, and conference with Watt Gregory, senior partner the securities
section. Masseys entries for April 23, 1985, show that had conference with Mrs. Clinton,
NW: 15416 Docld: 70001585 Page
work the preferred stock offering. Also April 24, internal Madison memorandum
from Latham Greg Young, Madisons comptroller, announced Madisons retainer Rose:
Greg, have retained the Rose law firm. will paying them retainer
$2,000 per month. Please ahead and send the first $2,000 check the firm
care Hillary Clinton.
Madison issued its first retainer check Rose May 1985, the amount $2,000.
For the next fifteen months through August 1986, Madison continued send Rose monthly
retainer checks all but two the amount $2,000. There was written engagement
agreement between Madison and Rose. Rose billed Madison its usual hourly, rates and used the
monthly retainer prepayment against fees actually incurred Rose. Mrs. Clinton
conference with John Latham, conference with Les Baledge, another associate the securities
section Rose, and conducted research preferred stock offering. Id..
DEK014947. Mrs. Clinton review[ed] draft docwnents and had conferences
with Massey, Latham, and Davis Fitzhugh, attorney Madison. Massey and Sharon Grimes, paralegal Rose, conducted legal research and draft[ed) documents.
54-002312771. McDougal says that had never paid retainer law firm
before. McDougal 302, 2/19/97 (DRAFT), Latham says that Rosewas the only law firm
Madison ever had retainer. Latham 302, 2/14/95,
The second and third checks Rose dated 5/17/85 and 7/22/85 were the
amounts $2,018.00 and $3,023 .20, respectively. 54-00231446, 54-00232199. The difference
represents fees incurred excess the $2,000 retainer. noted above, McDougal had written retainer agreement with Rose for the
representation the Bank.of Kingston matter. There was policy Rose 1984 1985
requiring written retainer agreements; such decisions were left the individual attorney. Letter Bruce Ericson from Alden Atkins, Oct. 31, 1995, (In 1985, Rose Law Firm did
not have policy regarding retention letters. are unaware any retention letter for Madison
Guaranty.) (RIC120845);
_Jnte-~al Madison documents reference the monthly retainer payments Rose
prepai.c:JJegai fees See. e,2,, 54-00266225, 54-00264666 667, 54-00264669, 54-00260954,
FOIA(b) Rule Fecleral Rul Crim inal Proce dure
NW: 15416 Docld: 70001585 Page
described the agreement letter McDougal and Latham dated July 14,
1986, follows:
[I]n April, 1985, advised you that the firm would credit fees against monthly
retainer and then bill for whatever fees might excess the retainer the
end each.month.
Mrs. Clinton was the billing attorney the Madison account, and almost all the
retainer checks were addressed her attention. Rose had policy 1985 with regard
and the decision whether use retainer was discretionary with the responsible
attomey. the regularity ofretainers Rose, Ron Clark testified, back those days, was
little bit unusual for Rose get retainer. Even this day, except for large clients, its
unusual. Webb Hubbell, chief operating officer Rose from 1985 through 1988, testified that retainers were indeed unusual, and could not remember any client Rose other than Madison
which was retainer. her understanding the regularity retainers, Mrs. Clinton
54-00260979 980. Each cover letter transmitting Roses bills acknowledges
receipt the previous months retainer fee,~. 54-00266228 (April Retainer Received ...
April Fees ... Balance Due ...
Thirteen Madisons nineteen checks Rose listed the payee Rose Law
Firm, Attn: Hillary Clinton. See. e.2., 54-00231446, 54-00232199, 54-00232674, 54-00233116,
54-00233456,54-0054-00234001,54-00234265,54-00212147,54-00212393,54-00214419,5400215014, _54-0021613 Rose deposited all Madisons checks into trust account against which
the actual fees were billed. RICI20846.
Letter Bruce Ericson from Alden Atkins, Oct. 31, 1995, (In 1985,
Rose Law Firm did not have any policy regarding retainers client advances. The decision
about whether retainer client advance would requested was left the discretion each
lawyer depending the circumstances the particularmatter.).
Clark GJ, 3130194, 58-59.
Hubbell GJ, 12119/95, 187-188.
