What Jean Lewis Knows
Adams, James Ring
What ed 11.Knows ewes THEY BECAME FAMOUS AS THE KANSAS CITY THREE: JEAN LEWIS, A REPUBLICAN, AND HER TWO SUPERVISORS, BOTH DEMOCRATS, WHO WERE PLACED ON ADMINISTRATIVE LEAVE FOR DARING TO...
...In a typically petty gesture, the RTC refused to date her leave from that Monday, forcing her to use up sick days for the hospital stay...
...She later explained that Borod had created a conflict of interest by suing the FDIC in other cases...
...Were these leaves designed to chill federal probers and put the lid on the regular bureaucracy...
...Fiske's request...
...Just as suddenly, they were returned to work...
...Hubbell's father-in-law, Seth Ward, was suing Madison to collect a $400,000 sales commission...
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...Their only public statements to date have been congressional testimony (which in the case of Jean Lewis ended abruptly when a combination of stress and asthma medication produced extremely high blood pressure...
...Was it simply Ryan's idea to discredit Lewis, or did that strategy originate at the level that could coordinate both the bureaucracy and the congressional Democrats, namely the White House...
...As it happens, Lewis and her co-workers have provided evidence that suggests that friends of the Clintons were spying on their work almost from the beginning...
...The inspector general of the Federal Deposit Insurance The American Spectator • July 1997 Corporation (FDIC), which took over the now defunct RTC, completed an internal review of this episode last February...
...These are questions the Inspector General's report is sure to avoid...
...In a clandestine late night meeting at the Kansas City airport Marriott, she gave him the full story...
...The White House took notice of their dogged work by November 5. That Friday, four White House aides, including Counsel to the President Bernard Nussbaum, sat down in the Williams & Connolly law office with three private lawyers for the Clintons...
...A staff memo later revealed that at least as early as May 1994 the head of the Kansas City PLS was calling Washington to pass on reports about Lewis...
...Either possibility would be a major breach of a criminal investigation, far more serious than the White House-Treasury contacts that preoccupied the 1994 round of VVhitewater hearings...
...The group called itself the "Dog Pound" because of the arrangement of its cubicles—a title Lewis thought fitting "because of the snarling and howling that constantly emanated from it...
...It placed her name tag in front of an empty chair and tried to discredit her as a Republican partisan...
...attorneys...
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...The appointment of Kenneth Starr on the same day as the hearing came as a total surprise...
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...The agreement from Forshey concerned royalties from "BITCH" coffee mugs and T-shirts...
...It seemed to the Kansas City investigators that this policy was aimed directly at the nine Madison referrals then in the works...
...Other tensions developed, Lewis admits, because of her "instant personality conflict" with the liaison for the Kansas City PLS...
...She noticed that administrative staff from this 38 July 1997 • The American Spectator group seemed to be hovering around her office during meetings or checking the fax log after she used it...
...Such a punishment usually leads to a quick exit, although the three were never told exactly what the charges were against them...
...one of the more primitive members of Congress, released a hostile summary of her career, miscalling her a file clerk for a failed Texas thrift and drawing attention to the personal bankruptcy caused by the failure of the brokerage firm that employed her ex-husband...
...Payback came that July, when the House Banking Committee finally agreed to hold limited Whitewater hearings...
...And the PLS reviewers raised a question similar to the lawyers' defense: Could these checks represent two contributions each and hence fall under the legal limit...
...By the next Tuesday, Lewis was removed from the Madison case...
...Thus I declined...
...This coincidence raises two questions: Could the PLS review have been channeled directly to the White House damage-control team...
...If I had walked in to testify that day," she says, "I would have walked right into a bear trap...
...Years earlier, after a heated meeting in which someone had muttered "bitch" at her, she had had a brainstorm and arranged the word Magilla-style to make the slogan "Boys, I'm Taking Charge Here...
...But the Kansas City Three raise serious suspicions about political interference...
...When Clinton's friends there tried to dismiss her referral as insubstantial, she and her co-workers pro37 A 6 JAMES RING ADAMS is an investigative writer for The American Spectator...
