The Special Committee's Whitewater Report

ENDNOTES FOR PART 3: THE ARKANSAS PHASE


1 Although the documents are signed by Mr. and Mrs. McDougal, but are not signed by President Clinton, the information reported by the Clintons on their 1978 federal income tax return corresponds exactly with the cost and date information on the purchase agreement and installment note, indicating that the transaction was consummated on January 25, 1977. (See Williams & Connolly Prod. DKSN022069; Haddon Morgan & Foreman Document LP01547.)

2 There is no independent documentary evidence that the $400 down payment was made, but a deposit ticket from 1st Jacksonville Bank of Jacksonville, Arkansas indicates that Rolling Manor Inc. deposited a $155.51 payment by then-Attorney General Clinton into its bank account on April 22, 1977. (Williams & Connolly Document DKSN022068; Haddon Morgan & Foreman Document LP01546).

3 The deposit ticket, which was stamped by the bank, indicates that the outstanding balance on the note was $10,917.82, consistent with what the balance of the note would be after the first monthly payment of $155.51 is applied to interest and principal. Williams & Connolly Prod. DKSN022068; Haddon Morgan & Foreman Document LP01546.

4 Based on information reported in their 1977 federal income tax return, the Clintons' adjusted gross income in 1977 was just $41,731. After accounting for adjusted itemized deductions ($9,688) and other adjustments, e.g., federal taxes withheld, ($8,835), the Clintons' disposable income in 1977 was $23,208, before any expenditures for such items as principal payments on their mortgage, food, and clothing. Thus, a $9,500 payment would have equaled more than 40 percent of their total disposable income in 1977.

5 Mr. Ritter's recollection of these meeting is vague, and if these meeting were held to execute loan renewals, the dates of these meetings do not comport with the available documentary evidence. If both of these meetings were convened to execute loan renewal documents it is possible that they occurred one or two years later than Mr. Ritter recollects (for instance the interest rate first increased in 1980, but did not increase significantly until 1981). Mr. Ritter left Citizen's Bank at the end of 1983.

6 The remaining $6,052 balance of Mrs. Clinton's loan was paid off in two payments-- one in the amount of $285 from the man who had purchased the property from Mrs. Clinton, and the other, $5,797, from an unknown payor.

7 On November 1, 1989, Mr. Wade filed for Chapter 11 bankruptcy protection. On August 27, 1990, Mr. Wade's bankruptcy was converted to an involuntary bankruptcy under Chapter 7. Wade's involuntary bankruptcy remained open as late as 1995. ( 4/24/95 Pillsbury Report p. 124).

8 Elsewhere in his notes, Mr. Foster wrote:

A.

Colo analysis was of economic loss

(1) did not take into account interest deductions

(2) calculation included some items for which there were no canceled cks.
Williams & Connolly Document DKSN000517. "Colo analysis" was an apparent reference to the Lyons report.

9

Haddon Morgan & Foreman Document LP 00690-95 (Clinton 1981 income tax return); Haddon Morgan & Foreman Document LP 00696-719 (Clinton 1982 income tax return); Haddon Morgan & Foreman Document LP 00720-739 (Clinton 1983 income tax return); Haddon Morgan & Foreman Document LP 00740-762 (Clinton 1984 income tax return); Haddon Morgan & Foreman Document LP 00763-786 (Clinton 1985 income tax return); Haddon Morgan & Foreman Document LP 00787-815 (Clinton 1986 income tax return); Haddon Morgan & Foreman Document LP 00816-860 (Clinton 1987 income tax return). Haddon Morgan & Foreman Document LP 00861-894 (Clinton 1988 income tax return); Haddon Morgan & Foreman Document LP 00895-942 (Clinton 1989 income tax return); Haddon Morgan & Foreman Document 133-00005495-5503 (Clinton 1990 amended income tax return); Haddon Morgan & Foreman Document 133-00005520-5583 (Clinton 1990 income tax return); Haddon Morgan & Foreman Document 133-00005827-5904 (Clinton 1991 income tax return); Haddon Morgan & Foreman Document 133-00006319-6346 (Clinton 1992 income tax return).

10

Internal Revenue Code Section 453 allows, under certain conditions, taxpayers to pay gains on the sale of property on the installment method.

11

The gross profit percentage on this transaction was 42.9%. Haddon Morgan & Foreman Document LP 00672 (Installment Gain on Sale Schedule - attachment to Clinton 1978 income tax return). Since the remaining gain was $5,405, the basis would be $7,194.

12

Treas. Regs. Section 1.6001-1(a) states that taxpayers shall keep records which "are sufficient to establish the amount of gross income, deductions, credits..." on the taxpayer's return.

13

Haddon Morgan & Foreman Document LP 00523 (check 697, dated December 28, 1978, issued to Great Southern Land Company, Inc. in the amount of $10,130.58 states "Reimbursement for six months interest"; check 396, dated December 29, 1979, issued to Citizens Bank & Trust in the amount of $4,752.88 states "Interest Payment"; check 395, dated December 29, 1979, issued to James B. McDougal in the amount of $237.50 states "Reimbursement of Interest pd."). Haddon Morgan & Foreman Document 00528 (check 1623, dated December 30, 1986, issued to Security Bank in the amount of $1,635.51 states "Int on note 957585.").

14

There is also no evidence that the Clintons had an obligation to repay, or did repay, Whitewater. Whitewater's books for the year ending May 31, 1981 do not show that the corporation reduced the Clintons' notes payable that was established when the land was transferred into the corporation. Nor do they show that the corporations recorded a receivable from the Clintons. Haddon Morgan & Foreman Documents LP 01957-69.

15

There is also no evidence that the Clintons had an obligation to repay, or did repay, Whitewater. Whitewater's books for the year ending May 31, 1982 do not show that the corporation reduced the Clintons' notes payable that was established when the land was transferred into the corporation. Nor do they show that the corporations recorded a receivable from the Clintons. Haddon Morgan & Foreman Documents LP 01957-88.

16

Betsey Wright, who ran Governor Clinton's 1984 campaign, testified that $30,500 was raised at the event. (Wright, 1/26/96 Dep. p. 278.) Ms. Wright, the custodian of records for that campaign, she based that figure on checks from 17 persons or entities that she said had been collected in connection with the fundraiser. (O'Melveny & Myers Production CCBW-0017-24.) Mr. McDougal has stated in various interviews that the fundraiser raised about $35,000. (E.g. New York Times, 12/15/93 p. B8.) Notes taken by Susan Thomases in 1992 of a conversation she had with Sherry Curry reflect that "MacD FR raised $39,150." (Willkie Farr & Gallagher Production ST 45.)

17

Senator Fulbright himself could not be interviewed because he had a stroke several years ago and died in February 1995.

18

Mr. Chertoff. Did Mr. Latham come to you and offer you work for the Madison Guaranty Savings & Loan?

Mr. Massey. I don't believe so.

Mr. Chertoff. Did Mr. Latham come to you and ask you to help him -- come to you directly, that is to say, before you'd been assigned to the matter, and ask you to help him with an effort by the savings and loan to issue preferred stock?

Mr. Massey. Sir, I don't remember that. It could have happened, but I don't remember that.

19 In an interview with RTC investigators, Mr. Latham stated that "McDougal had friends over there and he suggested we use them. When asked who the friends were Latham said that they were Hillary Rodham Clinton and others."

20 Well as I have said consistently since 1992. . . my recollection is that Mr. Massey wanted to do the work he had discussed with Mr. Latham, that some partners, I believe in the securities section, had advised Mr. Massey that they were not enthusiastic about undertaking the representation on behalf of Jim McDougal and Madison because of some problems in having work paid for in the past, and that there were discussions among partners.

I believe it was Vince Foster who came to me, who said that Mr. Massey wanted to do this work, but the partners didn't want him to do it . . . And I was asked, as someone who knew McDougal, if I could intervene and perhaps set up an opportunity for Mr. Massey to do this work.


So I talked with Mr. Massey about the work. Mr. Massey told me, as his testimony relates, that he had a talk with Mr. Latham, but it wasn't up to Mr. Latham, and he wasn't getting any support from others within the firm, and I told him I would talk to Mr. McDougal, which I did. (1996 Pillsbury, Madison & Sutro Interview of Hillary Rodham Clinton, pp. 27-31, Resolution Trust Corporation Document S-INTV000628-632.)

21

The Rose Law Firm letter had misspelled Mr. Handley's name; they wrote "Hanley".

22 In addition, starting on May 14, 1985 and until the end of 1985, the Rose Law Firm attempted to secure approval for a broker-dealer subsidiary for Madison. (Massey, 6/15/95 RTC Statement p. 3). The proposal was submitted to the Arkansas Savings and Loan Board Association.

23 The Pillsbury law firm reached the conclusion that "a court might hold that the acquisition, as structured, was fraudulent," and noted that "the use of Seth Ward as a straw has some of the earmarks of a fraudulent or intentional attempt to violate the law." 2/6/96 Pillsbury Report pp. 142, 146.

24 At trial, Mr. Ward took the position that the notes worth $370,943 was evidence of his entitlement to unpaid commissions, but he denied that the $400,000 loan was related to any commissions. That loan, he maintained, was separate and fully discharged when he quitclaimed the property securing the mortgage -- Holman Acres -- back to Madison. 12/28/95 Pillsbury Report pp. 31-32. When the jury returned a verdict for Mr. Ward, it

25 As with the September 24, 1985 letter, there is a second version of the May 1 option.(RTC Document SW1-070 - SW1-074). The only substantive difference between the two is that the property at issue in the second option is not Holman Acres, but a 6.67 acre parcel of land containing the Levi Strauss Building.(RTC Document SW1-070 - SW1-074).

26 Mr. Hubbell stated that "I remember that Mr. Ward would come to my office and on occasion, ask my secretary to type letters that he had handwritten or had been drafted somewhere else." Hubbell, 2/7/96 Hrg. p. 11.

27

All three were subsequently arrested and convicted for felonies involving drug use and distribution.

28

Mr. Lasater testified that he was first introduced to President Clinton by the President's mother Virginia Kelly at Oaklawn Racing Park in Hot Springs Arkansas in the 1970's. Lasater, 5/1/96 Hrg. p. 10.

29

Mr. Nash is currently the Director of the White House Personnel Office.

30

Mr. Hardwicke was appointed by Governor Clinton to the AHDA board, and served from 1980 - 1986 or 1987. Hardwicke, 2/15/96 Dep. p.6. Mr. Hardwicke testified that he has been a "pretty close" personal friend of Bill Clinton since 1974. Hardwicke, 2/15/96 Dep. p. 11.

31

The Multi-Family Sub-Committee made this recommendation after considering both oral and written proposals from eight financial firms. ADFA Document 10/19/95 (Not Numbered).

32

Mitchell Williams billed Lasater & Co. $32,150.93 for legal services performed related to "legislative advice" and the "leasing proposal." TJ Raney Production 72.

33

The Mitchell Williams attorney who signed the May 16 opinion letter, was Anne Ritchey, one of the lawyers who had performed work for the Lasater group.

34

Mr. Gaines was the governor's office liaison with state public safety agencies.

35 In May, 1986, Mr. McDougal asked Mr. Hale to substitute another application for the file. According to Mr. Hale, Mr. McDougal was "real frightened and he was--he said he had to see my file, he had to get the file. I asked him what the problem was. He said he was going to have to change the purpose out. He had prepared another loan application showing the loan for a different purpose and he had to exchange that out, and he had things that were going bad at Madison. (McDougal trial, p. 3308). The other application states that "real estate brokerage and land development was Master Marketing's business. (McDougal trial, p. 3347).
1. Williams & Connolly Document DKSN013309.
2. Williams & Connolly Document DKSN013309.
3. Norton, 5/6/96 pp. 8-9.
4. June 11, 1996 Interview of Don Denton by FDIC.
5. Stout, 4/30/96 Dep. p. 13.
6. House Document Fundraiser 17.
7. 12/19/95 Pillsbury Report p. 6.
8. 12/19/95 Pillsbury Report p. 29.
9. Clark, 1/30/96 Hrg. p. 24.
10. RTC Document, 99000942.
11. 12/28/95 Pillsbury Report p. 31.
12. Williams & Connolly Document DKSN029024.
13. Williams & Connolly Document DKSN029026.
14. Clark, 6/10/96 FDIC OIG Interview p. 1.
15. Denton Document 000000021.
16. RTC Documents SEN33125, SEN33195.
17. Clark, 6/10/96 FDIC OIG Interview p. 8.
18. Clark, 6/10/96 FDIC OIG Interview p. 8.
19. Clark, 6/10/96 FDIC OIG Interview p. 9.
20. Clark, 6/10/96 FDIC OIG Interview p. 9.
21. Clark, 6/10/96 FDIC OIG Interview p. 9.
22. Denton, 6/11/96 FDIC OIG Interview p. 2.
23. Denton, 6/11/96 FDIC OIG Interview p. 2.
24. Denton, 6/11/96 FDIC OIG Interview p. 2.
25. Denton, 6/11/96 FDIC OIG Interview p. 2.
26. Denton, 6/11/96 FDIC OIG Interview pp. 2-3.
27. Denton, 6/11/96 FDIC OIG Interview p. 3.
28. Denton, 6/11/96 FDIC OIG Interview p. 3.
29. 6/13/96 letter from Senators Alfonse D'Amato, Richard Shelby, Christopher Bond, Connie Mack, Lauch Faircloth, Robert Bennett, Rod Grams, Pete Domenici, Orrin Hatch, and Frank Murkowski to David Kendall.
30. Affidavit of Hillary Rodham Clinton, June 17, 1996, p. 2.
31. 6/17/95 Letter from David Kendall to Alfonse D'Amato, p. 2.
32. H. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 73.
33. Black, 2/5/95 Dep. Majority Exhibits 1 & 2.
34. Black, 2/5/95 Dep. Exhibit 1; Williams & Connolly Document DKSN028984.
35. RTC Document S-INTR00096 - S-INTR00097.
36. RTC Document, 0000091.
37. Hubbell, 12/27/95 RTC OIG Interview pp. 21-22.
38. Hubbell, 4/20/95 RTC OIG Interview p. 7.
39. Hubbell, 2/7/96 Hrg. pp. 191-192, 212.
40. Hubbell, 2/7/96 Hrg. p. 212.
41. Hubbell, 2/7/96 Hrg. p. 212.
42. Hubbell, 12/27/95 RTC OIG Interview p. 22.
43. Hubbell, 2/7/96 Hrg. p. 108.
44. Hubbell, 6/4/96 Dep. p. 46.
45. Hubbell, 6/4/96 Dep. pp. 51-52.
46. Patten, 12/8/94 RTC OIG Interview p. 2.
47. Patten, 12/8/94 RTC OIG Interview p. 2.
48. RTC Document 005222.
49. Denton, 6/3/96 FDIC OIG Interview pp. 4, 6, 8; Denton, 6/11/96 FDIC OIG Interview pp. 4, 6, 8.
50. Denton, 6/3/96 FDIC OIG Interview p. 4.
51. Denton, 6/3/96 FDIC OIG Interview p. 6.
52. Denton, 6/11/96 FDIC OIG Interview p. 3.
53. Denton, 6/11/96 FDIC OIG Interview p. 3.
54. Denton, 6/11/96 FDIC OIG Interview p. 3.
55. Hubbell, 2/7/96 Hrg. pp. 14-15.
56. Hubbell, 2/7/96 Hrg. pp. 17-26.
57. Latham, 5/16/96 Hrg. p. 15.
58. W. Clinton, 4/28/96 McDougal Trial Testimony p. 120.
59. Associated Press, 5/24/95, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."
60. Associated Press, 5/24/95, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."
61. Knight, 05/16/96 Hrg. p. 10.
62. Knight, 4/26/96 Dep. p. 13.
63. H. Clinton, 11/10/94 FDIC OIG Interview p. 3.
64. Massey, 1/11/96 Hrg, p. 233.
65. Massey, 1/11/96 Hrg. pp. 18-19.
66. Massey, 1/11/96 Hrg. pp. 25-26.
67. Massey, 1/11/96 Hrg. pp. 29, 222-23.
68. Bunch Document 5/14/96 (Not Numbered).
69. Bunch, 5/16/96 Hrg. pp. 18-21.
70. H. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 34.
71. H. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 41.
72. Williams & Connolly Document DKSN028934.
73. Schaffer, 1/25/96 Hrg. pp. 24-28.
74. Massey, 1/11/96 Hrg. pp. 184-185.
75. Massey, 01/11/96 Hrg. p. 113.
76. RTC Document MG0000759; Williams & Connolly Document DKSN 025966; Lyon, 12/14/95 Dep. p. 55.
77. Herr, 4/24/96 Hrg. pp. 18-19.
78. RTC Document DKRT800606A.
79. Herr, 4/24/96 Hrg. pp. 18-19.
80. Bratton, 1/5/96 Dep. pp. 44-45.
81. Williams & Connolly Document DKSN018008.
82. Williams & Connolly Document DKSN018011.
83. Denton, 5/8/96 Hrg. pp. 21-23.
84. Denton, 5/8/96 Hrg. p. 66.
85. Norton, 5/15/96 Hrg. pp. 4-5.
86. Norton, 5/15/96 Hrg. pp. 8-9.
87. Ritter, 4/24/96 Dep. pp. 52-55.
88. Ritter, 4/24/96 Dep. pp. 52-55; Pockrus, 4/26/96 Dep. pp. 41-42.
89. Burge, 2/15/96 Dep. pp. 85-86.
90. Strange, 5/2/96 Dep. pp. 55-57.
91. Pockrus, 4/26/96 Dep. pp. 24-26.
92. Jackson, 2/12/96 Dep. pp. 46-48.
93. Jackson, 2/12/96 Dep. p. 48.
94. Lyon, 1/23/96 Hrg. p. 30.
95. Lasater, 2/22/96 Dep. pp. 144-145; FDIC OIG Report of Investigation, Vol. 3, Exhibit 51.
96. Lasater, 5/1/96 Hrg. p. 28.
97. Thomasson, 2/23/96 Dep. pp. 85-87.
98. Stout, 4/30/96 Dep. pp. 30-31.
99. Chandler, 5/1/96 Hrg. pp. 191-93.
100. Stout, 4/30/96, Dep. p. 80.
101. Stout, 4/30/96 Dep. pp. 14, 20.
102. Garner, 6/13/96 Dep. pp. 29-31, 44.
103. Garner, 6/13/96 Dep. pp. 32-33.
104. Williams & Connolly Documents DKSN027162 & DKSN018184.
105. Pillsbury Madison & Sutro, "Madison Guaranty Savings & Loan and Whitewater Development Company, Inc., A Preliminary Report to the Resolution Trust Corporation," April 24, 1995, pp. 130-131 (hereinafter the "4/24/95 Pillsbury Report").
106. W. Clinton, 4/28/96 McDougal Trial Testimony pp. 13-14.
107. W. Clinton, 4/28/96 McDougal Trial Testimony p. 13.
108. W. Clinton, 4/28/96 McDougal Trial Testimony p. 13.
109. 4/24/95 Pillsbury Report p. 17.
110. W. Clinton, 4/28/96 McDougal Trial Testimony p. 13.
111. 4/24/96 Pillsbury Report p. 15.
112. 4/24/96 Pillsbury Report p. 17.
113. 4/24/96 Pillsbury Report p. 18.
114. 4/24/96 Pillsbury Report p. 17.
115. 4/24/96 Pillsbury Report p. 19.
116. 4/24/95 Pillsbury Report pp. 19-22.

