Blood Spin

...Complaints about press bias often fail to recognize that coverage is shaped by editors who approve expenses or spike copy, not by reporters...

...The source for Gerth's March 1992 stories on Whitewater turned out to be Jim McDougal himself, the mastermind of the scheme and Bill Clinton's political mentor...

...He gives a clear account of the scheme, a series of short sales into a rising market orchestrated by the Chicago trading firm Refco and its head Thomas Dittmer...

...According to Stewart, her mentor Blair continued to make money until October, when Ditliner suddenly tricked his clients into losing trades that made millions for himself...

...Another 8o pages elapse before Stewart shows the full extent of the alleged criminality in McDougal's empire, when he reports on the criminal referrals that eventually emerged from the Resolution Trust Corporation, the federal agency charged with cleaning up the S&L debacle...

...For starters, take Stewart's treatment of Hillary's cattle futures killing...

...Presenting his work as the "mainstream" answer to the right-wing exploitation of Whitewater and other Clinton scandals, Stewart inadvertently but thoroughly damns his liberal establishment colleagues...

...But Stewart's timeline goes strange in describing the endgame...

...The spin doctors in the White House are finally willing to make these mea culpas if they divert attention from the graver questions about the Clintons' abuse of power since their move to Washington...

...Stewart alludes to this Arkansas state court case, but appears not to have read it...

...In his prissiest manner, Stewart gives an answer in his "Notes on Sources...

...Look it up yourself (pages 136 to 138...

...And a willful misrepresentation on a loan application could violate federal law...

...The local bank that held it, 1st Ozark National Bank of Flippin, agreed to roll over the mortgage into a one-year loan, but it pressed the Clintons for a personal financial statement...

...by James Ring Adams 29 gating their enemies...

...Hillary wanted him to show how a conspiracy of fringe publications and "well-heeled right-wing think tanks" forced the "mainstream media" to waste resources on a non-story...

...Stewart was bound to feel compromised at some point, although it took a surprisingly long time...

...She told him to put down what was bothering him, and the exercise seemed to brighten his mood...

...It is well known to Independent Counsel Kenneth Starr, and many of the Whitener and Associates business records are now publicly available...

...There are many of these...

...He admits that as page one editor in 1992 he "had nominally overseen" front page political stories, but in good Whitewater style, he points a finger elsewhere: the campaign coverage, he maintains, was directed by Washington bureau chief Al Hunt...

...He consistently gives the name of David Hale's lending company in three words, although Hale's checks and letterhead always hyphenated it as "Capital-Management Services...

...A hard-working road-builder who married at age 15, Whitener made the mistake of going into a real-estate partnership with McDougal, a home-town boy from Bradford, and letting Jim and Susan handle the books...

...He downplays the scathing 1986 federal examination that forced the McDougals out of Madison Guaranty...

...Hillary left the market in July1979, he says, after a one-day killing of $40,000, her largest...

...These sources so obviously slant Stewart's narrative that he could have titled his main sections, "This Is Stuff I Got From Susan McDougal" and "This Came From Bernie Nussbaum...

...Could there be a connection between this meeting and the abrupt removal of Lewis from the Madison case days later...

...Dan Lasater, Clinton's bond-and drug-dealing friend, isn't even in the index...

...Stewart honors Hillary's agenda with a number of gratuitous slurs at what we might call the illegitimate press, such as the Wall Street Journal editorial page (which "veteran Washington Democrats . . . had long grown accustomed to brushing .. . aside") and of course "the right-wing, easily discredited" American Spectator...

...Roger Clinton is mentioned once...

...But the meetings with Bill never came off as both sides realized the depth of their dilemma...

...It comes from a complaint about Washington in Vincent Foster's alleged "suicide note": "Here ruining people is considered sport...

...It is not the least of the many misleading statements in this valuable but annoyingly flawed book...

...So why doesn't Stewart provide even the barest context...

...Although Stewart struck out on his own, he never quite shook off his compromised beginning...

...Stewart found that many of the breaks in the story came from old-fashioned legwork by reputable mainstream reporters such as Jeff Gerth of the New York Times, Bill Rempel and Douglas Frantz of the Los Angeles Times, and Susan Schmidt and Michael Isikoff of the Washington Post...

...The McDougals, Nussbaum, and others often sound as if they went out on a limb to protect the first couple, without receiving their due reward...

...The Clintons on their side saw soon enough the dangers of giving free access to an investigator anxious to prove his independence...

...Stewart goes easier on his (and my) former employer, the Wall Street Journal (or at least its news side), yet its performance was no better...

...Possibly, but it doesn't emerge from the disjointed chronology of Stewart's book...

...Blair did indeed sue Refco and Dittmer, but his complaint says that his losses started in June...

