The Obstructionists
Adams, James Ring
The Obstructionists How the Clinton administration is blocking the Whitewater inquiry on at least three fronts. by James Ring Adams T he Whitewater affair is no longer a minor land deal in the...
...Since bank regulators such as .the RTC are confined to civil suits and don't have power to bring criminal cases, the Kansas City branch followed long-standing procedures by referring apparent felonies to the FBI and the Justice Department...
...On February 24, Senator Phil Gramm asked Altman pointblank, "Have you or any member of your staff had any communication with the president, the first lady, or any of their representatives, including their legal counsel or any member of their White House staff, concerning Whitewater or the Madison Savings and Loan...
...According to others in the U.S...
...was trying to salvage its investment in Beverly Enterprises, Inc., the nation's largest chain of nursing homes...
...I am particularly concerned that officials of the Kansas City RTC office are being gagged and possibly coerced by the Washington RTC office," Leach wrote, attaching a confidential memo...
...On Tuesday, November 9, the Justice Department made it official...
...But there is a question why he was the focus of U. S. Attorney Paula Casey's efforts when she found that the many potential charges against Madison Guaranty, such as forgery, diversion of funds, and deception of federal regulators, weren't worth criminal investigation...
...It began its tenure with an unprecedented purge of all United States attorneys and quickly intervened in an ongoing trial of a political ally, Democratic Rep...
...In his letter to the clerk, Mackay made the strange statement, in light of the intense coverage of the case, that "unsuspecting targets and subjects will be put on notice of the investigation, and evidence and other materials pertinent to the investigation may be destroyed or lost...
...the deal was Clark's potential opposition...
...In general, though, the document concentrates on Hale's frantic attempts to shuffle his bad loans out of the sight of SBA auditors...
...Clinton maintains in his self-defense that he was not personally aware of the most blatant incidents of interference, the Washington-based pressure on thrift regulators recently described by Rep...
...Questions about his tenure as number-three at the Justice Department are likely to mark the next, and most sinister, phase of the affair...
...22 The American Spectator April/ May 1994 Hillary's Rose Law Firm colleague Webster Hubbell...
...His body was found later that day, neatly laid out with gun in hand, next to a cannon in Fort Marcy Park, Virginia, where only the poorly equipped U.S...
...Lindsey didn't say, and apparently wasn't asked, if Kennedy had mentioned the call to his old Rose Law Firm colleague Webb Hubbell at Justice...
...He wanted this girl...
...The judge, a fixture on the Little Rock political scene, could testify against public officials up to and including the governor, and would even agree to be wired in a sting operation...
...Jean Lewis took another call from her friend Donna, the Ethics lady, asking if she'd received a letter from Little Rock...
...His testimony ties Clinton personally to James McDougal's financial machinations...
...The Fall of Steve Clark Hale had years of his personal freedom at stake, so his take on the investigation obviously reflected a very large measure of self-interest...
...She also learned that Jim Guy Tucker's law firm, the former general counsel to Madison Guaranty, also used the warehouse...
...On March 21, he admitted that talks went beyond procedural matters, and included the politically sensitive question of whether he should recuse himself from the Madison case...
...The American Spectator on March 17 petitioned the Eighth District Court of Appeals in St...
...In a cross-examination, he tried to show that the Gazette exposé was planted by Bill Clinton's supporters to scuttle Clark's campaign...
...The Powers That Be have decided that I'm better off out of the line of fire (and I ain't arguing...
...Later in his testimony, he repeated that there was only "one substantive or meaningful contact," referring to the meeting on February 2. Altman never mentioned the September 29 Hanson-Nussbaum meeting or an even better-attended follow-up...
...Historians may credit Deputy Treasury Secretary Roger Altman with bringing about the turning point, when he testified before the Senate Banking Committee on February 24...
...District Court in Little Rock granted the warrant to FBI agent Steven Irons...
...Hale believes that the administration anticipated this battle from the moment he emerged as the designated fall guy for the myriad financial scandals that loomed under the label "Whitewatergate...
...W bile U.S...
...Generally you try to get the guy to talk and hold prosecution in abeyance," said a highly regarded prosecutor who asked to speak on background...
...Iowans say that Rose partner Kennedy was at the center of the deal...
...He met with Casey on September 7. By her account, she gave him a flat no on immunity or reduction of charges...
...A day after the press conference, Clinton withdrew his support from the bond issue, killing it off...
...Treasury Secretary Lloyd Bentsen, one of the few old Washington hands in the administration, moved quickly to distance himself from his subordinate, referring Altman's conduct for review to an independent ethics officer...
...Cause if anything pissed him off more than anything else it's for Clark to scoop him on a babe like that...
...The American Spectator April/May 1994 31...
...by James Ring Adams T he Whitewater affair is no longer a minor land deal in the Ozarks, if it ever was...
...But this was the first notice Kansas City had received that any decision had been made by anyone...
...If after conviction he were still willing to testify against others, she said, her Litigation Committee would consider filing a motion to reduce his sentence...
...Hale had to stand trial on a felony count, she said...
...Such are the business standards of the state that his standing among his peers was compromised less by his indictment than by his offer to turn state's evidence...
...But when he charges that his legal troubles serve the political ends of Bill Clinton, he can cite a dramatic precedent...
...The Railroading of David Hale A last-minute deal with Independent Counsel Fiske forestalled the federal criminal trial of former Municipal Judge David Hale and brought the Whitewater grand jury its first major insider witness...
...Now it stands accused of trying to ram through aconviction of the one witness who links Bill Clinton directly to the Madison Guaranty financial scam...
...On October 6, Tucker visited Clinton in the White House, his first time there since the election, for a 20-minute private meeting...