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testified, however, that retainer agreements were not unusual cant call their name you right now, but was not unusual ask client,
new client client that perhaps there had been some billing problems with the past, make deposit against fees and expenses.
How Mrs. Clinton came the billing attorney the Madison account dispute,Q..
According Joe Giroir, former chief operating officer Rose, the billing attorney usually -but not always the person brought the client the firm. The billing attorney
responsible for assigning and supervising the legal work addition reviewing and sending
bills the client. internal Rose document entitled The Daily Briefs dated April 29, 1985,
announces Madison new client and identifies Mrs. Cli~ton the attorney for the
account. The purpose The Daily Briefs announce new clients and determine whether
the firm has any conflicts.
....-... Clinton, OIC Deposition, 4/22/95, 14.
Girioir GJ, 7/18/96, 12. Rose had policy that first and second year associates
could not serve billing attorney. Giroir GJ, 7118196, 13; Massey Senate Hearing, 1/11/96, 76.
li. 13.
105-00008011. second The Daily Briefs dated the next day announces the
second Madison matter the broker/dealer and Mrs. Clinton again the attorney. 10500008012. February 1989, Vince Foster sent ten-page proposal the FDIC soliciting
legal work. 105-00003859 868 Page eight the letter addresses potential conflicts
interest follows [Rose] does not represent any savings and loan assocation state
federal regulatory matters. From time time have provided specialized services some
savings and loan associations such areas employment discrimination, work-out
participation loans and bankruptcy. not represent any these clients ongoing basis
... 105-00003866. Notably
omitted from Fosters description are the services Rose provided for Madison between 1985 and
1987: regulatory work before state agencies, cc;i.pitalization, real-estate developments, etc.
NW: 15416 Docld: 70001585 Page
Evidence Supportine McDou~als Version
Obviously the disproof Mrs. Clintons unpaid bill story does not, necessarily require
affirmative proof McDougals jogging version. Equally obviously, the jury were credit
affirmative proof the jogging incident, would significant and wolild greatly assist the
prosecution. And, most obviously all, with Jim McDougals death the admissible evidence
the jogging incident very limited. What follows below summary the proof available
without McDougaJ only portion which admissible, but the full scope which useful assessing McDougals veracity.
Jim McDougal has identified several people who may have information confirming his
version the jogging incident. least one these witnesses, according McDougal, was
present during McDougals meeting with Clinton. The other witnesses may have knowledge
the jogging incident because contemporaneous statements made McDougal about the
circumstances Roses retention. addition, one witness, Rae Ann Moles, who was not
identified McDougal, claims she overheard the meeting between McDougal and Clinton.
These witnesses and other evidence pertaining the jogging incident are outlined below.
Bill Clipton
Remarkably, Bill Clinton does not deny the jogging incident. Clinton testified has
been Madison [l]ess than times, more than two, threen and while Madis~n
once twice actually went in. When asked about the jogging incident, Clinton says has Clinton OIC Deposition, 4/22/95, 66. Clinton 825 Trial Testimony, 4/28/96, 69-71.
NW: 15416 Docld: 70001585 Page
tried remember and not accusing McDougal oflying, but does not remember anything
like the jogging incident: dont recall that. aware that has recounted conversation
about that. But dont have any specific recollection doing that. Clinton said does not
recall any conver5ation where asked McDougal send legal work Mrs. Clinton.
also said does not recall ever complaining McDougal about financial problems and telling
McDougal that Hillary and need some money.n
BUI Henley Clinton OIC Deposition, 4/22/95, 83: you have any reason believe that Jim McDougal not being
No. about (the jogging incident]? have absolutely hav.e reason believe that. And have
really tried search memory see there was anything remotely similar
what said. mean, really tried remember the conversations.that Ive had
with him try figure out, because not accusing hin:t not telling the truth. not simply not remember the conversation says occurred.
l.d.. 67. Clinton also testified does not recall whether knew 1985 that
Mrs. Clinton was doing legal work for Madison. Id.. 65-66 dont recall that did know [in
1985 that Hillary was doing some work for Madison]. Normally Hillary didnt discuss her legal
work with me.)
Id.. 69.
l.d.. 72. Clinton says does not remember McDOugal ever complaining that the
Clintons were not putting their fair share into Whitewater: certainly dont remember any time
when complained about that. can remember the occasions which said had put more money in, and when did
put more money in, and did that. Clinton OIC Deposition, 4/22/95, 83-84.