117. W. Clinton, Interrogatory Answers to RTC 5/24/95 p. 4, Williams & Connolly Document DKSN001095.
118. H. Clinton, Interrogatory Answers to RTC, 5/24/95, pp. 27-28, Williams & Connolly Document DKSN000793-794.

119. H. Clinton, Interrogatory Answers to RTC, 5/24/95, pp. 27-28, Williams & Connolly Document DKSN000793-794).

120. The RTC interrogatories state, in part:

Interrogatory No. 1: DESCRIBE each and every occasion before August 1978 on which YOU:

(d) Invested in real estate (including any investments in corporations and partnerships that dealt primarily in real estate. In answering this interrogatory, be sure to DESCRIBE the real estate transactions referred to in documents DKRT900707, DKRT900715 and DKRT900716.

The referenced documents which were attached to the interrogatories sent to President Clinton include: (1) Schedule D (Form 1040) from the Clintons' 1978 Federal Income Tax Return showing capital gains and losses (DKRT900707); (2) Schedule 2B attached to the same return showing long term capital gains (DKRT900715); and, (3) an un-numbered schedule showing an installment gain on sale for 15 acres of unimproved land (DKRT900716).
121. W. Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 1-3.

122. RTC Document DKRT900707.
123. RTC Document DKRT900707, DKRT900716.
124. 4/24/95 Pillsbury Report p. 13.
125. Williams & Connolly Document DKSN022069 626
126. Haddon Morgan & Foreman Documents LP0656-LP0672.
127. Williams & Connolly Document DKSN022069.
128. Williams & Connolly Document DKSN022066.
129. Williams & Connolly Document DKSN022961.
130. Norton, 5/15/96 Hrg. pp. 21-22.
131. Norton, 5/15/96 Hrg. pp. 21-22.
132. Norton, 5/15/96 Hrg. pp. 8-9.
133. Norton, 5/15/96 Hrg. pp. 5-6.
134. Norton, 5/15/96 Hrg. pp. 4-5.
135. Norton, 5/15/96 Hrg. p. 7.
136. Norton, 5/15/96 Hrg. pp. 7-8.
137. Norton, 5/15/96 Hrg. pp. 8-9.
138. Norton, 5/15/96 Hrg. pp. 8-9.
139. Norton, 5/15/96 Hrg. pp. 8-9.
140. The initial loan was made by several bank insiders with an interest in this land deal steered the loan to the bank. (See generally, Burge, 2/15/96 Dep., pp. 22-26). The original Whitewater loan for $182,611 was brought to the Flippin Bank by Chris Wade, a director of Flippin Bank and the local realtor who sold the property, and ushered through with the assistance of James Patterson, President and director of Flippin Bank and a shareholder in 101 River Development, Inc., the owners of a larger parcel of land that included the Whitewater property. (Burge, 2/15/96 Dep. p. 21).


141. Mercantile Bank Document D28.
142. Burge, 2/15/96 Dep. pp. 21-22.
143. Burge, 5/8/96 Hrg. pp. 17-20.
144. Burge, 5/8/96 Hrg. p. 71.
145. Burge, 2/15/96 Dep. pp. 49, 54.
146. Denton, 5/8/96 Hrg. pp. 75-76.
147. Denton, 5/8/96 Hrg. p. 87.
148. Denton, 5/9/96 Hrg. pp. 21-23.
149. Berry, 5/10/96 Dep. pp. 29-30.
150. Denton, 5/8/96 Hrg. p. 66.
151. Burge, 2/15/96 Dep., pp. 85-86.
152. Denton, 5/8/96 Hrg. p.51.
153. Ritter, 4/24/96 Dep. p. 24.
154. Ritter, 4/24/96 Dep. pp. 43-46.
155. Ritter, 5/8/96 Hrg. pp. 32-35.
156. Ritter, 4/24/96 Dep. p. 51.
157. Ritter, 4/24/96 Dep. p. 51.
158. Ritter, 4/24/96 Dep. p. 54.
159. Ritter, 4/24/96 Dep. pp. 52-55.
160. Ritter, 4/24/96 Dep. pp. 52-57.
161. H. Clinton Interrogatory Answers to RTC, 5/24/95 p. 7; W. Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 11-12.
162. 4/24/95 Pillsbury Report pp. 30-31.
163. Bunch, 5/2/96 Dep. pp. 37-38.
164. Pockrus, 4/26/96 Dep. pp. 22-23.
165. Bunch, 5/2/96 Dep. p. 42.
166. RTC Document DKRT070031
167. RTC Document DKRT070031
168. Pockrus, 4/26/96 Dep. pp. 10, 14.
169. RTC Document DKRT400134
170. Pockrus, 4/26/96 Dep. p. 16.
171. Pockrus, 4/26/96 Dep. pp. 41-42.
172. Pockrus, 4/26/96 Dep. pp. 32, 38.
173. Jackson, 2/12/96 Dep. pp. 24-26.
174. Jackson, 2/12/96 Dep. p. 28.
175. Jackson, 2/12/96 Dep. pp. 45-46.
176. Madison Cease & Desist Order
177. Jackson, 2/12/96 Dep. pp. 24-26.
178. Pockrus, 4/26/96 Dep. pp. 24-26.
179. Jackson, 2/12/96 Dep. pp. 38-40.
180. Jackson, 2/12/96 Dep. p. 44.
181. Jackson, 2/12/96 Dep. pp. 46-47.
182. 4/24/95 Pillsbury Report p. 65.
183. Campbell, 4/29/96 Dep. pp. 51-52.
184. Campbell, 4/29/96 Dep. pp. 41-44.
185. Lyon, 1/23/96 Hrg. p. 30.
186. Security Bank 11/20/86 Letter to HRC re: Loan over due $15,435.31.
187. Jackson, 2/12/96 Dep. pp. 86-88.
188. Security Bank 1/4/96 (Not Numbered)(10/5/87 HRC Loan Application.
189. Jackson, 2/12/96 Dep. pp. 89-91.
190. H. Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 15-16.
191. RTC Document, DKRT100318, 200743-46, 400481.
192. Webb, 12/18/95 Dep. pp. 12-13.
193. Union National Bank, 4/26/96 (Not Numbered).
194. RTC Document DKRT100649-653.
195. RTC Document DKRT200475.
196. 4/24/95 Pillsbury Report pp. 50,127.
197. Strange, 5/2/96 Dep. p. 74.
198. Strange, 5/2/96 Dep. pp. 55-56.
199. Strange, 5/2/96 Dep. pp. 55, 67-68, 77-82
200. See, e.g., Ritter, 4/24/96 Dep. pp. 19, 69-70; Dewey, 5/3/96 Dep. pp. 15, 31, 55-56; Proctor, 5/2/96 Dep. p. 26.
201. Ritter, 4/24/96 Dep. pp. 19-20.
202. Proctor, 5/8/96 Hrg. p. 109.
203. Proctor, 5/2/96 Dep. p. 52.
204. RTC Document DKRT000376.
205. 4/24/95 Pillsbury Report p. 22.
206. 3/5/84 Letter from Ed Penick, TC Bancshares to the Federal Reserve Bank of St. Louis; Penick, 5/9/96 Hrg. p. 85.
207. Strange, 5/9/96 Hrg. p. 186.
208. Proctor, 5/2/96 Dep. pp. 63-64.
209. Penick, 5/9/96 Hrg. p. 85.
210. Penick, 5/3/96 Dep. pp. 10-12.
211. Sisk/Grobmyer, 5/7/96 Dep. p. 25; Dewey, 5/3/96 Dep. p. 50.
212. Penick, 5/3/96 Dep. pp. 47-50.
213. Mercantile Bank Document 4/25/96 (Not Numbered) (5/27/86 File Notes of Edward M. Penick, Jr.).
214. 1987 Ark. Acts 539.
215. Ark. Const. Ann. amend. 14 (Michie 1987 & Supp. 19950 (Ex. A).
216. Penick, 5/3/96 Dep. p. 52.
217. Penick, 5/3/96 Dep. p. 48.
218. Penick, 5/3/96 Dep. pp. 47-51; Berry, 5/10/96 Dep. pp. 36-39; 49-50.
219. 4/24/95 Pillsbury Report pp. 131-132.
220. RTC Document DKRT200475.
221. RTC Document DKRT700113.
222. Proctor, 5/2/96 Dep. p. 52.
223. Strange, 5/2/96 Dep. p. 35.
224. Proctor, 5/2/96 Dep. p. 52.
225. Mercantile Bank Document D212.
226. Proctor, 5/2/96 Dep. p. 52; Dewey, 5/3/96 Dep. p. 21.
227. Dewey, 5/3/96 Dep. p. 22-23.
228. Proctor, 5/8/96 Hrg. pp. 108-110.
229. Dewey, 5/3/96 Dep. p. 66.
230. Strange, 5/9/96 Hrg. pp. 91-93.
231. Penick, 5/3/96 Dep. pp. 22-24.
232. Penick, 5/3/96 Dep. pp. 22-31.
233. Proctor, 5/2/96 Dep. p. 55.; Dewey 5/3/96 Dep. p. 28.
234. Penick, 5/3/96 Dep. pp. 22-23, 32.
235. RTC Document DKRT700294.
236. Eldridge, 5/9/96 Hrg. p. 162.
237. The McDougals never provided a financial statement for this renewal, and in December 1987, 1st Ozark waived the requirement for them. (Mercantile Bank Document D173).


238. Mercantile Bank Document, 5/2/96 (Not Numbered).
239. 809 F.2d. 266 (5th Cir., 1987).
240. Hartsfield, 5/7/96 Dep. pp. 32-34, 49-50.
241. Hartsfield, 5/7/96 Dep. pp. 69-70; Wright, Lindsey & Jennings Document JRTS00010, 00012 and 00494.
242. Penick 5/3/96 Dep. pp. 73-79; Wright, Lindsey & Jennings Document JRTS00002, 00012, 00142-00143, 00491, 00496-00497 and 00593.
243. Wright, Lindsey & Jennings Document 00204-00205.
244. Wright, Lindsey & Jennings Document 000118.
245. Wright, Lindsey & Jennings Document JRTS00012, 00593.
246. Hartsfield, 5/7/96 Dep. pp. 53-54, 68-70.
247. Hartsfield, 5/7/96 Dep. pp. 54-57; Wright, Lindsey & Jennings Document JRTS00142, 00593.
248. Wright, Lindsey & Jennings Document JRTS00491.
249. Mercantile Bank Document D163.
250. Proctor, 5/8/96 Hrg. pp. 131-134.
251. Mercantile Bank Document D186-187.
252. Wright, Lindsey & Jennings Document JRTS00382.
253. Wright, Lindsey & Jennings Document JRTS00197.
254. Wright, Lindsey & Jennings Document JRTS00195.
255. Wright, Lindsey & Jennings Document JRTS00109.
256. Wright, Lindsey & Jennings Document JRTS00206.
257. Penick, 5/9/96 Hrg. pp. 116-117.
258. Wright, Lindsey & Jennings Document JRTS00141.
259. Wright, Lindsey & Jennings Document, JRTS00204.
260. Penick, 5/9/96 Hrg. pp. 191-192; 1988 Ark, Acts 12 (extraordinary session).
261. Mercantile Bank Document D184.
262. Proctor, 5/8/96 Hrg. pp. 133-135.
263. Jeff Gerth, "The 1992 Campaign: Personal Finances; Clintons Joined S. & L. Operator in an Ozark Real Estate Venture," N. Y. Times, Mar. 8, 1992, p. A1.
264. Lynch, 5/14/96 Dep. pp. 94, 107-108.
265. Lynch, 5/14/96 Dep. pp. 104-112.
266. Blair, 2/19/96 Dep. p. 25.
267. Blair, 2/19/96 Dep. p. 25; Keker & Van Ness Document LML103.
268. Lynch, 5/14/96 Dep. p. 54.
269. Keker & Van Ness Document LML0103.
270. Keker & Van Ness Document LML0103.
271. Keker & Van Ness Document LML0103.
272. Keker & Van Ness Document LML0104.
273. RTC Document S-MG00085.
274. RTC Document S-MG00085.
275. Blair, 2/19/96 Dep. pp. 103-104.
276. Blair, 2/19/96 Dep. pp. 101-103.
277. Patterson, 5/8/96 Hrg. pp. 137-138.
278. River Valley Bank Document 4/26/96 (Not Numbered)(Mortgage Notes for Lots 2, 9, 23, 30, 37, 43 and 44 of Whitewater Estates).
279. Hatfield & Lassiter, 2/21/96 (Not Numbered)($9,628.67 check from Ozark Air Services to First Ozark National Bank signed by Chris Wade designated to "payoff Whitewater Loan").
280. Proctor, 5/8/96 Hrg. pp. 173-175.
281. 1/4/96, Letter from Jack T. Lassiter to Special Committee.
282. Patterson, 5/8/96 Hrg. pp. 136-138.
283. Patterson, 5/8/96 Hrg. p. 157.
284. Patterson, 5/8/96 Hrg. p. 153.
285. Patterson, 5/8/95 Hrg. p. 157.
286. Patterson, 5/8/96 Hrg. p. 158.
287. Patterson, 5/8/96 Hrg. pp. 141; 152-153.
288. Patterson, 5/8/96 Hrg. p. 157.
289. Patterson, 5/8/96 Hrg. pp. 150-153; 156.

