Hey retard, what's 2+2? LOL, retard, Whitewater didn't have a thing to do with sex. Revenge is not a legal reason for launching an investigation. Enron is a witch hunt, pure and simple.
Subject: The New York Times 3/8/92, By: Jeff Gerth
"Clintons Joined S & L Operator in an Ozark Real Estate
Venture"
WASHINGTON - Bill Clinton and his wife were business
partners with the owner of a failing savings and loan
association that was subject to state regulation early in
his tenure as Governor of Arkansas, records show.
The partnership, a real estate joint venture that was
developing land in the Ozarks, involved the Clintons and
James B. McDougal, a former Clinton aide turned developer.
It started in 1978, and at times money from Mr. McDougal's
savings and loan was used to subsidize it. The corporation
continues to this day, but does not appear to be active.
Mr. McDougal gave a detailed account of his relationship in
several interviews in the last two weeks. This account,
along with an examination of related local, state and
federal records and interviews with dozens of others in
Arkansas, found the following:
Available records covering the most active period of the
real estate corporation, Called Whitewater Development,
appear to show that Mr. McDougal heavily subsidized it,
insuring that the Clintons were under little financial risk
in what turned out to be an unsuccessful enterprise. The
corporation bought 200 acres of Ozark Mountain vacation
property and planned to sell it in lots. During this
period, the Clintons appear to have invested little money,
so stood to lose little if the venture failed, but might
have cashed in on their 50 percent interest if it had done
well.
The Clintons and Mr. McDougal disagree about what happened
to Whitewater's records. Mr. McDougal says that at Mr.
Clinton's request they were delivered to the Governor's
mansion. The Clintons say many of them have disappeared.
Many questions about the enterprise cannot be fully answered
without the records.
After federal regulators found that Mr. McDougal's savings
institution, Madison Guaranty, was insolvent, meaning it
faced possible closure by the state, Mr. Clinton appointed a
new state securities commissioner, who had been a lawyer in
a firm that represented the savings and loan. Mr. Clinton
and the commissioner deny giving any preferential treatment.
The new commissioner approved two novel proposals to help
the savings and loan that were offered by Hillary Clinton,
Governor Clinton's wife an lawyer. She and her firm had
been retained to represent the association.
The Clintons improperly deducted at least $5,000 on their
personal tax returns in 1984 and 1985 for interest paid on a
portion of at least $30,000 in bank loan payments that
Whitewater made for them. The deductions saved them about
$1,000 in taxes, but since the error was more than three
years ago, Internal Revenue Service regulations do not
require the Clintons to pay.
The complicated relationship between Mr. McDougal and the
Clintons came to light in an investigation by The New York
Times of the Clinton's tax records and business
relationships. It raises questions of whether a governor
should be involved in a business deal with the owner of a
business regulated by the state and whether, having done so,
the governor's wife through her law firm should be receiving
legal fees for work done for the business.
Confusion is Cited
Asked abut these matters, the Clintons retained two lawyers
to answer questions. The lawyers said the improper tax
deductions were honest errors, made because there was
confusion over who really owned a certain piece of
Whitewater property and who was responsible for the loan
taken out to buy it, Whitewater or the Clintons.
The deed for the land and the loan papers are all in the
Clinton's names. The lawyers said they were not in a
position to answer questions about where the money that went
into Whitewater came from. But generally, they said they
thought neither the Clintons nor Mr. McDougal had profited
from the venture. They also said the Clintons were once
liable for about $100,000 in bank loans that financed
Whitewater's original purchase of land. But the lawyers
have only been able to find original documents showing
$5,000 that the Clintons paid. Some questions abut the
relationship and the Clinton's role in it may be difficult
to resolve because of differing accounts and the missing
records.
The two lawyers representing the Clintons are Susan P.
Thomases, a longtime friend, and Loretta Lynch, a campaign
aide who participated in several hours of interviews at Ms.
Thomases' Manhattan offices Thursday and Friday.
Payments on Debt
The records that are available, and Mrs. Thomases' account,
show that Whitewater made payments - between 1982 and 1985
on Mrs. Clinton's $30,000 real estate debt, reducing debt by
about $16,000 while also paying at least $14,000 in
interest. At least one of those checks was signed by Mr.
McDougal.
Mrs. Clinton originally borrowed the $30,000 from a bank
also controlled by Mr. McDougal, Bank of Kingston, but
"Hillary took the loan on behalf of the corporation," Ms.
Thomases said. That, she explained, is why Whitewater made
the payments.
The Clintons' 1984 and 1985 tax returns show they took
deductions for interest payments of $2,811 and $2,322 that
Whitewater made. "It clearly is an error," Ms. Thomases
said. She noted that the tax returns for those years were
prepared by accountants in Arkansas.