...A fastidious, even prissy, reporter, he had the skills to follow a paper trail, and too much integrity not to...

...She was driven, Stewart says, by a nesting instinct, trying to lay up cash for the child she wanted to have...

...This is the first time in my memory that a reporter has been squeamish about citing allegations that have been so thoroughly described, not only in the press but in legal documents...

...Stewart gives ample space to McDougal's self-delusions, his returning to his hometown "a conquering hero, his pockets bulging with cash ...liberating his fellow citizens from the stodgy stranglehold of the entrenched bankers...

...Jim asked Judge Hale about making a loan to Susan from a Small Business Administration backed lending company the judge operated on the and a week later gave Susan a check for $300,000...

...Far from coming out of the blue, the $300,000 check to Susan followed a series of loans that Hale made to political figures such as Governor Clinton's first chief of staff...

...Stewart does contribute significant original reporting...

...And indeed he did have a one-and-a-half-hour talk with Hillary in the Map Room...

...Stewart, in fact, uncovered another potential federal felony for the growing bill of particulars, a misleading financial statement that the Clintons used to prevent a foreclosure on the Whitewater mortgage after the financial and mental collapse of their partners...

...She told him that the first couple was looking for a reputable, nonpartisan journalist who would clear their name by telling their side of the story and investi'Stewart reports that the jottings on the torn-up sheet of legal pad found posthumously in Foster's briefcase had actually been written about ten days before his death at the urging of his wife Lisa...

...As the Oklahoma City bombing also demonstrated, the diminished souls in Clinton's entourage have a habit of exploiting heart-rending tragedy to score points on their critics...

...Stewart ducks the entire question of White House interference with the criminal investigation of Madison Guaranty...

...Instead, we hear Bernie Nussbaum claiming over and over that he did nothing unethical or illegal...

...Only one county in Arkansas is that size, Pulaski County, home of Little Rock and North Little Rock...

...In many respects this is the single most important transaction in the Whitewater case...

...An indictment won't be a statement of fact until it produces a conviction,but in the meantime it is a public document describing a reconstruction of events that has passed muster before a grand jury...

...For all of Stewart's interviewing, however, some names are conspicuously absent...

...But they happen to be the heart of the scandal we call Whitewater...

...Stewart ducks the entire question of White House interference with the criminal investigation of Madison Guaranty...

...By any standard there is ample source material to justify using Hale's context in the main narrative, when it would explain to the reader what was going on...

...Under the circumstances, I treated his assertions as allegations...

...Adding "blood" for the heightened drama, Stewart seems to buy into the White House view that the Whitewater scandal was whipped up by a right-wing cabal to destroy the Clintons' progressive promise...

...When Madison Guaranty went under, Whitener lost his house...

...He ignores the real effect McDougal had on the lives of his boyhood acquaintances...

...0 JAMES RING ADAMS is The American Spectator's Whitewater correspondent...

...But his greatest revelations come in spite of himself, as he struggles to reconcile the facts with his sympathies for Bill and Hillary Clinton...

...When a law suit blocked the bill as too much of a special interest deal, Clinton in 1988 called a special session of the legislature to pass state-wide county branch banking...

...Whitewater exploded as a story in late 1993 because senior editors swept it under the rug in the 1992 campaign, when the American public needed to hear about it...

...The Clintons finally produced a statement giving White-water a grossly inflated value...

...Patsy Thomasson, Lasater's right-hand and now deputy director of personnel in the White House, makes only a brief, innocuous appearance...

...Cynics may note how closely Stewart's argument tracks with the White House dismissal of Hale...

...He reports that the Los Angeles Times main office kept Washington Bureau Chief Jack Nelson in the dark about Frantz and Rempel's work on Troopergate, fearing that he'd leak it to his White House buddies...

...But Stewart's fellow editors at the "mainstream media" receive the most devastating treatment, emerging as cowardly, incompetent, and very quick to kill stories they feared might offend the White House...

...Stewart concludes that the Clintons act as if they have a lot to hide...

...As readers of this magazine know well, this loan is the same one that Hale says he was pressured to make by Governor Clinton himself in a meeting back in February 1986...

...If the Clintons went to this length to avoid filing a financial statement in 1988, they were showing a keen awareness that the 1987 statement was phony...

...This indeed was his starting point...

...The McDougals ran his account as part of their check-kiting scheme, leaving it thousands of dollars overdrawn for up to eighteen months and then giving Freddy short-term notes to sign to cover the deficit...

...But he seems ignorant of the House Small Business Committee study of this collusion by Iowa state professor John Helmuth...

...Stewart has no excuse for an even more glaring omission...

...He quotes from a critical, but relatively mild 1984 federal examination of Madison Guaranty and gives excessive weight to Susan's rationalizations...