290.557riend and political supporter of the Clintons since the late 1970s292.292. Lyons, 11//2/95 Dep. pp. 11, 13. and was the ad hoc chair of a group of lawyers from around the country who provided support and volunteer legal advice and services to the Clinton campaign.293293. Lyons, 11/2/95 Dep. p. 19.
Mr. Lyons reviewed the available Whitewater "documents and information...that had been assembled by campaign staff after the issue had been raised by Mr. Jeff Gerth of the New York Times."294294. Lyons, 6/5/96 Dep. p. 11. Based on his preliminary analysis of the documents, Mr. Lyons determined that the campaign "needed accounting help to assist in a financial reconstruction." He "made a recommendation to campaign staff and to Governor and Mrs. Clinton . . . to engage Patten, McCarthy & Associates,"295295. Lyons, 6/5/96 Dep. p. 10. a Denver financial consulting firm.
In early March 1992, Mr. Lyons contacted Leslie Patten, a certified public accountant and president of Patten, McCarthy & Associates,296296. Patten, 5/31/96 Dep. p. 9. and engaged his firm, on behalf of the Clintons, to conduct "a financial reconstruction of Whitewater Development Corporation from the then available books and records."297297. Lyons, 11/2/95 Dep. p. 47. Mr. Lyons and Mr. Patten were "friends" and "had a professional relationship for a number of years."298298. Lyons, 11/2/95 Dep. p. 47. Mr. Patten's firm provided "consultation on banking, financial, accounting and tax matters arising from business litigation and expert witness testimony on such issues."299299. Haddon Morgan & Foreman Document LP01155. On March 10, 1992 the Patten firm began working on its analysis of Whitewater.300300. Patten, 5/31/96 Dep. pp. 69-71. Mr. Patten and Norris Weese, another certified public accountant and the firm's vice president, were the only professionals who performed work on the document that became the final report.301301. Patten, 5/31/96 Dep. pp. 12-13. Mr. Weese went to Arkansas to gather documents and began the financial analyses, and Mr. Patten reviewed the financial analyses and drafted the document that became the final report.302302. Patten, 5/31/96 Dep. pp. 12-13.
Work on the so-called Lyons report proceeded rapidly, with the involvement of Mrs. Clinton. On March 18, 1992, just eight days after the Mr. Patten and Mr. Weese began work on the project, a draft of the final report was completed,303303. Patten, 5/31/96 Dep. pp. 69-71. and was faxed the next day to Mr. Lyons, Mrs. Clinton, Loretta Lynch and James Hamilton, a lawyer working with Mr. Lyons on the Clinton campaign.304304. Haddon Morgan & Foreman Documents LP01108-114, LP01115-169 and LP01170-176. The fax to Mrs. Clinton and Ms. Lynch was 55 pages long and contained over 30 pages of work papers prepared by the Patten firm. On March 20, a revised draft was faxed to Mrs. Clinton, Mr. Hamilton, and John Klusaritz, another Clinton campaign lawyer.305305. Haddon Morgan & Foreman Documents LP01177-90. Later that day, Mr. Patten faxed to Mrs Clinton a revised report, dated March 20, 1992 and addressed to Governor Bill Clinton and Hillary Rodham Clinton, that contained six type-written pages. The report was signed by Mr. Patten and Mr. Weese.306306. Haddon Morgan & Foreman Documents LP01101-107. According to Mr. Patten, "the substance of the report was pretty much final at that point," but "I think we were premature in signing it because we had not obtained everybody's comments."307307. Patten, 5/31/96 Dep. p. 75. During this period, Mr. Patten testified that he "was in fairly regular communication with Mr. Lyons," who "was anxious to get this project completed and was seeking periodic updates as to where we were in the process."308308. Patten, 5/31/96 Dep. pp. 19-20.
Then, on March 20 or March 21, 1992, Mr. Lyons contacted Mr. Patten and told him that he wanted two versions of the report prepared, a summary version that only addressed specific questions raised by the press and a full report addressed to him. According to Mr. Patten's testimony:
It's at this approximate point [in] time when Mr. Lyons advised me that he wanted a summary report prepared. . . . The essence of it was that Mr. Lyons indicated that he [would] like to have a summary report in addition to the full report which would be addressed to him. . . . My understanding was that the purpose of the summary report was to address two or three specific questions that had been raised by the press.309309. Patten, 5/31/96 Dep. pp. 75-77.
Mr. Lyons testified that the Patten firm "prepared a single report and a summary of it"310310. Lyons, 11/2/95 Dep. p. 103. and that "[o]ne is simply shorter and in my opinion was more responsive to the issues that were then being put forward by the press."311311. Lyons, 11/2/95 Dep. p. 112. On March 21, 1992, Mr. Patten faxed a shorter version of the report to Mrs Clinton.312312. Haddon Morgan & Foreman Documents LP01086-92. As with the version of the report faxed to Mrs. Clinton the day before, this version of the report, dated March 21, 1992, was addressed to the Clintons and was signed by Mr. Patten and Mr. Weese, but it was almost three pages shorter than the previous day's version.313313. Haddon Morgan & Foreman Documents LP01086-92. On March 22, 1992, Mr. Patten faxed even shorter versions of the report, dated March 23, 1992 and signed by Mr. Weese and Mr. Patten, to Mrs. Clinton and Ms. Lynch.314314. Haddon Morgan & Foreman Documents LP01058-69.
On March 23, 1992, Mr. Patten faxed Mrs. Clinton the final summary version of the Patten firm's report, which contained three type-written pages and two pages of charts.315315. Haddon Morgan & Foreman Documents LP01115-119. A one page cover letter from Mr. Patten to the Clintons states: "Pursuant to the request of James Lyons, Esq., enclosed please find Patten McCarthy & Associates, Inc's report pursuant to our recent engagement."
In a March 23, 1992 letter to the Clintons, Mr. Lyons notified the Clintons that his review of Whitewater had been completed. He noted the findings of the summary report, including that the Clintons' had "invested approximately $70,000 in the corporation."316316. Lyons Documents JML 077-78. The Clinton campaign only released the final summary version of the Patten firm's report to the press,317317. Lyons, 11/2/95 Dep. p. 112. and Mr. Patten testified that Mr. Lyons "is the only individual that received both versions of the report."318318. Patten, 5/31/96 Dep. p. 68.
On April 10, 1992, Mr. Lyons sent the Clintons the final complete version319319. Haddon Morgan & Foreman Documents LP01105-14. of the Patten firm's report, which contained seven type-written pages and three pages of charts.320320. Lyons Documents JML 140. In his cover letter, Mr. Lyons states:
Enclosed please find the complete report prepared by Patten, McCarthy & Associates concerning Whitewater Development. A summary of this report was previously sent to you and released to the press along with a cover letter from me on March 23, 1992. I have deferred sending this complete report until now to avoid any confusion or possible inadvertent production. The only copies of this report which exist (other than the enclosed original) are in my file and the confidential files of Les Patten.321321. Lyons Documents JML 140.

He then explained that the summary report omitted several items:

Please note the enclosed report discusses such things as the $9,000 interest deduction taken by you in 1980, lot 13 and borrowings associated with it, and the sale of 24 lots in 1985 to Ozark Air for assumption of the mortgage and an airplane. None of these items is set out in the summary report which was released to the press. Similarly, the summary report released to the press did not contain Schedule 1, which details loans and advances by the McDougals and the Clintons from 1980- 1991.322322. Lyons Documents JML 140.

Mr. Lyons concluded his letter by noting: "Accordingly, it is my recommendation to you that you maintain the complete report in strictest confidence and do not waive either the attorney/client or accountant/client privilege which attaches to the enclosed report."(emphasis added)323323. Lyons Documents JML 140.
Mr. Lindsey testified that the complete report was not released to the press as of late 1993.324324. Lindsey, 6/12/95 Dep. pp. 79-80. According to his testimony, "it turned out later [after late 1993] at least one reporter, through other sources, probably Independent Counsel, who knows, reported on the longer version of the Lyons report, but at that time I don't think anyone had reported on it."325325. Lindsey, 6/12/95 Dep. pp. 79-80.
In March 1994, almost two years to the date after the Patten firm issued its report, it was discovered that the report had overstated the Clintons investment in Whitewater by $22,244.65.326326. Lyons Documents JML 2584-85. The $68,900 investment in Whitewater by the Clintons reported by the Patten firm included a check paid by Mr. Clinton to Madison Bank and Trust in 1982 on a loan used to purchase a house for his mother in Hot Springs, Arkansas.327327. Lyons Documents JML 2584-85. Thus, the Patten firm overstated the Clinton's Whitewater investment by more than 30 percent.
Less than two weeks after this error was first acknowledged, Mr. Patten, in a November 4, 1993 memorandum to Mr. Lyons, explained the problems that his firm had encountered in its analysis. Mr. Patten noted that his firm's work "did not and could not constitute an audit, review, compilation or the application of agreed upon procedures as those terms are understood within the accounting profession." He further wrote that "source documentation was not available in many instances and we had to utilize the next best available documentation," and that "[t]he financial statements that we reconstructed took into consideration monies paid by the Clintons, the McDougals and others that had not been reflected in the accountant's workpapers or tax returns."328328. Haddon Morgan & Foreman Documents LP00014.
C. The Clintons Finally Get Out of Whitewater
Among the documents in Mr. Foster's office at the time of his death was his handwritten note: "Get out of White Water."329329. Williams & Connolly Document DKSN000481. To that end, Mr. Foster, Mr. Hubbell and others in the Clinton organization met with Mr. Lyons on November 24, 1992, two weeks after Mr. Clinton was elected President.330330. Hearings before the Special Committee to Investigate Whitewater Development Corporation and Related Matters, administered by the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on the Inquiry into whether Improper Conduct Occurred Regarding the Way in which White House Officials Handled Documents in the Office of White House Deputy Counsel Vincent W. Foster, Jr., 104th Cong., 1st Sess., July 18, 1995 - August 10, 1995 [hereinafter "S. Hrg."], 8/8/95 p. 28; Williams & Connolly Document DKSN000482.
Mr. Blair called Mr. McDougal's attorney, Sam Heuer, and told him that "the Clintons and the McDougals needed to be totally separated over the Whitewater thing."331331. Blair, 2/19/96 Dep. p. 62. According to Mr. Blair, he suggested that Mr. McDougal pay a nominal amount to buy the Clintons' interest in Whitewater:332332. Blair, 2/19/96 Dep. p. 67. "I think we settled on a thousand dollars as an appropriate nominal amount."333333. Blair, 2/19/96 Dep. p. 67. There was one problem: "McDougal doesn't have a thousand dollars."334334. Blair, 2/19/96 Dep. p. 69. Mr. Blair then told Mr. Heuer, "[W]ell, what the heck, I will loan him the thousand dollars. I'll just Fed Ex you a check to your trust account. And I believe that's what I did."335335. Blair, 2/19/96 Dep. p. 70. The loan was made without interest,336336. Blair, 2/19/96 Dep. p. 72. and Mr. McDougal has never repaid Mr. Blair.337337. Blair, 2/19/96 Dep. p. 72.
On December 22, 1993, Mr. McDougal and the Clintons executed the transaction to get the Clintons out of Whitewater.338338. Blair, 2/19/96 Dep. p. 84. Mr. Foster obtained the Clintons' signature for the documents executing the sale.339339. Blair, 2/19/96 Dep. p. 63. It is unclear whether Mr. Foster, Mr. McDougal, or the Clintons knew that Mr. Blair gave Mr. McDougal the $1000 to buy the Whitewater shares from the Clintons.340340. Blair, 2/19/96 Dep. p. 73.
Mr. Blair then assigned Mr. Foster the task of contacting the accountants and preparing the Clintons' tax returns.341341. Blair, 2/19/96 Dep. p. 79. The issue facing Mr. Foster in the months preceding his death was how to treat the $1000 sale on the Clintons' 1992 tax returns. The basic dilemma stemmed from the Clintons' claim, bolstered by the publicly released Lyons report, that they had incurred significant losses on their investment in Whitewater. The problem with declaring the loss on the Clintons's tax return was the lack of a proper basis with which to calculate the cost of the venture to the Clintons. Despite their claim that they were 50% partners in the venture, the Clintons had contributed less than 25% of the funds used to cover Whitewater's losses.
Also among the documents in Mr. Foster's office at the time of death were his notes of conversations with the Clintons' accountant, Yoly Redden.342342. Redden, 5/30/96 Dep. p. 237. The notes, in Mr. Foster's hand, identified the tax problem as a "can of worms you shouldn't open."343343. Williams & Connolly Document DKSN000518. His notes in the file outlined the basic tax issues the Clintons faced in connection with Whitewater:
"1) What was nature of deductions
A. How deduct interest/principal payments for corp.?

2) Can you use contribution which predated incorporation?

3) Contribution/advancements of $68,900 to the McD

4) Inability to utilize $8000 capital loss"344344. Williams & Connolly Document DKSN000514.
Mr. Foster's objective was to avoid calling attention to Whitewater during the annual audit of the President and Mrs. Clinton's tax returns by the Internal Revenue Service audit.345345. Jeff Gerth and Stephen Engleberg, "Documents Show Clintons Enjoyed Far Vaster Protection from Whitewater Losses," New York Times, July 15 1995, at A18. One approach was simply to report a wash, that is, to show no loss and no gain from the venture, thereby obviating the need for any tax treatment. The problem with such treatment, however, was that it would have bolstered the allegation that the Clintons were insulated from Whitewater losses and thus the company was a vehicle for Mr. McDougal to channel funds to the Clintons.
In notes titled "Discussion Points," Mr. Foster wrote:
1) An argument that they were protected against loss:
A) wash is consistent with this theory346346. Williams & Connolly Document DKSN000515.

But Mr. Foster did not a have a proper cost basis with which to calculate the Clintons' true losses or gains. His discussion points continued:
2) Improper to reduce basis by improper tax benefit

3) Computation of economic loss was based, in part, on assumptions
Whereas computation of tax gain or loss must be defensible in audit.347347. Williams & Connolly Document DKSN000515.
Therein lay the problem. To claim a loss based on economic assumptions, as the Lyons report did, was one thing.1 1 Elsewhere in his notes, Mr. Foster wrote:
A. Colo analysis was of economic loss
(1) did not take into account interest deductions
(2) calculation included some items for which there were no canceled cks.
Williams & Connolly Document DKSN000517. "Colo analysis" was an apparent reference to the Lyons report. But to claim a loss on the Clintons' 1992 tax returns without proper support and documentation increased the likelihood of calling attention to Whitewater during the IRS audit--of opening the can of worms that Mr. Foster and the Clintons' accountant wished to keep sealed.348348. Williams & Connolly Document DKSN000518.
Mr. Foster's notes summarized the options as follows:
"10 Options
$1000 basis so no tax effect
but is arbitrary & still risks audit
vs
0 basis w/ $1000 gain
avoids any audit of issue"349349. Williams & Connolly Document DKSN000519.
In a letter to Mr. Foster days before the tax returns were due, Ms. Redden, the accountant the Clintons hired to handle Whitewater tax issues, wrote: "Because of the numerous problems with Whitewater records and the commingling of funds with other companies and individuals, I believe many explanations may have to be made if we claim a loss."350350. Sidley & Austin Document 0000185. This letter, addressed to Mr. Foster, was not among the documents in Mr. Foster's office that the White House produced to the Special Committee. It was obtained by the Special Committee through another source.351351. Sidley & Austin Document 0000185. Ms. Redden testified that after the Clintons were in the White House she had a number of discussions with Mr. Foster concerning tax issues related to Whitewater.352352. Redden, 5/30/96 Dep. p. 228. The main focus of these numerous communications was the tax basis for the Clintons' contributions to Whitewater and how to treat the $1000 payment.353353. Redden, 5/30/96 Dep. pp. 230-231.
The Clintons' final tax returns for 1992 reported a capital gain of $1000 from the sale of stock to Mr. McDougal.354354. Jeff Gerth and Stephen Engleberg, "Documents Show Clintons Enjoyed Far Vaster Protection from Whitewater Losses," New York Times, July 15, 1995, at A18. According to Ms. Redden, "I think we need to claim no gain or a loss."355355. Redden, 5/30/96 Dep. p. 234. Mr. Foster did not follow her advice, however, because he was also consulting with another accountant, and "[a]t the end we compromised what we were going to put in the return in connection with Whitewater."356356. Redden, 5/30/96 Dep. p. 234.
IV. The Clintons' Questionable Tax Treatment of Whitewater: A History of Unreportable Income and Improper Deductions