...Apparently tracking federal thrift examination reports, the document reportedly mentioned business partnerships involving former Clinton aide Stephen Smith, James McDougal, and Jim Guy Tucker...
...Nonetheless, Hale's apparent clout with the highway department reinforces a claim he is said to have made in 1989 to another client...
...JRA According to Lewis's notes, Breslaw said: "The people at the top" wanted an answer "that would get them off the hook...
...Henneman made a formal request for copies of the referrals and exhibits and said her supervisors were considering whether to bring in the Public Integrity Section...
...Judge Reasoner granted the petition on March 30, grumping that he would have done it without the eighth circuit's intervention...
...Leach's floor statement, was one of the most damaging administration actions to have come to light...
...Porter said Lindsey was laughing and asked if she'd seen the article...
...No one has yet said this happened...
...But the parallel deal in Arkansas ran afoul of state politics...
...He sought out a Little Rock defense attorney named Randall Coleman, who had already made a name for himself by taking on the Arkansas establishment...
...Hale's allegation fits too tightly with the separate pattern of abuse: the blatant interference with the savings and loan regulators at the Kansas City RTC...
...Some thirty internal documents from the Kansas City RTC traced what its lead investigator on Madison called "the beginnings of a cover-up...
...Any time a referral comes in that would make the department look bad or has political implications," Lewis says she was told by a person bearing the title "ethics program manager," "it goes to the attorney general...
...attorney's office to sound them out...
...Whatever the connection between those two transactions, Hale added a kicker to the Dardanelle mortgage that promised to cover his guaranty and return a profit...
...At a pre-trial hearing on Hale's federal indictment, Gaylord Westbrook of Monroe, Louisiana, testified that the judge had bragged about then Governor Clinton's connection to Hale's family-owned Capital-Management Services, Inc., a Little Rock lending company formed in 1979 with funding from the Small Business Administration...
...Coleman managed to win another thirty days, but, as Hale reconstructs it, he came back and said, "David, I've been practicing law for twenty-five years and I've handled some high-profile cases...
...f Coleman hoped to warn off the prosecutors, he soon found it wouldn't work...
...Even though the charges against Clark were confirmed in a fair trial, his defenders see it as selective prosecution...
...I'm a little surprised they'd go ahead and try him right away...
...one-hundred for $250...
...Altman said that on February 2, he and Jean Hanson, general counsel at Treasury, met with White House counsel Bernard Nussbaum to give him a "heads-up" on the impending expiration of the statute of limitations on civil suits involving Madison...
...Altman himself began to send a series of letters to Senate Banking Committee Chairman Donald Riegle, revealing more meetings as his memory was prodded by press inquiries...
...In fact, a number of boxes, she said, were missing...
...But adding to the mystery was its date, February 6, a week after Mackay was replaced by the appointment of the independent counsel...
...his evidence came in a stack of bureaucratic memos...
...The history of these referrals produced one of the many bombshells of March, this one dropped by Rep...
...although other reasons suggest themselves...
...Nearly everyone except the participants in the meeting recognized the impropriety, especially when more detail emerged later...
...The next day, Gazette reporter Anne Farris picked up the story and broke the scandal...
...I'll get right on it,'" said Hale...
...In similar terms, no one denies there are substantive grounds for investigating David Hale and his lending company...
...The public indictment obviously ended any chance of using Hale in a sting operation, although Casey tartly observed in the September 21 letter that Hale had foreclosed that option by talking to the Times...
...When House Banking Committee Chairman Henry B. Gonzalez abruptly canceled the oversight hearings of the RTC scheduled for that date, Leach took his case to the floor of the House...
...He told her to check out the other names on the list...
...In answer to a follow-up question, he said this contact occurred "about three weeks ago...
...Possibly by coincidence, Lewis received a call from her contact at the Ethics Program just after noon the same day...
...Coleman met with Casey right after Labor Day andoffered Hale's cooperation...
...There a deputy Associate Counsel William Kennedy was an old friend, and Coleman decided to tell him, in Coleman's words, that "we have clients with mutual problems developing in a federal investigation down here...
...When reporters began to ask about this curious sequence, they received the condescending admission that maybe the U.S...
...Harold Ford of Tennessee...
...Bristow, on cross-examination, brought out that Porter's attention had been drawn to the article by a telephone call from Bruce Lindsey, a partner in Clinton's former law firm and the treasurer of his 1990 campaign...
...Park Police had jurisdiction...
...He added that Kennedy had relayed Coleman's message to White House Counsel Nussbaum...
...Leach noted in his letter to Fiske, Bentsen then dodged the bullet of informing Congress by in effect pleading the Fifth...
...Madison Financial Corporation, a subsidiary of the thrift that McDougal used for his real estate deals, agreed to buy back the land at a steep profit if Hale's corporation could induce the State Highway Department to pave a nearby dirt road...
...This story starts with an apparently unrelated business deal involving the Rose Law Firm and a subsidiary of Stephens Inc., two of the biggest players in the Arkansas political economy...
...By the time Brown arrived at the Excelsior, the party was in full swing...
...When the court ruled in 1981 that the judge should be elected or named by the governor, the Republican governor who defeated Clinton reappointed Hale and signed a bill re-establishing the court so that Hale could be eligible to seek election to the post...
...In November, White House aide Bruce Lindsey, the designated spokesman on Whitewater, acknowledged the contact to Washington Post reporters...
...Brown about a Red Cross fund-raiser attended by Clinton and other officials at the state fairgrounds in Little Rock in 1984-5...
...State Attorney General Steve Clark had made a career of exposing nursing home exploitation...
...Kennedy's "client," of course, was the president, and the,associate counsel called back a few days later, says Coleman, to ask if Hale would allege that he had had any "face-to-face" meetings with Clinton...