...For all of Jim McDougal's enthusiasm and Susan's naïveté, the RTC found that they were running a giant check-kiting fraud, hiding their multi-million losses by switching worthless checks from one account to another...

...Some of the Clintons' erstwhile friends gave him detailed interviews, earning the whitewash intended for the first couple...

...We're told that Hillary's trades were directed by her friend Jim Blair, lawyer for Tyson Foods and client of Refco's Springdale, Arkansas, broker Robert L. "Red" Bone...

...This is hardly the right-wing cabal of the first lady's imagination...

...Surprisingly, the book has no footnotes at all to identify source documents, making it very hard to evaluate the many reconstructed dialogues...

...31 initial account of Susan McDougal's $300,000 loan from David Hale, a central issue in the McDougal/Tucker trial now underway in Little Rock, describes money that just fell out of the blue...

...But the "adversaries" of the subtitle turned out to be much different...

...Without noting the restrictions placed on Hale by the independent counsel, Stewart complains "he did not agree to be interviewed by me nor could I corroborate his crucial claims...

...The bill passed on the same day that the Twin City subsidiary gave the Clintons a waiver on filing a new financial statement...

...One evening in late March 1986, writes Stewart with a straight face, Jim and Susan were having dinner at the Black-Eyed Pea in Little Rock when David Hale dropped in...

...Not on your political life...

...In a major shift, state banking commissioner Marlin Jackson agreed to back county-wide branch banking in counties with populations over 200,000...

...He notes that the McDougals hired more experienced help after the 1984 exam, without mentioning that the new executive was the federal examiner in charge of that audit...

...In exploring an obscure area of the Whitewater deal from 1987-1988, he finds Bill and Hillary involved in their own possible felony and misuse of power...

...This journalistic malpractice mars some of Stewart's own work...

...Readers of this magazine will remember Whitener as a case study in the McDougals' business practices (see "Beyond Whitewater," TAS, February 1994...

...He relies on oral testimony for a garbled quote from a Jean Lewis phone message, even though a copy of the more vivid original had been available for months...

...side...

...Their enemies were making points with Whitewater because there was plenty to work with...

...Stewart reserves the fine print at the bottom of the page for alternate versions of events, or outright denials...

...Patsy Thomasson makes a brief appearance...

...The American Spectator May 1996Can you trust a book that puts so much faith in Jim and Susan McDougal and Bernie Nussbaum...

...Stewart's failure to write an adequate history is the more bizarre in light of his haughty dismissal of Hale's credibility...

...Hale said no problem, 32 May 1996 • The American Spectator...

...one can tell who it gores by White House efforts to dismiss it as a rehash...

...These documents are in the public record...

...But his most serious flaws add up to a deliberate pattern of blurred chronologies and withheld facts, with the end result, if not the aim, of mitigating the most serious charges against the Clintons...

...Stewart is too experienced a legal reporter to miss the implications...

...More importantly, it gives the lie to his sympathetic treatment of the McDougals...

...Yes, the Clintons were careless, because their public service left them no time to worry about financial details...

...But the figure most sorely missed is Freddy Dean Whitener, a contractor and farmer from Bradford, Arkansas...

...One has to conclude that the White House, and Senate Democrats, continue to present this document as a suicide note because it allows them an emotional slap at the Wall Street Journal editorial page...

...He repeatedly refers to the federal law making a felony of false financial submissions, without saying outright that the Clintons should be indicted...

...Yes, the press had a story to follow, but it was all part of an ugly blood sport...

...When he finally regained control of his records, he found that he had been stuck with $1.6 million in debt, four times what he thought he owed...

...Just weeks earlier she was exposed to a large loss, and any normal trading office would have demanded that she put up nearly $120,000 in cash to cover her positions...

...Even if he absolves himself, Stewart produces enough facts to show that senior editors at the establishment papers fell down on the job...

...Our article, "The Ties that Blind," TAS, August 1994, was based in part on Helmuth's work...

...BLOOD SPIN WHAT JAMES B. STEWART LEAVES OUT OF BLOOD SPORT, HIS LATEST BEST-SELLER 44 1 believe this to be a comprehensive account of these events," James B. Stewart writes in the prologue to his new, much publicized study of Whitewater, Blood Sport: The President and His Adversaries (Simon & Schuster, 479 pages, $25...

...The basic problem appears in the title itself...

...His 2Stewart shows a cavalier attitude toward the source documents...

...Roger Clinton is mentioned once...

...It's a shame that Stewart concentrated his interviewing on the inner circle around Bill and Hillary Clinton, letting himself be charmed by the likes of the McDougals, while ignoring the story of their real victims...

