Hillary, Whitewater, and Madison Guaranty

In 1994 the Hillary Clinton Quarterly and Matt Hallisey investigated Hillary’s role in the complex business deals of the McDougals, the Whitewater land development project, and Madison Guaranty Savings and Loan. 

“You can’t be a lawyer if you don’t represent banks.”
— Hillary Clinton, March, 1992

As a special counsel begins his investigation into a real estate venture part-owned by then-Governor and Mrs. Clinton in the mid-1980s, questions have been raised about Mrs. Clinton and her law firm’s representation of various entities involved in a savings and loan association that later collapsed. The special counsel, Robert B. Fiske, Jr., is examining documents to determine whether the owner of Madison Guaranty Savings and Loan Association improperly diverted money from his institution to Whitewater or to pay Mr. Clinton’s gubernatorial campaign debts, or in any other way that may have benefited the Clintons. The owner, James B. McDougal, was a part owner of Whitewater Development Company with his wife Susan and the Clintons; he also served as Mr. Clinton’s economic development aide in his first term as governor. The investigation is also expected to focus on allegations that the Rose Law Firm, and perhaps Mrs. Clinton herself, as a partner at the firm, engaged in representations of clients that may have constituted a conflict of interest under ethical guidelines for lawyers.

Among the many questions facing the special counsel are the following:

1. Did Hillary Rodham Clinton represent Madison Guaranty Savings and Loan Association before the Arkansas Securities Commissioner in 1984 and 1985?

The S & L sought authorization from the regulatory board to issue a class of preferred stock and to set up a service corporation to engage in the securities brokerage business. As found in an investigative report issued for the Resolution Trust Corporation (RTC, a government agency that disposes of assets of insolvent S & Ls), the Rose firm represented Madison before the Securities Commissioner, Beverly Bassett Schaffer, who was appointed by then-Governor Bill Clinton. Mrs. Clinton had joined the firm in 1977 and became partner in 1979, during her husband’s first term as governor. Although she was not an active trial attorney at the Rose firm, Mrs. Clinton lent prestige to the firm, and she made over $200,000 when she resigned in 1992.

The Rose firm has said that another partner at the firm, Richard Massey, conducted most of the work before the securities board. However, correspondence between the law firm and the securities department shows that either Mrs. Clinton or Massey could be contacted for information. Further, Mrs. Clinton was involved to the extent that she drafted an opinion for the firm, concluding that Madison, as an Arkansas chartered institution, could lawfully issue preferred stock. In May, 1985, Ms. Bassett responded to the law firm by letter addressed to Mrs. Clinton, in which she agreed with Mrs. Clinton’s conclusion and approved Madison’s application to issue preferred stock.

In September, 1985, the securities commissioner approved the service corporation conditioned on Madison raising the required capital by the end of 1985. Madison never raised the capital and the service corporation was not formed. In 1986, Madison was insolvent and the Federal Deposit Insurance Corporation (FDIC, an independent executive agency that insures deposits in qualified banks and savings institutions) took control, ousting Mr. McDougal as owner. Thus, although it is unclear whether Mrs. Clinton appeared before the regulatory board (lawyers at the firm have said they cannot recall her ever appearing before the commission), she was actively involved behind the scenes in Madison’s efforts to gain approval to issue preferred stock and engage in brokerage activities.

In representing Madison before the regulatory board, Rose presented an audit report of Madison’s financial statements issued by Frost & Co. for calendar year 1984. In 1988, Madison sued Frost & Co. for accounting malpractice, alleging that the accounting firm failed to fairly represent Madison’s financial condition. The following year, the FDIC retained Rose, after the late Vince Foster solicited the business for the firm, to pursue the lawsuit against Frost, joining Madison as a defendant. In the lawsuit, which was later settled in the FDIC’s favor for over $1 million and earned Rose more than $400,000 in legal fees (increasing taxpayer burden to bail out the thrift), Rose argued that Frost failed to detect Madison’s insolvency during its 1984-85 audit of the S & L. The extent, if any, of Mrs. Clinton’s involvement in the lawsuit is unclear.

2. Did the First Lady’s involvement as a lawyer for the Rose firm appearing before the Arkansas Securities Commissioner constitute a conflict of interest?

In a February 17, 1994 report of a review conducted by the FDIC’s Legal Division into questions related to the FDIC’s retention of Rose in the litigation resulting from the failure of Madison, the FDIC found that Rose’s prior representation of Madison before the securities commissioner and its later representation of the FDIC in its lawsuit against Frost and Madison did not represent a conflict of interest. The FDIC analyzed whether a conflict of interest existed that should have been disclosed before Rose agreed to represent the FDIC. In finding that Rose’s representation of Madison before the securities board in 1985 was not “directly adverse” to its representation of the conservatorship in 1989, the FDIC reasoned that Rose represented Madison’s interests in both actions. The latter representation was merely on behalf of the S & L’s conservator and the agency’s takeover of Madison has been likened to a trustee in bankruptcy; thus, Rose’s representation was not adverse.

Ethical guidelines for attorneys, embodied in a code of ethics in all states, including Arkansas at the time, require attorneys to examine their relationships with clients to ensure that the lawyer’s professional judgment is exercised solely for the client’s benefit, free of any compromising influences and loyalties. It is the lawyer’s, not the client’s, responsibility, to resolve conflicts of interest questions. This duty of loyalty to the client underlies the rule that a lawyer must not represent a client if to do so will be “directly adverse” to another client’s interests unless the lawyer “reasonably believes the representation will not adversely affect the relationship with the other client and each client consents after consultation.”

A client must not be asked to consent if a “disinterested lawyer would conclude that the client should not agree to the representation under the circumstances.” Consent is invalid unless it is given by the client after consultation, defined as information “reasonably sufficient to permit the client to appreciate the significance of the matter in question.” In other words, the attorney must disclose all relevant facts to the client.

In general, lawyers within a law firm are usually regarded as a single unit for conflicts of interest purposes. That is, if one lawyer within a firm has a conflict of interest and cannot take on a matter, no other lawyer in the firm can take on the matter either. Again, loyalty to the client is the purpose of the rule with the practical recognition that information acquired by one lawyer is frequently exchanged among attorneys within a law firm.

