Where Was Hillary?
Brock, David
David Brock Where Was Hillary? And where's the desk she told the IRS she bought for $1,116? / n all of the shady Arkansas financial dealing and Washington strong-arming that have been lumped...
...As is well known, Hillary invested $1,000 in cash in a margin account in October 1978 with the brokerage Ray E. Friedman & Co...
...Indeed, in 1980, the last year Hillary was LSC chairman, the Clintons failed to declare $6,498 Hillary made in capital gains on the Stephens trades, recording only a $449 commodity loss for the year...
...Since Hillary's firm was suing her former accountants, the ethics issue was whether Hillary should have told the governSuccess in Life and Business Is Only Limited by Imagination and a Desire to Accomplish...
...Mike Wallace, a Mississippi lawyer who served as board chairman in the mid-1980s, asked incredulously...
...These trades are especially interesting because they represent Hillary's second most successful trading day as a cattle speculator, resulting in a net profit of $25,280 when these fourteen contracts were sold a month later...
...In other words, the judgment of Hillary's law firm might have been colored by the fact of Frost & Co.'s political contributions to her husband and the prior fiduciary relationship between Frost & Co...
...I'm Hillary Rodham," she began, "and I'm chair—whatever—person, thing, or whatever") and lasted all day (adjourning at 5:15 p.m...
...In 1990, the FDIC's legal division adopted policies governing conflicts of interests for the lawyers it retains...
...By July 1979, when the Refco account was closed, she had made trading profits of approximately $99,537...
...For example, in 1979, when she was board chairman, Hillary reported $8,823 in gross income from the LSC...
...Why so long...
...n all of the shady Arkansas financial dealing and Washington strong-arming that have been lumped under the rubric of Whitewater, no single fact, taken by itself, has proved of great legal or ethical or political import...
...The FDIC found that no written record existed to show what the Rose firm disclosed to the government before taking the 1989 case...
...With Webb Hubbell as lead attorney, Rose in 1991 settled the original $10 million suit with Frost & Co...
...audit—which had been written by an accountant who had two outstanding loans from Madison...
...The 1989 Frost case, however, raises a different type of conflict, because a Rose lawyer had ties to a party (Frost) whose interests were adverse to Rose's client's...
...According to the transcript of the meeting, which is a public record, Hillary chaired the "1979 Board Retreat" at the Airlie House in Airlie, Virginia, on January 26 and 27...
...That meeting convened at 9:00 a.m...
...Thus, Hillary may have been able to excuse herself for at most a few moments during two short recesses—one in the morning and one in the afternoon—to give the okay for the transactions, as the non-discretionary Refco account required her to do, but she would not have had the time to focus her attention on market fluctuations that day...
...Where-upon, at 12:10 p.m...
...Yet on this very same day, Hillary was busy conducting an LSC board meeting, which was open to the public and covered by a court reporter, as is the board's usual practice...
...In 1988, Madison sued its accountants for breach of contract, claiming that Frost & Co.'s audits misrepresented the failing bank's financial condition...
...In and of itself, the non-disclosure may be judged a minor matter...
...but it is part of a now-established pattern, the fourth such non-disclosure in Rose's legal work for the federal government to date.1 Earlier this year, the FDIC conducted an investigation into whether Hillary's prior representation of Madison before the Arkansas Securities Commission presented a conflict in the 1989 case...
...Others who benefited from Blair's advice conceded to the New York Times on July 5 that they left the trades The American Spectator September 1994 21 entirely to him, and allegations that Tyson received favorable treatment during both Clinton's governorship and his presidency have been the subject of numerous media reports...
...But scandals as complex as Whitewater unfold slowly, and it is the accumulation of facts that will eventually yield, like brush strokes on a canvas, a complete picture of the First Couple...
...Indeed, in August 1990, when Rose was seeking to settle the suit for the government, Frost & Co...
...Some of the lawyers involved in the review had even overruled contemporaneous reports of Rose Firm conflicts from FDIC field personnel...