...But the official in charge of "redacting" the report says he has been instructed to release only what is already in the public record...
...The calls, significantly, went to Thomas Hindes, the PLS associate general counsel, and his assistant Mark Gabrellian, both later involved in the administrative leave decision...
...In late September a legal team headed by Carmichael received the documents and supporting files, and produced a memo with a number of minor points...
...Breslaw also repeatedly asked for accelerated payment of the Rose bills, some of which were later part of the expensepadding felony charges against Hubbell...
...Lewis declined an invitation to testify, saying that Independent Counsel Fiske had narrowed the scope of the topics she could discuss...
...She learned later that he had been prompted to bring it up by a query from the Treasury Department...
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...Several times she suspected that her desk had been rifled and her computer files monitored...
...The lawyer explained to a number of colleagues how "positive" Hubbell's influence would be for the RTC...
...Lewis vividly remembers a PLS lawyer in Kansas City bubbling with excitement at the news in 1993 that Hubbell would be the number three official in the Justice Department...
...These contract lawyers were running a booming business suing defaulted borrowers and those "deep pockets" entities that survived the various thrift collapses, such as boards of directors and accounting firms...
...Both Kulka, the general counsel of the RTC, and Ryan, who ended his long and checkered career as its acting president, denied that they gave any such instructions to Breslaw...
...A faction developed in the Kansas City criminal investigations office that kept close ties with the PLS...
...Lewis and her supervisors mailed off the second wave of referrals in October 1993...
...duced nine more...
...attorney, called it a possible witness-tampering felony...
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...The criminal investigations unit, where Jean Lewis worked, checked on possible wrongdoing at the S&L's and submitted reports to the FBI and the U.S...
...Conflicts between PLS and the criminal-investigation units were commonplace throughout the RTC, but in the Kansas City office they were worsened by one fact: the favorite contractor for its PLS division was Little Rock's notorious Rose Law Firm...
...Lewis calls the refusal of the PLS to work with other agencies a kind of "outrageous bravado...
...Some of the office tensions were built into the RTC's structure...
...Committee Democrats released a copy of a representation agreement between Lewis and her longtime friend and lawyer Michael Forshey...
...But when she hired Hubbell, she rejected complaints that he had a conflict of interest of his own...
...Leach revealed the interference in a floor statement on March 24, the day that the House leadership canceled a scheduled oversight hearing on the RTC...
...The Forshey fax went even higher, right to the hands of RTC deputy head Jack Ryan, who personally sent it to the House Banking Committee Democrats...
...had made a comical misreading, but their attacks showed an ominous level of coordination...
...The last straw for the Kansas City investigators, however, came after the appointment of Independent Counsel Robert Fiske on January 20, 1994...
...In fact, one item in the review memo, dated October 7, shows up in the notes of the meeting a month later between Nussbaum, Kennedy, and the Clintons' private lawyers...
...On February 2, Breslaw visited Kansas City as part of a review of the Madison civil case, and held her famous conversation with Lewis...
...As a Little Rock grand jury began to look at Madison in connection with the David Hale case, the volume of requests picked up greatly, and Little Rock FBI agent Steven Irons began to complain about delays from the new RTC procedure...
...Lewis noticed an unusual interest from co-workers outside the chain of command...
...After fighting a Senate subpoena, the White House released the Kennedy notes at the tail end of the Senate Whitewater Committee hearings, just before Christmas in 1995...
...The RTC Legal Division insisted on controlling all of the investigators' contacts with the new on 15% to 65% OFF...
...Referral CR0196 concerns a loan that may have provided funds for Jim McDougal's April 5,1985 fundraiser for Clinton, and it names the "Bill Clinton Political Committee Fund" as a suspected violator...
...In spite of her flurry of memos to officials in her office, the issue had to be resolved at the senior level in Washington...
...BY JAMES RING ADAMS T hey are known as the Kansas City Three...
...In congressional testimony they said they hardly knew her, in sharp contrast to her first-name friendship with Webb Hubbell...
...But the Democratic majority went after her anyway...