Rose’s senior administrative partner, Webster L. Hubbell (former Associate Attorney General in the Justice Department), has said that when Rose represented the FDIC in its suit against the auditor Frost & Co., he orally disclosed to the FDIC the firm’s prior representation of Madison before the regulatory board. Written disclosures of conflicts of interest are not required under ethical guidelines for lawyers. However, prudent lawyers often use written disclosures and client consent in conflicts of interest matters. The FDIC’s report, however, states that it is unclear whether the FDIC staff was informed of the prior representation.

With the passage of time and inadequate documentation, the FDIC’s investigation failed to uncover any evidence of disclosures. And, since at the time (the late 1980s) many savings and loans were going into conservatorship, the FDIC did not have formal guidelines in place to deal with conflicts. (It was not until 1990 that the agency adopted procedures requiring client waivers even where there is only the “appearance” of a conflict.) In its report, the FDIC stated that disclosure of prior representation as involved in this case may not have been required. Yet, in an apparent realization that the FDIC may have overlooked a violation in this instance, the report states that “where a firm is aware of such a prior relationship, we would expect it to convey that information to our staff to assist in determining whether to retain the firm.” In any event, it concluded that the prior representation did not represent a conflict of interest.

Since the report’s release, it has been heavily criticized by some Republican members of Congress as playing down the true extent of an ethical violation by the Rose firm. (The acting head of the FDIC, Ricki Tigert, is a personal friend of the Clintons and has since agreed to recuse herself from any issues involving the Clintons and Whitewater.) According to the FDIC spokesman, David Barr, the FDIC has reopened an investigation into the Rose firm’s retention in response to Senator Alphonse D’Amato’s request for a new investigation. This official investigation, Barr says, is expected to last 90 days and will be conducted by the FDIC’s Inspector General’s office. That office has greater powers and authority not possessed by the Legal Division, including the power to subpoena records and documents and obtain statements under oath.

The RTC report, on the other hand, suggests Mrs. Clinton’s firm failed to properly disclose its dealings with Madison. The report mentions Mr. Hubbell’s verbal disclosures but says no documents were found detailing other conflicts of interest. In fact, the RTC’s attorney cannot recall anyone at the Rose firm telling her that the firm previously represented Madison. The RTC report leaves it to the General Counsel to determine any appropriate action.

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Mrs. Clinton, if she did advocate on behalf of Madison before the securities commissioner, did not necessarily create an ethical violation of conflict of interest rules. Although Ms. Bassett (the securities commissioner) has said she was unaware of Mrs. Clinton’s Whitewater investment with Mr. McDougal, the commissioner’s office could have been informed of the relationship and the conflict may have been waived. In any case, a lawyer, under the ethical guidelines, has a duty of diligence, which includes acting with dedication and zeal on behalf of the client. The attorney may use any lawful and ethical measures required to vindicate a client’s cause. Indeed, her relationship with McDougal may have caused Mrs. Clinton to be zealous and work extra hard on behalf of her client—” what any good lawyer should do,” says George Washington University Law Center professor of legal ethics Thomas D. Morgan. However, Mrs. Clinton’s involvement lends an appearance of impropriety. Before an official appointed by her husband, Mrs. Clinton advocated on behalf of Madison, the owner of which was her investment partner.

3. Did the Rose Law Firm’s representation of Madison, with Hillary Clinton’s active involvement in advocating on the client’s behalf before the securities commission, constitute a Kaye, Scholer-type violation of ethical regulations?

On March 11, 1992, Kaye, Scholer, Fierman, Hays & Handler (Kaye, Scholer) a Manhattan law firm that represented Charles Keating’s Lincoln Savings & Loan, settled with the Office of Thrift Supervision (OTS, a Treasury Department office that examines and regulates savings associations) for $41 million arising out of an administrative action. OTS had frozen Kaye, Scholer’s assets in response to alleged legal and ethical violations, which the firm vigorously denied, in the firm’s representation of Lincoln. Since the case was never litigated and Kaye, Scholer was forced to settle because of the unprecedented asset freeze, the significance of the action is unknown.

In the 1980s, Kaye, Scholer represented Lincoln before the Federal Home Loan Bank Board (FHLBB, the OTS’s predecessor) on securities filings and bank examinations. OTS accused Kaye, Scholer of numerous violations, including misrepresenting Lincoln’s income and net worth and failing to disclose the reasons for the resignation of Lincoln’s auditor. OTS alleged that, by misleading the FHLBB, Kaye, Scholer prevented regulators from recognizing the riskiness of Lincoln’s loan practices and problems with its financial condition.

The practical implications of the Kaye, Scholer case have been interpreted by some legal experts as imposing an affirmative obligation on attorneys to conduct due diligence in regard to their banking clients. That is, they may not necessarily merely rely on their clients’ information when advocating before a government regulatory board; they must investigate further and provide full disclosure. The decision seems to expand the fiduciary duty lawyers owe their clients to government regulators.

The Rose firm’s representation of Madison has been compared to Kaye, Scholer’s representation of Lincoln. Madison was likely insolvent at the time Rose appeared before the regulatory board in 1985 and vouched for an audit report issued by Frost & Co., the accounting firm that the FDIC later sued. Since Mrs. Clinton and others stood to benefit from Madison’s continued existence (the thrift was a source of loans for many prominent Arkansans), it has been speculated that the Rose firm may have misled the state securities commissioner.

According to Pr. Morgan, “if Mrs. Clinton’s personal interests in Whitewater Development interfered, such that she favored McDougal, and thus was not in the best interests of the institution (Madison) itself, then there could be a Kaye, Scholer-type violation.” If the Rose firm’s attorneys knew of Madison’s insolvency and actively misled the regulatory board, there is clearly an ethical violation, perhaps as severe as Kaye, Scholer. However, only the special counsel, with sufficient resources at his disposal, will be able to determine the extent of any improprieties by the Rose firm before the regulatory board. And perhaps only Mrs. Clinton herself can resolve many of the unanswered questions about her role.

4. What effect, if any, will the special counsel’s investigation into Whitewater Development and Madison Guaranty have on the First Lady and her legal career outside government?

An appearance of impropriety has been raised in Mrs. Clinton’s involvement with Whitewater and Madison. By investing in real estate with an individual who later became an owner of a prominent Arkansas savings and loan and then representing the thrift before the Securities Commissioner raises a question as to her objectivity in the matter. How this bodes for the First Lady and her legal career beyond government service remains to be seen. The special counsel’s investigation is expected to be thorough and lengthy.

