Reprinted from The Washington Times , 5am -- May 6, 1998
'Payoff' check keeps Clinton in swirl of Whitewater probe
By Jerry Seper
THE WASHINGTON TIMES
A $5,081 check signed by Susan McDougal and containing the notation "Payoff Clinton" puts the president in the middle of a possible money laundering scheme involving a failed thrift and the real estate venture that began the entire Whitewater investigation.
Lawyers and others close to the probe said the check, introduced by prosecutors during McDougal's April 23 Little Rock, Ark., grand jury appearance, is believed to come from a cache of Madison Guaranty Savings and Loan Association documents reviewed by prosecutors and the thrift's late owner, James B. McDougal.
The Aug. 1, 1983, check, drawn on James McDougal's trustee account and payable to Madison, goes to a central accusation in the Whitewater probe -- that James McDougal surreptitiously provided financial benefits to Arkansas Gov. Bill Clinton in exchange for regulatory favors and access to campaign cash -- according to the sources.
It was not clear yesterday whether the check, along with information given in recent weeks to the grand jury by former Arkansas Gov. Jim Guy Tucker, the newest cooperating Whitewater witness, will lead to charges or to a mention in reports independent counsel Kenneth W. Starr is writing for the federal appeals court and the House Judiciary Committee, where possible impeachment hearings would be held.
Mr. Clinton's personal attorney, David E. Kendall, said the check involved efforts by the McDougals to pay off a Whitewater-related business loan at another bank. He described the notation as an accounting reminder that it involved the Clintons.
"This accounting notation simply refers to the retirement of a Whitewater Development Company corporate loan. Governor Clinton himself never received a cent of this," Mr. Kendall said.
Last year, a cashier's check bearing Mr. Clinton's name was found in the trunk of an abandoned car by a repair-shop owner near Little Rock. The $27,000 Madison check, later turned over to the grand jury, bore no endorsement from Mr. Clinton, but the proceeds are believed to have been deposited in one of two Arkansas banks where the Clintons did business.
The 1982 check was found in a tornado damaged car belonging to ex-Madison employee Henry Floyd, who said he was delivering thrift records in 1988 to a warehouse for storage but instead took the car to be repaired. Because of a billing dispute, he never went back to pick it up.
Mr. Kendall, at the time, also discounted that discovery, saying documents found in the trunk of a "long-abandoned used car may have the authenticity and credibility of a newly discovered and freshly written Elvis autobiography."
James McDougal, partner with the Clintons in Whitewater Development Corp., agreed to cooperate in the Starr probe after his ex-wife, Susan, made a September 1996 appearance before the grand jury. It was then that she first declined to answer questions about Mr. Clinton's knowledge of an illegal $300,000 loan she received in 1986. Mr. McDougal is believed to have pointed investigators to numerous documents and other potential witnesses.
A plea agreement in the case was acknowledged by Mr. Starr's office in court papers in November 1996 seeking a delay in Mr. McDougal's sentencing. At the time, the former thrift owner faced 84 years in prison but, with Mr. Starr's help, the sentence was reduced to three years.
In the filing, deputy independent counsel W. Ray Jahn said Mr. McDougal met with FBI agents and Whitewater prosecutors "numerous times, providing them with information pertinent" to the investigation.
Mr. Jahn said the information resulted in additional inquiries that required "interviewing and reinterviewing witnesses, conducting additional grand jury proceedings, and reviewing and examining records and documents."
Although is is not clear what information Mr. McDougal may have provided, he was in a position to know the financial workings of Madison -- which failed in 1989 at a cost of $50 million -- and Whitewater. At the time, prosecutors wanted to corroborate documents already in hand and to discover new records.
Mr. McDougal initially refused to cooperate but changed his mind after his conviction on 18 felony counts in the first trial. His cooperation included information that Mr. Clinton was aware of the loan to Susan McDougal -- which the president denied knowing about under oath in the first trial.
Mr. McDougal, who died March 8 at a federal prison in Texas, where he was serving his three-year sentence, first brought Whitewater to the public's attention, laying out the Arkansas real estate project for the New York Times in March 1992.
In a tape-recorded conversation during the 1992 presidential campaign, he called Mr. Clinton a liar and disputed a March 1992 claim that the Clintons had lost money in Whitewater:
"I noticed that article yesterday in The [Washington] Post where some guy there just accepted the Clintons' $68,000," Mr. McDougal said.
"I could sink it quicker than they could lie about it if I could get in a position so I wouldn't have my head beaten off. And Bill knows that."Copyright 1998 News World Communications, Inc.
Reprinted with permission of
The Washington Times.
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