NW: 15416 Dodd: 70001585 Page
Jim McDougal says that Bill Henley, Susan McDougal;s brother, was present during the
meeting where Bill Clinton discussed. sending legal work Mrs. Clinton. Henley says was
not present such meeting but does remember seeing Clinton leave McDougals office and
McDougal complaining about Clintons leaving sweat stain the chair.
Henley testified before the grand jury that one morning between 6:30 a.m. and 8:30 a.rn. went Madison meet with McDougal. Henley said the door McDougals office
closed, Heriley waited short period time more than minutes. Henley thinks
McDougals secretary, Sue Strayhorn, was also present sitting her desk outside McDougals
office. When the meeting ended, Henley said Clinton, who was jogging clothes and
sweating, exited McDougals office. Henley and Clinton exchanged pleasantries, and Clinton left
the building. Henley testified that soon Clinton was out earshot, McDougal commented, dont mind the son bitch corning here and taking time, but wish wouldnt
sweat through chairs.11 Henley said and McDougal then entered McDougals office and McDougal 302, 6/22/95, 6-7 (McDougal advised that Bill Henley was
present during this meeting.); McDougal 302, 19/97 (DRAFn, (Bill Henley was also
present McDougals office when Clinton came irijogging attire.).
McDougal says Henley was Madison help with backed-up title work. Henley
was real estate salesman for Madison Financial Corporation, subsidiary Madison.
Henley GJ, 6/18/96, Strayhorn had been present outside McDougals office Henley remembers,
would inconsiStent with McDougals timing the jogging incident because Sue Strayhorn
began work Madison February 1985 well after McDougal says the
jogging incident occurred. Strayhorn 302, 3/30/94, This testimony also inconsistent with
testimony from Rae Ann Moles. Moles testified she overheard Clinton and McDougal set the
retainer, but Moles left Madison before Strayhorn started work. ~subsection infra.
Henley,GJ, 6/18/96, 27, 50.
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conducted their meeting. Henley testified that while was McDougals office noticed
fresh sweat stain one the two chairs facing McDougals desk. Henley was only able
date the event sometime 1984 1985. The only conversation Henley has had with
McDougal about the jogging incident occurred during the 825 trial, sometime after the book
Blood Sport was published. Henley said McDougal corrected quote the book attributed
McDougal apparently Henley:. McDougal told Henley that did not refer Clinton
son-of-a-bitch quoted the book.
Susan McDoual
Jim McDougal feels certain discussed the jogging incident with Susan McDougal.
Id. 46-4
Id. 33. Henley testified one point, however, that believed the event may
have occurred the summertime. When asked why thought occurred the summertime,
Henleys explanation was Clinton was sweating and must have been hot. Id. 33-34.
The relevant portion from Blood Sport reads follows:
McDougal gently steered [Clinton] out the office. Susans brother Bill Henley
was standing nearby. With the governor safely out earshot, McDougal turned Henley. dont mind the fat little son bitch coming and talcing
time. just Wish wouldnt ruin chair.
Stewart, Blood Sport (1996), 124. McDougal 302, 2/19/97 (DRAFT), 8-9; McDougal GJ, 4/2/97, 103-104: Susan was also quoted the Washington Post arid other publications,
think, saying, Yes, know about this. you recall talking her about this?
Would that have been something you would have told her about? sure yes. would have been something would hcwe told her within
the business day, would think.
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Ms. McDougal refuses give statement the OIC, but she has given statements print and
television media consistent with Jims recollection. Shortly after publication Gerths article
March 1992, The Washin~on Post quoted Slisan follow-up piece follows
Hillary came one day and was telling about the problem. The problem was
finances, her finances .... She came Jims office. remember Jim laughing and
saying afterward,Well; one lawyers good another, might well hire
Hillary. She was retainer. remember everyone sitting around laughing
and saying: need hire Hillary Clinton. interview with Diane Sawyer ABCs Prime Time Live, Ms. McDougal
corroborated that Jim told her contemporaneously about his discussion with Clinton.