The American Bar Association (ABA) has formulated a set of standards to impose sanctions on attorneys who violate ethical guidelines. They serve as a model for courts to apply, taking into account the facts and circumstances of each case and any aggravating or mitigating circumstances, such as the attorney’s knowledge or the client’s waiver in the matter in question.

Generally, the court asks a series of questions to determine the proper sanction:
(1) what ethical duty did the lawyer violate?
(2) what did the lawyer know at the time of the injury?
(3) what was the extent of the injury caused by the lawyer’s misconduct?
(4) are there any aggravating or mitigating circumstances?

The ABA regards the duty of loyalty to the client, including avoiding any conflicts of interest, as among the most important of the ethical principles designed to protect the public. Although punishment can be as severe as disbarment, it is rarely imposed in conflict of interest situations because the lawyer must be found to have “knowingly used information relating to representing his former client with the intent to benefit the lawyer or another while causing serious injury to a client.” Either suspension, reprimand, admonition, or even a less severe sanction, if any at all, may be appropriate in this case.

Given the passage of time, lack of FDIC procedures and documentation, the initial findings of the FDIC exonerating the Rose firm, and the significant possibility that Mrs. Clinton did not even appear before the regulatory board, sanctions, even hypothetically, are difficult to impose. For practical purposes, should Mrs. Clinton return to private law practice following government service, the prestige she will lend to a firm will likely outweigh any damage to her credibility that her involvement in Madison’s regulatory board activity could possibly have done.

Notwithstanding the possible effects on Mrs. Clinton’s private legal career, however, since the statutory mandate for the special counsel does not apply to the First Lady, any findings of impropriety may not damage her public role. In general, it may lead to congressional oversight of the First Lady’s advisory role and definition of the functions of First Lady and perhaps compensating her. Indeed, it may subject the First Lady to greater scrutiny and accountability. Ironically, given her powerful role as First Lady and the warm response she has received on Capitol Hill, the investigation’s findings may cause Congress to treat Mrs. Clinton with skepticism and as an ordinary White House official.

Sleaze for sale: How Hillary Clinton’s enemies use the media.

From the Hillary Clinton Quarterly archives —

When Bill Clinton became the 42nd president of the United States, Little Rock, Arkansas, officially became the red light district of American politics.

What’s being sold in Little Rock these days are rumor and innuendo about Bill and Hillary Clinton, and the trade is brisk. As in other American cities, the Little Rock district is inhabited by a predictable assortment of sleazy regulars — in this case, ultra-conservative Rambo-types and Ross Perot pseudo-operatives.

What’s surprising, however, are the number of respectable journalists nibbling at the edges, somewhat like shy, first-time johns, titillated by the sleazy spectacle, but afraid to score, lest they catch some fatal disease or, worse, get caught by their wives.

Our story about “sleaze for sale” begins on November, 14, 1992, a few days after Bill and Hillary Clinton won the right to live at 1600 Pennsylvania Avenue. The story ultimately leads to some of the most respected media in this country, including the Wall Street Journal, Los Angeles Times, the Associated Press, and CBS News.

Following a report in the Little Rock Democrat-Gazette in early November, 1992, about our intention to publish the Hillary Clinton Quarterly, we received a phone call from a man who said he had proof that Hillary Clinton had “as many affairs as Bill Clinton.”

The man’s name was Larry Case. He described himself as a retired private investigator with connections to those friendly folks who brought us the Gennifer Flowers affair. Larry Case shared some amazing information with us. Hillary, he said, “was involved with several lawyers at the law firm,” while half of Hillary’s friends “were having affairs with Bill.”

As we reviewed our media clippings regarding the troopers’ story, we were amazed to discover that Hillary Clinton, while vocal in her defense of her husband, never denied or responded to the troopers’ allegations regarding her own alleged infidelities.

Case specifically mentioned someone named Barret Hamilton, Junior. “They had an affair. The state police found pictures of him and Hillary.” Our would-be Little Rock informant also said that he could put us in touch with railroad workers who would testify that they had slept with Hillary Clinton.

We were just a little bit curious: why hadn’t these allegations about the soon-to-be First Lady been reported before? Case said they thought they had enough dirt to discredit Bill Clinton. “We didn’t feel she was a factor, so nobody reported on her,” he told us.

We thanked Case for calling and went back to working on other stories for the premier issue of HCQ. A few days later, however, we received another phone call from Little Rock, this time from someone named Larry Nichols. Larry #2 told us that Larry #1 had suggested he call. Larry #2 had worked for Clinton at the Arkansas Development and Finance Authority. His story was pretty much what we heard from Larry #1. Mrs. Clinton, Nichols told us, was “dating a Mr. Dennison at the Rose Law Firm.”

Nichols explained that “Hillary and Bill have what you’d call an open relationship.” Why, we asked Larry #2, did these stories never appear before? No one would dare say anything negative about the Clintons, he told us. “This state is so zipped up,” was how he described it.

The two phone calls — one from Larry Case, the other from Larry Nichols — were our first glimpses at the sordid underbelly of American politics. In all candor, from a journalistic standpoint we initially felt intrigued by the calls. There had been enough in the press about Bill’s philandering that it seemed conceivable that Hillary might have tried to even the score by doing the same. Now, just as they were preparing for Washington, we were getting phone calls from two self-described Little Rock insiders who could bring down a President, or a First Lady, if they could prove their story.

On the other hand, it was clear that the Two Larrys were attempting nothing less than character assassination. Neither Larry offered any proof, their motivation was suspect, and the idea of publishing their remarks made us feel as sleazy as the allegations. We decided to leave the dirty work to the tabloids.

Then came “Troopergate.”

David Brock’s piece in the American Spectator raised the art of political pornography to a new level. What made the story significant was the painful and faltering response of Bill Clinton to allegations of marital infidelity, and the casualness of the mainstream media in repeating the allegations.

We decided to find out what we could — specifically as the story related to Hillary Clinton. Brock offered some tasty vignettes of Hillary responding to Bill’s indiscretions, as well as a detailed report of the First Lady engaging in some amorous activity with her law partner, American Spectator.

As we reviewed our media clippings regarding the troopers’ story, we were amazed to discover that Hillary Clinton, while vocal in her defense of her husband, never denied or responded to the troopers’ allegations regarding her own alleged infidelities. We called the White House press office and asked deputy press secretary Neel Lattimore about it. “We were never specifically asked about her by the press,” he said. “Well, then, we’re asking,” we said, incredulous about this example of blatant gender bias. “Mrs. Clinton refuses to dignify the story — any part of the Spectator story — with a response,” said Mr. Lattimore. At least we asked.

