1981
Hillary Clinton writes Jim McDougal: "If Reagonomics works at all, Whitewater could become the Western Hemisphere's Mecca."
Major drug trafficker Barry Seal, under pressure from the Louisiana cops, relocates his operations to Mena, Arkansas. Seal is importing as much as 1,000 pounds of cociane a month from Colombia according to Arkansas law enforcement officials. He will claim to have made more than $50 million out of his operations. Later, as an informant, he will testify that during this period As an informant Seal testified that in 1980-81, before moving his operation to Arkansas, he made approximately 60 trips to Central America and brought back 18,000 kilograms. In 1996 the Progressive Review will report: "The London Telegraph has obtained some of the first depositions in ex-CIA contract flyer Terry Reed's suit against Clinton's ex-security chief - and now a high- paid FEMA director - Buddy Young. According to the Telegraph's Ambrose Evans-Pritchard, "Larry Patterson, an Arkansas state trooper, testified under oath that there were 'large quantities of drugs being flown into the Mena airport, large quantities of money, large quantities of guns.' The subject was discussed repeatedly in Clinton's presence by state troopers working on his security detail, he alleged. Patterson said the governor 'had very little comment to make; he was just listening to what was being said.'"
Mena state police investigator Russell Welch will later describe the airport, pointing to one hanger he says is owned by a man who "doesn't exist in history back past a safe house in Baltimore in 1972." Another is owned by someone who "smuggled heroin through Laos back in the seventies." Still another is "owned by a guy who just went bankrupt. So what's he do? Flies to Europe for more money." Welch points to a half dozen Fokker aircraft parked on an apron, noting that "the DEA's been tracking those planes back and forth to Columbia for a while now."
1982
A DEA report uncovered by Ambrose Evans-Pritchard will cite an informant claiming that a key Arkansas figure and backer of Clinton "smuggles cocaine from Colombia, South America, inside race horses to Hot Springs."
IRS agent William Duncan and an Arkansas State Police investigator take their evidence concerning drug trafficking in Mena to US Attorney Asa Hutchinson. They ask for 20 witnesses to be subpoenaed before the grand jury. Hutchinson chooses only three. According to reporter Mara Leveritt, "The three appeared before the grand jury, but afterwards, two of them also expressed surprise at how their questioning was handled. One, a secretary at Rich Mountain Aviation, had given Duncan sworn statements about money laundering at the company, transcripts of which Duncan had provided to Hutchinson. But when the woman left the jury room, she complained that Hutchinson had asked her nothing about the crime or the sworn statements she'd given to Duncan. As Duncan later testified, 'She basically said that she was allowed to give her name, address, position, and not much else.' The other angry witness was a banker who had, in Duncan's words, 'provided a significant amount of evidence relating to the money-laundering operation.' According to Duncan, he, too, emerged from the jury room complaining 'that he was not allowed to provide the evidence that he wanted to provide to the grand jury.'"
1983
Mochtar Riady forms Lippo Finance & Investment in Little Rock. A non-citizen, Riady hires Carter's former SBA director, Vernon Weaver, to chair the firm. The launch is accomplished with the aid of a $2 million loan guaranteed by the SBA. Weaver uses Governor Clinton as a character reference to help get the loan guarantee. First loan goes to Little Rock Chinese restaurant owner Charlie Trie.
State regulators warn McDougal's Madison Guarantee S&L to stop making imprudent loans. Gov. Clinton is also warned of the problem but takes no action.
According to a later account in the Tampa Tribune, planes flying drugs into Mena in coolers marked "medical supplies." are met by several people close to then-Governor Bill Clinton.
Although he is under investigation for drug activities, Dan Lasater's firm is given a piece of 14 state bond issues.
1984
Riady buys a stake in the Worthen holding company whose assets include the Stephens-controlled Worthen Bank. Price: $16 million. Other Worthen co-owners will eventually include BCCI investor Abdullah Taha Bakhish.