...James Leach (R-Iowa...
...on Tuesday, July 20, the U.S...
...The plea bargain takes the case to a new level, in which detailed sworn testimony implicates much of Arkansas's political elite, including Webster Hubbell's father-in-law, the sitting governor Jim Guy Tucker, and Bill Clinton himself, in illicit financial deals...
...Lewis took another trip to the Little Rock warehouse and noticed that the Madison records were much tidier...
...As Rep...
...She gave me a drop-dead date of November 8," Hale said...
...Charge by charge, memo by memo, the picture accumulates of a rule by crony, bent on politicizing the most sensitive parts of the federal bureaucracy to protect the president and first lady, but primarily the president...
...case wasn't in its computer, and second, it had been passed up directly to the attorney general...
...On the other hand, Hale, a Democratic Party operative since he headed the University of Arkansas Young Democrats, admits, "I'm no choir boy...
...On March 5, in the storm that followed, Clinton showed the door to Nussbaum...
...They had a big suite where they were gonna have a big party, just this group...
...Nussbaum brought along the White House political troubleshooter Harold Ickes and Hillary Clinton's chief of staff Margaret Williams...
...He is one of the aides subpoenaed by Independent Counsel Fiske over the controversial meetings with the Treasury officials...
...Afterward, as Clinton was preparing to return to the governor's mansion, he met some of the "HeeHaw" crew, including a woman Brown remembers only as Elizabeth, "a beautiful girl with dark curly hair," with whom Clinton was "obviously enamored...
...RTC President Albert Casey announced a consolidation of regional offices that led to the transfer of the Madison case from Tulsa to Kansas City...
...That's when I decided to go public...
...In one of the unsung acts of heroism that dot the history of the savings and loan debacle, Lewis refused to give in...
...According to a November 1993 report in the Washington Post, the referral listed dozens of questionable transactions...
...He kept 133 acres of unfarmable land for a side deal with McDougal...
...Altman's answers raise the specter of the more serious felony charge of making a false statement or obstructing a congressional inquiry...
...attorney's office and told the deputy, "Some really high-profile people are involved...
...The current majority has twisted the buzzword concern about "gridlock" into an excuse for a potentially vicious form of one-party rule...
...October was a very tense time for Hale...
...Altman answered "I've The American Spectator April/May 1994 27 had one substantive contact with White House staff, and I want to tell you about it...
...On September 23, Donna 3 Donald Mackay, a career lawyer in this division, later served briefly as special prosecutor in the Madison case until the appointment of independent counsel Robert Fiske...
...On October 14, Nussbaum met again with Jean Hanson...
...In March 1986, Hale borrowed $300,000 from Madison Guaranty for a shell company called the Dardanelle Development Corporation...
...After she read it, she turned for advice to her 4 Clinton's rivalry with Clark has an interesting history...
...The constitutional danger comes from the unwillingness of the Democratic Congress to exercise oversight and protect the independence of the bureaucracy in its functions of regulation and criminal prosecution, areas in which the public good clearly demands independent action...
...The "careless ad hoc campaign-type manner" of some White House staff work, he wrote, could expose one or two aides to a stay in the slammer...
...See "Beyond Whitewater," in last February's TAS...
...Hale asserts that she passed the word to stop talking to the press...
...Higher-ups were at work indeed, at both Justice and Treasury...
...Agent Irons' affidavit refers to several of Hale's most sensitive loans, including the $300,000 loan to Susan McDougal and another to James McDougal's homage to Franklin Delano Roosevelt, the bizarre real estate development on Campobello Island...
...Acting Assistant Attorney General John C. Keeney announced that the criminal division at main Justice would take over both Hale's case and the Madison Guaranty investigation...
...By the end of August, her team had prepared criminal referrals alleging a $1.5 million check-kiting scheme by which bad checks were circulated among the business accounts controlled by McDougal or his partners...
...Proof is lacking, but there is a crucial coincidence...
...Hale's co-defendants repeated the quote in court papers, in making a successful motion to sever their case from Hale's...
...The new appointee was Paula Casey, a former staff member for U.S...
...Hale surmises that the contents of the search warrant must have been known in Washington...
...According to Hale and Coleman, the career deputy replied, "I've got eight more years to retirement...
...The same team until recently controlled much of federal law enforcement...
...As this piece of dynamite worked its way through the RTC bureaucracy, the White House, with incredible bad judgment, lit the political fuse...
...His offenses were distant enough from the Whitewater land deal to keep the spotlights focused in another direction...
...But a March 8, 1992 New York Times article by Jeff Gerth reopened the Madison questions...
...The release emphasized that Casey was concerned about "misperceptions," not about real conflict...
...lawyer, who happened to be Webster Hubbell...
...But Hale soon saw a sign that the plan could never have worked in the first place...
...When Gerth called Casey for comment, she went ballistic, to use Hale's words...
...In December, Clark dropped a bomb on the proposal...
...Justice Department spokesman Carl Stern told the Washington Post, "This was not a review conducted by Paula Casey...
...As interim head of the Resolution Trust Corporation, the savings-and-loan cleanup agency, Altman admitted that his RTC regulators had met with White House lawyers...
...Send your order to: The American Spectator, P.O...
...The document demanded items of great interest to the Clinton administration: Hale's papers on "Masters Marketing, Susan of [sic] James McDougal," and on two Little Rock development companies, Castle Sewer and Water Corporation and Southloop Construction...
...I'm not going to touch it...
...Rose, you will remember, employed Hillary Rodham Clinton, Vincent Foster, William Kennedy, now associate White House counsel, and Webster Hubbell...