We braced ourselves for the worst and called Little Rock. It had been more than a year since Larry Case and Larry Nichols first called us. We never reached Larry Nichols, though we had a strange conversation with a woman who answered for him. “I just want out of this mess,” she told us. We did speak to Larry Case, once in mid-December, 1993, a day or two after the Troopergate story broke, and then in mid-March, 1994, after Troopergate had disappeared from the radar screen and just as Whitewater was heating up.

Talking to Larry Case is an eerie experience. Like an episode from the Mad magazine cartoon, “Spy vs. Spy,” we knew that while we were recording him, with his permission, he was recording us, without our permission. Our conversations lasted well over two hours. From what he said to us, it’s very clear that disseminating rumors about Bill and Hillary Clinton is second only to chicken farming as a growth industry in Arkansas. As Case put it, “everybody here had something for sale in regards to Clinton.”

What’s also clear is that there is a substantial and steady demand for anti-Clinton stories — the more lurid the better. The market, in approximate order of significance, includes members of the far-right media, pro-choice evangelicals with cash in their pockets, national and local Republicans, the tabloids (both foreign and domestic), and lastly, the mainstream media.

With such a demand for anti-Clinton material, it’s clearly a seller’s market: the amount of substantiated scandal for sale is significantly less than the number of potential buyers. Indeed, there appears to be a hierarchy among scandal mongers. At the apex are those who can substantiate their stories with tape recordings, witnesses, or affidavits. At the bottom of the scandal chain are story tellers with unverifiable, albeit racy, stories to tell. No doubt, Pareto’s law rules here, so that 80% of the rumors come from 20% of the rumor-mongers.

What is more astonishing than the lurid tales told by people like the Two Larrys is the complicity of some of the nation’s most respected media in creating and nourishing a market for Clinton-bashing. The traditional media, based on some hypocritical journalistic standard, wait for the tabloids to break a new Clinton scandal. Then, once news of the scandal itself becomes news, the mainstream press then freely reports it. Informants like the Two Larrys come in handy, both for providing tips about which angles of a story to pursue, and for actual information.

In checking out Case’s story, we confirmed that he has met and/or had telephone conversations with Bill Rempel, an investigative journalist for the Los Angeles Times, John Fund, an editorial writer for the Wall Street Journal, and Bill Simmons, Little Rock bureau chief of the Associated Press. John Paxon of CBS News did not return our phone calls.

No one will admit to using any information provided by Larry Case. Given our own experience, we have to ask why these otherwise credible news organizations are dealing with Larry Case (and all the other Larrys) in the first place?
John Fund, who told us that he did attend the Washington meeting described in our interview with Case, blamed the Clintons for forcing journalists to rely on questionable sources and informants. If the Clintons were more forthright in disclosing information, he argued, the press wouldn’t need the Larry Cases of the world. (Such an argument reminds us of the john who blames his frigid wife for his trips to the whore house.)

Later in our conversation, Fund agreed that the boundaries among traditional media, print and electronic tabloids, radio talk shows, celebrity journalists and cause-related newsletters have become so blurred that it becomes nearly impossible to sort out good sources from bad sources, a credible news tip from one that’s completely self-serving.

At the very least we have to acknowledge the baseness of the game being played, not just by someone like Larry Case, who freely admits he hates Clinton and is out to make a buck, but by everyone who hangs out in the red light district and is trying to score.
What follows is a transcript of two conversations with Larry Case. Our purpose in publishing the transcript is to give our readers a first-hand look at the Little Rock rumor mill. It is not for the squeamish or the gullible. After getting Larry’s permission to turn on our tape recorder, we asked him about the American Spectator story, which had just broken in the media that week.

