- The Washington Times - Tuesday, April 11, 2000

The Arkansas Supreme Court, which is considering disbarment proceedings against President Clinton, yesterday said it also is investigating whether first lady Hillary Rodham Clinton engaged in fraud in a questionable Whitewater-related land deal.
The probe, confirmed by the court's Committee of Professional Conduct, has focused on accusations about Mrs. Clinton's legal representation of a failed Madison Guaranty Savings and Loan Association real estate venture, which the Federal Deposit Insurance Corp. called a "sham."
A major area of concern is an option agreement that facilitated a $300,000 payment to Seth Ward, father-in-law of Mrs. Clinton's law partner, Webster L. Hubbell. The option, written by Mrs. Clinton and Mr. Hubbell while they were at Little Rock's Rose Law Firm, guaranteed Mr. Ward a payoff and negated his liability in the project.
The Arkansas probe was sought in 1996 by the Landmark Legal Foundation, a public-interest law firm in Washington, although James A. Neal, executive director of the Committee of Professional Conduct, confirmed in a letter this week the original request had been lost. Mr. Neal said the committee had begun a new "review" and would report its findings in 30 days.
"Let's hope this time they don't misplace the paperwork," said Landmark President Mark A. Levin, who threatened last month in a letter to seek an order from the Arkansas Supreme Court forcing the committee to undertake the investigation.
Mr. Neal was out of the office yesterday and unavailable for comment. A secretary said no one else could speak about the matter.
Mr. Clinton was investigated by the committee on charges he obstructed justice and lied under oath in the Paula Jones sexual harassment case and before the Monica Lewinsky grand jury. The committee has given him until April 21 to respond.
With regard to Mrs. Clinton, the FDIC said in September 1996 that she and Mr. Hubbell drafted legal papers that Madison used to deceive bank examiners and divert $300,000 to Mr. Ward.
The FDIC said the papers "facilitated the payment of substantial commissions to Mr. Ward, who acted as a straw buyer" in the Madison venture, known as Castle Grande.
A straw buyer is one who owns property in name only, having never put up any money or assumed any risk.
The FDIC said the Ward payment violated federal regulations, but did not accuse Mrs. Clinton or Mr. Hubbell of criminal wrongdoing. It raised serious questions, however, about their involvement in a real-estate deal that ultimately cost taxpayers $3.8 million when Castle Grande failed.
The first lady, in a sworn statement to the FDIC, said she did not recall working on the option, although Rose Law Firm billing records mysteriously discovered in the White House living quarters show that the word processing code used by the firm for legal documents prepared by Mrs. Clinton is on at least four pages of the option.
The billing records show Mrs. Clinton spoke with Madison officials about Castle Grande on 14 occasions, billed Madison for a "conference call with Seth Ward," and listed charges for "telephone conference with Seth Ward regarding option."
The May 1986 option was designed to facilitate the transfer of a 22.5-acre parcel to Mr. Ward from the Castle Grande project, a 1,050-acre development near Little Rock. Though the option was never exercised, it disguised the reason for the $300,000 payment and created a paper trail to justify the outlay.
Mr. Hubbell, who served 18 months in prison on his guilty plea to defrauding the government and the Rose firm of $400,000, has declined to comment on the option.
Mrs. Clinton's attorney, David Kendall, has said the option was never exercised "so it did not facilitate the payment of a single penny of commissions to Mr. Ward."
He also has noted that the FDIC did not accuse Mrs. Clinton of wrongdoing or having knowledge of any illegal intention with regard to the option.
Mr. Ward has denied any wrongdoing, saying his role in the project has unfairly been described by the FDIC.

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