...After the financial collapse of Jim and Susan McDougal in 1987, their partners in the Whitewater Development Co., the Clintons, were liable for an outstanding mortgage of more than $52,000...

...Equal time here goes to Susan's disappointment at not being allowed to defend herself before the regulators...

...By fudging the chronology, Stewart obscures a very fishy deal...

...Stewart does get around to reporting Hale's charges, but only zoo pages later, in his section on the eruption of Whitewater in the press in late 1993...

...In the first section, derived evidently from Susan McDougal, Stewart whitewashes the financial misconduct at Jim McDougal's bank and S&L...

...Seduced by visions of intimate chats in the White House, Stewart jumped at the assignment...

...Stewart has little excuse for missing this story...

...The public record alleges a conspiracy starting in October 1985 to use the judge's lending company as a front for bailing out McDougal's Madison Guaranty S&L...

...And this isn't the last example of distorted narration...

...Yes, the Arkansas White House circle told a lot of little lies, because they wanted to get on with business...

...Dan Lasater isn't even in the index...

...This picture leaves Stewart with another problem...

...In the case now underway in Little Rock, the McDougals and Jim Guy Tucker are accused of funneling $500,000 from Madison to Hale's Capital-Management Services, so that he could lend the money back to their "political family...

...So he went with Susan's version instead...

...It will undoubtedly be the focus of the questioning when President Clinton gives his videotaped testimony in the McDougal/Tucker trial...

...One might ask whether, for whatever reason, this year of commodity trading was designed to give the Clintons the nice round sum of $100,000, but Stewart dodges the question...

...But first, let's give him credit for giving the story a major push forward...

...His family still seethes at the memory of Susan McDougal's haughty demeanor as she drove them into bankruptcy...

...The author apparently had long heart-to-heart chats with Jim and Susan McDougal, the financiopaths who brought the Clintons into the Whitewater deal...

...The American Spectator • May 1996 This impressive display of reporting makes Stewart's later lapses all the more startling...

...He gives a perfunctory account of RTC investigator jean Lewis's dogged pursuit of the case (again well known to TAS readers), concluding with her removal in November 1993...

...As it happens, Twin City was based in North Little Rock, and would have been the only bank in the state to benefit from the new law...

...As he reports in his first pages, he received a call two years ago from Susan Thomases, the New York lawyer who is a close friend and adviser to the Clintons...

...In other words, Stewart misses the most damning aspect of the commodities story: Hillary, the novice, made her largest gain after her financial adviser was taking a bath...

...Sometimes, Whitener thinks, some of Susan's henchmen did the signing for him, without his knowledge...

...He commits his full share of inaccuracies, many of which can be blamed on the haste of producing the book.2 His grammar takes a nose dive in the epilogue, a breathless attempt to keep up with fast-breaking news...

...New York Times Managing Editor Joseph Lelyveld and Executive Editor Max Frankel separately spiked some of Gerth's more important work, including a scoop on David Hale's charges against Bill Clinton...

...Some pages later he notes the "five lawyer" meeting of November 5, without mentioning that, according to notes kept by White House assistant counsel William Kennedy (and reprinted in his own appendix) someone there said that RTC people were "trying to get BC [Bill Clinton] and JGT [Jim Guy Tucker...

...Yes, that's the way Stewart writes it...

...Hale was under the threat of indictment and had an incentive to implicate bigger fish...

...Stewart did have serious credentials — a Pulitzer Prize at the Wall Street Journal, where he wound up as page-one editor, and a best-selling book on the Ivan Boesky—Michael Milken scandals...

...Yet such is the quality of the Clintons' friendships that even these sources show Bill and Hillary as self-centered, self-righteous, and dishonest, to others and themselves...

...30 May 1996 • The American Spectator Times editor Shelby Coffey dithered so much on the piece—preferring to go on a skiing vacation than to get the story out first—that Frantz ultimately quit in disgust...

...He confirms what this magazine reported nearly two years ago, that Hillary was thrown $100,000 worth of scraps from a massive scheme to manipulate the cattle futures commodity market in 1978-79...

...Los Angeles For all of Stewart's interviewing, some names are conspicuously absent...

...Leaving aside the possibility of bribery, Stewart seems too jaded to notice the impropriety of doing financial favors for a sitting governor and his wife...

...This in the end is the voice of the "mainstream...

...These are questions that Stewart—and liberal Democratic Washington—seems determined to avoid...

...At the same time that the bank approved the loan, its parent company, Twin City Bankshares Corp., received a major break—legislation easing the state's restrictive banking law...

...It's left to the non-mainstream press to ask whether the Clinton White House tried to interfere with federal investigations, and whether this self-righteous entourage has trampled on the unwritten rules of propriety that hem in a president's potential to pervert the workings of justice...