McDougal also said that she was Madison the day the jogging incident, saw Clinton jogging
and sweating, and saw that Jim and Clinton talked with each other:
There are things that you can help clear little bit from for
some us. The decision have Mrs. Clinton help with some
the legal affairs for Madison.
Ill tell you what know about it, wasnt present the time.
But know that Bill came the bank one day. was jogging and sweating. The famous story ofthe sweat the chair
didnt see that. But did see that was running, and was
sweating. And came the bank. And did talk with Jim.
After that, Jim came and said, Ive just given Hillary some
work from the bank. that alright with you? was the bank
that day ....
And did say then that that Mr. Clinton had asked for her?
What said was, She needs the work And said, Thats fine
with me. Those were his exact words. that time, that day,
Maraniss and Weisskopf, Lawver Will Review Arkansas Land Deal, Washington
Post, Mar. 12, 1992, Al. interview with the OIC, Jim McDougal was read Susans quote
from The Washiniton Post. McDougal agreed with Susans statement but added that either Bill
Henley must have told Susan about the jogging incident. McDougal 302, 2/19/97
(DRAFT), 8-9.
NW: 15416 Docld: 70001585 Page
She needs the work. And said, Thats fine, Jim.
Because, again, she has talked about the business coming
different way coming through connection between someone
who was her office and someone who knew your husband.
McDougal: dont know about that.
But this you know? did take place?
Oh, yes.11 the eve her jailing for contempt Court, Ms. McDougal told Larry King she did
not witness the jogging incident and that her only knowledge comes from Jim McDougal: only know that Jim came and said, They need the money. going
give her the work. that alright with you? And said yes. Thats all know
about how that came be.
Rae Ann Moles
Rae Ann Moles was hired Madison April 1983 miscellaneous clerical work.
Moles remembers event similar the jogging incident described McDougal. Moles says
that late one afternoon August September 1984, Bill Clinton rushed past her into
McDougals office wearing jogging clothes. Moles says she heard most their conversation
Prime Time Live (ABC television, Sep. 1996, out-takes, tape (emphasis
Live (CNN television broadcast, Sep. 1996) (emphasis added).
Moles writin book her
riences Madison.
McDougal does not remember who his secretary was the time the jogging
incident. McDougal 302, 2/19/97 (DRAFT), Moles was McDougals secretary until she
left January 1985 and was later replaced Sue Strayhorn
NW: 15416 Docld: 70001585 Page
because McDougals office door was open.91 Moles said McDougal complained Clinton about outstanding Whitewater loan and urged the Clintons pay their fair share. According
Moles, Clinton told McDougal that Webb Hubbell was encouraging Rose attorneys get more
savings and loan business, and then Clinton asked McDougal put Mrs. Clinton $2,000 per
month retainer. McDougal told Clinton really didnt have anything for the Rose Law Firm [and] that the Mitchell law firm was representing the institution and performing
expected. Moles testified McDougal asked Clinton how the account would shown
coming in, and Clinton said Hubbell would take care and that more than likely young
associate would given credit for the account.
Moles says Clinton and McDougal met for about hour and half two hours and that
she left before the meeting ended home. When Moles came work the next morning,
McDougal said, Well, weve put Hillary payroll. Susan will shortly. She doesnt
know about it. When tell her, shes going really upset. There may quite incident.
Moles GJ, 10/19/95, 18. But see Moles 302, 8/4/94 219195, (McDougal
had Moles into his office and introduced her Clinton.).
Moles 302, 8/4/94 219195, Moles GJ, 10/19/95, 19-20.
Moles GJ~ 10/19/95, (Mr. Clinton asked him hire the Rose Law Firm.);
Moles 302, 8/4/94 219195, (CLINTON said that and HILLARY CLINTON were
need some money and because was government servant, only made much.
RODHAM CLINTON the ROSE LAW FIRM $2,000 per month retainer.). Bill Clinton
says has absolutely recollection talking Hubbell about Hillary and Rose being
retainer and doing legal work for Madison. Clinton OIC Deposition, 4/22/95, 72-73.
Moles GJ, 10/19/95, 22.