...Has Bill Clinton turned Justice and Treasury into political instruments for his personal protection, and does the Democratic majority in Congress have the fortitude to assert the public interest...
...No one claims the indictment itself was necessarily concocted...
...But neither of the counsels took any action or alerted anyone in the White House, said Lindsey, "because they didn't take it seriously...
...This charge of political interference in a criminal trial is one of the most sinister aspects yet to emerge in the Whitewater scandal...
...Hale, 53, has a broad, open face and a style that is relaxed even by the standards of a state where sworn enemies will begin a serious argument with a genial exchange of pleasantries...
...Little Rock lawyers still wonder why federal prosecutors mounted such a weak case, which involved one of the least of Madison's many apparent violations...
...Lewis began to call main Justice, and heard first, the Henneman, the ethics program manager who had received most of Jean Lewis's calls, asked to get copies of the transmittal letters on the upcoming new batch of criminal referrals...
...Incumbent governors and political establishments are fair game for federal prosecutions...
...24 The American Spectator April /May 1994 attorney told him the government planned to issue an indictment in ten to fifteen days...
...otherwise, her office was going to start "stacking" charges...
...These are the questions that surround the tenures of Webster Hubbell and Roger Altman...
...Casey brushed off the suggestion in a letter dated Wednesday, September 16...
...He went over to the U.S...
...Talk of an undercover operation dropped from sight...
...In 1989, Stephens Inc...
...Altman described it as a procedural briefing on the way the RTC would decide which suits to bring and which to drop...
...It also included members of the cast from "Hee-Haw," the popular country-western television show...
...Political Trials Clinton's assurances to the contrary, Little Rock insiders persist in seeing the indictment of Clark as revenge for one or another of his offenses against the establishment...
...The fear of this evolution is the nerve that Whitewater hit in the first place...
...Meanwhile, friends of Elliott Abrams might ask how Roger Altman's performance before the Senate Banking Committee differed from' the testimony that brought the Reagan State Department official to grief...
...On September 23, her office put forward its indictment of Hale and didn't bother to seal it...
...The announcement of Casey's recusal said she had made her decision the previous week, meaning that on Monday she was pressing Hale for a guilty plea after she supposedly had left the case...
...Coleman added that if Hale started.talking, he could prove as embarrassing as Heidi Fleiss, the Hollywood madam...
...Incredibly, it took the government seven months to release one of the most basic documents in any criminal case, even though the rules of the court specifically state that it should go in the public case file as soon as the indictment is filed...
...His reaction to Mackay, and later to Independent Counsel Fiske, has been highly colored by his prospect of making a deal...
...She said, 'I will get back to you.'" Coleman was in bed with a back injury and lay by his telephone waiting for her call...
...Well before the expiration date of his agreement with McDougal, Hale delivered on his end of the bargain...
...H ale first learned of his case on Wednesday morning, July 21, 1993, when FBI agents burst into his offices at Capital-Management Services with a search warrant listing twenty-five of his clients...
...Altman's defense, that he didn't know about the earlier meetings, raises the question of just who is running the Treasury Department...
...She said if I didn't come on and plead guilty, she was going to add all these charges...
...They invited us up to the Excelsior Hotel," says Brown...
...In one facet of his complicated personality, Bill Clinton is emerging as an Ivy League version of Huey Long...
...While the case worked its way up to the Arkansas supreme court, Hale suspended proceedings During Clinton's governorship, his political team was accused of using the criminal courts to discredit opponents...
...She testified that she had seen her name in an initial Gazette story that published the expense account records of all the state's constitutional officers...
...Hale and Coleman point to recent examples in Oklahoma and Kentucky...
...Coleman went back to the U.S...
...In a recent appearance before a House Appropriations subcommittee, Bentsen was asked if he knew in advance about Altman's meeting with the White House...
...Their legal work was handled by Jim Guy Tucker, now governor of Arkansas, and their business dealings involved Little Rock civic leader Seth Ward, father-in-law of Webster Hubbell, who was then the newly confirmed number three at the Justice Department...
...She assured Lewis, probably all in innocence, that if Little Rock stalled, the "higher-ups" at Justice would make sure something got done...
...Tucker's schedule also included meetings with chief-of-staff Thomas F. "Mack" McLarty and then-associate attorney general Webb Hubbell...
...Even before his indictment, he survived a series of scrapes over the organization and conduct of his court, one of Governor Clinton's innovations...
...Hale's case is the first...
...Concerns began to percolate through the RTC bureaucracy, heated further by the discovery that a Little Rock law firm handling RTC business had hired a former Madison Guaranty employee who had been accused of fabricating at least two years' worth of the thrift's minutes...
...The Case of the Vanishing Referrals Meanwhile, Paula Casey was displaying a remarkable lack of interest in the debacle at Madison Guaranty Savings and Loan that Hale blamed for his own problems.' The regional office of the Resolution Trust Corporation began to wonder what had happened to the criminal referrals it had made the year before in the Madison case...
...That explanation doesn't account for the lack of action after the voting was done...
...Abrams pled guilty in 1991 to two misdemeanor counts of withholding information from Congress, defined as the willful failure or refusal to provide full and complete testimony...
...A secretary in the attorney's office told Lewis her boss had said that, after the case went to Washington, "we'd probably never hear about it again...
...The current apology is that the bureaucracy didn't want to appear to be trying to influence the election...
...In May, after finishing up another case, Jean Lewis began to pester Irons and the interim U.S...
...attorney for eastern Arkansas...
...the matter at hand was a series of criminal referrals about Madison Guaranty Savings and Loan, one of which is said to have mentioned the Clintons...
...The word in main Justice, Lewis heard, was that "USA Casey had stated she could 'deal' with other referrals as well...