The Clintons' gross income in 1984, as reported on their tax
returns, was about $111,111 and they paid $22,280 in Federal
taxes. In 1985, their reported income was about $102,000,
and they paid $18,791 in Federal taxes.
Longtime Friendship
Mr. Clinton and Mr. McDougal had been friends since the
1960s. When Mr. Clinton became the nation's youngest
Governor at 32 years old, he took Mr. McDougal into his
administration as an aide for economic development. It was
about this time that the men formed Whitewater.
A few years later Mr. McDougal, having left government in
1979, bought control of a small savings and loan
association, Madison Guaranty, and built it into one of the
largest state-chartered associations in Arkansas. But over
time, the savings and loan got in trouble, like many others
around the country. Finally, Federal regulators took the
savings and loan away from Mr. McDougal, and a Federal grand
jury charged him with fraud, though he was acquitted. The
Clintons were not involved in those proceedings.
Mr. McDougal began having personal problems, too. He was
found to be suffering from manic-depressive illness, though
he was judged competent to stand trial. In the interviews,
Mr. McDougal appeared stable, careful and calm.
A year after the Clintons and McDougals bought the Ozark
Mountain property and founded Whitewater Development in
1979, the corporation bought a modular house for about
$22,000 and placed it on one of its lots. That lot was then
conveyed to Mrs. Clinton, and the deed indicates that she
paid nothing for it. Ms. Thomases says this was an error by
Whitewater. The deed, she said, should have shown the price
and said that Mrs. Clinton paid.
But the house was carried on the books as a Whitewater
corporate asset and used as a model house to attract other
buyers, according to Whitewater records produced by Ms.
Thomases. Because the records are incomplete, it is unclear
exactly what happened. But about the same time, Mrs.
Clinton personally borrowed $30,000 from Mr. McDougal's bank
to pay for the house and lot.
Ms. Thomases said Mrs. Clinton and the corporation regarded
this as a corporate debt, though it was in Mrs. Clinton's
name. The corporation included no one but the Clintons and
the McDougals. It was this debt that Whitewater made
payments on until the end of 1985.
One year after acquiring the property, Mrs. Clinton sold it
for $27,500, with payments to be made over time, records
show. It is not clear who received the buyer's down payment
of $3,000. But Ms. Thomases said it was the corporation
that took the loss on its books. A few years later, the
buyer went bankrupt and stopped making payments and then he
died.
In 1988, Mrs. Clinton bought back the house from the estate
of the buyer. Records show that she paid $8,000 and than
resold the property a short time later for about $23,000,
after closing costs. The Clintons reported a capital gain
that year of $1,640.
Ms. Thomases explained that the capital gain was small
because, as a part of that transaction, Mrs. Clinton had to
pay off Whitewater's remaining $13,000 debt on the property,
originally incurred by Mrs. Clinton. The payments the
previous owner had been making to Whitewater before he went
bankrupt had been used to pay off that debt.
Account Overdrawn
It was during the period when Whitewater was making the
Clintons' loan payments that Madison Guaranty was putting
money into Whitewater. For example, Whitewater's check
ledger shows that Whitewater's account at Madison was
overdrawn in 1984, when the corporation was making payments
on the Clintons' loan. Money was deposited to make up the
shortage from Madison Marketing, an affiliate of the savings
and loan that derived its revenues from the institution,
records also show.
It was also in 1984 that Madison started getting into
trouble. Federal examiners studied its books that year,
found that it was violating Arkansas regulations and
determined that correcting the books to adjust improperly
inflated profits would "result in an insolvent position,"
records of an examination show.
Arkansas regulators received the federal report later that
year, and under state law the securities commissioner was
supposed to close any insolvent institution. As the
Governor is free to do at any time, Mr. Clinton appointed a
new securities commissioner in January 1985. He chose
Beverly Bassett Schaffer, a lawyer in one of the firms that
had been representing Madison.
Fund Raising Ideas
Ms. Thomases, after talking to Mr. Clinton this week, said
the Governor chose her because they were friends, and
because he wanted to appoint a well qualified woman to an
important post. In interviews, Mrs. Schaffer, now a
Fayetteville lawyer, said she did not remember the federal
examination of Madison but added that in her view, the
findings were not "definitive proof of insolvency."
In 1985, Mrs. Clinton and her Little Rock law firm, the Rose
firm, twice applied to the Securities Commission on behalf
of Madison, asking that the savings and loan be allowed to
try two novel plans to raise money. Mrs. Schaffer wrote to
Mrs. Clinton and another lawyer at the firm approving the
ideas. "I never gave anybody special treatment," she said.
Madison was not able to raise additional capital. And by
1986 Federal regulators, who insured Madison's deposits,
took control of the institution and ousted Mr. McDougal.
Mrs. Schaffer supported the action.
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