NW: 15416 Docld: 70001585 Page
you get uncomfortable, downstairs. Moles said that after learning that Madison retained
Rose, she asked McDougal .if Madison was going split the legal work between the Mitchell
firm arid Rose. McDougal responded, Y9u are send the Rose Law Firmnothing. Moles
resigned from Madison January 1985 .98 HUla[y Clintons Income
The Clintons tax returns are consistent with McDougals cJaim that 1984 when the
jogging incident occurred something was happening the Rose Law Finn which reduced Mrs.
Clintons earnings. The Clinto. tax returns for years 1983, 1984, and 1985, reflect that Mrs.
Clintons income from Rose decreased each those years follows
Wai:es from Rose 82,741 72,989ioo 55,382 101
Statements Relatiue Hillan Cliptops Yenjon
Id. 26. 27.
Moles 302, 8/4/94 219195, .Moles testimony corroborated her sister,
Sarah Handley, former financial examiner for the Arkansas Securities Department. Handley
testified that Moles told her while Moles was working Madison that Clinton had come
[Madison] and that the conclusion that visit McDougal had retained Hillary, the Rose
Law Firm. Handley GJ, 10/31/95, 22.
NW: 15416 Docld: 70001585 Page
Upon graduation from law school May 1984, Rick Massey began work for the Rose
Law Firm law clerk~ 102 When passed the bar examination August 1984, became
associate Rose and was assigned the securities section. Masseys mentor the securities
section was David Knight,
Massey became involved with Roses work for Madison
the very beginning the representation and did most the legal work Madisons first two
matters the preferred stock offering and the limited partnership/broker-dealer. Mrs. Clintons version Madisons retainer Rose puts Massey the center the
origination. the general question whether brought the Madison business Rose,
Massey says that do[es] not know how Madison Guaranty came client the firm. 103
However, Massey testified that while does not remember how the business came in, does
not remember feeling brought the client in: dont recall feeling like this was that
killed this deer ... didnt have big part when they came in. 104 When pressed Chairman
DAmato the Senate Whitewater hearings, Massey conceded would have remembered
bringing the client, but does not remember bringing in:
Chairman DArnato. Mr. Massey, let say something you. First-year
associate, youre there, you had brought this business, would have been the
first piece business think you testified that you brought into the firm; right?
Massey republican. Massey GJ, 1117/95, 88. Massey testified before the
Senate Committee that has very good memory. Massey Senate Hearing, 1/11/96, 238.
Massey GJ, 1117/95, (My position .has been that not and today
that not aware how what their motivation was for hiring us. have had
relationship with their president, which might have been factor. But dont you know, dont
know that you know, dont know. Youd have ask them why they came us, kl. 82)
(emphasis added). See also Massey FDIC Interview, 10/4/94,
Massey Senate Hearing, 1111/96, 78.
NW: 15416 Docld: 70001585 Page --.
Mr. Massey. Thats correct.
Chairman DArnato. You would have remembered that?
Mr. Massey. Thats correct.
Chairman DArnato. You dont remember bringing that business into the
Mr. Massey. No, sir, not.
Chairman DArnato. Same day, contemporaneously. you had brought
the client in, you would know that you brought the client in, went over that.
First-year associate, eight months, you would have known that, would have
been memorable, wouldnt it? Yes no?
Mr. Massey. Yes. 105
Despite this admission, Massey also maintained during the hearing, dont have all the
facts ... its outside knowledge whether brought the Madison matter not. 11106 important note recurring theme Masseys responses: Massey concedes that his memory
differs from Mrs. Clintons the facts how the business came Rose; the individual
events, however, Massey does not unequivocally say that the event did not happen; merely
says that does not remember that the event did happen.
David Knight remembers attending the Jurich with Latham and Massey, and Knights
Id... 232-233, 240-241. Chairman DArnatos point classic deductive
syllogism: Massey says that, had the event happened, would have remembered the event, and does not
remember the event; therefore, the event did not happen.
ld,. 29,
NW: 15416 Docld: 70001585 Page
memory consistent with Masseys.107 Knight testified the purpose the lunch was
solicit legal business from Latham: took Mr. Latham lunch, and cant remember
certairily the specific conversation but the gist was told him little bit about the types
work that Rick arid did. Representative clients for the finn. And then asked him for
business. Knight testified that Latham said McDougal made the decision which law firm hire and that Madison was happy with the Mitchell law firm: recollection that said
that Mr. McDougal was really the one that made decisions about hiring lawyers .... also said
that Madison regularly used another law firm and that thought they were satisfied with the
services provided the law finn. 11109 Knight further testified left the lunch with the
impression that the matter was closed and that Rose was not going get any business from
Madison. 110
Latham says that does not remember taking class where Knight and Massey both
taught and does not remember lunch with Massey and Knight. 111 Latham testified
Knight Senate Hearing, 5/16/96, 10. Knight testified that the lunch occurred
after the conclusion the law school course which Massey helped him teach.