During the years that the Clintons owned an interest in Whitewater, the Clintons adopted an aggressive approach to the tax treatment of their investment. This approach sometimes resulted in errors on their federal income tax returns. From 1978 to the early 1990s, the Clintons invested a total of $42,192 in Whitewater.357357. 4/24/95 Pillsbury Report, pp. 130-31. During this same period, the Clintons deducted $42,656 of their Whitewater related expenses on their federal income tax returns -- almost $500 more than their total investment in the corporation.
The Special Committee's analysis of the Clintons' treatment of individual Whitewater-related items on their federal income tax returns reveals that the Clintons took a number of questionable tax positions relating to Whitewater. From 1992 to the present, the Clintons have admitted taking improper deductions of $7,928 and omitting income of $8,171 on their federal income tax returns during the period of their Whitewater investment. Therefore, the Clintons have admitted understating their income by $16,099 during this period. Based on its analysis of the available evidence, the Special Committee concluded that the Clintons could have understated their income on Whitewater related items by an additional $33,771, for a total increase in taxable income of $49,870.
The Clintons have explained that errors on their tax returns relating to Whitewater were due to mistakes made by their accountants. The Clintons did not fully disclose, however, all of their financial information to their accountants,358358. Norton, 5/15/96 Hrg. pp. 3-4; Norton, 5/6/96 Dep. pp. 83-84. did not discuss the details of important financial transactions with them,359359. Norton, 5/6/96 Dep. pp. 92-93, 100-101. and sometimes simply ignored their accountant's advice.360360. Norton, 5/15/96 Hrg. pp. 8-9.
Gaines Norton, the Clintons' personal accountant from 1978 to 1984, stated that the Clintons provided him with the information used to prepare their tax returns.361361. Norton, 5/15/96 Hrg. pp. 3-4. According to Mr. Norton, a former IRS revenue agent and a certified public accountant, the Clintons did not provide him with underlying documents, but instead provided him with summaries,362362. Norton, 5/15/96 Hrg. pp. 3-4. such as handwritten lists on notepads.363363. Norton, 5/6/96 Dep. pp. 20 and 83-84. In one case, Mr. Norton raised specific tax concerns about the structure of Whitewater and Mr. Clinton told him "to back off and leave the issue alone."364364. Norton, 5/15/96 Hrg. pp. 8-9. The errors and questions discussed in this section, therefore, cannot be dismissed as merely mistakes by the Clintons' personal accountants.
A. 1978: The Clintons' Unreported Income of $5,405 from 15-Acre Installment Sale

The Clintons may have unreported income of $5,405 from their 1978 installment sale of 15 acres of land originally purchased from Rolling Manor Inc., a company owned and controlled by Mr. McDougal. On January 25, 1977, then-Attorney General Clinton purchased 20 acres of land from Rolling Manor Inc. for $11,400.365365. Haddon Morgan & Foreman Document LP01547. The Clintons' 1978 federal income tax return reports that they sold 20 acres of land in 1978 in two separate transactions, a cash sale of five acres and an installment sale of 15 acres. On May 17, 1978, the Clintons sold five acres on a cash basis for $5,000, resulting in a gain of $2,150, which was properly reported on Schedule D (Capital Gains or Losses) of their 1978 return.366366. Haddon Morgan & Foreman Document LP0663. On July 23, 1978, the Clintons sold 15 acres of unimproved land on the installment method for $14,985, resulting in a gain of $6,435.367367. Haddon Morgan & Foreman Document LP00672. Since the Clintons elected to report this $6,435 gain on the installment method, only $886 of the gain was taxable in 1978 and was reported by the Clintons on their return.368368. Haddon Morgan & Foreman Documents LP00663, LP00672. The $5,549 balance of the gain ($6,435 - $886) from this 15-acre land sale was to be reported in future years as the Clintons received the payments from the buyer.
$5,405 of the $5,549 deferred gain reported on the Clintons' 1978 return does not appear, however, in their subsequent federal income tax returns. The Clintons did not report any income from the 15-acre installment sale on their 1979 tax return.369369. RTC Document DKRT800001-20. The Clintons did report $144 in capital gains from an installment sale on Schedule D (Capital Gains and Losses) of their 1980 tax return.370370. Haddon Morgan & Foreman Document LP00682. The Clintons did not report any income from the 15-acre installment sale on any of their tax returns after 1980.1 1 Haddon Morgan & Foreman Document LP 00690-95 (Clinton 1981 income tax return); Haddon Morgan & Foreman Document LP 00696-719 (Clinton 1982 income tax return); Haddon Morgan & Foreman Document LP 00720-739 (Clinton 1983 income tax return); Haddon Morgan & Foreman Document LP 00740-762 (Clinton 1984 income tax return); Haddon Morgan & Foreman Document LP 00763-786 (Clinton 1985 income tax return); Haddon Morgan & Foreman Document LP 00787-815 (Clinton 1986 income tax return); Haddon Morgan & Foreman Document LP 00816-860 (Clinton 1987 income tax return). Haddon Morgan & Foreman Document LP 00861-894 (Clinton 1988 income tax return); Haddon Morgan & Foreman Document LP 00895-942 (Clinton 1989 income tax return); Haddon Morgan & Foreman Document 133-00005495-5503 (Clinton 1990 amended income tax return); Haddon Morgan & Foreman Document 133-00005520-5583 (Clinton 1990 income tax return); Haddon Morgan & Foreman Document 133-00005827-5904 (Clinton 1991 income tax return); Haddon Morgan & Foreman Document 133-00006319-6346 (Clinton 1992 income tax return). How the Clintons collected a total of $2,066 in 1978 on the sale of this 15 acre tract of land, collected no funds in 1979, collected a total of $335 in 1980, of which $144 was reported as a gain on their 1980 tax return, and then collected no other funds from the buyer remains unexplained.
If the Clintons collected the funds due from the buyer of the 15-acre parcel, they were required to report a portion of each payment as a gain on their tax returns, just as they reported a $144 gain on their 1980 return.1 1 Internal Revenue Code Section 453 allows, under certain conditions, taxpayers to pay gains on the sale of property on the installment method. As described above, the Clintons reported no other gains on any of their subsequent returns. Of course, if the Clintons did not receive payments from the buyer, they would not have been required to report gains on their income tax returns. If the buyer of the property defaulted, however, the Clintons could have foreclosed on the property and then resold the property to another buyer, but there is no evidence on any of their subsequent tax returns that such action was taken by the Clintons. In addition, if the buyer defaulted, the Clintons could have taken a $7,194 deduction for their remaining basis in the 15 acres, but there is no evidence of such a deduction on any of the Clintons subsequent tax returns.1 1 The gross profit percentage on this transaction was 42.9%. Haddon Morgan & Foreman Document LP 00672 (Installment Gain on Sale Schedule - attachment to Clinton 1978 income tax return). Since the remaining gain was $5,405, the basis would be $7,194. Moreover, if the property was foreclosed upon and not sold, then the Clintons would still own it, but this property is not shown on the Clintons 1991 Federal Election Disclosure form.371371. Haddon Morgan & Foreman Document 133-00000518-531.
B. 1979: The Clintons' Improper Interest Deduction of $2,400
The $2,400 interest deduction claimed by the Clintons on their 1979 tax return may have been improper under federal income tax law. On December 7, 1979, Whitewater deposited in its account a check from the Clintons in the amount of $2,900.372372. RTC Document DKRT900994. On the books of Whitewater, this check was recorded as $500 for capital and $2,400 as "Loan - Bill Clinton".373373. RTC Document DKRT800044-68. According to its books, Whitewater's first interest payment in the amount of $4,352.63 was made to Citizen's Bank of Flippin on May 5.374374. RTC Document DKRT800053. On their 1979 federal income tax return, the Clintons claimed an interest deduction of $11,749 for payments to "Bank and Loan Companies."375375. RTC Document DKRT800009. This amount included the Clintons' $2,400 payment to Whitewater.376376. RTC Document DKRT800001-20.
Federal income tax law allows a deduction for "all interest paid or accrued within the taxable year on indebtedness,"377377. Internal Revenue Code Section 163(a). but the burden of proof for establishing the propriety of an interest deduction is on the taxpayer.1 1 Treas. Regs. Section 1.6001-1(a) states that taxpayers shall keep records which "are sufficient to establish the amount of gross income, deductions, credits..." on the taxpayer's return. In this case, there is no evidence that the Clintons' $2,400 payment to Whitewater was for interest on indebtedness. Indeed, the only available evidence, the $2,900 deposit slip and the entries on Whitewater's books, indicates that the $2,400 payment was a loan to the corporation, which the corporation had an obligation to repay, and not an interest payment. Moreover, Whitewater did not make its first interest payment to a bank until May 5, 1980, almost five months after the Clintons' payment of $2,400 was deposited, and there is no evidence that Whitewater's first interest payment of $4,352.63 included the Clintons $2,400.378378. RTC Document DKRT8000533.
An IRS audit of the Clintons' 1979 income tax return resulted in no changes. However, there is no evidence that the revenue agent reviewed all of the relevant documents regarding this interest deduction.379379. RTC Document DKRT11000804-808. Absent proof that Whitewater's books and records were made available to the revenue agent by the Clintons, the result of the 1979 audit is inconclusive on this issue. Indeed, it is possible that the revenue agent would have reviewed only a canceled check or bank records, determined that less than the full payment was deducted, and accepted this as sufficient evidence to verify the deduction.
C. 1980: The Clintons' Improper Interest Deduction of $9,000
The $9,000 interest deduction claimed by the Clintons on their 1980 tax return may have been improper under federal income tax law. On August, 23, 1980, Mrs. Clinton wrote a personal check in the amount of $9,000.380380. RTC Document DKRT800533. The Clintons' deducted this $9,000 payment on their 1980 federal income tax return as interest paid to "James McDougal."381381. Haddon Morgan & Foreman Document LP00673-89. A third-party endorsement by Citizens Bank of Flippin, dated September 5, 1980, is on the reverse side of the Clintons' check.382382. RTC Production DKRT800533.
Federal income tax law allows a deduction for "all interest paid or accrued within the taxable year on indebtedness,"383383. RTC Document DKRT800533. but the burden of proof for establishing the propriety of an interest deduction is on the taxpayer. In this case, there is no evidence that the Clintons' $9,000 payment was used to pay interest on indebtedness. Nor is there evidence on the face of this check that it was intended to be used to pay interest. The payee on the check was left blank, and there is no designation or notation on the check that it was intended to be used to pay interest.384384. RTC Document DKRT800533. In addition, the absence of a notation on the check that it was for interest is particularly probative, since Mrs. Clinton made such a notation on the other checks that she wrote to pay interest on the Whitewater debt. Mrs. Clinton wrote at least four other personal checks to pay interest on Whitewater related debt -- three before and one after the $9,000 check, and, on each of these checks, Mrs. Clinton wrote a notation that the checks were for interest.1 1 Haddon Morgan & Foreman Document LP 00523 (check 697, dated December 28, 1978, issued to Great Southern Land Company, Inc. in the amount of $10,130.58 states "Reimbursement for six months interest"; check 396, dated December 29, 1979, issued to Citizens Bank & Trust in the amount of $4,752.88 states "Interest Payment"; check 395, dated December 29, 1979, issued to James B. McDougal in the amount of $237.50 states "Reimbursement of Interest pd."). Haddon Morgan & Foreman Document 00528 (check 1623, dated December 30, 1986, issued to Security Bank in the amount of $1,635.51 states "Int on note 957585."). Moreover, the Clintons' checkbook entry designates this check as a "land payment," not an interest payment.385385. Letter from David Kendall to the Honorable James A. Leach, May 24, 1996, forwarding a report entitled "Review of Clinton Tax Adjustments Proposed by the House Committee on Banking and Financial Services," p.8 (hereinafter the "Kendall Report"). "Land payment" could refer either to a principal or interest payment. Since Mrs. Clinton generally noted when a payment was for interest, however, her notation that this check was for a "land payment" would tend to confirm that this payment was for principal, not interest.
Analyses of the available bank records also indicate that the $9,000 check was used to pay principal, not interest. A report prepared by Patten, McCarthy & Associates, a Denver accounting firm hired by the 1992 Clinton Presidential Campaign, states:
In our telephone conversation with her [Mrs. Clinton] and you [James Lyons] on March 18, 1992, she reaffirmed that she believed that it was an interest payment. Based on our reconstruction of the probable amortization of the mortgage loan at Citizens Bank & Trust, we believe the $9,000 went to reduce principal.386386. Lyons Document JLM 088.
The report of Pillsbury, Madison & Sutro is even more conclusive on this point. It states:
On August 23, 1980, the Clintons paid $9,000 to an unknown payee. Through a reconstruction of the Citizens Bank mortgage, it has been determined that this payment was applied as principal to the outstanding balance of the Citizens Bank loan.387387. 4/24/95 Pillsbury Report, p. 31.
Thus, the available evidence indicates that the bank applied the $9,000 to reduce principal, not interest.
According to the report prepared by the President and Mrs. Clinton's counsel, David Kendall, since the Clintons "owed interest to Citizens Bank of Flippin, WDC [Whitewater] or the McDougals, if they intended that their $9,000 check represents the interest, then Mr. and Mrs. Clinton accurately deducted the $9,000 payment as interest."388388. Kendall Report, pp. 10-11. However, there is no evidence of any unconditional and legally enforceable indebtedness between the Clintons and Whitewater or Mr. McDougal at the time of this payment. While an indebtedness did exist between the Clintons and Citizens Bank, Mrs. Clinton's intent that a payment on the note was for interest is not sufficient to support an interest deduction under federal income tax law.
Courts generally will give effect to an arrangement between a creditor and a debtor allocating payments on an indebtedness to principal and/or interest where that arrangement is bona fide and done at arm's length.389389. Bayou Verret Land Co. v. Commissioner, 52 T.C. 971, 985-986 (1969), affd. on this issue 450 F.2d 850 (5th Cir. 1971). However, a taxpayer cannot deduct prepaid interest, regardless of her intent.
There is no evidence of that such an arrangement existed between Mrs. Clinton and Citizen's Bank. Nor is there evidence that Mrs. Clinton communicated to the bank or any other party that the payment was for interest. Absent such an arrangement, payments by a debtor are first allocated to accrued but unpaid interest and then to principal.390390. Bayou Verret Land Co. v. Commissioner, 52 T.C. 971, 985-986 (1969), affd. on this issue 450 F.2d 850 (5th Cir. 1971).

