Reprinted from The Washington Times , 5am -- April 20, 1998
Whitewater prosecutors split over charging Hillary
By Jerry Seper
THE WASHINGTON TIMES
Whitewater prosecutors have written at least one draft indictment of Hillary Rodham Clinton, but they remain divided over whether to charge the first lady with lying about legal work she did for a failed Arkansas real estate project.
Lawyers and others close to the Whitewater probe said the draft became "a work in progress" after Mrs. Clinton's January 1996 grand jury appearance, when prosecutors concluded she made false statements under oath in denying doing legal work for the 1,050-acre Castle Grande venture.
Sources said prosecutors remain divided over how to proceed in the case.
Some believe Mrs. Clinton should be indicted for false statements she made to the grand jury and to federal banking regulators at the Resolution Trust Corp. and the Federal Deposit Insurance Corp. about her Castle Grande work. They also think she and White House officials tried to cover up her involvement in the venture.
Others, while not convinced she was telling the truth, have said inconsistencies in Mrs. Clinton's sworn statements should be addressed in reports independent counsel Kenneth W. Starr will deliver to the federal appeals court and Congress.
"There is concern among some about how successful they might be in bringing a criminal indictment against Mrs. Clinton for obvious reasons, but there is no lack of desire to do so," said one lawyer familiar with the probe. "The requirements here are greater than just dotting the i's and crossing the t's."
Any indictment decision, the sources said, will be made by Mr. Starr in consultation with his top deputies and will hinge on two major points: whether there is sufficient evidence to contradict her sworn testimony, and whether prosecutors can win the case in court.
"No one wants to bring the case to court and lose," said a second lawyer also familiar with the probe.
Prosecutors, however, are convinced that it is Mrs. Clinton's own words that continue to fuel the controversy.
For example, the sources said, Mrs. Clinton said in sworn statements to the RTC and the FDIC that she did limited legal work for Madison Guaranty Savings and Loan Association, which helped bankroll the Castle Grande project, and did little or no work for Castle Grande. She told the same story to Whitewater prosecutors at a July 1995 White House deposition and is believed to have repeated the tale six months later to the grand jury.
But prosecutors say a review of the records shows that sworn statements by Mrs. Clinton are contradictory and misleading. The sources said her involvement with the failed project was only fully detailed with the discovery of Rose Law Firm billing records in the White House living quarters in January 1996, two years after they had been subpoenaed by Mr. Starr.
A week before the billing records were found, the RTC said in a Dec. 28, 1995, report it had little information on Mrs. Clinton's ties to Madison or Castle Grande. After the records' discovery, the RTC concluded Mrs. Clinton was more involved with the two entities than was previously known.
The records show Mrs. Clinton billed Madison for 60 hours of legal work; spoke with Madison officials about Castle Grande project on 14 occasions; discussed legal matters with Madison's owners, James or Susan McDougal, 16 times; had 28 meetings with Rose firm lawyers on Madison; and met with state regulators about Madison at least twice.
A major area of concern, the sources said, is an an option agreement regulators said "facilitated" a questionable $300,000 payment to Seth Ward, the Madison official to whom the first lady spoke about Castle Grande. The agreement was written by Mrs. Clinton and her Rose firm partner, Webster L. Hubbell.
The transfer guaranteed Mr. Ward a payoff and negated his liability in the project. While the option was never exercised, it disguised the reason for the payment and created a paper trail to justify the outlay to Mr. Ward, who is Mr. Hubbell's father-in-law.
Prosecutors have focused on Mrs. Clinton's billings between February and May 1986 for legal conferences involving the option's approval and the Ward payoff, the sources said.
Mrs. Clinton told the RTC in May 1995 she had no memory of providing legal services for Mr. Ward and said in a sworn statement she did not know the Castle Grande name, believing the project was called IDC -- after the property's former owner -- even though the Castle Grande name was widely associated with the site.
Former RTC lawyer Patricia Black, now associate inspector general at the FDIC, told the Senate Whitewater Committee in 1996 it was "quite likely" she would have tried to question Mrs. Clinton as part of the Madison inquiry had she known of the billing records.
She said Mrs. Clinton's legal work on the option would have been of interest because Mr. Ward, as a Madison employee, was part of "insider deals that resulted in a substantial loss to the institution."
Madison was closed in 1989 at a cost to taxpayers of $50 million.
The sources said prosecutors recently re-interviewed H. Don Denton, the chief lending officer at Madison. Mr. Denton, who testified before the Whitewater grand jury, told regulators that during the spring of 1986, he cautioned Mrs. Clinton about Castle Grande and she dismissed his advice.
Prosecutors, the sources said, also have questioned Mr. Denton about Mrs. Clinton's role in back-dating the Ward option. They said the option, dated Sept. 24, 1985, may have been rewritten in the spring of 1986 to increase the payment to Mr. Ward from about $75,000 to $300,000.
The sources said prosecutors also have focused on the destruction of records describing Mrs. Clinton's ties to Castle Grande as regulators closed in on Madison in 1988. They said the documents disappeared just before the Federal Home Loan Bank Board audited the thrift and were destroyed in what is believed to have been part of a plan to protect the Clintons from media scrutiny.
James McDougal, who died March 8 in a Texas prison, told prosecutors that Madison's records were moved to a small warehouse just before the audit.
Mrs. Clinton admitted taking part in a 1988 Rose firm "housekeeping effort" that included the destruction of her Madison and Castle Grande files.
It is not clear why Mrs. Clinton destroyed the records, since litigation concerning Castle Grande and Mr. Ward began that same year and continued through 1990.Copyright 1998 News World Communications, Inc.
Reprinted with permission of
The Washington Times.
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