Jim McDougal tries to prevent state agencies from shutting down his S&L, which has been providing cash for the Whitewater operation. Mrs. Clinton is put on a $2,000 a month retainer by the S&L. McDougal will later write in his book that the payments were in lieu of his earlier system of passing money to Bill Clinton. Ms. Clinton will later claim not to have received any retainer nor to have been deeply involved with Madison. Subsequent records show, however, that she represented Madison before the state securities department. After the revelation, she says, "For goodness sakes, you can't be a lawyer if you don't represent banks."
The Washington Times will later quote an unnamed Clinton business associate who claims the governor used to "jog over to McDougal's office about once a month to pick up the [retainer] check for his wife."
Foreshadowing future Wall Street interest in Clinton, Goldman Sachs, Payne Webber, Salomon Brothers and Merrill Lynch all show up as financial backer of the governor. Also on the list: future king-maker Pam Harriman. But Bill Clinton's funders include not only some of the biggest corporate names ever to show an interest in the tiny state of Arkansas but some of the most questionable. A former US Attorney will later tell Roger Morris, "That was the election when the mob really came into Arkansas politics. . . It wasn't just Bill Clinton and it went beyond our old Dixie Mafia. . . This was eastern and west coast crime money that noticed the possibilities just like the legitimate corporations did."
Dan Lasater buys a ski resort in New Mexico for $20 million and uses Clinton's name (with permission) to promote it. Later, a US Customs investigative report will note that the resort is being used for drug operations and money laundering. Lasater also flies to Belize with his aide Patsy Thomasson to buy a 24,000 acre ranch. Among those present at the negotiations is the US Ambassador. The deal falls through because of the opposition of the Belize government.
A private contractor for Arkansas' prison system stops selling prisoners' blood to a Canadian broker and elsewhere overseas after admitting the blood might be contaminated with the AIDS virus or hepatitis. Sales of prisoners' blood in US are already forbidden.
Tens of thousands of dollars in mysterious checks begin moving through Whitewater's account at Madison Guaranty. Investigators will later suspect that McDougal was operating a check-kiting scheme to drain money from the S&L
Hot Springs police record Roger Clinton during a cocaine transaction. Roger says, "Got to get some for my brother. He's got a nose like a vacuum cleaner." Roger is arrested while working at menial jobs for Arkansas "bond daddy" Dan Lasater.
Barry Seal estimates that he has earned between $60 and $100 million smuggling cocaine into the US, but with the feds closing in on him, Barry Seal flies from Mena to Washington in his private Lear Jet to meet with two members of Vice President George Bush's drug task force. Following the meeting, Seal rolls over for the DEA, becoming an informant. He collects information on leaders of the Medellin cartel while still dealing in drugs himself. The deal will be kept secret from investigators working in Louisiana and Arkansas. According to reporter Mara Leveritt, "By Seal's own account, his gross income in the year and a half after he became an informant - while he was based at Mena and while Asa Hutchinson was the federal prosecutor in Fort Smith, 82 miles away - was three-quarters of a million dollars. Seal reported that $575,000 of that income had been derived from a single cocaine shipment, which the DEA had allowed him to keep. Pressed further, he testified that, since going to work for the DEA, he had imported 1,500 pounds of cocaine into the U.S. Supposed informant Seal will fly repeatedly to Colombia, Guatemala, and Panama, where he meets with Jorge Ochoa, Fabio Ochoa, Pablo Escobar, and Carlos Lehder - leaders of the cartel that at the time controlled an estimated 80 percent of the cocaine entering the United States."
Ronald Reagan wants to send the National Guard to Honduras to help in the war against the Contras. Massachusetts Governor Michael Dukakis goes to the Supreme Court in a futile effort to stop it but Clinton is happy to oblige, even sending his own security chief, Buddy Young, along to keep an eye on things. Winding up its tour, the Arkansas Guard declares large quantities of its weapons "excess" and leaves them behind for the Contras.