The available evidence indicates that no accrued but unpaid interest was due on the Citizens Bank loan when the Clintons' $9,000 check was endorsed by Citizens Bank on September 5, 1980. One month earlier, on August 5, 1980, the Citizens Bank note was extended and modified and, at the same time, the Clintons paid Citizens Bank the quarterly interest owing and due of $4,350, which they properly deducted on their 1978 return.391391. 4/24/95 Pillsbury Report, p. 31. No principal payment had been made on the loan as of the date of its renewal.392392. 4/24/95 Pillsbury Report, p. 31. Just 18 days later, Mrs. Clinton wrote the $9,000 check for "land payment." The next quarterly interest payment on the note would not have been due until November 5, 1980, two months after Citizens Bank endorsed the Clintons' $9,000 check.
D. 1980: The Clintons' Unreported Income of $10,000 from Whitewater payment of the $20,000 Union Bank Note
Whitewater's 1980 payment of a 1978 $20,000 unsecured, personal note of Mr. McDougal and Mr. Clinton may have resulted in $10,000 of income to the Clintons that was not reported on their 1980 federal income tax return. On June 19, 1978, Mr. McDougal and Mr. Clinton obtained a $20,000 unsecured, personal loan (Loan # 0004197) from Union National Bank of Little Rock.393393. RTC Document DKRT900145. The proceeds of this loan were used to make the down payment on the 230 acres of land in Marion County, Arkansas that became Whitewater.394394. 4/24/95 Pillsbury Report pp. 15-16. On December 17, 1979, the Union National Bank note was renewed for 6 months, with a new maturity date of June 16, 1980.395395. RTC Document DKRT900155. As of the date of that renewal, the principal of the note remained $20,000.396396. RTC Document DKRT900155. On June 10, 1980, Mr. McDougal borrowed $20,000 from the Bank of Cherry Valley in Cherry Valley, Arkansas,397397. RTC Document BCV0004. and deposited those funds in Whitewater's account at the Union National Bank.398398. RTC Document DKRT900968. On June 23, 1980, Whitewater disbursed $21,346.29 to Union National Bank, using a corporate check with the notation "For Note # 0004197 Plus interest thru 6/23/80," to pay off the accrued interest and principal owed personally by Mr. McDougal and Mr. Clinton to Union National Bank.399399. RTC Document DKRT901077.
Section 61 of the Internal Revenue Code states that "gross income means all income from whatever source derived, including . . . income from discharge of indebtedness."400400. Internal Revenue Code Section 61(a)(12). Courts have ruled that amounts expended by a corporation for an individual taxpayer's benefit would constitute income to the taxpayer.401401. Lash v. Commissioner, T.C. Memo 1956-87 ("amounts expended by Bristol for petitioner's benefit would constitute income to him. . . ."). Section 108(e)(4)(A) of the Code states that income is realized if debt is discharged or acquired by a related entity.402402. Internal Revenue Code Section 108(e)(4)(A).
The central issue is whether Whitewater's payment to Union National Bank discharged any debt owed by Mr. Clinton. Mr. McDougal and Mr. Clinton were jointly and severally liable on the Union National Bank note.403403. Haddon Morgan & Foreman Document LP00106. Whitewater's incorporation did not change this, since the Union National Bank note was not transferred to Whitewater.404404. Haddon Morgan & Foreman LP00106. Therefore, Whitewater's payment to Union National Bank eliminated Mr. Clinton's obligation to that bank.
However, if Mr. Clinton was an obligor on the Bank of Cherry Valley note, from which Whitewater received the funds to pay Union National Bank, then Whitewater's debt would not have discharged any debt owed by Mr. Clinton. In this case, the debt simply would have shifted from Union National Bank to the Bank of Cherry Valley.405405. Haddon Morgan & Foreman Documents LP01957-69. 1 1 There is also no evidence that the Clintons had an obligation to repay, or did repay, Whitewater. Whitewater's books for the year ending May 31, 1981 do not show that the corporation reduced the Clintons' notes payable that was established when the land was transferred into the corporation. Nor do they show that the corporations recorded a receivable from the Clintons. Haddon Morgan & Foreman Documents LP 01957-69. On the other hand, if Mr. Clinton was not an obligor on the Bank of Cherry Valley note, then Whitewater's payment would have discharged debt owed by Mr. Clinton. In this case, the Union National Bank debt, on which Mr. Clinton was jointly and severally liable, would have been replaced by the Bank of Cherry Valley debt, on which Mr. Clinton was not liable. In the latter case, Mr. Clinton would owe the IRS additional taxes on the $10,000 of discharged debt, his share of the Union Bank debt.
Was Mr. Clinton an obligor on the Bank of Cherry Valley note? Mr. Clinton has stated that "any shift of this $20,000 loan from Union Bank did not affect its character as an acquisition loan, for which my wife and I considered ourselves equally responsible with the McDougals for repayment."406406. W.Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 12-13. However, testimony by the Bank of Cherry Valley's former President, Maurice Smith, indicates that the loan was made to Mr. McDougal individually, and most of the bank documents support his testimony. Indeed, Mr. Smith testified that the bank "just loaned it to Jim McDougal" and that Mr. Clinton did not make payments on the loan.407407. Smith, 4/23/96 Dep. p. 25.
Most of the available loan documents indicate that Mr. McDougal was the sole obligor on the Bank of Cherry Valley note.408408. Williams & Connolly Document DKSN 021879 (Bank of Cherry Valley note, dated 4/13/81); RTC Document (Not Numbered) Bank of Cherry Valley note, dated 12/9/82, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 6/9/84, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 12/3/84, with James McDougal as maker, signed only by James McDougal. Mr. McDougal's name, and not Mr. Clinton's, is typed on each of the documents, and Mr. McDougal signed each of the documents.409409. Williams & Connolly Document DKSN 021879 (Bank of Cherry Valley note, dated 4/13/81); RTC Production (Not Numbered) Bank of Cherry Valley note, dated 12/9/82, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 6/9/84, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 12/3/84, with James McDougal as maker, signed only by James McDougal. Only one loan document appears to have Mr. Clinton's signature on it, and Mr. Clinton's name is not typed on that document.410410. RTC Document DKRT100500. Moreover, that document is dated more than two years after the note was originated.411411. RTC Document DKRT100500.
E. 1982: The Clintons' Unreported Income of $5,691 for Whitewater Payment of Citizens Bank of Jonesboro Note
A 1982 payment by Whitewater of the principal and interest on a $5,000 note between the Citizens Bank of Jonesboro and Mr. Clinton may have resulted in $5,691.20 of income to the Clintons that was not reported on their 1982 federal income tax return. A May 21, 1981 personal financial statement of the Clintons lists a $5,000 note payable to Citizens Bank of Jonesboro as a liability under the heading "general debt."412412. RTC Document CBF0280. On February 17, 1981, Mr. Clinton wrote a personal check in the amount of $243.82 to Citizens Bank, which had a notation "Interest on Note #585-270."413413. Hogan & Hartson Document BL011114. On February 22, 1982, Whitewater disbursed a check in the amount of $5,691.20 to Citizens Bank.414414. RTC Document DKRT500067. The notation on the check states "Note 585-270,"415415. RTC Document DKRT500067. and the Whitewater checkbook entry designates this check as payment of "Note #585-270 - Bill Clinton."416416. Haddon Morgan & Foreman Document LP02928.
Section 61 of the Internal Revenue Code states that "gross income means all income from whatever source derived, including . . . [i]ncome from discharge of indebtedness."417417. Internal Revenue Code Section 61(a)(12) Courts have ruled that amounts expended by a corporation for an individual taxpayer's benefit would constitute income to the taxpayer.418418. Lash v. Commissioner, T.C. Memo 1956-87 ("amounts expended by Bristol for petitioner's benefit would constitute income to him. . . ."). Whitewater paid Mr. Clinton's note at Citizens Bank of Jonesboro, but Mr. Clinton has stated that "[i]t is possible that it was a WDC-related loan."419419. W. Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 23-24. If Mr. Clinton invested the proceeds of this loan in Whitewater and Whitewater then repaid the loan, Mr. Clinton would have received no personal benefit from Whitewater's payment of the note, and, therefore, would not have been required to recognize income from discharge of indebtedness.
The evidence is inconclusive on whether this Citizens Bank of Jonesboro loan was related to Whitewater. A March 1, 1982 letter from Jim McDougal to Bill Clinton states:
I have paid from the Whitewater Development Corporation the note you owed Citizens Bank of Jonesboro. You are correct in your belief that the sum of money borrowed was part of your investment in Whitewater. 420420. RTC Document DKRT400989.

Yet, there is no evidence on Whitewater's books that it received $5,000 from either the Clintons or Citizens Bank of Jonesboro.421421. RTC Document DKRT800044-68; Haddon Morgan & Foreman Document LP01957-88. 1 1 There is also no evidence that the Clintons had an obligation to repay, or did repay, Whitewater. Whitewater's books for the year ending May 31, 1982 do not show that the corporation reduced the Clintons' notes payable that was established when the land was transferred into the corporation. Nor do they show that the corporations recorded a receivable from the Clintons. Haddon Morgan & Foreman Documents LP 01957-88. Indeed, when Whitewater disbursed $5,691 to Citizens Bank of Jonesboro, it recorded the full amount as "interest" paid, which indicates that the corporation had never recorded a liability that could be reduced upon payment of the note.422422. Haddon Morgan & Foreman Document LP01981-2.
Although the evidence is inconclusive on whether these funds were invested in Whitewater, under federal income tax law the Clintons would bear the burden of proof that this payment did not result in any benefit to them personally. It is unclear whether the March 1, 1982 McDougal letter would be considered sufficient proof that the Clintons invested the funds received from the Citizens Bank of Jonesboro in Whitewater. If found insufficient, the Clintons would have unreported income of $5,691.20, excluding any interest and penalties.
F. 1984: The Clintons' Improper Deduction of $144 for Real Estate Taxes
On their 1984 federal income tax return, the Clintons improperly deducted $144 for real estate tax payments for which they were reimbursed by Whitewater. On October 10, 1984, the Clintons paid $144 to Marion County for the payment of real estate taxes on Whitewater lot 13. On November 4, 1984, Whitewater reimbursed the Clintons for this amount.423423. Haddon Morgan & Foreman Document LP02018. Since the Clintons were reimbursement for the taxes paid, this deduction was improper. On May 24, 1996, the Clintons acknowledged this error and repaid the federal taxes owed to the Bureau of Public Debt and the state taxes owed to an Arkansas charity.424424. Kendall Report, p. 11.
G. 1984 and 1985: The Clintons' Improper Interest Deductions of $2,811 and $2,322

On their 1984 and 1985 federal income tax returns, the Clintons improperly deducted $5,133 for interest payments made paid by Whitewater, not the Clintons.425425. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20. In 1984 and 1985, Whitewater made interest payments to the Security Bank of Paragould in the amounts of $2,811 and $2,322, respectively, that the corporation deducted on its corporate tax returns.426426. Haddon Morgan & Foreman Document LP00109. The Clintons also claimed these same interest deductions on their 1984 and 1985 federal income tax returns.427427. Haddon Morgan & Foreman Document LP00109. Since Whitewater made the interest payments to the bank, it, and not the Clintons, was entitled to those deductions. On December 28, 1993, almost two years after the errors were first reported, the Clintons repaid the taxes owed due to these errors.428428. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20. The Clintons did not explain the delay.429429. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20.
H. 1987: The Clintons' Improper Interest Deduction of $2,561
On their 1987 federal income tax return, the Clintons improperly deducted $1,636 for interest which they also deducted on their 1986 federal income tax return. On December 30, 1986, Mrs. Clinton wrote a check in the amount of $1,635.51 to Security Bank of Paragould.430430. Haddon Morgan & Foreman Document LP00528. On their 1986 federal income tax return, the Clintons deducted $1,636 for interest paid to "Security Bank."431431. Haddon Morgan & Foreman Document LP00790. In 1987, Security Bank of Paragould sent the Clintons a statement of interest paid on their loan during 1987, which listed interest paid of $2,561.33.432432. Hogan & Hartson Document BL011121. On their 1987 federal income tax return, the Clintons deducted $2,561 in interest paid to "Security Bank.433433. Haddon Morgan & Foreman Document LP00858.
The $2,561 of interest deducted on the Clintons' 1987 tax return improperly included the $1,635.51 payment made by the Clintons in 1986 and deducted on their 1986 tax return. The $925 balance of this amount ($2,561 - $1,636) was also improperly deducted by the Clintons on their 1987 tax return. This interest was paid by Hillman Logan, the owner of Whitewater lot 13. On May 24, 1996, the Clintons acknowledged these errors and repaid the federal taxes owed to the Bureau of Public Debt and state taxes owed to an Arkansas charity.434434. Kendall Report, p. 11.
Documents show that the Mrs Clinton may have discussed this error with her personal accountant, Yoly Redden, and Loretta Lynch on March 23, 1992 -- almost four years before the Clintons acknowledged the error. Notes taken by Ms. Redden of a March 23, 1992 telephone conversation between herself, Mrs. Clinton and Ms. Lynch state:
Clinton Campaign - Issue discussed with HC & Loretta Lynch
1987 $2,651 deducted per return to Security Bank of Paragould. [found canceled check from Clintons dated 12/30/86 check # 1623 for 1635.51.]
1986 1,636 paid [an arrow in Ms. Redden's notes points from this entry to the 1987 entry]435435. Haddon Morgan & Foreman Document 133-00001008.
Ms. Redden testified that in this conversation she had discussed with Mrs. Clinton and Ms. Lynch whether or not certain deductions had been "double-counted" on the Clintons' 1986 and 1987 federal income tax returns and that this issue had been discussed even prior to this conversation.436436. Redden, 5/30/96 Dep. pp. 184-187.
I. 1988: The Clintons' Improper Deduction of $1,275 for Real Estate Taxes

The $1,275 real estate tax deduction claimed by the Clintons on their 1988 tax return may have been improper under federal income tax law. On October 28, 1988, Mrs. Clinton reimbursed Ozark Realty $1,275.15 for real estate taxes due on several Whitewater lots.437437. RTC Document DKRT101031-35 and DKRT101043-44. On their 1988 federal income tax return the Clintons deducted $1,275 as real estate taxes.438438. Haddon Morgan & Foreman Document LP00866. Generally, only the owner of real property is entitled to deduct real property taxes on the property, since those taxes are the liability of the owner under federal income tax law.439439. See DeVere v. Commissioner, 35 T.C.M. 28 (1976); Anderson v. Commissioner, 33 T.C.M. 234 (1974), aff'd. per curiam, 527 F.2d 198 (9th Cir., 1975). Since the Clintons did not own the property on which the taxes were assessed, they were not entitled to a deduction for the payment of those real estate taxes. A taxpayer who owns a beneficial interest in property and who pays taxes thereon to protect that interest may deduct the taxes, even though legal title is in another.440440. Cornelia C.F. Horsford v. Commissioner, 2 T.C. 826 (1943); Estate of Movius, 22 T.C. 391 (1954); Steinert v. Commissioner, 33 T.C. 447 (1959). Beneficial interest is narrowly defined, however, and does not appear to the Clintons interest, if any, in the lots on which these real estate property taxes were assessed. Therefore, the Clintons' $1,275 payment to Ozark Realty for real estate taxes may not be an allowable deduction.
J. 1988: The Clintons' Unreported Income of $1,673 from the Sale of Lot 13

On May 24, 1996, the Clintons acknowledged that they under-reported the capital gain from the sale of a Whitewater lot owned by Mrs. Clinton by $1,673 on their 1988 federal income tax return.441441. Kendall Report, pp. 12-13. On that return, the Clintons reported a $1,640 long-term capital gain from the sale of lot 13.442442. Haddon Morgan & Foreman Document LP00861-94. In computing the capital gain from this sale, the Clintons included in their basis calculation payments made by the previous owner of the lot.443443. Haddon Morgan & Foreman Document LP00861 - LP00894; Kendall Report, pp. 12-13. As a result, the cost of the property was artificially inflated by $1,673, reducing the gain reported by the Clintons by this same amount on their 1988 tax return. The have repaid the federal taxes owed to the Bureau of Public Debt and the state taxes owed to an Arkansas charity.444444. Kendall Report, pp. 11.

Part II. GOVERNOR CLINTON'S QUESTIONABLE RELATIONSHIP WITH JAMES MCDOUGAL

While Mr. McDougal was carrying the Clintons share on the Whitewater loans, Governor Clinton, using the power of his political office, acted favorably on Mr. McDougal's other business ventures and accepted Mr. McDougal's recommendations regarding state action. These favors took the form of granting Mr. McDougal influence in appointments to state positions445445. RTC Document MG0000759; Williams & Connolly Document DKSN025966; Lyon, 12/14/95 Dep. p. 55., steering lucrative state leases to Madison Guaranty446446. Herr, 4/24/96 Hrg. pp. 18-19., and making decisions for Mr. McDougal concerning state regulators.447447. RTC Document DKRT800606A. This pattern of favoritism was important to Mr. McDougal, whose thrift was experiencing serious financial trouble.
The motive for this favoritism is clear. From the standpoint of Governor Clinton, if Madison Guaranty failed or Mr. McDougal experienced financial troubles, the Clintons could be liable for the full Whitewater debt. Thus, Governor Clinton had a reason to act to ensure the viability of Mr. McDougal's savings & loan, even if such action was adverse to the interests of the state.
I. James McDougal's Madison Guaranty: A Corrupt Savings & Loan
In January 1982, James and Susan McDougal, along with several others, purchased 90% of the stock of the Woodruff County Savings & Loan Association for $246,500, which they renamed Madison Guaranty Savings & Loan Association ("Madison Guaranty").448448. 4/24/95, Pillsbury Report p. 43. To finance the purchase of Madison Guaranty, the McDougals borrowed $70,000 from Worthen Bank. Mr. McDougal inaccurately indicated on the change of control applications that he had obtained the money through "funds received from closely held corporations." 449449. 4/24/95, Pillsbury Report p. 43. In June 1983, the McDougals borrowed another $142,186 from Worthen Bank to acquire stock belonging to other investors in Madison Guaranty in order to acquire exclusive control over the S&L.450450. 4/24/95, Pillsbury Report p. 43.
Mr. McDougal's true interest was always real estate investments, and his control of Madison Guaranty allowed him to pursue such investments. On the other hand, Madison Bank & Trust, Mr. McDougal's other federal institution, was prohibited from such investments.451451. 4/24/95, Pillsbury Report p. 43. In early 1982, Mr. McDougal incorporated Madison Financial Corporation as a subsidiary of Madison Guaranty for the sole purpose of real estate investment.452452. 4/24/95, Pillsbury Report p. 45.
From the beginning, Mr. McDougal viewed Madison Guaranty as a personal "candy store."453453. 4/24/95, Pillsbury Report p. 43. Soon after its purchase Mr. McDougal began to borrow personally from Madison Guaranty to pay down other loans including financing Whitewater.454454. 4/24/95, Pillsbury Report pp. 44-45.
In 1984, the Federal Home Loan Bank Board ("FHLBB") examined Madison Guaranty and concluded that "[t]he viability of the institution is jeopardized through the institution's current investment and lending practices in real estate development projects." The FHLBB attempted to force Madison, through a cease and desist order and a supervisory agreement, to stop lending money to the McDougals or any McDougal-controlled entity, and require Madison Guaranty to raise additional capital.
Shortly thereafter, Mr. McDougal hired Mrs. Clinton and the Rose Law Firm to represent Madison Guaranty and then-Governor Clinton appointed Beverly Bassett Schaffer to the position of Arkansas Securities Commissioner, based possibly on Mr. McDougal's recommendation. Mrs. Clinton and Ms. Schaffer discussed -- and Ms. Schaffer approved -- a novel proposal for Madison Guaranty to raise capital through the issuance of preferred stock. Ms. Clinton and the Rose Law Firm also represented Madison Guaranty in connection with land transactions and real estate investments, notably Castle Grande.
Beginning in March 1986, the FHLBB again examined Madison Guaranty.455455. Clark, 1/30/96 Hrg. p. 9. James Clark, the examiner-in-charge, testified that the examiner discovered "a group of insiders was obtaining cash in what amounted to a pyramid scheme" led by the principal insider, James McDougal.456456. Clark, 1/30/96 Hrg. p. 9.
Mr. Clark testified that in his 20 years as a bank examiner, Madison Guaranty was on of the top five worst financial institutions that he examined in terms of self dealing by insiders.457457. Clark, 1/30/96 Hrg. p. 15. The 1986 examination report concluded that "management blatantly disregarded numerous regulations," "ignored" parts of the Supervisory Agreement.458458. Hogan & Hartson Document BL010705. Moreover the report stated that Mr. McDougal's effective control of Madison Guaranty "enabled [him] to use corporate resources to develop large land developments [and] to divert substantial amounts of funds from the projects to himself and others."459459. Hogan & Hartson Document BL010705. The examiners cited Campobello, Maple Creek, and Castle Grande as problematic projects.460460. Hogan & Hartson Document BL010705. Although Madison Guaranty's financial statements indicated that the institution was in the black, the FHLBB report noted that improper accounting appeared to be the source of the profit, not successful investing. The report stated that, "[i]f profits [of the real estate projects] were booked properly, the Institution would be, in fact, insolvent."461461. Hogan & Hartson Document BL010705.
A. Madison's Fraudulent Land Deals
Examiner Clark testified that Mr. McDougal "had total control of Madison Guaranty funds" and that Mr. McDougal could "dispense those funds at any time he wished, and he did so through the land development projects."462462. Clark, 1/30/96 Hrg. p. 17. The 1986 federal examination uncovered several instances where Madison Guaranty insiders engaged in "sham transactions" or acted as a "straw man," an arrangement whereby the "purchaser of the property would obtain legal title to a property without having any actual financial interest in the property simply as a means to hide true ownership of the property."463463. Clark, 1/30/96 Hrg. p. 18. The sham transactions were used as a means to place phony profit on the books in attempt to falsely inflate net worth.464464. Clark, 1/30/96 Hrg. p. 19.

