For the past 20 years, Kenneth Starr has avoided the limelight. And why not? As the independent counsel who investigate Whitewater and other Clinton-related scandals, he received enough attention to last several lifetimes.
Now, however, Starr has written a book about those days. It’s called Contempt: A Memoir of the Clinton Investigation.
The contempt in question was that of Bill and Hillary Clinton. The two manifested it differently, though.
According to Starr, Bill Clinton displayed his contempt genially. During his interviews, Bill “bobbed and weaved, but was always pleasant as he avoided answering.”
Hillary, not surprisingly, was a different story. “In the space of three hours,” says Starr, “she claimed, by our count, over a hundred times that she ‘did not recall’ or ‘did not remember.’” Her “strained performance” struck Starr as “preposterous” and “suggested outright mendacity.” It was clear to Starr and his team that “Mrs. Clinton couldn’t be bothered to make it appear as if she were telling the truth.”
Starr considered bringing perjury charges against Hillary. He had no doubt that she committed the offense, but concluded it would be too difficult to prove she lied by repeatedly saying, “I don’t know.”
In short, Hillary’s “contempt” accomplished her mission.
Nowadays, few people know (or remember) the underlying offenses Hillary Clinton covered up with those “I don’t knows.” Perhaps Starr’s book will partially remedy this situation.
The following is an account of Hillary Clinton’s Whitewater-related misdeeds. It first appeared in substantially this form in a 2015 Power Line post:
In the 1990s, Clinton stole and/or caused to be destroyed [documents] establish[ing] her role as the attorney for participants in a fraudulent scheme called Castle Grande.
Clinton, working with Webster Hubbell and Vince Foster, stole hard copies of the billing records of the Rose law firm where they were partners. They erased the electronic version of these records. One set of these documents was later found in the White House, just outside Hillary’s private office, by an employee. Another set was found in Foster’s attic by his widow, some years after he committed suicide. Clinton’s time sheets (handwritten, as was the practice back in the day) were never found.
To understand why Clinton stole and destroyed the documents, it’s necessary to understand the Castle Grande back story. Here are the basics.
Bill Sweats the Small Stuff
In the 1980s, Hillary Clinton was a partner at the Rose law firm. Because she was also the state’s first lady, and because she liked to serve on various commissions and to escape from Arkansas whenever possible, she didn’t bill a lot of hours.
Like most big law firms, Rose didn’t mind as long as she brought in business for other lawyers to work on. But Clinton wasn’t bringing in a quantity of business commensurate with her status as the governor’s wife.
Under pressure to bring in more business, Hillary nagged her husband. Philandering Bill had more than even the normal incentive to accommodate his wife.
Accordingly, one day during his jog, he stopped by the office of Jim McDougal, the principal stock holder of Madison Guaranty Savings & Loan Association and a partner in Whitewater Development Company. The purpose of the visit was to urge McDougal to send some work Hillary’s way.
Years later, McDougal recalled how Bill, still sweating from his run, plopped himself down in an expensive leather chair — a gift to McDougal from his wife. McDougal’s main concern was how to get the governor out of the chair before he ruined it. (Bill denies the story — I did not have sweat in that chair — but this is the kind of thing that’s hard to make up.)
As a result of the meeting, McDougal retained the Rose law firm to do the legal work associated with a venture called Castle Grande. The firm performed this work in 1985 and 1986.
In addition to Madison Guaranty, Rose represented Seth Ward, an employee of Madison and the father-in-law of Webster Hubbell. Hubbell was Hillary’s law partner and friend, and later the associate attorney general of the United States in the Clinton administration. Hubbell worked with Clinton on the Castle Grande matter.
Mr. Ponzi, call your office
The Castle Grande project was a scheme to commit fraud through real estate loans. It was basically a pyramid scheme that used a series of loans to enrich Madison insiders. Madison was, in effect, McDougal’s personal piggy-bank.
The land in question was a scrub pine forest that previously had failed as an industrial development project. The sales price of the property was $1.75 million.
State regulations prohibited McDougal from investing more than 6 percent of Madison’s S&L assets. McDougal therefore put up $600,000 of Madison’s money. Seth Ward put up the remaining $1.15 million.
Ward borrowed the money from Madison on non-recourse, no personal obligation to repay basis. If federal regulators found out about this circumvention, Madison could be shut down.
The land appraiser for the property inflated his appraisals to support loans to purchasers, including future Arkansas governor Jim Guy Tucker who bought a water and sewer system for the Castle Grande project. The appraiser later pleaded guilty to federal conspiracy charges.
David Hale, head of an outfit licensed to provide lending to minorities and the economically disadvantaged, conspired with McDougal and Tucker to use his operation as a pass-through to generate additional loans from Madison. A friend and business associate of Hale’s borrowed $825,000 from Madison to buy three properties from Hale. But he never used the money. Instead, it went to Hale, who used it to recapitalize his company with matching funds from the Small Business Administration.
Hale loaned a $150,000 down payment to Tucker who bought out a portion of Ward’s Castle Grande holdings for $1.2 million. Tucker borrowed the additional $1.05 million from Madison.
McDougal loaned former Senator William Fulbright, a long-time friend, $700,000 to buy out the bulk of Ward’s remaining holdings. The net effect was to remove Ward’s non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison.