Clinton bodyguard, state trooper LD Brown, applies for a CIA opening. Clinton gives him help on his application essay including making it more Reaganesque on the topic of the Nicaragua. According to Brown, he meets a CIA recruiter in Dallas whom he later identities as former member of Vice President Bush's staff. On the recruiter's instruction, he meets with notorious drug dealer Barry Seal in a Little Rock restaurant. Joins Seal in flight to Honduras with a purported shipment of M16s and a return load of duffel bags. Brown gets $2,500 in small bills for the flight. Brown, concerned about the mission, consults with Clinton who says, "Oh, you can handle it, don't sweat it." On second flight, Brown finds cocaine in a duffel bag and again he seeks Clinton's counsel. Clinton says to the conservative Brown, "Your buddy, Bush, knows about it" and of the cocaine, "that's Lasater's deal."
1985
A relative of Bill Clinton is raped. Wayne Dumond is arrested and imprisoned in the case. While awaiting sentencing, Dumond himself is sexually assaulted and castrated by two masked men. A local sheriff, later sentenced to 160 years for extortion and drug dealing, displays Dumond's testicles in a jar on his desk under a sign that read, "That's what happens to people who fool around in my county." A parole board, upon receiving new evidence of Dumond's innocence, will vote to release him after 4 1/2 years in prison. Governor Clinton -- according to the managing editor of the Arkansas Democrat Gazette -- stages a "romping, stomping fit" and blocks the release.
Clinton establishes the Arkansas Development Finance Authority that will be used, in the words of one well-connected Arkansan as "his own political piggy bank." Though millions of dollars are funneled to Clinton allies, records of repayments will be hazy or non-existent. AFDA brags to prospective out-of-state corporations of Arkansas' anti-union climate. Dan Lasater is a major underwriter and gets a $30 million bond deal for state police radios even as the governor's stepbrother Roger is making a bargain with the US attorney to testify against Lasater in a drug case.
Arkansas state pension funds -- deposited in Worthen by Governor Bill Clinton -- suddenly lose 15% of their value because of the failure of high risk, short-term investments and the brokerage firm that bought them. The $52 million loss is covered by a Worthen check written by Jack Stephens in the middle of the night, an insurance policy, and the subsequent purchase over the next few months of 40% of the bank by Mochtar Riady. Clinton and Worthen escape a major scandal.
Mochtar's son James comes back to Arkansas to manage Worthen as president. He bonds with Clinton and Charlie Trie.
Lippo executive and Chinese native John Huang becomes active in Lippo's operations in Arkansas.
China Resources pays for a Lippo-organized trip to Asia by Gov. Clinton, according to a later FBI inteview with John Huang.
Mochtar and James Riady engineer the takeover of the First National Bank of Mena in a town of 5,000 with few major assets beyond a Contra supply base, drug running and money-laundering operations.
Terry Reed is asked to take part in Operation Donation, under which planes and boats needed by the Contras "disappear," allowing owners to claim insurance. Reed has been a Contra operative and CIA asset working with Felix Rodriguez, the Contra link to the CIA and then-Vice President Bush's office. Reed later claims he refused, but that his plane was removed while he was away.
Park on Meter, a parking meter manufacturer in Russellville, Arkansas, receives the first industrial development loan from the Arkansas Development Finance Authority in 1985. Some suspect that POM is doing a lot more than making parking meters -- specifically that it has secret federal contracts to make components of chemical and biological weapons and devices to carry them on C-130s for the Contras. The company later denies the Contra connection although it will admit having secret military contracts. Web Hubbell is the company's lawyer. Right next to POM, on land previously owned by it, is an Army reserve chemical warfare company.
A series of checks to Clinton and his campaign are endorsed and deposited in Madison S&L. One of the checks -- a cashiers check in the amount of $3,000 -- has the name of a 24-year-old college student on it. When informed of this in 1993, the then-student, Ken Peacock, will deny having made any such donation.
Whitewater fails to file corporate tax returns for this year.
