Whitewater controversy
It began with an investigation into the real estate investments of Bill and Hillary Clinton and their associates, Jim and Susan McDougal, in the Whitewater Development Corporation.
This failed business venture was incorporated in 1979 with the purpose of developing vacation properties on land along the White River near Flippin, Arkansas.
A March 1992 New York Times article published during the 1992 U.S. presidential campaign reported that the Clintons, then governor and first lady of Arkansas, had invested and lost money in the Whitewater Development Corporation.
[1] The article stimulated the interest of L. Jean Lewis, a Resolution Trust Corporation investigator who was looking into the failure of Madison Guaranty Savings and Loan, also owned by Jim and Susan McDougal.
From 1992 to 1994, Lewis issued several additional referrals against the Clintons and repeatedly called the U.S. Attorney's Office in Little Rock and the Justice Department regarding the case.
Jim Guy Tucker, Bill Clinton's successor as governor, was convicted of fraud and sentenced to four years of probation for his role in the matter.
[10] In the spring of 1978, McDougal proposed that the Clintons join him and his wife, Susan, in buying 230 acres (93 ha) of undeveloped land along the south bank of the White River near Flippin, Arkansas, in the Ozark Mountains.
The goal was to subdivide the site into lots for vacation homes, intended for the many people coming south from Chicago and Detroit who were interested in low property taxes, fishing, rafting, and mountain scenery.
[10] The four borrowed $203,000 to buy the land and subsequently transferred ownership of it to the newly created Whitewater Development Corporation, in which all four participants had equal shares.
[10][14] When Bill Clinton failed to win re-election in 1980, Jim McDougal lost his job as the governor's economic aide and decided to go into banking.
[12] In spring 1985, McDougal held a fundraiser at Madison Guaranty's office in Little Rock that paid off Clinton's 1984 gubernatorial campaign debt of $50,000.
Hillary Clinton, then an attorney at Rose Law Firm (which is based in Little Rock) provided legal services to Castle Grande.
[18] Taking place in the midst of the nationwide savings and loan crisis, the failure of Madison Guaranty cost the United States $73 million.
[27][28][29] In April 1994 after Webster Hubbell resigned from his position as Associate Attorney General and was facing fraud charges, there was the potential that he might cooperate with Ken Starr's investigation.
Media pressure continued to build, and on April 22, 1994, Hillary Clinton gave an unusual press conference under a portrait of Abraham Lincoln in the State Dining Room of the White House, to address questions on both Whitewater and the cattle futures controversy; it was broadcast live on several networks.
Afterwards, she won media praise for the manner in which she conducted herself during the press conference;[14] Time called her "open, candid, but above all unflappable...the real message was her attitude and her poise.
The New York Times was criticized by Gene Lyons of Harper's Magazine, who felt its reporters were exaggerating the significance and possible impropriety of what they were uncovering.
[37] At Clinton's request, Attorney General Janet Reno appointed a special prosecutor, Robert B. Fiske, to investigate the legality of the Whitewater transactions in 1994.
In May 1994, Fiske issued a grand jury subpoena to the President and his wife for all documents relating to Madison Guaranty, with a deadline of 30 days.
[3] Attorney Randy Coleman's defense strategy was to present Hale as the victim of high-powered politicians who forced him to give away all of the money.
[40] This characterization was undermined by testimony from November 1989, wherein FBI agents investigating the failure of Madison Guaranty had questioned Hale about his dealings with Jim and Susan McDougal, including the $300,000 loan.
However, he "flip flopped" in the face of "intense criticism" by conservatives and new evidence of sexual misconduct,[39] diverted to some degree by the burgeoning Clinton–Lewinsky scandal.
Starr's subsequent indictment of McDougal for criminal contempt of court charges resulted in a jury hung 7–5, in favor of acquittal.
Christopher Ruddy, a reporter for Richard Mellon Scaife's Pittsburgh Tribune-Review, and later CEO of Newsmax, helped fuel much of this speculation with claims that Starr had not pursued this line of inquiry far enough.
Gonzalez called Leach "obstinate", "obdurate", "in willful disregard" of House etiquette, and "premeditatedly" plotting a "judicial adventure".
[52] On November 19, 1998, Independent Counsel Starr testified before the House Judiciary Committee in connection with the Impeachment of Bill Clinton over charges related to the Clinton–Lewinsky scandal.
[56] Kenneth Starr's successor as Independent Counsel, Robert Ray, released a report in September 2000, that stated "This office determined that the evidence was insufficient to prove to a jury beyond a reasonable doubt that either President or Mrs. Clinton knowingly participated in any criminal conduct.
"[23] Nevertheless, Ray criticized the White House saying that delays in the production of evidence and "unmeritorious litigation" by the president's lawyers severely impeded the investigation's progress, leading to a total cost of nearly $60 million.
In May 1985, Jim McDougal sold the remaining lots of the failed Whitewater Development Corporation to local realtor, Chris Wade.
[58] The length, expense, and results of the Whitewater investigations turned the public against the Office of the Independent Counsel; even Kenneth Starr was opposed to it.