For example, the 1986 examination found that the Castle Grande project was "purchased and sold in a series of fictitious transactions" to straw buyers.465465. Clark, 1/30/96 Hrg. p. 21. At the recently concluded McDougal-Tucker trial, Don Denton, chief lending officer of Madison, testified that Seth Ward was a "nominee" buyer in the purchase of part of the land.466466. Denton, 3/18/96 McDougal Trial Testimony p. 1025. These transactions were structured in this way to enable Madison Guaranty to violate the Arkansas state regulation prohibiting Madison Guaranty from investing more than 6% of its assets into Madison Financial Corporation.467467. Clark, 1/30/96 Hrg. p. 146.
Bank examiners also found that Madison Guaranty insiders obtained financing for real estate projects that were fully funded by Madison Guaranty.468468. Clark, 1/30/96 Hrg. p. 155. In addition, insiders received real estate commissions that they did not earn.469469. Clark, 1/30/96 Hrg. pp. 155-56.
B. Madison's Phony Books and Records
The 1984 examination of Madison Guaranty had concluded that the books and records were "inadequate."470470. Clark, 1/30/96 Hrg. p. 92. The books and records at Madison Guaranty were "poor, missing, and in some cases, intentionally misleading."471471. Clark, 1/30/96 Hrg. p. 10. The loan files did not sufficiently document the disbursements of the loan proceeds.472472. Clark, 1/30/96 Hrg. p. 32. Mr. Denton testified that prior to the arrival of the examiners in March 1986, the staff of Madison Guaranty went through the loan files to find out what was missing, back dated documents, and had phony appraisals prepared.473473. Denton, 3/18/96 McDougal Trial Testimony p. 1125. Robert Palmer, a Madison appraiser, confirmed that he prepared several inflated appraisals for Madison Guaranty and backdated several appraisals.474474. Palmer, 3/26/96 McDougal Trial Testimony pp. 2152, 2178, 2193. Moreover, Mr. Clark testified that the appraisals were "wholly inadequate" and "the reports seemed to us to be essentially shams, some documents to put into the loan file."475475. Clark, 1/30/96 Hrg. p. 142.
The 1986 FHLBB examination of Madison Guaranty lasted from March through September of 1986, as opposed to the three to four weeks that it would normally take for an S&L that size, because "Madison Guaranty's problems were so severe and its records were so poor."476476. Clark, 1/30/96 Hrg. p. 14. Moreover, Madison Guaranty's management actively obstructed the examination by retaining needed loan files or withholding information.477477. Clark, 1/30/96 Hrg. p. 15.
C. Federal Regulators Oust Mr. McDougal from Madison
On June 19, 1986, Walter Faulk, the FHLBB's Supervisory Agent responsible for Madison Guaranty, issued the preliminary report of the examination.478478. O'Melveny & Meyers Document CCBW885-887. This report was so devastating that the Arkansas Securities Commissioner Beverly Bassett Schaffer believed it "effectively put Madison out of business."479479. O'Melveny & Meyers, Document CCBW884
Curiously, on July 2, 1986, Ms. Schaffer forwarded a letter which Mr. Faulk had sent to Madison Guaranty, to Samuel Bratton, then Counsel to Governor Clinton, with a personal note attached. The note stated, "Madison Guaranty is in pretty serious trouble. Because of Bill's relationship with McDougal we probably ought to talk about it."480480. O'Melveny & Meyers Document CCBW884. Mr. Bratton, who had already spoken with Governor Clinton several times about Madison Guaranty's financial difficulties, was well aware of the Governor's personal ties to Mr. McDougal.481481. Bratton, 2/13/96 Hrg. pp. 6,9. After Mr. Bratton received the note, he spoke with Ms. Schaffer about the possible closure of Madison Guaranty by the FHLBB,482482. Bratton, 2/13/96 Hrg. p. 7. and the upcoming FHLBB meeting in Dallas on July 24 where Madison's financial problems would be discussed.483483.483. O'Melveny & Meyers Document CCBW885. After Mr. Bratton received Ms. Schaffer's memorandum he contacted Governor Clinton, telling him of the FHLBB's plans.484484. Bratton, 2/13/96 Hrg. p. 7. Mr. Bratton also went to see Betsey Wright, the Governor's Chief of Staff, and they "together carried this to the Governor rather than my sending it in his normal mail."485485. Wright, 1/26/96 Dep. p. 229.
Although the exact date of Governor Clinton's receipt of the copy of the FHLBB's letter is unknown, he certainly received it before July 14, 1986.486486. Wright, 1/26/96 Dep. p. 230. It is clear that Governor Clinton knew that Mr. McDougal -- his business partner, friend, and client of his wife's law firm -- was in serious financial trouble before it was ever made public.
Results of an examination by the FHLBB are to be kept confidential, and "[t]he law requires that release of an exam report be restricted."487487. Clark, 1/30/96 Hrg. p. 115. Bank regulators should not share the results of exams with anyone outside of the regulatory agency. James Clark, the FHLBB examiner, could not think of one reason why it would be appropriate for a state bank regulator to tip off the governor's office with regard to an ongoing bank examination.488488. Clark, 1/30/96 Hrg. pp. 116-17. Moreover, Mr. Clark testified that, given Governor Clinton's business relationship with Mr. McDougal, the "tip off" from Ms. Schaffer certainly "had the appearance of a conflict."489489. Clark, 1/30/96 Hrg. p. 120.
On July 11, 1986 the Federal Home Loan Bank Board met to discuss Madison. Ms. Schaffer, her associate Charles Handley, nine persons from the FHLBB, and the Madison Board of Directors were all present.490490. RTC Document 001395. Mr. and Mrs. McDougal were not present.491491. RTC Document 001395. Mr. Clark expressed some concerns about Ms. Schaffer's presence at the FHLBB meeting because she had performed legal work for Madison Guaranty when she was in private practice, and he viewed that as a conflict with her oversight capacity as the Arkansas Securities Commissioner.492492. Clark, 1/30/96 Hrg. p. 36.
During the meeting, Dawn Pulcer of the FHLBB mentioned that she thought Ms. Schaffer's conduct during the meeting was peculiar. Ms. Pulcer's contemporaneous notes of the meeting reflect that during the course of discussion at the FHLBB meeting Ms. Schaffer appeared to be frowning, and asked only one question: "[w]ho is representing the McDougals?"493493. RTC Document 1403, 7432. Ms. Pulcer stated that she "[t]hought it was a little odd. I, too, would have expected her to say something in support of the actions that the Federal Home Loan Bank Board supervisory authorities were taking."494494. Pulcer, 1/30/96 Hrg. pp. 122-123.
At this meeting, FHLBB determined that Mr. McDougal and Mr. Latham should be removed from Madison. On July 14, 1986, just three days after this meeting, Ms. Wright wrote a telling message to Governor Clinton that reads:
White Water stock
(McDougal's company)

Do you still have? (pursuant
to Jim's current problems

If so, I'm worried about
it.495495. Williams & Connolly Document DKSN013309.

Governor Clinton responded by writing "No-Do not have any more---B."496496. Williams & Connolly Document DKSN013309. Ms. Wright claimed it was then well known that Mr. McDougal had been removed from the bank. But the local newspaper did not report the event until July 25, 1996, eleven days later.497497. Wright, 1/26/96 Dep. p. 232.
Curiously, on the very same day that Ms. Wright inquired about Governor Clinton's relationship with Mr. McDougal, Mrs. Clinton wrote a letter to Mr. McDougal and Mr. Latham terminating the Rose Law Firm's retainer agreement with Madison Guaranty.498498. Williams & Connolly Documents DKSN001168-9. Along with the letter, Mrs. Clinton sent a check from the Rose Law Firm refunding Madison Guaranty's outstanding retainer balance.499499. Williams & Connolly Documents DKSN001168-9.
Mrs. Clinton has given at least two different accounts regarding why she terminated the Rose Law Firm's representation of Madison Guaranty.500500. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."; H. Clinton, Interrogatory Answers to RTC 2/4/94 pp.36-37; H. Clinton, 2/14/96 FDIC Interview pp. 91-96. In a press conference on April 22, 1994, Mrs. Clinton said that the Rose Law Firm's relationship with Madison Guaranty was terminated because Madison Guaranty could not meet the requirements imposed by Ms. Schaffer for the issuance of preferred stock.501501. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House." p. 15. However, in response to interrogatories on February 4, 1994, Mrs. Clinton said that the representation of Madison Guaranty was terminated due to "the increasing work the Rose Law Firm was doing for FSLIC ... the firm had decided in early July, 1986, generally to avoid taking on any new or expanded representations of S&L's."502502. H. Clinton Interrogatory Answers to RTC, 5/24/95 pp.36-37. In Mrs. Clinton's February 14, 1996 interview with the FDIC, Mrs. Clinton stated that the letter to Madison Guaranty was written in direct response to a memorandum written by Herb Rule, then the managing partner of the Rose Law Firm, to all attorneys.503503. H. Clinton, 2/14/96 FDIC Interview p. 92.
II. Governor Clinton Provides Benefits to James McDougal and Madison S&L

During the time when Mr. McDougal was running Madison Guaranty and carrying the Clintons on the Whitewater investment, Governor Clinton acted favorably on Mr. McDougal's various proposals before the state. Indeed, substantial evidence supports Mr. McDougal's claims that he had "clout" with the Governor.504504. Lyon, 12/14/95 Dep. pp. 28-29.
A. Governor Clinton Steers Valuable State Leases to Madison

Governor Clinton exercised the power of his office to steer two lucrative lease contracts to Madison Guaranty.505505. Herr, 4/24/96 Hrg. pp. 18-19. Helen Herr, the former Leasing Administrator for Arkansas State Building Services ("ASBS"), testified that she first learned in January or February 1984 that Madison Guaranty was interested in leasing space to Arkansas Housing Development Agency ("AHDA") during a meeting in the office of Paul Mallard.506506. Herr, 2/13/96 Dep. pp. 15-16. Mr. Mallard, the Director of ASBS called Ms. Herr into his office to meet Susan McDougal. Mr. Mallard told Ms. Herr that the McDougals were developing a building on South Main Street in Little Rock, in Quapaw Quarter, and that they had additional office space that they wanted to rent.507507. Herr, 2/13/96 Dep. pp. 16-17. This office space was difficult to lease because it was located in an unsafe part of Little Rock and the real estate market in Little Rock was soft. Many commercial landlords were eager to fill their office space with long term tenants.508508. Herr, 4/24/96 Hrg. p. 10.
In fall 1983, AHDA developed a need for additional office space. ASBS was considering office space on Brookwood Drive that the Director of AHDA, Wooten Epes, felt would be suitable.509509. Herr, 4/24/96 Hrg. p. 12. After meeting with Mrs. McDougal, Mr. Mallard instructed Ms. Herr to examine the Madison office space.510510. Herr, 4/24/96 Hrg. p. 13.
When Mr. Epes, AHSA's Director, complained to Ms. Herr about the Madison space, she recommended that he state his complaints in writing. On March 5, 1984, Mr. Epes wrote a letter to Ms. Herr rejecting the proposal that AHDA lease the office space from Madison.511511. Herr, 4/24/96 Hrg. p. 16. Mr. Epes was concerned that the Madison space was not sufficiently large and was not located in a safe part of Little Rock.512512. Herr, 4/24/96 Hrg. p. 15. When Ms. Herr brought Mr. Epes' letter to Mr. Mallard's attention, Mr. Mallard told her that the leasing contract was going to Madison Guaranty because the McDougals were "friends" of the Governor.513513. Herr, 2/13/96 Dep. p. 34-35. Ms. Herr specifically testified: "When I presented the objections from Mr. Epes about the Madison space, [Mallard] said that the governor's office wants us to lease that space ... and that the McDougals were friends" of Governor and Mrs. Clinton.514514. Herr, 2/13/96 Dep. p. 34-35. Mr. Mallard also told her that "they weren't going to consider other proposals" because the "governor's office wants us to lease this space and that's the way it's going to be."515515. Herr, 4/24/96 Hrg. p. 19. Mr. Epes took his concerns to the Governor.516516. Herr, 4/24/96 Hrg. p. 24. Mr. Epes testified that Governor Clinton refused to overrule Mr. Mallard's decision, and that was the Governor's final word.517517. Herr, 4/24/96 Hrg. p. 24.
On April 1, 1984, the AHDA entered into a lease with Madison Guaranty.518518. Arkansas State Building Services Document, 2/13/96 (Not numbered.) The lease was for a 60-month term at $4,800 per month.519519. Arkansas State Building Services Document, 2/13/96 (Not numbered.) The contract realized nearly $300,000 in payments to Madison.520520. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
In 1985 AHDA became the Arkansas Development Finance Authority ("ADFA").521521. Arkansas State Building Services Document, 2/13/96 (Not numbered.) ADFA subsequently sought to lease additional office space for their new employees.522522. Arkansas State Building Services Document, 2/13/96 (Not numbered.) As a result of this change, ADFA entered into another contract with Madison.523523. Arkansas State Building Services Document, 2/13/96 (Not numbered.) In August 1987, however, ADFA canceled its lease with Madison because it needed still more space, which was the concern that Mr. Epes had from the beginning.524524. Arkansas State Building Services Document, 2/13/96 (Not Numbered.)
Moreover, the State of Arkansas, through ASBS, leased space in an additional building from Mr. McDougal, in Quapaw Quarter, to house the Arkansas Revenue Department.525525. Arkansas State Building Services Document, 2/13/96 (Not numbered.) Other than the three leases entered into with McDougal-owned entities, Ms. Herr could not recall any other leases the state entered for office space in the lease in Quapaw Quarter.526526. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
Don Denton, a Madison loan officer, believed that the state leases were a political payback by Governor Clinton to the McDougals. Mr. Denton testified that the connection "[s]tood out like a beacon at night."527527. Denton, 5/7/96 Dep. p. 81.
B. McDougal Holds a Questionable 1985 Fundraiser for Clinton