Latham Senate Deposition, 5115196, 10-11. Latham remembered being taught
corporations course Knight while law school. Latham seemed leave open the possibility
that may have taken course after law school that was taught both Knight and Massey:
Not unless well, may have, was continuing course, maybe they were teaching
course that had interest and attended for bit. would have been after law school, but
dont remember it. ls1
remembers Massey some point expressing interest obtaining some Madisons legal
work: recall that Rick pitched the business the sense that wanted hire them
legal work for us. not remember the lunch. 112 deposition before the Senate Whitewater
Committee, Latham testified Massey did approach him, but told him the decision hire Rose
was McDougals:
Rick Massey and ran into each other when were studying for the bar, and
Rick went work for the Rose Law Firm after that, and had talked with about using the Rose Law Firm. And think probably mentioned that McDougal some point. some later point, Jim came back and said lets use the
Rose Law Firm, Wld wanted put them retainer .... think wanted
use them because had friends over there, and one those friends, course,
was Hillary. had used the Rose Law Firm there before. Whats open there,
course, what prompted Jim make that decision. Was conversation with
Hillary was just because had suggested that some point would like
work with the Rose Firm some point. dont know. 113 interview with FDIC investigators, Latham said McDougal suggested that Madison
use Rose:
LATHAM said that one time, date not recalled, JAMES MCDOUGAL
suggested that MADISON GUARANTY use ROSE for some the legal work
the institution. LATHAM said that, MCDOUGAL had friends over there,
suggested use them. LATHAM said when asked who the friends were that
was HILLARY ROD HAM CLINTON and others. 114
Latham says McDougal made the decision which law firm hire and that Latham did not
Latham Senate Hearing, 5/16/96, 35.
Latham Senate Deposition, 5/15/96, 7-8. Latham says the pitch from Massey
occurred while they studied for the bar examination and thus suggests that his conversation with
Massey occurred the summer 1984 roughly consistent with the timing the jogging
incident alleged McDougal. Latham graduated from law school May 1984, would
have studied for the bar the summer 1984. 2031-00000027.
Latham FDIC Interview, 7/12/95,
NW: 15416 Docld: 70901585 Page
have that authority. When specifically asked who made the decision hire Rose, Latham
testified, Jim McDougal did. 116 Latham does not remember any discussions about there being unpaid bill from the Bank Kingston litigation 117 and says not aware what legal issue
McDougal wanted Rose work on, although does remember discussions with McDougal
about acquiring broker/dealer. 118
Massey also says does not remember discussion
any Rose partner about Madisons having outstanding bill and partners objecting bringing
Madison again client because the billing problems: Ive heard that there were
discussions, that there was some disgruntlement. And discussions like this could have gone on. dont believe was party them. 119 Massey acknowledged that Mrs. Clintons version the
retainer .doesnt square with his, 120 and insists has memory ever discussing Madison
Latham 302, 2/14/95, Latham Senate Deposition, 5115/96, 12-13; Latham
Senate Hearing, 16/96, 14-15.
Latham Senate Hearing, 5/16/96, 15. When asked safe say you
personally did not hire the Rose Law Firm work for Madison, Latham responded, Yes, the
sense that didnt make the decision hire them and move that forward. Latham Senate
Deposition, 5/15/96, 8-9. Pat Heritage-Hays, assistant Latham, says that when she
learned Madison was paying Rose $2,000 per month, she asked Latham about it, and
responded, Oh, its one Jims deals. Heritage-Hays 302, 1/6/95,
Latham Senate Deposition, 5/15/96, 20; Latham 302, 2/14/95,
Latham 302, 2/14/95, Latham told FDIC investigators, however, that
Massey worked the preferred stock and broker/dealer issues because Latham specifically
asked him to. Latham FDIC Interview, 7/12/95
Massey Senate Hearing, 1111/96, 23-24; Massey GJ, 11/7/95, 33,
wasnt usually consulted involved billing matters first year associate .... didnt know
there had been reduction the bill.).