...gave $1,000 to Clinton's gubernatorial re-election campaign...
...As the Clintons' tax preparers in the late 1970s, the small firm may have had access to damaging information about both the Clintons' Whitewater investment and Hillary's cattle-futures speculation...
...Might Rose's lawyers have had an incentive, then, to negotiate a settlement favorable to Frost & Co...
...Ken Boehm of the National Legal and Policy Center—the ethics watchdog group that has sued Hillary's health-care task force for operating in secret—has asked the FDIC inspector general to determine whether Rose's representation was affected by the undisclosed Hillary-Frost connection...
...Tax records from those days, reluctantly released by a White House under media pressure, show that Hillary also took dubious deductions to defray the tax liability on her Legal Services Corporation board of directors income...
...In fact, in the case of at least one major trade, her various alibis and fallback positions appear untrue because they are logistically impossible...
...The provision relevant to the Frost case states: A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless: (1) the lawyer reasonably believes the representation will not be adversely affected...
...The Rose Law Firm was chosen to represent the U.S...
...T he FDIC review was fishy from the start, since the agency was investigating itself...
...its managing partner Steven Humphries said at the time that his firm's attorneys had "no problem" with Rose's involvement in the suit...
...Refco...
...may have found links between the bank and the Whitewater development—such as insured deposits from Madison diverted to Whitewater...
...At the time of the earlier case, she was on a $2,000-a-month retainer from the bank...
...1 n her press conference in late April, her final statement to date on the controversy, Hillary tried hard to further the impression that she made the calls on when to buy and sell the futures contracts...
...Former board member Basile Uddo, who served during the Bush administration, called the deductions "way out of line and unheard of...
...The upshot is that Hillary's business and political links to Frost & Co...
...government in the suit against Frost & Co...
...and (2) the client consents after consultation...
...24 The American Spectator September 1994...
...E ven if the representation was not compromised, the Hillary-Frost relationship is the sort of link most clients would want to know about...
...According to records released by the White House in April of this year, on January 26, 1979, Hillary purchased eleven live cattle contracts and made a second purchase of three live cattle contracts...
...22 The American Spectator September 1994 was any furniture...
...Matt Labash helped in the research for this article...
...and both Clintons...
...Blair initially downplayed his role, saying, "I passed on my advice...
...Hillary explained...
...A probe by the agency's inspector general is continuing...
...The plan was approved, but the stock deal never went through because the capital was never raised...
...That's a new one on me...
...A conflict of interest is generally regarded as existing whenever the law firm or lawyer in question either has or represents an interest adverse to the client of a nature sufficient to affect counsel's legal judgment and ability to represent the client zealously...
...After all, in 1979, Hillary was the wife of the governor, and the governor's mansion in Little Rock presumably comes fully furnished...
...CITATION CORPORATION 2 Office Park Circle Suite 204 Birmingham, AL 35223 (205) 871-5731 FAX (205) 870-8211 The American Spectator September 1994 23 ment about her business ties to Frost & Co...
...proceeded—were partners in Capitol Avenue Development Co., which owned the $68 million TCBY Tower in downtown Little Rock...
...I canvassed four former members of the LSC board, none of whom claimed deductions on their taxes for furniture or supplies or their automobile, and each of whom laughed out loud when read the list of Chairman Rodham's deductions...
...Despite Hubbell's interest and involvement in the Ward proceedings, which were ongoing during the Madison case against Frost, the FDIC found no conflict because Hubbell was not Ward's attorney...
...Arkansas adopted the American Bar Association's "Model Rules of Professional Conduct" for attorneys in 1985...
...But both he and Hillary insisted that she made her own decisions (sometimes consulting with Blair) and controlled the trades...
...She was also working at the Rose firm, which surely didn't require its lawyers to provide their own desks...
...were bankrupted by the litigation, TCBY would suffer...
...Blair now conceded that "I turned the orders in...
...nterestingly, in the LSC years, the Clintons' tax returns were prepared by the Little Rock accounting firm of Frost & Co...
...No, I don't want to wait until 2:00...