...Hubbell even met with a group of senior PLS employees in their Washington offices...
...The investigation of the administrative leaves has reignited one of the most potentially explosive topics in Whitewater, and it will be heard loud and clear in coming months...
...Fighting the Fix As the case began to lead toward criminal referrals, Ms...
...Doesn't this make participants in the meeting material witnesses of, if not parties to, a conspiracy to obstruct justice...
...But the most coordinated attack focused on an alleged book deal...
...The two lead partners in its RTC billing were Vince Foster and Webb Hubbell...
...Their story is every bit as embarrassing to the government as the stall on the Inspector General's report suggests...
...For the record, those at the meeting, in addition to Bernard Nussbaum and William Kennedy, included White House aides Bruce Lindsey and Neil Eggleston, and Clinton family lawyers David Kendall, Stephen Engstrom, and James Lyons...
...Independent Counsel Kenneth Starr has looked into the incident, and Rep...
...She let her desktop tape recorder capture the rest of the meeting...
...But the biggest strain quickly became the Madison Guaranty investigation...
...When Lewis recovered from her astonishment, she realized that someone had intercepted a fax from Forshey about an entirely separate matter...
...It's also predictable that the report will do its best to make Jean Lewis and her fellow investigators look bad...
...I had been asked not to testify on anything other than my conversation with April," she says...
...Lewis had been right to worry that the "Dog Pound" was watching her movements...
...What ed 11.Knows ewes THEY BECAME FAMOUS AS THE KANSAS CITY THREE: JEAN LEWIS, A REPUBLICAN, AND HER TWO SUPERVISORS, BOTH DEMOCRATS, WHO WERE PLACED ON ADMINISTRATIVE LEAVE FOR DARING TO PURSUE CRIMINAL REFERRALS AGAINST THE CLINTONS—THE SAME REFERRALS THAT LED TO THE CONVICTION OF JIM GUY TUCKER AND THE MCDOUGALS...
...From now on, the investigative unit was to send them to the Legal Division for review before they were delivered to the U. S. attorneys...
...The close-knit team thought this with one mind, but Lewis took the next step entirely on her own...
...Paul Kanjorski (D.-Penn...
...Kanjorski et al...
...Now they have agreed to speak in exclusive interviews with The American Spectator...
...It did not have the authority to bring charges on its own...
...The Breslaw visit capped the conclusion already reached by Lewis, and her supervisors Ausen and Iorio: the Powers That Be in Washington wanted to manipulate, frustrate, and if possible shut down the Madison case...
...Subscribe to I koicricao S'pcctaim i-Soo-;24-3469 40 July 1997 • The American Spectator...
...A truncated 3o-page version is on the verge of being made public in response to repeated Freedom of Information Act requests...
...When Ausen and Iorio showed up for work on Monday, August 15, they received their walking papers and were escorted out of the building...
...Unless I could testify on other matters I had no means to defend myself without violating Mr...
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...He told them to keep in touch if they had any problem with his department...
...She made contact with Rep...
...Former Resolution Trust Corporation (RTC) investigator Jean Lewis—along with her former supervisors, Richard Iorio and Lee Ausen —did the most to keep alive the criminal investigation of Madison Guaranty Savings and Loan, owned by Bill Clinton intimates Jim and Susan McDougal...
...On June 1993, RTC Washington headquarters issued new guidelines on criminal referrals...
...When she visited a friend in another RTC office in July1993, he asked casually about a high-profile investigation...
...Or, more gravely, could the damage-control team have influenced the PLS review...
...This policy would have routed contacts with Fiske through senior Washington officials...
...Robert Barr (R.-Ga...
...Payback Time Within ten days of the congressional hearings, news of the administrative leaves hit Kansas City...
...As a bureaucratic compromise, Carmichael was removed as well...
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...Before drawing fire from Washington, their unit faced continuous sniping from people in their own Kansas City office...
...Was this intended to intimidate potential witnesses for the independent counsel, who at the time seemed to be losing steam...
...Meanwhile the Professional Liability Section (PLS) supervised the law firms that tried to recover assets for the failed S&L's...