Asa Hutchinson leaves the US Attorney's office to make an unsuccessful bid for US Senate. According to police sources, Hutchinson had been aware of what was happening at Mena and the investigation into it, but did nothing. Hutchinson is replaced by Mike Fitzhugh who is reluctant to let investigators Russell Welch of the state police and William Duncan of the IRS present evidence of money-laundry to a grand jury.
1986
Journalist Evans-Pritchard will describe the Arkansas of this period as a "major point for the transshipment of drugs" and "perilously close to becoming a 'narco-republic' -- a sort of mini-Columbia within the borders of the United States." There is "an epidemic of cocaine, contaminating the political establishment from top to bottom," with parties "at which cocaine would be served like hors d'oeuvres and sex was rampant." Clinton attends some of these events.
A Federal Home Loan Bank Board audit describes Madison as financially reckless, rife with conflicts and on the brink of collapse. It says that the S&L's records are so poor that examiners often could not discover the "real nature" of transactions.
Capital Management Services Inc., owned by David Hale, makes an SBA-approved loan of $300,000 to Susan McDougal, sole owner of an advertising firm called Master Marketing. The loan will never be repaid.
Dan Lasater, Arkansas bond don who is close to Clinton, pleads guilty to cocaine distribution charges. The case also involves Clinton step brother Roger, who testifies against Lasater in a plea agreement. Both Lasater and Roger Clinton will serve brief prison terms. While Lasater is in prison his affairs will be run by Patsy Thomasson, who later becomes a White House aide.
BARRY SEAL FOLLOWING HIS MURDER
Seal is scheduled to testify at the trial of Jorge Ochoa Vasques. But in February, shortly before the trial is to begin, Seal is murdered in Baton Rouge gangland style by three Colombian hitmen armed with machine guns who attack while he seated behind the wheel of his white Cadillac in Baton Rouge, La. The Colombians, connected with the Medellin drug cartel, are tried and convicted. Upon hearing of Seal's murder, one DEA agent says, "There was a contract out on him, and everyone knew it. He was to have been a crucial witness in the biggest case in DEA history."
Eight months after the murder, Seal's cargo plane is shot down over Nicaragua. It is carrying ammunition and other supplies for the Contras from Mena. One crew member, Eugene Hasenfus, survives.
The attorney general of Louisiana tells US Attorney General Ed Meese that drug trafficker Barry Seal has smuggled drugs into the US worth $3-$5 billion.
Whitewater fails to file corporate tax returns for this year.
1987
According to the McDougals, the Whitewater files are transferred to the Clintons. In the 1992 campaign, the Clintons will say they can not find the records.
Clinton gives Arkansas Traveler awards to Contra operatives Adolpho and Mario Calero and John Singlaub.
Two boys, Kevin Ives and Don Henry, are killed in Saline County and left on a railroad track to be run over by a train The medical examiner will initially rule the deaths accidental, saying that the boys were unconscious and in a deep sleep due to marijuana. The finding will be punctured by dogged investigators whose efforts are repeatedly blocked by law enforcement officials. Ultimately, the bodies will be exhumed and another autopsy will be performed, which finds that Henry had been stabbed in the back and Ives beaten with a rifle butt. Although no one will ever be charged, the trail will lead into the penumbra of the Dixie Mafia and the Arkansas political machine. Some believe the boys died because they accidentally intercepted a drug drop, but other information obtained by the Progressive Review suggests the drop may have dispensed not drugs but cash, gold and platinum -- part of a series of sorties through which those working with US intelligence were being reimbursed. According to one version, the boys were blamed in order to cover up the theft of the drop by persons within the Dixie Mafia and Arkansas political machine. Ives mother will later charge that high state and federal officials participated in a coverup: "I firmly believe my son and Don Henry were killed because they witnessed a drug drop by an airplane connected to the Mena drug smuggling routes."
Prosecutor Jean Duffey will later tell talk show host in answer to whether law enforcement people were involved in the train death murders: "I believe the law enforcement agents were connected to some very high political people because they have never been brought to justice and I don't think they ever will be. I think they are protected to avoid exposing the connection...There have been several murders of potential witnesses. Anyone who could have solved this murder many years ago has been systematically eliminated."