Massey GJ, 1117/95, (In exchange about Mrs. Clintons allegation that
Massey went some secu.rities partners Rose about bringing Madison client, Massey
was told, Mrs. Clintons version doesnt square, course, with your version, which Massey
NW: 15416 Docld: 70001585 Page
billing matters with any Rose partners:
[D]o remember going the partners and saying, want represent the -Madison, and other partners saying, Youre not going that until they catch their bill, and maybe there ought retainer. have read that Giroir
said that. dont recall Giroir ever having said that me. dont remember
being any that discussion, and frankly would not have been matter
which normally would involved because was first year associate, and
didnt have much inputon billing arrangements that kind. Its possible,
however. just dont remember it. 121
Massey further testified the grand jury that remembers such discussion with any
securities partners Mrs. Clinton:
Mr. Massey, you remember anything about your going the securities
partners and saying, want work case for Madison, and they said, Were
not going approve that until Madison has paid what they owe some
other case?
Either with any securities partners with Mrs. Clinton? dont no, sir. dont remember that. dont remember doing that with anybody. 122
.Other Evidepce
Webb Hubbell
responded, understand.).
Massey GJ, 1117/95, 84-85. According article The Los An~eles Times,
Giroir told Rose partners that did not want Madison client again. Risen, White House
Woes: Documents Hint More Help Mrs. Clinton for SL Owner, Los Angeles Times, May
31, 1994, (McDougal had refused pay Roses bills, prompting the firms managing
partner, Joseph Giroir, declare that did not want McDougal Rose client again the
future, according partners.). Giroir testified the grand jury that has memory Rose
representing Madison 1985 and 1986 and memory any discussion5 the firm about the
representation. Giroir GJ, 7/18/96, 23-27.
Massey GJ, 1117195, 32. Massey told the grand jury, however, that although
does not remember doing so, possible may have gone Knight and told him thought was going get Madison client. l.d.. 84-85.
NW: 15416 Docld: 70001585 Page
Hubbell says that Massey approached him 1984 and asked him for help getting
Madisons business. 123 Hubbell testified that Massey said had been talking John Latham
and Massey felt that Rose had opportunity get some Madisonswork. 124 Hubbell says
did not anything assist Massey getting the business. 125 who actually brought the client Rose, Hubbell says, Massey was the one who
wanted them client and that Mrs. Clinton was one those who helped him accomplish that
task. 126 interview with the OIC, however, Hubbell said Mrs: Clinton brought the Madison
Hubbell Senate Deposition, 10/26/95, 134-136; Hubbell 302, 2/1/95,
Hubbell left Rose from September 1984 through January 1985, while completed
unexpired term the Arkansas Supreme Court.
Hubbell Senate Deposition, 10/26/95, 134-136.
li. 122. Hubbell says has personal knowledge who brought the client in. Hubbell OJ, 517196, 74-75 dont know for sure who brought .... dont have
personal knowledge, right.). the grand jury, Hubbell was read quote from news article
follows: Webster Hubbell, partner and spokesman Rose, said that nothing the law
firms records indicates that Hillary Clinton brought the Madison Guaranty business. Thats
new one me, said. When asked whether the quote was accurate, Hubbell responded,
dont know said that, but there nothing the records this where lawyers are being
lawyers, Mr. Ewing. There nothing the records the firm that show that Hillary brought
the business. li. 08.
According notes Susan Thomases from conversation with Hubbell February 24,
1992, Hubbell told Thomases that Massey will say brought the business:
Massey had relationship Latham had relationship MacD. Rick will say had
rel[ationship} Latham had lot getting the client in. She did all the billing.
According time recs, had numerous conflerences] with Latham, Massey, and McDougal both transactions. She reviewed some docs. She had one 4-85 the beginning the
deal Bev. [Bassett]. Neither deal went through. Broker/dealer was opposed staff approved Bev under certain condition which they never met. Preferred stock? But for Massey, would
not been there. But was billing partner and attended conferences.
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