...Clinton strategists likely hoped that public attention would be diverted by the holiday...
...The main offense of the Kansas City Three was to produce a series of criminal referrals on Madison Guaranty Savings and Loan...
...The Name of the Rose As an unabashed conservative Republican, Lewis drew the most fire from Clinton supporters, but her work at all times met the standards of her experienced supervisors, both lifelong Democrats...
...when Breslaw started talking about what "the people at the top, Ellen Kulka and Jack Ryan" wanted to see coming out of the Madison investigation, Lewis seized on the evidence that the fix was in...
...The RTC had been designed as a temporary agency to clean up the debris of the savings and loan debacle, and had hundreds of failed thrifts under its aegis...
...They spent two hours reviewing the Whitewater problem, including the rapidly multiplying criminal allegations...
...As the pace of the investigation quickened, the PLS began to assert control of outside contacts...
...In the process, he made Lewis a household name...
...NOW, FOR THE FIRST TIME, THEY'RE OPENLY TALKING ABOUT OBSTRUCTION OF JUSTICE...
...The spat over the document production was one of the excuses used for removing Lewis from the case...
...So far, only one person outside of the agency, House Banking Committee Chairman Jim Leach, is known to have read the full report...
...The two women are about the same height and possibly equal in self-confidence...
...Lewis was in the hospital and didn't get formal notice until that Friday, when she returned to the office...
...a former U.S...
...If Jean Lewis was removed at the direction of presidential aides, don't we have a case of interference with a criminal probe, to protect one of its targets...
...Their first effort, meanwhile, provided the groundwork for Kenneth Starr's successful prosecution of Madison Guaranty co-owners Jim and Susan McDougal, and their partner, Arkansas Governor Jim Guy Tucker...
...By September 1993, Karen Carmichael, the PLS liaison who was Lewis's nemesis, was designated subpoena compliance officer...
...She began to keep sensitive Madison documents with her at all times...
...Jim Leach, then ranking minority member of the House Banking Committee...
...The referral listed four suspect $3,000 checks from Madison, which are also identified in the Kennedy notes...
...The referrals themselves are still secret, but the PLS review memo listing their contents has been in the public record since August 1995...
...When I learned the fax had been intercepted," she says, "I was stunned and angry...
...The fax from Forshey wasn't the first of her mail to be intercepted and sent up the chain of command...
...Notes kept by then–Associate Counsel William H. Kennedy III singled out Jean Lewis and her unit as the enemy...
...As TAS readers well know, Jean Lewis submitted the first referral in September 1992 and pursued it tenaciously when it disappeared for months into the upper reaches of the Justice Department...
...Rep...
...Was the punishment revenge for the forced resignations of deputy Treasury secretary Roger Altman and Treasury general counsel Jean Hanson, who stepped down at the end of that week...
...The review took no more thantwo weeks, so it didn't slow down the case...
...A friend in the FBI, she says, once even asked her to intercede with the PLS to gain access to a witness in an Oklahoma case...
...Rose handled by far the largest caseload for the Kansas City office (which had jurisdiction over the central and southwest states...
...And Michael was angrier than I'd ever seen him...
...The Washington-based PLS attorney supervising Madison Guaranty, April Breslaw, fired the Memphis firm, Borod and Huggins, that had already prepared an in-depth study of the Madison failure and transferred the business to Rose...
...But Breslaw wasn't Hubbell's only friend in the RTC...
...The Legal Division would also handle all queries from other agencies...
...But it did provide a window for outsiders to learn what was in the highly confidential referrals...
...So far as we can tell, no one has ever bothered to ask...
...The long delay has prompted the targets of the punishment to break their silence...
...In August 1994, when Democrats still controlled Congress and the House Banking Committee had just completed a hearing that was a Whitewater whitewash, these three suddenly found themselves placed on a two-week administrative leave...
...Under the heading "RTC" Kennedy wrote, "people trying to get BC [Bill Clinton] and JGT [Jim Guy Tucker...
Vol. 30 • July 1997 • No. 7