On April 4, 1985, James McDougal hosted a fundraiser for Governor Clinton at Madison Guaranty to raise money to pay off the Governor's outstanding personal debt from his 1984 gubernatorial campaign.528528. Williams & Connolly Document DKSN001259; 4/24/95 Pillsbury Report p. 102. In the closing days of that race, Governor Clinton had obtained an unsecured personal loan in the amount of $50,000 from the Bank of Cherry Valley. 529529. Smith, 4/23/96 Dep. p. 33, 35.
The exact amount of money raised at the event is not known. The campaign finance report listing the contributions received at the fundraiser is missing from the Pulaski County Clerk's office and has never been located. By all accounts, however, the fundraiser netted more than $30,000 to pay off Governor Clinton's personal debt.1 1 Betsey Wright, who ran Governor Clinton's 1984 campaign, testified that $30,500 was raised at the event. (Wright, 1/26/96 Dep. p. 278.) Ms. Wright, the custodian of records for that campaign, she based that figure on checks from 17 persons or entities that she said had been collected in connection with the fundraiser. (O'Melveny & Myers Production CCBW-0017-24.) Mr. McDougal has stated in various interviews that the fundraiser raised about $35,000. (E.g. New York Times, 12/15/93 p. B8.) Notes taken by Susan Thomases in 1992 of a conversation she had with Sherry Curry reflect that "MacD FR raised $39,150." (Willkie Farr & Gallagher Production ST 45.)
Four $3,000 checks were collected at the fundraiser.530530. RTC Document B-1, C-1, D-3, D-5. The names on the checks were James B. and Susan McDougal, J.W. Fulbright, Ken Peacock, and Dean Landrum.531531. RTC Document B-1, C-1, D-3, D-5. J.W. Fulbright is the late former Senator. Ken Peacock is the son of former Madison director and borrower Charles Peacock.532532. Peacock, 4/24/96 Hrg. p. 169. Dene Landrum, who is now deceased, was Mr Peacock's business associate.533533. Peacock, 4/24/96 Hrg. p. 169-170. His first name was misspelled on the check as "Dean."534534. RTC Document D-5.
All four checks were dated April 4, 1985.535535. RTC Document B-1, C-1, D-3, D-5. The James McDougal check was written on the McDougal's personal checking account at Madison Guaranty and was signed by Susan McDougal.536536. O'Melveny & Myers Document CCBW-0017. The Fulbright, Peacock, and Landrum checks were Madison Guaranty cashier's checks bearing numbers 2496, 2497, and 2498, respectively.537537. RTC Document B-1, D-3, D-5.
There is strong evidence suggesting that the $3,000 check in Senator Fulbright's name was purchased by Mr. McDougal out of funds from his Flowerwood Farms account. Senator Fulbright did not attend the fundraiser, although he was expected to.538538. Wright, 1/26/96 Dep. p. 280; W. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 40. In 1994, Kent Goss, an RTC investigator, questioned Senator Fulbright's lawyer, a former aide to the Senator, about the $3,000 check.539539. House Document House W/W RPT. 2953-2954. 1 1 Senator Fulbright himself could not be interviewed because he had a stroke several years ago and died in February 1995. Mr. Goss wrote that although it was "evident" that Senator Fulbright was "a meticulous record-keeper," there was no record of any charitable donation in the amount of $3,000 between 1984 and 1991.540540. House Document House W/W RPT. 2953-2954. Nor did Senator Fulbright's bank statements reflect a $3,000 debit during the relevant time.541541. House Document House W/W RPT. 2953-2954. Senator Fulbright's lawyer added that he believed that the Senator had "no knowledge" of a $3,000 contribution to Governor Clinton.542542. House Document House W/W RPT. 2953-2954.
The Pillsbury Madison & Sutro Report on Madison Guaranty and Whitewater commissioned by the Resolution Trust Corporation attempted to trace the source of funds of the Fulbright check.543543. 4/24/95 Pillsbury Report pp.108-110. According to this report, on April 4, 1985, the same day that the Fulbright check was issued, a $3,000 check payable to Madison Guaranty was written on Flowerwood Farms' account at Madison Guaranty.544544. 4/24/95 Pillsbury Report pp.108-110. The Flowerwood Farms check was apparently deposited in the Madison cashier's check account, as it was encoded with "7001312" -- the number of that account.545545. 4/24/95 Pillsbury Report p.109. A $3,000 deposit was posted in the account 7001312 on April 4, 1985.546546. 4/24/95 Pillsbury Report p.109.
Despite this evidence, the Pillsbury Report erroneously concluded that the link between the Flowerwood Farms check and the Fulbright check "has not been conclusively confirmed" because Madison Guaranty issued two other cashier's checks for $3,000 on April 4, 1985, i.e., those in the names of Ken Peacock and Dean Landrum.547547. 4/24/95 Pillsbury Report p. 109. However, Charles Peacock, an attendee and donor at the fundraiser, has admitted to purchasing those two checks.548548. Peacock, 4/24/96 Hrg. p. 169-170. The Pillsbury report recognized: "[I]f the Ken Peacock and Dene Landrum cashier's checks were funded by Charles Peacock III, the Flowerwood Farms check could have funded the remaining $3,000 cashier's check, the one from Fulbright."549549. 4/24/95 Pillsbury Report p. 109.
Mr. Peacock's testimony establishes, and the documentary evidence confirms, that he caused the checks to be issued. Mr. Peacock admitted that he purchased the $3,000 checks in the names of his son and Dene Landrum.550550. Peacock, 1/16/96 Dep. pp. 22-23. Mr. Peacock said he bought the check in his son's name because he thought it might help his son secure a job with Governor Clinton.551551. Peacock, 1/16/96 Dep. pp. 22-23. He testified that he bought the check in Mr. Landrum's name because Mr. Landrum wanted to help the child of a friend receive a scholarship awarded by Governor Clinton.552552. Peacock, 1/16/96 Dep. p. 23.
The documentary evidence is consistent with Mr. Peacock's admission that he procured the checks. On April 4, 1985, Mr. Peacock wrote a $6,000 counter check payable to Madison Guaranty, apparently on his account #15253.553553. RTC Document D-2. The check was encoded with "7001312" -- the number of the Madison cashier's checking account. That same day, Mr. Peacock purchased a cashier's check for $4.554554. RTC Document D-5. Madison Guaranty charged a $2 fee for cashier's checks.555555. 4/24/95 Pillsbury Report p. 106. When asked whether he bought this cashier's check to pay the $4 fee on the two $3,000 checks, Mr. Peacock said, "I'm sure that's what happened."556556. Peacock, 1/16/96 Dep. pp. 27-28. It seems clear that since Mr. Peacock purchased two of the $3,000 cashiers checks, the third $3,000 check was purchased with proceeds from Flowerwood Farms.
There is evidence that Mr. Peacock purchased the Ken Peacock and Dean Landrum checks with proceeds diverted from loans made by Madison Guaranty.
On the day of the fundraiser, April 4, 1985, Dixie Continental Leasing, a company owned by Mr. Peacock, purchased 29.77 acres of land on Woodson Lateral Road for $335,000.557557. Peacock, 12/10/86 Borod & Huggins Interview p. 5. Most of the sale was financed by Madison Guaranty with a $297,000 mortgage.558558. RTC Document A-3, A-8; Peacock, 12/20/86 Borod & Huggins Interview p. 107; RTC Production A-6.
Mr. Peacock borrowed an additional $50,000 from Madison Guaranty in his own name to fund the down payment on the property.559559. RTC Document E-1. The loan was executed on April 5, 1985, but was funded on April 4, 1985, with a $50,000 Madison Guaranty check payable to Mr. Peacock.560560. RTC Document E-1, D-1. The loan was secured by commercial air conditioning equipment appraised at $273,000 but ultimately sold as scrap by Madison Guaranty for $1,500.561561. Peacock, 4/24/96 Hrg. p. 173.
On April 5, 1985, Mr. Peacock wrote a check for $38,940 to Quapaw Title Co. to pay the down payment on the Woodson Lateral Road property.562562. RTC Document E-8. The check was deposited in Madison Guaranty.563563. RTC Document E-9. There is no documentary evidence indicating what happened to the remaining $11,060. Mr. Peacock does not remember how the remaining $11,060, a sum sufficient to fund the checks to Governor Clinton, was spent.564564. Peacock, 1/16/96 Dep. p. 43. Moreover, he does not recall what funds he used to pay for the cashier's checks: "I don't remember how I paid for them, whether I paid for them with a check or whether I paid for them out of funds or what I did."565565. Peacock, 1/16/96 Dep. p. 26.
The Pillsbury Report concludes that the source of funds for Mr. Ken Peacock's and Mr. Landrum's checks "cannot be established from the available documentation,"566566. 4/24/95 Pillsbury Report p. 107. because Mr. Peacock's April 1985 Madison Guaranty bank statement is missing.567567. 4/24/95 Pillsbury Report p. 107. Thus, it is not po

291. Lyons, 11/2/95 Dep. p. 10.
292. Lyons, 11//2/95 Dep. pp. 11, 13.
293. Lyons, 11/2/95 Dep. p. 19.
294. Lyons, 6/5/96 Dep. p. 11.
295. Lyons, 6/5/96 Dep. p. 10.
296. Patten, 5/31/96 Dep. p. 9.
297. Lyons, 11/2/95 Dep. p. 47.
298. Lyons, 11/2/95 Dep. p. 47.
299. Haddon Morgan & Foreman Document LP01155.
300. Patten, 5/31/96 Dep. pp. 69-71.
301. Patten, 5/31/96 Dep. pp. 12-13.
302. Patten, 5/31/96 Dep. pp. 12-13.
303. Patten, 5/31/96 Dep. pp. 69-71.
304. Haddon Morgan & Foreman Documents LP01108-114, LP01115-169 and LP01170-176.
305. Haddon Morgan & Foreman Documents LP01177-90.
306. Haddon Morgan & Foreman Documents LP01101-107.
307. Patten, 5/31/96 Dep. p. 75.
308. Patten, 5/31/96 Dep. pp. 19-20.
309. Patten, 5/31/96 Dep. pp. 75-77.
310. Lyons, 11/2/95 Dep. p. 103.
311. Lyons, 11/2/95 Dep. p. 112.
312. Haddon Morgan & Foreman Documents LP01086-92.
313. Haddon Morgan & Foreman Documents LP01086-92.
314. Haddon Morgan & Foreman Documents LP01058-69.
315. Haddon Morgan & Foreman Documents LP01115-119.
316. Lyons Documents JML 077-78.
317. Lyons, 11/2/95 Dep. p. 112.
318. Patten, 5/31/96 Dep. p. 68.
319. Haddon Morgan & Foreman Documents LP01105-14.
320. Lyons Documents JML 140.
321. Lyons Documents JML 140.
322. Lyons Documents JML 140.
323. Lyons Documents JML 140.
324. Lindsey, 6/12/95 Dep. pp. 79-80.
325. Lindsey, 6/12/95 Dep. pp. 79-80.
326. Lyons Documents JML 2584-85.
327. Lyons Documents JML 2584-85.
328. Haddon Morgan & Foreman Documents LP00014.
329. Williams & Connolly Document DKSN000481.
330. Hearings before the Special Committee to Investigate Whitewater Development Corporation and Related Matters, administered by the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on the Inquiry into whether Improper Conduct Occurred Regarding the Way in which White House Officials Handled Documents in the Office of White House Deputy Counsel Vincent W. Foster, Jr., 104th Cong., 1st Sess., July 18, 1995 - August 10, 1995 [hereinafter "S. Hrg."], 8/8/95 p. 28; Williams & Connolly Document DKSN000482.
331. Blair, 2/19/96 Dep. p. 62.
332. Blair, 2/19/96 Dep. p. 67.
333. Blair, 2/19/96 Dep. p. 67.
334. Blair, 2/19/96 Dep. p. 69.
335. Blair, 2/19/96 Dep. p. 70.
336. Blair, 2/19/96 Dep. p. 72.
337. Blair, 2/19/96 Dep. p. 72.
338. Blair, 2/19/96 Dep. p. 84.
339. Blair, 2/19/96 Dep. p. 63.
340. Blair, 2/19/96 Dep. p. 73.
341. Blair, 2/19/96 Dep. p. 79.
342. Redden, 5/30/96 Dep. p. 237.
343. Williams & Connolly Document DKSN000518.
344. Williams & Connolly Document DKSN000514.
345. Jeff Gerth and Stephen Engleberg, "Documents Show Clintons Enjoyed Far Vaster Protection from Whitewater Losses," New York Times, July 15 1995, at A18.
346. Williams & Connolly Document DKSN000515.
347. Williams & Connolly Document DKSN000515.
348. Williams & Connolly Document DKSN000518.
349. Williams & Connolly Document DKSN000519.
350. Sidley & Austin Document 0000185.
351. Sidley & Austin Document 0000185.
352. Redden, 5/30/96 Dep. p. 228.
353. Redden, 5/30/96 Dep. pp. 230-231.
354. Jeff Gerth and Stephen Engleberg, "Documents Show Clintons Enjoyed Far Vaster Protection from Whitewater Losses," New York Times, July 15, 1995, at A18.
355. Redden, 5/30/96 Dep. p. 234.
356. Redden, 5/30/96 Dep. p. 234.
357. 4/24/95 Pillsbury Report, pp. 130-31.
358. Norton, 5/15/96 Hrg. pp. 3-4; Norton, 5/6/96 Dep. pp. 83-84.
359. Norton, 5/6/96 Dep. pp. 92-93, 100-101.
360. Norton, 5/15/96 Hrg. pp. 8-9.
361. Norton, 5/15/96 Hrg. pp. 3-4.
362. Norton, 5/15/96 Hrg. pp. 3-4.
363. Norton, 5/6/96 Dep. pp. 20 and 83-84.
364. Norton, 5/15/96 Hrg. pp. 8-9.
365. Haddon Morgan & Foreman Document LP01547.
366. Haddon Morgan & Foreman Document LP0663.
367. Haddon Morgan & Foreman Document LP00672.
368. Haddon Morgan & Foreman Documents LP00663, LP00672.
369. RTC Document DKRT800001-20.
370. Haddon Morgan & Foreman Document LP00682.
371. Haddon Morgan & Foreman Document 133-00000518-531.
372. RTC Document DKRT900994.
373. RTC Document DKRT800044-68.
374. RTC Document DKRT800053.
375. RTC Document DKRT800009.
376. RTC Document DKRT800001-20.
377. Internal Revenue Code Section 163(a).
378. RTC Document DKRT8000533.
379. RTC Document DKRT11000804-808.
380. RTC Document DKRT800533.
381. Haddon Morgan & Foreman Document LP00673-89.
382. RTC Production DKRT800533.
383. RTC Document DKRT800533.
384. RTC Document DKRT800533.
385. Letter from David Kendall to the Honorable James A. Leach, May 24, 1996, forwarding a report entitled "Review of Clinton Tax Adjustments Proposed by the House Committee on Banking and Financial Services," p.8 (hereinafter the "Kendall Report").
386. Lyons Document JLM 088.
387. 4/24/95 Pillsbury Report, p. 31.
388. Kendall Report, pp. 10-11.
389. Bayou Verret Land Co. v. Commissioner, 52 T.C. 971, 985-986 (1969), affd. on this issue 450 F.2d 850 (5th Cir. 1971). However, a taxpayer cannot deduct prepaid interest, regardless of her intent.


390. Bayou Verret Land Co. v. Commissioner, 52 T.C. 971, 985-986 (1969), affd. on this issue 450 F.2d 850 (5th Cir. 1971).