Through various “cross-loans,” McDougal hoped to prevent regulators from discovering Ward’s true role, and thus Madison’s full investment, in Castle Grande. But federal regulators weren’t deceived. In 1986, they removed McDougal from Madison Guaranty.
Eventually, the FBI was called. Federal prosecutors ultimately convicted 14 individuals, including McDougal and Tucker (by then the sitting governor of Arkansas). But this occurred years later, after Bill Clinton had been elected president.
Will the Bloom Come Off the Rose?
By 1991, Bill Clinton was running for president. Like his other Democratic rivals, he campaigned against the “decade of greed” that had brought us the S&L scandals.
Fortunately for his campaign, Hillary’s involvement in the Madison scandal had remained obscure. In fact, when the Resolution Trust Corporation, a temporary federal agency created to resolve the S&L crisis, wanted to sue the accounting firm that had handled Castle Grande, it hired Rose (in the person of Hubbell) to bring the lawsuit. Hubbell never disclosed the obvious conflict that stemmed from his firm’s work on Castle Grande; nor did he reveal the fact that Rose performed work on this matter in 1985 and 1986.
Castle Grande seemed to be behind Hillary and Hubbell when a New York Times reporter named Jeff Gerth arrived in Little Rock and started asking questions. Some of his questions pertained to Hillary’s involvement with McDougal.
The Lady’s Records Vanish
By this time, the Clinton campaign already believed it had two strikes against it: Gennifer Flowers/”bimbo eruptions” and Bill’s draft dodging/disrespect for the military. Clinton involvement in the S&L scandal felt like strike three.
Hillary contacted Vince Foster. Foster had not been involved in the Castle Grande representation, but he was Hillary’s mentor and trusted adviser — so trusted that he would eventually come with the Clintons to Washington, where he served as second in command in the Office of White Counsel the unit that, among other things, tries to put out fires involving the president.
Foster and Hubbell sprung into action. They printed out all billing records pertaining to Castle Grande and removed them from the Rose law firm, whose property they were. Foster and Hubbell also collected all files pertaining to the representation — sweeping from office to office to demand the files — and removed them from the premises. And Hillary Clinton’s time sheets disappeared.
As for the electronic version of the billing records, they were erased. The FBI’s forensic team was unable to reconstruct them.
Hillary told Gerth that a Rose associate, Rick Massey, had done all of the work on the McDougal project. With the billing records and time sheets gone, she could feel comfortable telling this lie, which she would repeat to others in the media.
It sufficed. Castle Grande/Whitewater was a non-issue in the 1992 presidential campaign.
Guess What I Found
Federal prosecutors remained on the trail, however. Eventually, over Hillary’s objections, the administration agreed to the appointment of an independent counsel to investigate “Whitewater.”
In 1994, the Castle Grande billing records were subpoenaed. They were not produced at that time.
A year and a half later, Carolyn Huber, a White House employee, found the billing records in the private quarters of the first family, right outside Mrs. Clinton’s private office. Huber said that, not knowing what they were, she packed them up and took them to her own office. Only later, in early 1996, did she realize that these were the famous billing records that prosecutors were after.
The billing records were then produced, two years late. Hillary’s fingerprints were on them.
The records show that Clinton billed time for work on Castle Grande, and was the billing partner for this representation. More than that, they show that she and/or Hubbell performed legal services — described, for example, as “conference with Seth Ward” or just “Seth Ward” — on every day in which federal prosecutors had found that McDougal and/or his cronies committed an act in furtherance of their unlawful conspiracy e.g., backdating documents and making phony loans.
In effect, the billing records place Clinton and Hubbell at the scene of the crime.
Crime and Punishment, of some
The independent counsel indicted Hubbell for fraud against federal regulators. The fraud consisted, in essence, of concealing from federal agents and investigators the true role of Hubbell, the Rose law firm, and Hillary Clinton in Castle Grande.
Out of respect for the White House, the indictment referred to Hillary only as “Rose’s 1985-86 billing partner.” It did not mention her name. However, she appears throughout the indictment — referred to approximately three dozen times.
Hillary Clinton was slated to be called as a witness at Hubbell’s trial. Her attorney met with lawyers from the special counsel’s office to try to persuade them that the charges had nothing to do with Hillary. This absurd claim was rejected. The very next morning, Hubbell’s lawyer informed the special counsel that he would plead guilty.
Throughout the Whitewater/Castle Grande scandal, Hillary Clinton’s instinct was to stonewall and deceive. She lied about her role and removed and destroyed documents.
From Hillary’s perspectives, her instincts were spot on. Absent the appointment of the independent counsel, much unpleasantness, including the Monica Lewinsky matter and the impeachment, might well have been avoided. And had Clinton not stolen the Castle Grande documents, her husband’s 1992 campaign might have been derailed.
What’s past is prologue
Decades later, Hillary Clinton found herself embroiled in another scandal involving the destruction of records. The email scandal wasn’t just a replay of the Castle Grande document theft and destruction; it was the logical outgrowth of it. Hillary’s basic instinct having been reinforced in the 1990s, it was natural that they would give rise to a similar scandal.
As in the 1990s, Hillary narrowly escaped prosecution. However, she also narrowly lost the presidency, quite possibly because of the email scandal. Thus, Hillary’s basic instinct did not serve her well the second time around.