Reprinted from The Washington Times, March 19, 1998
Spotlight focuses on
Hillary as Tucker testifies
By Jerry Seper
THE WASHINGTON TIMES
Whitewater prosecutors yesterday called former Arkansas Gov. Jim Guy Tucker before a federal grand jury in Little Rock to discuss first lady Hillary Rodham Clinton's ties to a questionable real estate project in the mid-1980s.
"It was a long day of meticulous history," said Tucker, who is cooperating with independent counsel Kenneth W. Starr's office to avoid further prosecution.
He spent six hours answering questions and reviewing documents in his first appearance before the Whitewater grand jury.
Asked if his testimony was damaging to anyone, Tucker said, "Someone else would have to make that judgment." He called the questioning "not unpleasant" but declined to elaborate. Tucker said he expects to be called before the grand jury again soon.
After his testimony, the man who succeeded Bill Clinton as governor said he was told of allegations made by state troopers that Mr. Clinton used them to arrange sexual trysts.
"This was a group that was opposed to Clinton and seemed to have an ax to grind with him. They made allegations as to then-Governor Clinton's personal life, yes," Tucker said in response to reporters' questions.
In his deposition in Paula Jones' sexual-misconduct lawsuit against the president, former Trooper
-- Continued from Front Page -- L.D. Brown said he and Trooper Larry Patterson told their story to Tucker on March 12, 1990, at his campaign headquarters in Little Rock.
It was not known if Tucker testified about the troopers' allegations. The questioning before the grand jury was expected to focus on Mrs. Clinton.
According to lawyers and others close to the grand jury probe, Tucker is expected to corroborate accusations that Mrs. Clinton lied to federal regulators -- and perhaps a Washington grand jury -- when she said under oath she had little or nothing to do with the legal representation of Castle Grande.
Federal regulators have called Castle Grande, a 1,050-acre venture south of Little Rock, a "sham."
Prosecutors believe Tucker, who resigned in July 1996 after his conviction in the first Whitewater trial and agreed in January to cooperate to avert a trial on a second indictment, can testify that:
Mrs. Clinton did extensive legal work for Castle Grande, which failed in 1989 at a cost to taxpayers of $4 million. His testimony is expected to corroborate Rose Law Firm billing records discovered in 1996 in the White House residence that tie her to several Castle Grande billings.
The first lady and former Associate Attorney General Webster L. Hubbell, her partner at the Rose firm, helped divert $300,000 to Mr. Hubbell's father-in-law, Seth Ward, in the Castle Grande project. Prosecutors believe documents they drafted were used to deceive federal regulators and justify on paper the cash outlay to Mr. Ward, an official at Madison Guaranty Savings and Loan Association.
Mrs. Clinton's billings for Castle Grande intensified at one point in an effort to determine whether the project could offer commercial water and sewer services and if a microbrewery could be built at the site. The billing records show most of her work went for the water and sewer proposal and the microbrewery.
Federal regulators said that Mrs. Clinton was among 11 lawyers who billed Madison for legal services between May 1985 and September 1987 and that she did most of the thrift's legal work after May 1986.
She has denied any wrongdoing. She told regulators she knew the project as IDC, the name of the company that originally sold the property, and was not aware of the Castle Grande name "until it came to my attention through these investigations."
But Tucker is expected to tell the grand jury that the project was commonly known as Castle Grande and that at the time of Mrs. Clinton's association with Madison, a Federal Home Loan Bank Board report referred to it exclusively by that name.
Tucker, in agreeing to cooperate, averted a trial on a separate indictment sought by prosecutors in a $2 million bankruptcy scheme. In 1986, he proposed providing water and sewer services to Castle Grande, a Little Rock mobile-home park being developed and financed by Madison.
Castle Sewer and Water Corp. later defaulted on $860,000 in Madison loans and $300,000 to Capital-Management Management Services Inc., the Arkansas financial institutions at the heart of the Whitewater probe.
The mobile-home project later failed.
Mrs. Clinton told the Federal Deposit Insurance Corp. and the Resolution Trust Corp. in sworn statements that she did little or no work for Castle Grande. She is believed to have told a federal grand jury during a Jan. 26, 1996, appearance that she was not significantly involved in Castle Grande's legal representation, the sources said. If those statements can be shown to be false, Mrs. Clinton could be charged with perjury.
Madison's owner, James B. McDougal, who died March 8 of a heart attack while serving a three-year prison sentence on his conviction with Tucker in the first Whitewater trial, told prosecutors he hired Mrs. Clinton at the request of her husband, then governor, to handle Madison's legal work. He said a $2,000-a-month retainer she was paid included work on Castle Grande.
Capital-Management was owned by former Little Rock municipal judge David L. Hale, another cooperating Whitewater witness. Mr. Hale told The Washington Times he was intimately familiar with Castle Grande and its players and personally approved a $150,000 loan to the project, which was to be used for capital improvements at the site. The improvements were never completed.
Mr. Hale, who pleaded guilty in a deal with Mr. Starr to two felony counts of unrelated fraud in the Whitewater probe and served 20 months in a federal prison, said there was "no doubt" Mrs. Clinton played a role in Castle Grande.
The Rose firm billing records show Mrs. Clinton billed Madison for 60 hours of legal work over a 15-month period; spoke with Mr. Ward on 14 occasions during a seven-month period; discussed legal matters with James and Susan McDougal at least 16 times in 1985 and 1986 concerning the Madison thrift; had at least 28 meetings with Rose firm lawyers on Madison; and met with state regulators concerning Madison at least twice.
In a September 1995 report, the FDIC said Mrs. Clinton and Mr. Hubbell drafted legal documents for Castle Grande that were used to deceive bank examiners and divert the $300,000 to Mr. Ward. Mr. Hubbell quit the Justice Department in 1994 and later pleaded guilty in the Whitewater probe to stealing $482,000 from his Rose firm partners.
While the FDIC made no specific recommendation as to the legal liability of the Clinton-Hubbell documents, the agency said their work had "facilitated" substantial commission payments to Mr. Ward, who acted as a "straw buyer" in the Castle Grande deal.
A straw buyer is someone who owns property in name only, having never put up any money or assumed any risk.
Tucker controlled Castle Grande -- a sewer and water system, trailer park, microbrewery and shopping center -- until it was closed by federal regulators in 1989, the same year Madison was shut down at a cost to taxpayers of $50 million. He underwent a liver transplant last year and agreed to cooperate in exchange for probation on his guilty plea in the bankruptcy scheme.
This article is based in part on wire service reports.
Copyright 1998 News World Communications, Inc.
Reprinted with permission of
The Washington Times.
To subscribe to the Washington Times National Weekly Edition, click this icon or call 800-363-9118.