...Associate Counsel William Kennedy was an old friend, and Coleman decided to tell him, in Coleman's words, that "we have clients with mutual problems developing in a federal investigation down here...
...Bentsen could pull off his stonewalling, congressional aides later discovered, because House precedents in effect said that witnesses could get away with whatever the committee chairman decided to let them get away with...
...A 21-page report targeted the McDougals, and named the Clintons, not as targets for criminal prosecution, but as potential beneficiaries of allegedly illegal acts...
...I don't have any comment on any aspect of that investigation," Casey told The American Spectator...
...There was one discordant note, however...
...At 1:35 p.m...
...The issue is no longer a penny-ante land deal in the Ozarks but the integrity of the federal bureaucracy, and above all the bureaucracy dealing with the most sensitive of functions: financial regulation and the administration of justice...
...Breslaw denies that she tried to get Lewis to change her conclusion, but Rep...
...Blaming sloppy bookkeeping, Clark repaid the state nearly $4,000, but vowed to stay on as candidate for governor...
...Westbrook says Hale told him: "Son, thegovernor of Arkansas wouldn't be involved in this if we were doing anything illegal...
...CI © 1994 The American Spectator All Rights Reserved REPRINTS AVAILABLE Copies of James Ring Adams's "The Obstructionists" are available for $5 each: ten for $35...
...Hubbell also took the stand and, according to the Gazette headline, denied "political plotting...
...Casey and her successor Mackay, a career lawyer in the main Justice fraud division, both refuse to answer questions about the case...
...Attorney Casey was brushing off the RTC charges, she was also pushing hard on Hale to resolve his case...
...30 The American Spectator April/May 1994 Solving the Case of the Missing Affidavit N ormally federal officers explain their investigations in an affidavit to the federal judge requesting their search warrant, and such an affidavit was filed in David Hale's case on July 20...
...Coleman tried some last-ditch negotiations before letting Hale speak to the press...
...Some of his apparent tails were off-duty Little Rock policemen he recognized from his municipal court...
...A deal in Iowa actually went through in late 1989, backed by $85 million in tax-exempt bonds issued by the Iowa state finance authority...
...This was also the time Jean Lewis in Kansas City started pestering the Justice Department about the status of the RTC's case...
...Set up in 1979 as the state's first small-claims court, it expanded quickly into a full-scale municipal court, and Hale's appointment by a local official as presiding judge was challenged as unconstitutional...
...The McDougals, of course, were Bill and Hillary Clinton's partners in the Whitewater land deal...
...After eight of these conversations, the Kansas City office decided to go ahead itself...
...The RTC staff handed over its renewed criminal referral in early October, and the agency formally delivered it to the Justice Department...
...The last two outfits were spin-offs from a large real estate development in Little Rock financed by McDougal's Madison Guaranty...
...I gave Porter advice," he said, "that if she was so concerned she should call the governor as well as others...
...26 The American Spectator April/May 1994 personal debt incurred by Clinton himself...
...Louis to force the trial court to make it public...
...but the effect was devastating...
...It singled out bank checks that might have been involved in Clinton's 1984 campaign finances, including a post-election fund-raiser held at Madison Guaranty to help retire a $50,000 2 The Madison investigation was temporarily disrupted in May 1992 by another scandal within the RTC...
...People listed as his dining partners denied having eaten with him...
...In mid-August, he called the White House...
...T he fact of the September 29 meeting casts a harsher light over the events of the next month, including those in Little Rock...
...Although Lewis was by then well out of the loop, Breslaw had journeyed to Kansas City to get her to say that Whitewater had not caused a loss at Madison Guaranty...
...This time other White House and Treasury officials were present, including those later subpoenaed by Independent Counsel Fiske...
...A lobbyist was later charged with violating state ethics law for making the offer...
...Hey you!," she E-mailed her immediate supervisors on November 10...
...Brown had a couple of drinks and then went into another room to call Clinton...
...With this last letter, Sen...
...Hale took the letter to Madison Financial in 1989 and demanded it buy the land...
...n the course of the trial, Clark's defense attorney Bill Bristow developed an argument of some current interest...
...The most curious aspect of this conversation, however, is that it took place just as Assistant Treasury Secretary Altman was meeting in the White House with Bernard Nussbaum...
...The president himself has denounced the judge's tale as "bull...
...Combined with Foster's death, this action left him truly spooked...
...Coleman, who has a genial good-ol'-boy manner and a bulbous Huey Long nose, assured Hale that cases of this kind usually took up to eighteen months, as investigators pored over the voluminous files...
...To start with, the meeting violated elementary standards of impartiality, since the RTC is presumably not in the habit of notifying people who are about to be named in criminal referrals...
...The highly unusual rush in his trial, says Hale, is an attempt to discredit him as a convicted felon, so that President Clinton can argue, as he did to reporters on March 7, "There is no credible evidence and no credible charge that I violated any criminal or civil federal law eight or nine years ago...
...The Escalating Crisis In recent weeks, two of the Clintons' inner circle were forced from their senior positions, and the president named a Washington fixture, Lloyd Cutler, as short-term White House counsel, a pretty good sign of disarray...
...Al D'Amato (R-N.Y...
...As far as I know, Paula Casey didn't participate in any decision-making:" In that case, one has to ask how Bill Clinton's former law student could dismiss the criminal referrals so soon after she received them, since there was no visible decision-making elsewhere in Justice either, except to pass the Madison file as quickly as possible to someone else...
...At the same time, McDougal was negotiating with Hale for a $300,000 loan for his wife Susan...
...There's also the question whether this investigation, conducted by FBI agent Steven Irons, was related to the criminal investigation by Jean Lewis of the Kansas City RTC, who also dealt with Agent Irons...
