- The Washington Times - Thursday, March 21, 2002

A $70 million investigation into a questionable Arkansas land deal involving former President Bill Clinton and his wife, Hillary Rodham Clinton, formally ended yesterday with independent counsel Robert W. Ray declaring there was "insufficient evidence" to bring charges in the case.
Mr. Ray's final report said the Clintons' Whitewater business partner, James McDougal, illegally used cash from his failing savings and loan to prop up the Arkansas land deal, but prosecutors lacked evidence to bring charges against the Clintons.
"Insufficient evidence exists to establish beyond a reasonable doubt that either governor or Mrs. Clinton knowingly participated in the criminal financial transactions used by McDougal to benefit Whitewater," said the report, released yesterday by a three-judge panel of the U.S. Circuit Court of Appeals for the D.C. Circuit.
However, the report also said that "some of the statements given by both the President and the first lady during official investigations were factually inaccurate."
James and Susan McDougal were convicted in 1996 on fraud and conspiracy charges in a $3.1 million scheme involving bogus loans through Madison Guaranty Savings and Loan Association, the Little Rock thrift they owned.
Called the "Whitewater" investigation because of its ties to a real estate development on the banks of the White River in the Arkansas Ozarks, the probe netted 14 convictions or guilty pleas, including the McDougals, Arkansas Gov. Jim Guy Tucker and Associate Attorney General Webster L. Hubbell, a law partner of Mrs. Clinton's at Little Rock's Rose Law Firm.
The probe, begun in 1994 by special prosecutor Robert B. Fiske and later by independent counsel Kenneth W. Starr, focused on accusations that the Clintons knowingly participated in criminal conduct related to Madison, which failed in 1994 at a cost to taxpayers of $73 million.
The inquiry found insufficient evidence to prove Mr. Clinton lied when he told a jury in the McDougal trial he never borrowed any money from Madison; when he told the same jury he did not know about a $300,000 loan by Little Rock banker David L. Hale to Susan McDougal; and when he denied knowing how Mrs. Clinton's Rose firm had been hired by Madison to represent the thrift in matters before state regulators.
There also was insufficient evidence to prove Mrs. Clinton made false statements to the Resolution Trust Corp. regarding the relationship between Madison and the Rose firm, as well as her own work related to Madison; and that she sought to obstruct the Whitewater probe by withholding information in connection with Rose billing records.
With regard to the billing records, the report said prosecutors could not rule out the possibility that Mrs. Clinton, now a Democratic U.S. senator from New York, played a role in their disappearance and later discovery.
The report said there was "inconclusive" evidence concerning the records, which vanished after the 1992 election and mysteriously surfaced in the White House living quarters in 1996 18 months after the first lady had received a subpoena for the documents.
Prosecutors said it could not be determined whether "any person, including Mrs. Clinton, knowingly or willfully possessed the billing records with the intent to obstruct justice."
David E. Kendall, the Clintons' attorney, said the report shows that the investigation "ends as it began, with no evidence of any wrongdoing by the Clintons."
Mrs. Clinton's legal representation of Madison Guaranty was of major concern to prosecutors and federal banking regulators, who focused on an option agreement she and Mr. Hubbell wrote facilitating a $300,000 payment to Mr. Hubbell's father-in-law, Seth Ward.
Investigators said the option illegally guaranteed Mr. Ward a payoff and negated his liability in an Arkansas land venture known as Castle Grande.
The Federal Deposit Insurance Corp. said in September 1996 that Mrs. Clinton and Mr. Hubbell drafted legal papers that Madison used to deceive bank examiners and divert the $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 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. But it raised serious questions about their involvement in a real-estate deal that ultimately cost taxpayers $3.8 million when Castle Grande failed.
Mrs. Clinton denied working on the option in a sworn statement to the FDIC, although the Rose firm billing records discovered in the White House showed that the word-processing code used by the firm for legal documents prepared by Mrs. Clinton is on four pages of the option.
Mr. Ray's report said prosecutors "could not exclude the possibility that Mrs. Clinton put the billing records" in the White House.
James McDougal, sentenced to three years, agreed to cooperate as the government's chief witness in the Whitewater probe, but died in prison of a heart attack. Susan McDougal refused to cooperate with prosecutors and received a pardon from Mr. Clinton in January 2001.


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