...The most recent stipple is provided by the First Lady specifically, by her claim that she made her own trading decisions during a nine-month foray into the commodity futures market in the late 1970s...
...Both positions required Hillary's participation in board meetings...
...The review so angered Republican senators (Lauch Faircloth of North Carolina called it "an eight-page insanity plea") that the agency's acting chairman agreed to re-open it...
...When this extraordinary profit was first reported by the New York Times this past spring, the White House said Hillary had "invested...
...Though Hillary herself was not involved in the 1989 case, for purposes of conflict-of-interest rules, one partner's work is generally attributed to all of the partners in the firm...
...government in a suit against Lasater, who had been sued by a failed Illinois S&L for money lost in alleged unauthorized trades by the Lasater firm...
...The trades—thirty-two in all—were then called in to Refco by Blair...
...She may have taken it sometimes, and she may not have taken it sometimes...
...But was the furniture a legitimate deduction (if in fact there The Frost case is part of a nowestablished pattern: the fourth such non-disclosure in Rose's legal work for the federal government to date...
...The White House then revealed that Tyson Foods lawyer David Brock is the author of The Real Anita Hill (Free Press), now in paperback, and an investigative writer for TAS...
...t would later be revealed that during the period of her tenure at the LSC, Hillary was aggressively avoiding taxes—the now-famous deductions for Bill's used underwear being only the tip of the iceberg...
...As the auditors for Madison Guaranty, Frost & Co...
...0 1 The only one not discussed here concerns Webb Hubbell, whose father-in-law Seth Ward, an officer of Madison Financial Corp., defaulted on substantial loans to Madison...
...Within a week, the White House acknowledged that "most of the commodity orders . . . were placed by James B. Blair...
...On the 26th, the day of the two trades, the meeting run by Hillary started at 9:45 a.m...
...She clearly hoped to dispel the suspicion that Blair (or someone else) had essentially conducted the trades in her name, raising the issue of whether Blair was buying political influence for Tyson Foods through the arrangement...
...So [Blair] would talk to me, and he'd say: 'Here's what I think is going on...
...This was a discretionary account, meaning that trades could be ordered by a broker without her personally giving the go-ahead for every trade...
...could have presented a conflict for the Rose lawyers in the Madison case...
...a sofa at $750...
...after Rose partner Vince Foster wrote a letter soliciting the FDIC work on behalf of Rose...
...and TCBY Yogurt—on whose board Hillary served from May 1989 to May 1992, during the period that the case against Frost & Co...
...against this, she took deductions of $555 for car expenses and $644 for depreciation on furnishings...
...This was immediately contradicted by her broker, Robert L. "Red" Bone, who said, "I can't recall ever dealing with the Clintons...
...Purchases of equipment...
...the government should have known about it...
...The second trading day, May 1, 1980, is somewhat less interesting because it was in Hillary's second futures account, at Stephens Inc...
...In 1984, Frost & Co...
...for only $1 million, which was less than the insurance coverage held by Frost & Co...
...In 1989, the bank was closed and the Federal Deposit Insurance Corporation was appointed to manage the conservatorship, which included pursuing legal claims by the bank...
...If that was the case, the U.S...
...The Clintons' little-noticed ties to Frost & Co...
...shelves at $120...
...government in a case against Clinton cocaine crony Dan Lasater—that is, questions that go directly to Hillary's ethics as a lawyer...
...in her own accounts...
...If Frost & Co...
...On two days during which Hillary traded in futures in 1979 and 1980, she, was presiding over day-long meetings of the Legal Services Corporation board and thus could not plausibly have tracked futures markets on her own throughout the day to take advantage of price fluctuations, as someone who was directing her own trades would have done...
...Jack Frost gave both money and gifts of air transportation to both Clintons over the years, state records show...
...o'clock, the meeting was recessed, to reconvene at 1:00 p.m., this same day, Friday, January 26, 1979...
...There was also an undisclosed political relationship between Bill Clinton and Frost & Co., a contributor to Clinton campaigns...