Nine persons reportedly having information on the Ives-Henry murders will end up dead themselves. Keith McKaskle will express fear for his life because of the "railroad track thing" and tell his parents good-bye before his murder. An inmated will report being offered $4,000 to kill McKaskle. A suspect in the Ives-Henry murders will die in what initially is thought to have been a robbery but turns out to have been a set-up. Boonie Bearden vanishes without a trace. It is rumored he knows exactly what had happened at the tracks. James Milam is found decapitated; nonetheless, the state medical examiner, Fahmy Malak - who also called the Ives-Henry deaths accidental -- will declare the death to be of natural causes. Jeff Rhodes will be shot, burned, and have his hands and feet partially sawed off.
Terry Reed's plane is returned but, according to his account, he is asked not report it because it might have to be "borrowed" again. Reed later says that he had become aware that the Contra operation also involved drug running and had gotten cold feet. He also believed that large sums of drug money were being laundered by leading Arkansas financiers. He went to Felix Rodriguez and told him he was quitting. Reed was subsequently charged with mail fraud for having allegedly claimed insurance on a plane that was in fact hidden in a hanger in Little Rock. The head of Clinton's Swiss Guard, Capt. Buddy Young, will claim to have been walking around the North Little Rock Airport when "by an act of God" a gust of wind blew open the hangar door and revealed the Piper Turbo Arrow.
Whitewater fails to file corporate tax returns for this year.
1988
Conservative Democrats begin a series of nearly 100 meetings held at the home of Pam Harriman to plot strategy for the takeover of the Democratic Party. Donors cough up $1,000 to attend and Harriman eventually raises $12 million for her kind of Democrat. The right-wing Dems will eventually settle on Bill Clinton as their presidential choice.
Charles Black, a prosecutor for Polk County, which includes Mena, meets with Governor Clinton and asks for assistance in a probe of illegal activities. "His response," Mr. Black will tell CBS News later, "was that he would get a man on it and get back to me. I never heard back."
Following pressure from then-Arkansas Rep. Bill Alexander, the General Accounting Office opens a probe in April 1988; within four months, the inquiry is shut down by the National Security Council, according to a later report by Micah Morrison of the Wall Street Journal. Several congressional subcommittee inquiries sputter and stop.
The Senate Committee on Foreign Relations issues a report that describes the seriousness of the Barry Seal disaster. That report says, "Law enforcement officials were furious that their undercover operation was revealed and agents' lives jeopardized because one individual in the U.S. government - Lt. Col. Oliver North- decided to play politics with the issue . . . Associates of Seal, who operated aircraft service businesses at the Mena, Arkansas airport, were also targets of grand jury probes into narcotics trafficking. Despite the availability of evidence sufficient for an indictment on money laundering charges and over the strong protests of state and federal law enforcement officials, the cases were dropped."
1989
Madison S&L is closed by federal regulators at an eventual cost to taxpayers of $47 million.
FDIC hires Webster Hubbell of the Rose firm to press its case concerning Madison. Rose law firm, now representing FDIC, sues an accounting firm for $60 million, blaming its audits for causing millions of dollars in losses to the S&L. Although the job earns Rose $400,000 in fees and expenses the accounting firm will eventually settle by paying the government just $1 million.
A US Senate subcommittee calls the available evidence about Mena sufficient for an indictment on money laundering charges. But the feds scrap a five year probe of Mena and interfere in local investigations, and the state police are taken off the case. Clinton refuses a request from one of his own prosecutors to pursue the matter.
What will later be known as the Vast Right Wing Conspiracy begins on the left as a group of progressive students at the University of Arkansas form the Arkansas Committee to look into Mena, drugs, money laundering, and Arkansas politics.
Dan Short, a bank president, is abducted from his home in Benton Co., Arkansas and allegedly forced to open the State Bank in Noel, MO were $71,000 is allegedly taken. Three days before his abduction, he had told friends that he had been laundering drug money and was in trouble. |