First Conversation — December, 1993
HCQ: Why is it that these stories didn’t come out before?
CASE: Well, I can tell you why not. Because the local media here is feeding off of him being president. You being a writer and whatever yourself, you know when you got the president from your home state, you pretty well want to keep him there, ‘cause it’s kind of like “designer news,” you know.
HCQ: Do you know anything about the president or his staff people trying to keep things quiet?
CASE: Oh, yeah.
HCQ: Such as what?
CASE: Well, I won’t go into it on the phone.
HCQ: Well, they did say, I guess Bruce Lindsey said in a report that they did discuss it with troopers. Were they offering people jobs, as far as you know?
CASE: The Clinton Administration?
HCQ: Yeah.
CASE: Oh, yeah.
HCQ: I mean to keep quiet about what was . . .
CASE: Sure.
HCQ: When I called Larry Nichols the woman who answered seemed pretty upset about something. Do you have an idea? She had said she just wanted out and I wasn’t sure what she was referring to.
CASE: I understand that she is telling everybody that they don’t want no calls, but Larry Nichols was on A Current Affair last night. He is, you know, he got me trapped into some of this stuff by virtue of trying to come to me and getting my information. . . Larry Nichols has nothing, nothing whatsoever does he have. Whatever he had, he had from me. Larry Nichols has told so many lies in the last few months and it can be proven.
HCQ: What’s his motivation?
CASE: Uh, he hates Clinton. I mean I personally hate Clinton, too, but my motivation is, Clinton made all these offers to me, and he made them through other people, and he made them to me directly at the mansion, that I was going to be the head of the “ABC,” if I would take care of some problem he had.
HCQ: ABC is what?
CASE: Alcohol Beverage Control. So therefore that offer was made to me in the presence of the colonel of the Arkansas State Police and . . .
HCQ: Goodwin?
CASE: Yeah. . .and the director of finance and administration. We were all at the same meeting at the governor’s mansion at 7:30 a.m. in the morning. The meeting was called the day before and I didn’t know it until that night, and I had no idea Goodwin was going to be there. He told me he didn’t know he was going to be there. These offers had been made to me. That’s my personal situation.
HCQ: And that just never came to pass.
CASE: No.
HCQ: You’re a retired P.I.?
CASE: I’m a retired P.I., you know, but I was virtually forced out of the P.I. business, but I was going to leave anyway because I had so many offers. Once they tried to discredit me, as they’re doing to these state troopers. You’re gonna watch these state troopers take a fall. You just mark my words, these troopers are on their way down.
HCQ: They’re up against some pretty powerful people.
CASE: Very powerful people. And I really don’t know what their lawyers are doing by not letting them release names. They’re not releasing names. They’re just telling incidents and situations.
HCQ: How do you account for the fact that the AP had talked to a number of these women, that they all denied it or just refused to comment?
CASE: That was all planned. The local AP here is a joke, and I will tell the chief of the local bureau that myself. I sent him tape recordings of prostitutes that I had interviewed on the telephone and never met in my life and they gave me detailed descriptions of Clinton and, you know, everything. I gave him copies of those tapes.
HCQ: Who did you give those to?
CASE: Bill Simmons, chief of the bureau of the Associated Press here in Little Rock. He is an avid Clinton fan. And he either destroyed them or misplaced them or sent them back to me with a letter, which I have from him, saying that he was sorry that they got messed up in his tape machine. Now that’s what I received back on more than two occasions.
HCQ: Well, who would have hired you to look into Bill Clinton’s private life?
CASE: I won’t comment about that.
HCQ: Republicans, I’ve got to presume.
CASE: You know, I won’t comment on that.
HCQ: Does Ross Perot have anything to do with any of this?
CASE: I won’t comment about that. (Long pause) If you check my phone records, you would see phone calls back and forth between Ross Perot’s office and my house.
HCQ: I would.
CASE: Yes.
HCQ: Well, now, another question. When you called here, I wrote down, I didn’t tape record our conversation, but I kept notes. You said about Hillary Clinton: “She had as many affairs as Bill Clinton.”
CASE: That’s the information that people were giving to me, which I never even looked into. I got one man right now, I just left him, talking about a lesbian affair that she had. You know that Vince Foster was supposed to be her boyfriend.
HCQ: Yeah, I heard rumors about that. You had also mentioned someone named Barret Hamilton.
CASE: Yeah. Junior.
HCQ: Right.
CASE: Now my understanding is that when he died they cleaned out all the photographs at his condo in Colorado and here, too, of when he was with Hillary. Now that’s my understanding.
HCQ: That could only come from the state police.
CASE: I can’t comment on that. I’m having enough pressure here now, I don’t need no. . .
HCQ: Are you getting a lot of calls.
CASE: Shit. My phone hasn’t stopped ringing.
HCQ: I think this is all a big plot by Little Rock to get back in the news.
CASE: (Laughs) I don’t know what it is. Little Rock won’t go against Clinton for more than a 12-hour period. They’re hot on it for about 12 hours and then they’re cooled off. But the Associated Press here is strictly pro-Clinton.
HCQ: ou said you had played for Simmons. . .
CASE: I left the tapes with him. I’ve got letters, documents, signed by him back to me where he destroyed them or lost them, whatever. . . Every time something would happen to my recordings, he’d send them back to me with documentation.
HCQ: Were you working with Larry Nichols at one point?
CASE: No! Larry Nichols contacted me. I have no idea about Larry Nichols, till the Los Angeles Times told me we needed to get together and Bill Rempel told me Larry Nichols wanted to talk to me, and I called Larry Nichols and he responded. It was a great mistake, basically because I have caught Larry Nichols in so many lies. And I recorded my conversations with Larry Nichols. At one point he was telling me who he was doing it for — it was Republicans, he named them, he gave me names. I don’t know if you know this, I was contacted and I have faxed copies by a Washington law firm to me and an associate of mine in Arizona trying to buy everything we had two days before the election.
HCQ: What is the purpose now of coming out with these stories?
CASE: I don’t know what they’re doing it for. There’s been two other state troopers that was with them originally and now they have backed off.
HCQ: So now there’s just Patterson and Perry.
CASE: They’re trying to find Danny Ferguson and Ronnie Anderson.
HCQ: As far as Mrs. Clinton is concerned, the only place where she comes into the picture is when she had this argument with her husband.
CASE: Yes. Now he does have a temper. Larry Patterson acknowledged on CNN the other night that he had taken a girl to see Clinton off when he left for Washington. Hillary ran up to Larry and said “I know what she’s doing here and you better get that whore out of here.” I’m under the impression that that was Suzy W—, Suzy being the one that they alleged had his baby here, that worked in the governor’s office. I can tell you this that as of last night she is on a week’s vacation and she has been transferred to Bill Clinton’s Little Rock presidential office.
HCQ: If I have more questions, would you mind if I call back?
CASE: No, I don’t mind. Like I said, other than Vince Foster. . . I can tell you this. I was contacted by the Park police when Vince died. Remember how he died? They requested two tapes that I had. I certified mailed them to Captain Hume of the Park police return receipt requested. It took me two months to get that return receipt after two tracers. After two months I finally got it.
HCQ: This was a tape of . . .
CASE: This was a tape of conversations in regard to the Vince Foster murder. You can call them and ask them. I have no problem with you asking them what was on the tapes. I have copies of all the certification, where I sent it, then I have the return receipt when they signed for it.
HCQ: What do your instincts tell you about Foster and Hillary?
CASE: Vince Foster? Everyone around here says they were boyfriend-girlfriend. That’s what everybody tells me, I’m talking about in the legal profession.
HCQ: You have obviously some instincts as an investigator. Do you think there’s something to that?
CASE: I know there is. If I wanted to look into it, I’d know where I’d go.
HCQ: Where’s that?
CASE: I don’t want to comment on that. I would wait. I’m not going to jump on Hillary while they’re dumping all over Bill. You know you don’t want to side track one story. I’m not gonna sit here and tell you that I wouldn’t like to see Bill get downed, you know, just get taken completely out of office, because he is a liar. He doesn’t do nothing but tell lies to everybody. There’s documentation, you know, that he makes phone calls when he’s here to other women. But nobody’s ever looked that up.
HCQ: So you think these two troopers, Perry and Patterson, are telling the truth?
CASE: I can tell you they’re telling the truth.
HCQ: And the White House is just trying to keep this quiet?
CASE: Yeah, and the director of the Arkansas state police, who was here while Clinton was, and is still here, may talk soon, because I understand he’s fixing to leave the agency. He’s got enough time — hell, he’s retired two or three times.
HCQ: That’s Goodwin?
CASE: Yeah, Goodwin. Now he’s trying to hold his force intact out there. I think he’s being forced to lie. Now Goodwin doesn’t like to lie. He does not like to lie.
HCQ: Did you used to meet with him?
CASE: All the time. Everyday. And that’s what made everybody mad. Everybody else had to have a meeting with him and I could just go up there, go in his office, and shut the door. We went out socially. What are they saying where you’re at?
HCQ: It’s the straight AP story. It’s just. . .I mean people tell me the motivation of these troopers is suspect because they might write a book and make money. I have to remind people that the president has a strong motivation, if it is true, to keep the story from coming out. You can’t decide what the truth is based on motivation.
CASE: Most of them would have a reason, the troopers and the president. The people around here now are shying away from those troopers. I don’t care if Goodwin came out and said he knew it was true, if he came out and said it, they’d do the same number on him as they’re doing on those troopers. I just know how they work around here.
HCQ: You don’t doubt that Bill Clinton himself actually called these troopers. The White House said that.
CASE: He did call them. Now he had called Mark Allen, another former guard. He made numerous calls to Buddy Young. I don’t know if he acknowledged it yet. Buddy Young was his right-hand man.
HCQ: How come they didn’t make you an offer like that?
CASE: They made me an offer and then they tried to run me with it.
HCQ: That was the ABC?
CASE: ABC.
HCQ: Thank you for your time. I may need to call again. I hope you’ll take a minute to talk to me.
CASE: Any time.