...The prospect alarmed the White House, the Washington Post subsequently reported, because it meant that decisions about Madison-related lawsuits would pass out of political control...
...It had been scheduled for late 1992, but the pace now accelerated...
...When Lewis made that point in a November 1 reply to Casey, she quickly found herself persona non grata...
...As Brown describes it, "Steve Clark's got her and he is blitzed, he is on Cloud Nine already and he's hugged up to her and actually up on a glass table dancing on the damn table, shirt off...
...attorneys around the country...
...E verything about the September 29 meeting should arouse the interest of the independent counsel, and apBut two weeks after the indictment, says Hale, Governor Tucker demonstrated a special relationship with the Clinton administration...
...the purpose, he later testified, was to save the family farm of office manager Caren Croom Ross...
...By the end of April 1992, investigators began to review the Madison Guaranty business records, jumbled in an old, poorly lit Little Rock warehouse down by the river.2 A follow-up review of the Madison case had already been assigned in 1991 to Jean Lewis of the Kansas City RTC office...
...He refused to do long-distance telephone interviews, and some who came to Little Rock to meet him also felt they were being watched...
...The new U.S...
...The referral described check-kiting and revolving overdrafts...
...Leach reports that he's reviewed a tape confirming Lewis's version...
...But it was mysteriously missing from the public files...
...The scandal is now calling to the bar the entire governmental ethic of the Clinton administration...
...Hale avers that Bill Clinton personally lobbied him to make this loan, which helped finance a Whitewater land deal and clean up the Madison Guaranty books...
...According to documents collected for court testimony by Roy Drew, a Little Rock stock analyst and former employee of Stephens Inc., the Rose firm put together a plan to sell off Beverly's nursing homes in four states, starting with Arkansas, in July 1989...
...In the meantime, Hale offers a plausible explanation for his legal troubles: he was the lender whom Bill Clinton asked for help in keeping Madison Guaranty afloat...
...Responding to congressional pressure, the Justice Department appointed Donald B. Mackay as special prosecutor, starting the chain of events that wound up with Robert At Rose, says one report, they worked together so closely they were called the Four Musketeers...
...attorney in Little Rock for some kind of response to the referrals...
...And indeed, she did write a letter to Coleman dated September 21, warning, "Your client faces potential criminal exposure on a number of other items...
...But he told Brown, "You go on up there, check it out, see what's going on, and call me back at the mansion and we'll make up some story to get out...
...This serious charge was relegated to the inside pages of the New York Times and Washington Post, pushed off page one by the White House press offensive, but Leach backed it up on March 24...
...attorney, Paula Casey, had made the long-awaited formal decision on the first set of criminal referrals: she would decline to take action...
...Perhaps the most damaging of Jean Lewis's memos is her account of a 45-minute meeting with April Breslaw, attorney with the Federal Deposit Insurance Corporation, on February 2, 1994...
...Jane Jankowski, 1 As TAS reported in February, Hale lost more than half a million dollars in loans to entities involved with Madison...
...Administration insiders had telegraphed Nussbaum's departure for weeks, complaining to favored journalists about his bad judgment...
...Both Hunt and New York Timesman William Safire, the two poles of insider commentary, warned on that same day that in politics the cover-up is worse than the crime...
...Coleman said yes, but Kennedy declined his request for a meeting in Washington...
...In early February, the state police confiscated his files, forcing him out of the race, and in July he was indicted on one count of felony theft by deception...
...He saw Leslie Nielsen and other entertainers, and on one couch Bill's cousin Marie Clinton and on another Elizabeth—with Steve Clark...
...He received a favorable settlement, but details are sealed...
...He is the author of The Big Fix: Inside the S&L Scandal (Wiley) and co-author (with Douglas Frantz) of A Full Service Bank: How BCCI Stole Billions Around the World (Pocket Books...
...The action was based, said SBA spokesman Michael Stamler, on the severity of the problems in Hale's company...
...He also warned of damage to "the reputation of innocent persons and entities identified . . ." This letter was irregular on its face, since only the judge can order documents sealed...
...Fiske, the special counsel, I refuse to answer...
...The next day Hale started giving long interviews to Jeff Gerth of the New York Times...
...The turmoil led to charges from several regional office heads that the Bush administration was trying to shut down civil suits against politically connected S&L directors...
...Letters went out from Kansas City to Little Rock on September 1, 1992, addressed to Steve Irons of the FBI White Collar Crimes unit and to Charles A. Banks, then the U.S...
...The 52-page document turned out to be a bundle of incremental evidence, rather than a smoking gun...
...It would help in answering these questions to know just what prompted the July 21 raid on David Hale's office...
...This is a position that experienced public prosecutors find puzzling...
...On September 29, 1993, Jean Hanson, general counsel to the Treasury Department, met one-on-one with White House Counsel Nussbaum to tell him that the new referrals would mention the Clintons...
...Afterward, Tucker told reporters they had talked about health-care reform, highway projects, and the North American Free Trade Agreement...
...The SBA criminal referral was highly unusual action for the formerly somnolent agency, but at the time Bowles referred to it obliquely as an example of his more energetic administration...
...Stephens Inc., the largest privately owned brokerage house outside of Wall Street, was the center of power for brothers Witt and Jackson Stephens, kingmakers in Arkansas politics long before Bill Clinton came on the scene...
...Clinton, however, had to get back to the governor's mansion where Hillary was expecting him...
...tartly observed, Altman had revised his Senate testimony four times...
...Her team spent another three months on the case, and came up with nine more criminal referrals...
...Rumors of these diaphanous flutterings of the angel's wings (as Robert Penn Warren would have called them) began to reach Kansas City in very strange ways...
...3 Main Justice sent it back to Little Rock...