...raise some of the same troubling questions as Hillary's representations of Madison Guaranty and of the U.S...
...But the agency concluded that, if Rose had known, it would not have been a conflict in any event, reasoning that in both the 1985 and 1989 cases Rose was representing the S&L's interests...
...Ward sued Madison for unpaid commissions, and the case was settled on appeal...
...and adjourned at 6:00 p.m...
...The FDIC said its attorneys had no recollection of the Rose firm mentioning that its lawyers, including Hillary Clinton, had represented Madison before state regulators in 1985, or that Hillary was connected to James McDougal...
...Rose settled the $3.3 million case for just $200,000...
...What do you think...
...The policy says: A conflict of interest may arise because the law firm or a lawyer associated with the firm has a position or an interest of its or his or her own that places the law firm in a posture adverse to the FDIC...
...According to the records released by the White House, Hillary sold one SEP '80 T BOND that day—a short sale, because she then bought the SEP '80 T BOND on May 13 for a profit of $533.25...
...Hillary and Vince Foster represented the U.S...
...G. "Jack" Frost, the company's namesake, left the firm in 1980, and he says he retained no financial interest in the firm other than yearly income from a non-compete agreement...
...James B. Blair had been "consulted on many of the commodities trades and was viewed as an important financial adviser...
...at the time...
...Let's be back...
...The official transcript shows Hillary did not seem to desire any extra time to consult with her cattle-futures advisers in Arkansas or check the market herself: CHAIRMAN RODHAM: Get something to eat in the dining room and go to the Garden Room...
...But Hillary's chairing of yet another all-day LSC board meeting on May 1 this time at the Rivermont Hotel in Memphis, Tennessee—suggests again that she would not have had the time to monitor the markets and decide for herself whether and how to trade...
...and books at $57—deductions someone in business for herself might take to furnish an office...
...Asked flatly if she had been "riding on [Blair's] coattails," Hillary replied, "No, I wasn't . . ." However forthright Hillary's denials, there is now evidence that someone other than herself directed her trades...
...with a short break for lunch...
...conducted an audit of Madison Guaranty Savings & Loan, giving the bank a clean bill of health...
...Rather than report it as wages, she reported it as business income on Schedule C (listing her business as "consulting"), which made it easier to write off office furnishings, supplies, and books...
...Frost appeared happy with the settlement...
...For one thing, the firm had prepared her taxes at a time when she was doing everything possible to avoid paying her fair share...
...taxpayer was not properly represented by Rose...
...And as LSC board chairman, she had use of furnished offices and conference rooms in Washington...
...This past April, when the problem was discovered, the Clintons paid $14,615 in back taxes and interest...
...The size of this day's trades is telling: Since she made more than $25,000 on the trades, a market swing in the opposite direction could have left her $25,000 poorer, a significant chunk of money to wager on the fly when one considers that her husband's salary was only $35,000...
...She served as chairman from 1978 to late 1980, and remained on the LSC board until 1982...
...n 1977, President Carter appointed Hillary to the Legal Services Corporation, which oversees the government's legal assistance programs for the poor...
...In 1985, when Hillary and other Rose lawyersappeared before state regulators appointed by her husband to ask that Madison be allowed to raise needed capital by issuing preferred stock, she cited the Frost & Co...
...Don't expect much: The FDIC also found no problem in a 1987 case involving Dan Lasater, who gave the president's brother Roger $8,000 to pay off drug debts...
...According to the minutes, there were supplementary activities for the LSC board scheduled during lunch...
...She consulted with Blair, she said, but she did "not make every trade he recommended" and "used some other advice as well," including keeping abreast of the market herself by reading the Wall Street Journal and consulting other unnamed advisers...
...None of these explanations squares with Hillary's schedule at the time...
...She placed the cost of a desk at $1,116...
...For another, Frost & Co...
...The Rose firm was paid $400,000 in fees, a whopping sum for a non-litigated settlement...
...We are going to be back here at 1:00-2:00...
Vol. 27 • September 1994 • No. 9