Second Conversation — March, 1994 (More Sleaze for Sale!)
HCQ: The initial reason I wanted to call again, and you were correct, is that last time you said, “watch these troopers take a fall.” Now that story has just disappeared from sight. What’s happened to those guys?
CASE: I know both of them have been transferred. Larry Paterson has been transferred to the automobile dealership detail, which is a demotion from what he was doing. Now he goes to car lots and inspects them so that they can get their dealer tags. Now would you not call that a demotion?
HCQ: Yeah, that’s a demotion. And you’re certainly right about that. Is there anything that you’re aware of that, separate from what they have said, relates to Mrs. Clinton and the accusations that they made?
CASE: About Hillary and Vince?
HCQ: Yes, and you had also mentioned Barret Hamilton at one point.
CASE: The initial information that I had about Hamilton I supplied many months ago to Bill Rempel.
HCQ: He said none of that stuff panned out, that he’s never done a story based on any information you gave him.
CASE: The stories that I gave him were “girlie” stories. The stories that I talked to him about — you know the stuff that he could back up or substantiate — the biggest part of the time he had called them himself, and he had talked to them, and he had got the same response out of them that I had. This was back early on.
HCQ: Response from whom? Troopers?
CASE: No, girls. . . girls that he interviewed, that I interviewed. And there were recordings of my interviews with girls that I supplied to him. And he has them in his stockpile out there. He has recordings and stuff of girls that I interviewed that had been with Bill Clinton. Let me also tell you this. The only way that I knew how to get ahold of one of them was through Bill Rempel. He told me how to get ahold of them. He has sat on stories out there involving Bill Clinton and . . .
HCQ: Why?
CASE: I have no idea. . . . Because, I guess, it’s not their type of story. Additionally, the information I supplied to him, yes it was, it had all to do with, you know, women and stuff like that.
HCQ: What about the state troopers in the American Spectator story? They talked about a party at which Vince Foster and Hillary Clinton displayed some affection towards each other. Do you know anything about that? Is there anything, any shred of evidence that substantiates the rumor that Hillary and Vince Foster were more than professional associates?
CASE: All that I have in regards to that is people telling me, that knew them both closely, and which I did record, the people that I talked to, and the attorneys involved that I talked to. I had many people call me and tell me. As far as physically seeing them, no, I did not see them.
HCQ: You have recordings of people? Where? From the Rose Law Firm?
CASE: From the Rose Law Firm and from Wright, Lindsey and Jennings.
HCQ: And you have tape recordings. Would you be willing. . .
CASE: No.
HCQ: How do I know you really have them?
CASE: Well, that’ll come out, you know, soon. I’m sure that those recordings of people talking to me will be asked for before the grand jury — the one in regards to Vince Foster and Hillary Clinton.
HCQ: I’m not exactly the New York Times, Larry, but I do try to maintain some journalistic integrity and credibility. What is it that you can say to me or show me or tell me that’s going to give me some confidence that there’s some validity to the story?
CASE: First of all, I’m not the one wanting to write a story.
HCQ: I understand, but from what you’ve told me, in terms of your dislike for Bill Clinton, it sounds as if you wouldn’t mind getting the story out if it were possible.
CASE: I wouldn’t mind getting the story out, but as it’s going here in this town, everybody’s tried to clam everything up.
HCQ: Including you? Are you under pressure?
CASE: None that I feel.
HCQ: You seem reluctant to share information you say you have.
CASE: First of all, since you called me I have called Bill Rempel. He has not returned my phone call, and I’m going to confront him. Every conversation that Bill Rempel and I had in depth about anything, I recorded. I supplied him with information from day one about things nobody else knew. And he hounded me about things nobody else knew. I just want to get the story straight with him about what he’s trying to say about my information. Larry Nichols —
HCQ: Wait! Larry, if I can just interrupt for one second and close one part of this conversation we can go on. As far as you’re concerned, in providing information to me, there’s nothing regarding Hillary Clinton.
CASE: Nothing that I will provide you at this point.
HCQ: OK. So it’s all just hearsay, and I have to take your word for it.
CASE: As far as I’m concerned, I’m not telling you anything.
HCQ: OK. So why did you call me in November of 1992 about Hillary having affairs?
CASE: When did I call you?
HCQ: It was November 14th, 1992.
CASE: Now who called who?
HCQ: You called me.
CASE: I didn’t even know who the hell you were.
HCQ: Well, I think you did.
CASE: Now how the hell would I even have got your number.
HCQ: Probably from an article that was in the Little Rock Democrat-Gazette about my publication.
CASE: I do remember seeing something in there now. . .
HCQ: About the Hillary Clinton Quarterly. And you called on 11/14/92. And I didn’t know who you were.
CASE: Yeah, I remember that.
HCQ: And you said, “She had as many affairs as Bill Clinton.” I took notes.
CASE: Yes, she did.
HCQ: And you mentioned Bill Rempel.
CASE: I did make that statement.
HCQ: So what I’m trying to say is, there are all these allegations out there and part of my interest is that you called me with this information and in the meantime there’s been a lot of public discussion about these issues and I’m trying to find out if there’s any truth to it. You seemed like a likely source, since you had already broached the subject with me. All I’m saying is, as a journalist, I need something that says, this isn’t just some guy who’s pissed off at Bill Clinton, do you know what I mean? If there’s nothing, that’s fine. I’m perfectly willing to think of Hillary Clinton as a saint if that’s what she is.
CASE: You know as well as I do that there’s enough people out there that do not like Bill Clinton. And he’s lied to enough people to have a lot of enemies, and I’m one of them. But I’m not going to make up stuff about his wife on my own just to hurt him. Now if I repeat or have repeated something that someone told me to you or somebody else, it’s strictly hearsay as far as I’m concerned because it’s what someone else has told me. But it’s not based on something that I’m making up because I do record conversations when people call and talk to me. If they’re going to whitewash it and they’re going to look at it like this, they don’t need to know the story.
HCQ: Larry, who is feeding a lot of the Whitewater stories out there?