...The charges involve the submission of allegedly false financial statements to the Small Business Administration...
...After they "had figured out that none of us were there," she said, she got a call from Bill Clinton...
...And there, in the last stages of the 1992 presidential campaign, it completely dropped from sight...
...A pillar of his church and the Little Rock legal community, which he served for four terms as judge of the state's largest municipal court, he still has a reputation among old friends for personal honesty...
...Now a White House official, Lindsey has been delegated to field reporters' questions on Whitewater...
...Although the congressional spotlight fell on White House contacts with the RTC, the cover-up issue isn't just a question of bank regulation...
...Although Clinton shrugged off these documents as the work of Republican appointees, all of the RTC investigators are career civil servants or temporary help...
...The new U.S...
...spokeswoman for the Kansas City RTC, says emphatically that none of the staff in her office are political appointees...
...Calling it "Arkansas's decade" in D.C., Tucker added, "What's even more shocking than seeing former Governor Clinton in there as president is to walk through the halls and see all of these people that I know from Arkansas scattered around the White House...
...The deals involved getting state bond authorities to sell bonds to finance sale of the homes to non-profit corporations...
...On Monday, November 8, said Hale, Casey's office kept pressing for his decision...
...But two weeks after the indictment, says Hale, Governor Tucker demonstrated a special relationship with the Clinton administration...
...But the sequence of events had started fatefully the day before...
...In fact, Hale's lawyer Randy Coleman recounts that when he told former special prosecutor Donald Mackay that he would like to see this affidavit, Mackay replied, "So would I." Even after the document turned up, Mackay withheld it from Hale and told the court clerk to keep it under seal...
...ut Hale also wound up in court in a number of civil B suits stemming from his business deals, especially after the downfall of James B. McDougal, Bill Clinton's real estate partner and owner of the troubled Madison Guaranty Savings and Loan...
...Bentsen replied, "On advice of Mr...
...ADFA narrowly voted down the deal in October, while it sought Clark's opinion...
...When the bond proposal came before the Arkansas Development Finance Authority, a bond-issuing agency created by Governor Clinton, the main threat to According to Lewis's notes, Breslaw said: "The people at the top" wanted an answer "that would get them off the hook...
...Leach justly argues, they go to the heart of our con-stitutional system of checks and balances...
...But Hale kept talking and refused to plead guilty...
...She says, 'Oh yeah...
...Although Post reporters Susan Schmidt and Michael Isikoff had access, at the very least, to sources who had seen this document, congressional staffers say the RTC has so far refused to provide it to investigators from either the House or the Senate Banking Committee...
...He says, `What's up?' I said, hey, you ain't gonna believe this...
...He claims he was to be the token public official to take the rap and divert attention from all the' others...
...The best forum to provide an answer and restore public confidence will be a full-scale congressional hearing...
...The Wall Street Journal's Albert Hunt, a chronic late-corner to scandals involving Democrats, had just two days earlier put the potential damage with great delicacy...
...He called a press conference to say he had been offered a $100,000 campaign contribution if he would let the deal go through...
...A 12-issue subscription to The American Spectator is available for $35...
...Senator Dale Bumpers who had worked in Bill Clinton's campaigns and studied law under him when he taught at the University of Arkansas Law School in Fayetteville...
...Hale said, "Yes, this goes from the State House to the White House," and told him about his loans to Tucker and the McDougals...
...hatever the source of the paralysis in W Washington, Kansas City reacted with energy when it learned of the dropped potato...
...When the letter arrived, addressed to Lewis, it contained the strange statement, "I concur with the opinion of the Department attorneys that there is insufficient information in the referral to sustain many of the allegations made by the investigators or to warrant the initiation of a criminal investigation...
...She and her staff had recused themselves," it read, "because of their familiarity with some of the parties...
...Hale found it bad enough when FBI agents began carting boxes of records from his office...
...If this request at Justice was coordinated with the White House meeting with the Treasury officials, it puts an even more sinister cast on a contact that, up to Rep...
...This incident was still fresh in everyone's mind a month later in late January when the Arkansas Gazette started investigating Clark's expense account...
...the questions come up in its aftermath, when Hale tried to buy immunity by offering incriminating information on Arkansas's political elite, and ran into an icy federal shoulder...
...Late that day, Paula Casey calls up and says, okay, she's recused...
...It was a clear case of criminal fraud," said Stamler...
...His political career in ruins, he left the state...
...A second layer of charges involves the Justice Department...
...Just hours after the warrant was issued, and after receiving calls from the Rose Law Firm in Little Rock and from the lawyer who tried to reconstruct the Clintons' Whitewater deal, Vincent Foster died from a gunshot through his mouth...
...In June, Lewis learned that the referral had turned up in the fraud section of the criminal division, where the unidentified person assigned to it "didn't want to deal with it...
...Clark, who was considered Bill Clinton's most formidable opponent in the 1990 Democratic primary, blamed the "bribe" on the "Beverly-Stephens effort...
...His speech was polysyllabic, occasionally turgid, and delivered in an Iowa monotone...
...Fiske as independent counsel...
...Paving the road would open the parcel to development and greatly increase its value...
...The witness was a public relations professional and Clinton campaign worker named Marilynn Porter, who was put on the stand by the prosecuting attorney...
...FBI agent Steven Irons indicated that his leads came from Small Business Administration audits of Hale'.s lending company, the last one dated November 30, 1992...
...That f---ing Steve Clark's down here and he's got her nailed...
...Meanwhile, troubles won't be ending soon for one of the departed, James Ring Adams is The American Spectator's special investigator on Whitewater...
...she was listed in the twenty-sixth paragraph of the story as participant in a lunch with the attorney general that she knew she hadn't attended...