CASE: I think Dave Bossie, Debbie Stone, and Larry Nichols, because Dave Bossie, Debbie Stone, Floyd Brown, flew me and Larry Nichols to Washington. We stayed at Number One Washington Circle. We met with a guy named John Fund. He is (sic) senior editor of the Wall Street Journal. Floyd Brown was in there, Debbie Stone was in there, her sister was in there but I do not know her name. Now when Nichols and I got there, Nichols turns to me and says, “I hope you got something,” “What do you mean?” I said. He says, “I don’t have nothing.” I said, “What are you talking about?” He says, “Well, all I got is a tape.” He had with him a tape of the Iran Contras fighting. He didn’t know nothing about what he’d been doing.
HCQ: What was this meeting about? Flowers?
CASE: No, it was a book they were going to do early on.
HCQ: The Slick Willie book?
CASE: Yes. And he, Larry, everybody leaves, and so I wire the room. The entire meeting with Floyd Brown, John Fund, Debbie Stone, David Bosse and myself, Larry Nichols and there were two or three others, people in there who were high-up reporters, I don’t know where, the entire meeting was recorded. They’re well aware of that. Larry Nichols was well aware of that. Now everything that went on in that meeting was not real kosher.
HCQ: Now basically this was a meeting about how to screw Bill Clinton.
CASE: That’s right. That’s basically what it was — how to take down Bill Clinton. Everybody was taking shots. I got copies of all their notes, I got the room key, I got everything proving that we were there. Before I left, from that room, the first night we were there, I called Colonel Tommy Goodwin at the Arkansas state police. He returned my phone call from Little Rock to that room, verifying that I was there.
HCQ: Now, what is the Ross Perot angle on this? Why were you getting calls from him?
CASE: I was contacted, there was a group of attorneys contacted me and a friend I had out in Arizona, and offered us some big money two days before the election. They faxed a bunch of stuff to him in Arizona, which I have copies of everything to him. Braden, Mark Braden in Washington, and he’s with a large law firm, he faxed a picture of himself, his background, his history, and a copy of a contract agreement for us to supply stuff to him two days before the election.
HCQ: Who did Braden work for?
CASE: Braden, he, I recorded his conversations, along with two other lawyers, two big law firms were involved because they called me and when I told them no, they called my man in Arizona. My man in Arizona is where I sent everything when it got so hot around here.
HCQ: But the guys in Washington, the attorneys, they were trying to do the same thing, which is to take down Clinton?
CASE: That’s right, that’s right.
HCQ: How do you get hooked up with these people?
CASE: These people called me through somebody else. . .
HCQ: What does Perot have to do with the two Washington law firms?
CASE: Nothing, unless he had them call me.
HCQ: You said you got calls from Perot’s people.
CASE: I did. What I’m trying to tell you is when I wouldn’t deal with him and wouldn’t get him what they wanted, I feel like they tried to come in the back door with the attorneys in Washington.
HCQ: Did you give them any information?
CASE: I did not give them anything.
HCQ: Larry Nichols?
CASE: Larry Nichols didn’t even know who there were. For all I know, Larry Nichols might have told them how to contact me because at that time we did have the information up for sale.
HCQ: Have you gotten paid for any information that you’ve given regarding Clinton?
CASE: Well, I ain’t going to comment on that.
HCQ: Is that one of your objectives?
CASE: At this point in time, it would probably be my main objective.
HCQ: If I offered you money for something regarding Hillary Clinton, is that something you’re interested in?
CASE: My only interest now, my only interest whatsoever, is financial gain. I have nothing else to gain by any of this. I’m not somebody running for office or wanting to take down some politician just because I’m going to run for office like a lot of people around here in Arkansas. That was their game and I think they were using Larry Nichols.
HCQ: It sounds like he had a real hatred for Bill Clinton.
CASE: He does have a hatred for Bill Clinton. When he did this, he evidently ruffled the feathers of the Republican Party, too, because they got off of him. He came to me and said he had $375,000. They were going to wire transfer it to his bank account. He wanted me to meet with him the next day and he wanted everything that I had. We met the next day, he was supposed to bring a copy of the wire transfer to prove, you know, that he had the backing and everything. I called his bank, he had nothing, all he was trying to do was con the stuff out of me. He never even had the front money.
HCQ: Where was that coming from?
CASE: I think it was local Republicans. He never would tell me. He said it was coming out of Washington. A conservative contractor.
HCQ: It sounds like you can get whatever money can buy out there if you want something against Clinton.
CASE: That’s exactly the way it was for awhile. Everybody here had something for sale in regards to Clinton.
HCQ: Does that mean it wasn’t true?
CASE: No. No. You know they got to take care of themselves. You say something against Clinton back then your ass is grass. It’s still the same way. Anything you say against him, anything you come up with, and it was true, they could turn it around and make you look like an asshole.
HCQ: You mentioned that your tapes of people talking about Hillary might be subpoenaed?
CASE: I would assume.
HCQ: Why do you assume that?
CASE: From what I’ve read here, locally, they’re going to look at the Vince Foster — Hillary connection and there’s a couple of people know I have the tapes.
HCQ: That’s just tapes of other people repeating the rumors. Did you have any contact with the Park police?
CASE: Yes, I did.
HCQ: What was that all about?
CASE: That was about some recordings. I talked to Captain Hume.
HCQ: Those were just, what, conversations?
CASE: Yeah.
HCQ: So essentially what you’re saying is, you have had some contact with Perot but it didn’t go anywhere. They were trying to get you to do something.
CASE: This is before the election.
HCQ: Who would I talk to down there?
CASE: I’d have to look up the names somewhere.
HCQ: OK.
CASE: The last ones I talked to were top aides.
HCQ: Would he be discrediting Bill Clinton?
CASE: I don’t know. Do you know John Paxon at CBS News?
HCQ: I know the name.
CASE: Call him. He knows I talk to the Perot campaign. He’ll tell you. Tell him I told him to tell you. He’s called me. He called me last week.
HCQ: Paxon?
CASE: Paxon. P-a-x-o-n. CBS News out of Dallas. He calls me every time something comes up. He’ll tell you everything that I ever told him. I want everyone to know that conversations they have with me, I’m not going to lie because I’m on the same recordings that they are, you know.

Hillary, Whitewater, and our interview with Elle.

Elle’s interview about Hillary, Whitewater.

In early March, 1994, while most of the media fumed about their lack of access to First Lady Hillary Clinton, Elle magazine issued a stunning press release about their interview with the First Lady. The interview was the first indication of what Mrs. Clinton’s communications strategy was going to be regarding Whitewater.

I’ve reprinted below most of the news release, along with a transcript of a follow-up conversation I had about the interview with Elle’s managing editor, Elaina Richardson. The full interview will be published in the May issue of Elle.

Press Release from Elle magazine about their interview
with Hillary Clinton —

First Lady Hillary Rodham Clinton lashed out at her Whitewater critics and the press. . .in an exclusive interview with Meryl Gordon, a contributing writer for Elle magazine.

“This is a well-organized and well-financed attempt to undermine my husband, and by extension, myself, by people who have a different political agenda or have another personal or financial reason for attacking us. Taking it for what it is, which is pretty blatant, you can’t take it seriously.” Mrs. Clinton said in the March 4 interview in the White House study, just hours before six White House staffers — including two members of the First Lady’s own staff — were subpoenaed to testify before a grand jury about any contacts on Whitewater.

In response to a question about the image problems caused by these continuing investigations into Whitewater, Mrs. Clinton said, “I know nothing bad happened — and that’s what everybody’s going to know, as they should know now — since they have yet to come forward with anything other than the wildest kind of paranoid conspiracies. You just don’t pay attention to it. You have to do the best you can, refute it and counter it. But I am just not interested in spending my days falling into the trap that the fomenters of all this want us to — which is to become isolated and on the defensive and diverted. I’m not going to let that happen.”

Mrs. Clinton said that Republican opponents have been relentless in their efforts to discredit her, from the current attack on her legal role in the Whitewater case to snide comments about her cookie-baking skills during the 1992 campaign. “It’s all of the same pot,” she said. “It’s designed to find a way of undermining me. If one thing doesn’t work, these folks shift gears and try something else. It’s so transparent to me.”

Asked about the controversial late 1993 American Spectator article alleging numerous infidelities by her husband, Mrs. Clinton responded, “They’ll try anything. What’s so sad is that the so-called legitimate press, because of commercial pressures as best I can figure out, gets sucked into it. The kind of things that get printed and allowed to be said without corroboration and substantiation and evidence. Even the logic is bad.”

A few minutes later in the interview, Mrs. Clinton summarized her feelings: “I am stunned at the level to which malevolent, malicious false gossip has been permitted to become newsworthy.”

After I had a chance to review Elle’s press release, I called managing editor Elaina Richardson to get a sense of how the interview was conducted.

HILLARY CLINTON QUARTERLY: Could you tell us how the interview was arranged with the White House?

ELLE:  Whitewater was mentioned as a topic but it wasn’t set up as an interview about Whitewater. The original genesis of the interview, we put in a request several months before the interview took place and at that time what we wanted was to have two journalists go speak to Mrs. Clinton specifically about health care. We were going to have them ask questions that came out of their personal experience and give it a lot of human interest. The White House refused, they rejected that idea, because they didn’t like the idea of a two-to-one set up. The next thing that happened to us, Meryl Gordon spoke to Mrs. Clinton on the phone, because she was profiling Maggie Williams for us. They had a nice conversation then, so the way things worked out, we were given permission for Meryl to interview the First Lady. As we got down to the specifics, what that would be about, it was agreed to have a pretty wide ranging talk, what life’s like, how are you holding up under these pressures, including Whitewater.

HILLARY CLINTON QUARTERLY: The negotiations, if you can call them that, were they with Lisa Caputo?

ELLE: It was primarily Lisa and the writer.

HILLARY CLINTON QUARTERLY: Hillary’s response, as reported in your press release, was fairly strong. Who initially brought up the issue of Whitewater?

ELLE: It emerged when Meryl Gordon was telling a story that she had overheard about Whitewater. That initiated the conversation, and they went “on the record” at that point. It came out of the opening remarks between the two of them.

HILLARY CLINTON QUARTERLY: From what your writer told you, was Mrs. Clinton feeling as indignant as she sounded?

ELLE: My understanding is that she was very self-possessed, very poised, it wasn’t in any sense an angry rant. She was very thoughtful and calm, but she was also very understandably angry. The First Lady felt very strongly that she had done nothing wrong. She was very irritated by the suggestion that she had done otherwise.

HILLARY CLINTON QUARTERLY: I had gotten the impression from someone else on your staff that perhaps the White House was not totally delighted that parts of the interview were released ahead of time. Was that your sense as well?

ELLE: It is. A lot of my sense of it, too, is that obviously they have a lot of things on their mind. Partly, to be fair to them, the piece was originally scheduled for June, and they were not pleased that we were going to pull it forward a month.

HILLARY CLINTON QUARTERLY: Did someone call to complain?

ELLE: We had some calls from the press office, yes, basically saying they wished we hadn’t released the information because their expectation had been that nothing would appear until the June issue came out.

HILLARY CLINTON QUARTERLY: Do you think Elle will suffer any consequences, or are they being understanding about it?

ELLE: I haven’t chatted with them since then, but my hope would be that everybody understands that as journalists, when we were the only source on a breaking news story, there really wasn’t any way we could not run with it. We really have gone out of our way to be responsible about this. We’re not trying to pretend we have anything more than we have.

HILLARY CLINTON QUARTERLY: Were there other Whitewater-related comments in the story that you didn’t put into your news release?

ELLE: There are some other nice insights in the story, but as far as Whitewater is concerned, we’re not holding anything back.

HILLARY CLINTON QUARTERLY: Thank you for your time!