...The issues transcend any criminal investigation now in the hands of the independent counsel...
...His word explodes the myth, promoted by some unchivalrous factions in the White House, that Whitewater is Hillary's problem, not Bill's...
...All that day, they'd keep calling, keep calling," he said...
...Finally, Coleman called her back," said Hale, "and she acted like she didn't know anything about it...
...The state highway department notified Judge Hale that a contract on the road had been awarded...
...As soon as he started talking to the press, he began to notice what 28 The American Spectator April / May 1994 looked like a regular surveillance...
...In reporting this issue's cover story, Daniel Wattenberg was told by Arkansas state trooper and then-Clinton bodyguard L.D...
...attorney's office, Banks immediately sent the referral to main Justice in Washington, because it was so "politically hot...
...This was several months after the Kansas City RTC sent him its letter of criminal referral on Madison Guaranty, but an SBA spokesman told the Spectator that the SBA had made an independent criminal referral on Hale in May 1993, shortly after its new administrator, Erskine Bowles, took office...
...It never came...
...At the same time, Webb Hubbell announced that he and his staff would also avoid contact with the case...
...Brown says he urged Clinton to accept the invitation...
...In the late 1980s, Coleman brought a multi-million dollar securities fraud law suit against the powerful Worthen Bank, financier of Clinton's presidential campaign, and the Rose Law Firm, Worthen's legal ally...
...In sharp, contrast to its present reluctance to explore the Madison case, the Senate Banking Committee promptly scheduled hearings in August 1992 that gave a full airing to these charges...
...I can certainly understand the reluctance of anyone locally to engage in these matters," he wrote, "political realities being what they are...
...Clinton in his turn told a reporter, "There is no way any of us had anything to do with it...
...Dismayed by this reaction, Coleman took a gamble that in retrospect may have been a mistake...
...On October 6, Tucker visited Clinton in the White House, his first time there since the election, for a 20-minute private meeting...
...On March 23, the court of appeals agreed that the document should be made public but told the Spectator to apply first to the district court...
...But any hopes he was a sufficient scapegoat were quickly dashed when Independent Counsel Robert Fiske subpoenaed nine other White House and Treasury aides, including Altman himself...
...During Clinton's governorship, his political team was accused of using the criminal courts to discredit opponents...
...James Leach, ranking minority member of the House Banking Committee, at the end of a long, thoughtful letter to Independent Counsel Fiske asking for his cooperation with congressional hearings...
...As Rep...
...An unmarked van followed him home one day and parked for a long time near his house...
...attorney was due to start work around Labor Day, replacing the Little Rock victim of Janet Reno's purge...
...Is someone else involved in this thing...
...On September 15 he wrote a letter to Casey, asking her to step aside and bring in an independent prosecutorial staff...
...much of the money appears to have gone toward efforts to keep the thrift going...
...In one of the unsung acts of heroism that dot the history of the savings and loan debacle, Lewis refused to give in...
...But by this time federal regulators were closing down the parent S&L, and Hale was stuck with a default on his original mortgage...
...Box 549, Arlington, Virginia 22216-0549...
...parently has, since Jean Hanson was one of the Treasury officials to receive a subpoena...
...He said, `Goddamn that sonofabitch...
...twenty-five for $75...
...Now it stands accused of trying to ram through a conviction of the one witness who links Bill Clinton directly to the Madison Guaranty financial team...
...The records of one troubled deal, ironically, bears out Hale's claim to have had a special relationship with then-Governor Clinton...
...They ask, for instance, why no one made an issue of Governor Clinton's use of state vehicles and phones for his own personal affairs...
...Even Altman's four amended replies to the Senate Banking Committee fail to explain April Breslaw's pressure on Jean Lewis, behavior reminiscent of the worst scandals of the politicized financial regulation of the 1980s...
...His October trial prompted lavish local coverage, with three or four articles a day and frontThe American Spectator April/ May 1994 29 page pictures of the parade of handsome young women he was accused of entertaining with state money.4 Clark was convicted and fined $10,000...
...But I got the strangest feeling over there...
...These charges must set the agenda for the next round of Whitewater investigations...
...On March 16, Federal Judge Stephen M. Reasoner ordered the affidavit released to the defendants and their attorneys, but no one else...
...This consolidation also seriously disrupted the Professional Liability Section of the RTC Legal Division, which was in charge of filing damage suits against lawyers, accounting firms, directors, and other principals of failed S&Ls...
...It may well provide grist for the second criminal process to issue from the counsel's office...
...The attorney general called the deal "the product of the arrogance of wealth and the arrogance of power," making clear the latter phrase referred to Governor Clinton...
...attorney or Justice had erred in not telling the RTC investigators months earlier what had happened to their case...
...The RTC had written off the Madison Guaranty case after the 1990 acquittal of James McDougal and two of Susan McDougal's brothers on bank fraud charges...
...If Hanson and Nussbaum discussed ways to forestall Justice Department action, they might be vulnerable to charges of obstructing justice, the violation that devastated the Nixon White House...
...See page 51 for a complete listing of reprints available...
...A main target of the sting, just to judge by the frequency with The American Spectator April/May 1994 25 which he came up in the documents of Madison Guaranty and Hale's lending company, would have been Governor Jim Guy Tucker...
...According to Hale and Coleman, Casey seemed receptive...
...Henneman worked in the central Executive Office that provides support for the U.S...
...The American Spectator April /May 1994 23 but received his salary and a pay raise...
...At least one of the loans, says Hale, was made at the direct request of Bill Clinton...
...In a fit of generosity that a business associate told him was "crazy," Hale put his personal guaranty behind the mortgage...
...Coleman was startled...
Vol. 27 • April 1994 • No. 45