391. 4/24/95 Pillsbury Report, p. 31.
392. 4/24/95 Pillsbury Report, p. 31.
393. RTC Document DKRT900145.
394. 4/24/95 Pillsbury Report pp. 15-16.
395. RTC Document DKRT900155.
396. RTC Document DKRT900155.
397. RTC Document BCV0004.
398. RTC Document DKRT900968.
399. RTC Document DKRT901077.
400. Internal Revenue Code Section 61(a)(12).
401. Lash v. Commissioner, T.C. Memo 1956-87 ("amounts expended by Bristol for petitioner's benefit would constitute income to him. . . .").
402. Internal Revenue Code Section 108(e)(4)(A).
403. Haddon Morgan & Foreman Document LP00106.
404. Haddon Morgan & Foreman LP00106.
405. Haddon Morgan & Foreman Documents LP01957-69.
406. W.Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 12-13.
407. Smith, 4/23/96 Dep. p. 25.
408. Williams & Connolly Document DKSN 021879 (Bank of Cherry Valley note, dated 4/13/81); RTC Document (Not Numbered) Bank of Cherry Valley note, dated 12/9/82, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 6/9/84, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 12/3/84, with James McDougal as maker, signed only by James McDougal.
409. Williams & Connolly Document DKSN 021879 (Bank of Cherry Valley note, dated 4/13/81); RTC Production (Not Numbered) Bank of Cherry Valley note, dated 12/9/82, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 6/9/84, with James McDougal as maker, signed only by James McDougal; Bank of Cherry Valley note, dated 12/3/84, with James McDougal as maker, signed only by James McDougal.
410. RTC Document DKRT100500.
411. RTC Document DKRT100500.
412. RTC Document CBF0280.
413. Hogan & Hartson Document BL011114.
414. RTC Document DKRT500067.
415. RTC Document DKRT500067.
416. Haddon Morgan & Foreman Document LP02928.
417. Internal Revenue Code Section 61(a)(12)
418. Lash v. Commissioner, T.C. Memo 1956-87 ("amounts expended by Bristol for petitioner's benefit would constitute income to him. . . .").
419. W. Clinton, Interrogatory Answers to RTC, 5/24/95 pp. 23-24.
420. RTC Document DKRT400989.
421. RTC Document DKRT800044-68; Haddon Morgan & Foreman Document LP01957-88.
422. Haddon Morgan & Foreman Document LP01981-2.
423. Haddon Morgan & Foreman Document LP02018.
424. Kendall Report, p. 11.
425. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20.
426. Haddon Morgan & Foreman Document LP00109.
427. Haddon Morgan & Foreman Document LP00109.
428. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20.
429. Gerth and Labaton, "Whitewater Papers Cast Doubt on Clinton Account of a Tax Underpayment," The New York Times, August 6, 1995, p. 20.
430. Haddon Morgan & Foreman Document LP00528.
431. Haddon Morgan & Foreman Document LP00790.
432. Hogan & Hartson Document BL011121.
433. Haddon Morgan & Foreman Document LP00858.
434. Kendall Report, p. 11.
435. Haddon Morgan & Foreman Document 133-00001008.
436. Redden, 5/30/96 Dep. pp. 184-187.
437. RTC Document DKRT101031-35 and DKRT101043-44.
438. Haddon Morgan & Foreman Document LP00866.
439. See DeVere v. Commissioner, 35 T.C.M. 28 (1976); Anderson v. Commissioner, 33 T.C.M. 234 (1974), aff'd. per curiam, 527 F.2d 198 (9th Cir., 1975).
440. Cornelia C.F. Horsford v. Commissioner, 2 T.C. 826 (1943); Estate of Movius, 22 T.C. 391 (1954); Steinert v. Commissioner, 33 T.C. 447 (1959).
441. Kendall Report, pp. 12-13.
442. Haddon Morgan & Foreman Document LP00861-94.
443. Haddon Morgan & Foreman Document LP00861 - LP00894; Kendall Report, pp. 12-13.
444. Kendall Report, pp. 11.
445. RTC Document MG0000759; Williams & Connolly Document DKSN025966; Lyon, 12/14/95 Dep. p. 55.
446. Herr, 4/24/96 Hrg. pp. 18-19.
447. RTC Document DKRT800606A.
448. 4/24/95, Pillsbury Report p. 43.
449. 4/24/95, Pillsbury Report p. 43.
450. 4/24/95, Pillsbury Report p. 43.
451. 4/24/95, Pillsbury Report p. 43.
452. 4/24/95, Pillsbury Report p. 45.
453. 4/24/95, Pillsbury Report p. 43.
454. 4/24/95, Pillsbury Report pp. 44-45.
455. Clark, 1/30/96 Hrg. p. 9.
456. Clark, 1/30/96 Hrg. p. 9.
457. Clark, 1/30/96 Hrg. p. 15.
458. Hogan & Hartson Document BL010705.
459. Hogan & Hartson Document BL010705.
460. Hogan & Hartson Document BL010705.
461. Hogan & Hartson Document BL010705.
462. Clark, 1/30/96 Hrg. p. 17.
463. Clark, 1/30/96 Hrg. p. 18.
464. Clark, 1/30/96 Hrg. p. 19.
465. Clark, 1/30/96 Hrg. p. 21.
466. Denton, 3/18/96 McDougal Trial Testimony p. 1025.
467. Clark, 1/30/96 Hrg. p. 146.
468. Clark, 1/30/96 Hrg. p. 155.
469. Clark, 1/30/96 Hrg. pp. 155-56.
470. Clark, 1/30/96 Hrg. p. 92.
471. Clark, 1/30/96 Hrg. p. 10.
472. Clark, 1/30/96 Hrg. p. 32.
473. Denton, 3/18/96 McDougal Trial Testimony p. 1125.
474. Palmer, 3/26/96 McDougal Trial Testimony pp. 2152, 2178, 2193.
475. Clark, 1/30/96 Hrg. p. 142.
476. Clark, 1/30/96 Hrg. p. 14.
477. Clark, 1/30/96 Hrg. p. 15.
478. O'Melveny & Meyers Document CCBW885-887.
479. O'Melveny & Meyers, Document CCBW884
480. O'Melveny & Meyers Document CCBW884.
481. Bratton, 2/13/96 Hrg. pp. 6,9.
482. Bratton, 2/13/96 Hrg. p. 7.
483.483. O'Melveny & Meyers Document CCBW885.
484. Bratton, 2/13/96 Hrg. p. 7.
485. Wright, 1/26/96 Dep. p. 229.
486. Wright, 1/26/96 Dep. p. 230.
487. Clark, 1/30/96 Hrg. p. 115.
488. Clark, 1/30/96 Hrg. pp. 116-17.
489. Clark, 1/30/96 Hrg. p. 120.
490. RTC Document 001395.
491. RTC Document 001395.
492. Clark, 1/30/96 Hrg. p. 36.
493. RTC Document 1403, 7432.
494. Pulcer, 1/30/96 Hrg. pp. 122-123.
495. Williams & Connolly Document DKSN013309.
496. Williams & Connolly Document DKSN013309.
497. Wright, 1/26/96 Dep. p. 232.
498. Williams & Connolly Documents DKSN001168-9.
499. Williams & Connolly Documents DKSN001168-9.
500. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."; H. Clinton, Interrogatory Answers to RTC 2/4/94 pp.36-37; H. Clinton, 2/14/96 FDIC Interview pp. 91-96.
501. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House." p. 15.
502. H. Clinton Interrogatory Answers to RTC, 5/24/95 pp.36-37.
503. H. Clinton, 2/14/96 FDIC Interview p. 92.
504. Lyon, 12/14/95 Dep. pp. 28-29.
505. Herr, 4/24/96 Hrg. pp. 18-19.
506. Herr, 2/13/96 Dep. pp. 15-16.
507. Herr, 2/13/96 Dep. pp. 16-17.
508. Herr, 4/24/96 Hrg. p. 10.
509. Herr, 4/24/96 Hrg. p. 12.
510. Herr, 4/24/96 Hrg. p. 13.
511. Herr, 4/24/96 Hrg. p. 16.
512. Herr, 4/24/96 Hrg. p. 15.
513. Herr, 2/13/96 Dep. p. 34-35.
514. Herr, 2/13/96 Dep. p. 34-35.
515. Herr, 4/24/96 Hrg. p. 19.
516. Herr, 4/24/96 Hrg. p. 24.
517. Herr, 4/24/96 Hrg. p. 24.
518. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
519. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
520. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
521. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
522. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
523. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
524. Arkansas State Building Services Document, 2/13/96 (Not Numbered.)
525. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
526. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
527. Denton, 5/7/96 Dep. p. 81.
528. Williams & Connolly Document DKSN001259; 4/24/95 Pillsbury Report p. 102.
529. Smith, 4/23/96 Dep. p. 33, 35.
530. RTC Document B-1, C-1, D-3, D-5.
531. RTC Document B-1, C-1, D-3, D-5.
532. Peacock, 4/24/96 Hrg. p. 169.
533. Peacock, 4/24/96 Hrg. p. 169-170.
534. RTC Document D-5.
535. RTC Document B-1, C-1, D-3, D-5.
536. O'Melveny & Myers Document CCBW-0017.
537. RTC Document B-1, D-3, D-5.
538. Wright, 1/26/96 Dep. p. 280; W. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 40.
539. House Document House W/W RPT. 2953-2954.
540. House Document House W/W RPT. 2953-2954.
541. House Document House W/W RPT. 2953-2954.
542. House Document House W/W RPT. 2953-2954.
543. 4/24/95 Pillsbury Report pp.108-110.
544. 4/24/95 Pillsbury Report pp.108-110.
545. 4/24/95 Pillsbury Report p.109.
546. 4/24/95 Pillsbury Report p.109.
547. 4/24/95 Pillsbury Report p. 109.
548. Peacock, 4/24/96 Hrg. p. 169-170.
549. 4/24/95 Pillsbury Report p. 109.
550. Peacock, 1/16/96 Dep. pp. 22-23.
551. Peacock, 1/16/96 Dep. pp. 22-23.
552. Peacock, 1/16/96 Dep. p. 23.
553. RTC Document D-2.
554. RTC Document D-5.
555. 4/24/95 Pillsbury Report p. 106.
556. Peacock, 1/16/96 Dep. pp. 27-28.
557. Peacock, 12/10/86 Borod & Huggins Interview p. 5.
558. RTC Document A-3, A-8; Peacock, 12/20/86 Borod & Huggins Interview p. 107; RTC Production A-6.


559. RTC Document E-1.
560. RTC Document E-1, D-1.
561. Peacock, 4/24/96 Hrg. p. 173.
562. RTC Document E-8.
563. RTC Document E-9.
564. Peacock, 1/16/96 Dep. p. 43.
565. Peacock, 1/16/96 Dep. p. 26.
566. 4/24/95 Pillsbury Report p. 107.
567. 4/24/95 Pillsbury Report p. 107.
568. 4/24/95 Pillsbury Report pp. 107-108.
569. 4/24/95 Pillsbury Report p. 108.
570. RTC Document (Not Numbered) 9/25/97 letter from Selig to FHLBB, pp. 1-10.
571. RTC Document 10/25/95 (Not Numbered) Letter from Mitchell, Williams, Selig & Tucker to Examiners-in-Charge, 9/25/87 p. 7.
572. RTC Document 10/25/96 (Not Numbered) Letter from Mitchell, Williams, Selig & Tucker to Examiners-in-Charge, 9/25/87 pp. 2-4.
573. RTC Document 10/25/95 (Not Numbered) Letter from Mitchell, Williams, Selig & Tucker to Examiners-in-Charge, 9/25/87 pp. 2-4.
574. RTC Document 10/25/95 (Not Numbered) Letter from Mitchell Williams Selig & Tucker to Examiners-in-Charge, 9/25/87 p. 1.
575. Miller, 1/22/96 Dep. p. 40.
576. Hays, 2/23/96 Dep. pp. 21-22.
577. Hays, 2/23/96 Dep. pp. 21-22.
578. Hays, 2/23/96 Dep. pp. 22-23.
579. House Document Fundraiser 17.
580. 580.22
H use Document Fundraiser 18.
581. Hays, 2/23/96 Dep. p. 29.
582. House Document Fundraiser 18.
583. House Document Fundraiser 18.
584. Hays, 2/23/96 Dep. p. 77.
585. Hays, 2/23/96 Dep. p. 77.
586. Hays, 2/23/96 Dep. p. 57.
587. Hays, 2/23/96 Dep. p. 132.
588. Hopkins, 2/14/96 Dep. pp. 45, 47.
589. Hopkins, 4/24/96 Hrg. p. 165.
590. Hopkins, 4/24/96 Hrg. p. 166.
591. Hopkins, 2/14/96 Dep. pp. 81-82.
592. Hopkins, 4/24/96 Hrg. pp. 150-151.
593. Hopkins, 2/14/96 Dep. p. 75.
594. Rule 4.1(a) of the Arkansas Rule of Professional Conduct.
595. House Document Fundraiser 18.
596. Arkansas State Building Services Document, 2/13/96 (Not numbered.)
597. Herr, 4/24/96 Hrg. pp. 18-19.
598. RTC Document PLS03127.
599. RTC Document PLS03127-03128.
600. Vinson & Elkins Document RLFO2932-02934.
601. Vinson & Elkins Document RLF02932-02943.
602. Vinson & Elkins Document RLF02932-02943.
603. H. Clinton, Interrogatory Answers to RTC, 1/18/96 p. 13.
604. FDIC Document FDICHRC 0162-0163
605. Williams & Connolly Document DKSN018011.
606. Shults, 2/8/96, Dep. pp. 113-114.
607. RTC Document PLS031290-03132.
608. Williams & Connolly Document DKSN029016, RTC Document RS000941-0009444.
609. RTC Document RS000941.
610. Donovan, 1/31/96 Hrg. p. 304.
611. Williams & Connolly Document DKSN28997, DKSN29011, DKSN29013, DKSN29016 and Vinson & Elkins Documents Rose Law Firm vouchers #4372 & 4391.
612. 2/25/96 Pillsbury Report p. 107.
613. Shults, 2/8/96, Dep. pp. 113-114.
614. Shults, 2/8/96 Dep. pp. 57-58.
615. Shults, Ray & Kurrus, 11/30/95 (Not Numbered).
616. Shults, Ray & Kurrus 11/30/95 (Not Numbered), 4/24/87 Letter by Jim Guy Tucker.
617. Bratton, 1/5/96 Dep. pp.44-45.
618. Bratton, 1/5/96 Dep. p. 46.
619. Bratton, 2/13/96 Hrg. pp. 18-20.
620. Bratton, 2/13/96 Hrg. pp. 18-20.
621. Hernreich, 2/9/96 Dep. p. 12.
622. Williams & Connolly Document DKSN018008.
623. Williams & Connolly Document DKSN018008.
624. Williams & Connolly Document DKSN018008.
625. O'Melveny & Myers Document CCBW-0017, CCBW-0019, CCBW-0022; House Document Fundraiser 14.
626. Wright, 2/27/96 Dep. pp. 54-55.
627. Shults, Ray & Kurrus, 11/30/95 (Not Numbered), April 24, 1987 letter.
628. Bratton, 1/5/96 Dep. pp. 74-75.
629. Williams & Connolly Document DKSN013371.
630. Wright, 2/27/96 Dep. p. 64.
631. Williams & Connolly Document DKSN018001.
632. Williams & Connolly Document DKSN018011.
633. Williams & Connolly Document DKSN018011.
634. Williams & Connolly Document DKSN018011.
635. Williams & Connolly Document DKSN018011.
636. Williams & Connolly Document DKSN018011.
637. Williams & Connolly Document DKSN018012.
638. Williams & Connolly Document DKSN024856-024859.
639. Williams & Connolly Document DKSN024856-024859.
640. Shults, Ray & Kurrus, 11/30/95 (Not Numbered)(6/18/87 Letter from Robert Shults to Jeffrey B. Stern, Esq).
641. Lyon, 12/14/95 Dep. p. 28.
642. RTC Document MG-000555 - MG-000556.
643. Lyon, 12/14/95 Dep. pp. 12; 25-26.
644. Lyon, 12/14/95 Dep. pp. 25-26.
645. Lyon, 1/23/96 Hrg. p. 59; Lyon, 12/14/95 Dep. p. 29.
646. Lyon, 12/14/95 Dep. pp. 28-29.
647. Lyon, 12/14/95 Dep. pp. 47-49; Lyon, 1/23/96 Hrg. p. 16.
648. Lyon, 12/14/95 Dep. p. 40.
649. FDIC Document S-KCR01315.
650. FDIC Document S-KCR03152 - S-KCR01353.
651. House Memo on Quid Pro Quos p. 11.
652. Lyon, 12/14/95 Dep. p. 41.
653. House memo on Quid-Pro-Quos p. 11; House Document QPQ24.
654. Lyon, 12/14/95 Dep. p. 38.
655. Lyon, 12/14/95 Dep. pp. 39-40.
656. RTC Document MG-000555 - MG000556.
657. House Document QPQ26.
658. House Document QPQ28.
659. Williams & Connolly Document DKSN029011.
660. House Document QPQ27.
661. Dobbins Document 12/5/95 (Not Numbered).
662. Dobbins Document 12/5/95 (Not Numbered).
663. Dobbins Document 12/5/95, (Not Numbered).
664. Dobbins Document 12/5/95 (Not Numbered)
665. Dobbins Document 12/5/95 (Not Numbered).
666. Dobbins Document 12/5/95 (Not Numbered).
667. Dobbins Document 12/5/95 (Not Numbered).
668. Dobbins Document 12/5/95 (Not Numbered).
669. House Document QPQ4.
670. House Document QPQ5.
671. House Document QPQ6.
672. RTC Document DKRT800620A.
673. Pete Yost, "McDougal Complaint Prompted Then Gov. Clinton to Convene Meeting," Associated Press, 10/3/94.
674. Butler, 12/5/95 Dep. p. 16.
675. Butler, 12/5/95 Dep. pp. 19-21; House Document QPQ11.
676. RTC Document DKRT800606A.
677. Dobbins, 12/4/95 Dep. p. 73; Butler, 12/5/95 Dep. pp. 26-27; Choate, 12/5/95 Dep. p. 29.
678. Williams & Connolly Document DKSN013314 - DKSN013315.
679. RTC Document MG0000759.
680. RTC Document MG0000759.
681. Williams & Connolly Document DKSN025966.
682. Lyon, 1/23/96 Hrg. p. 12.
683. Lyon, 12/14/95 Dep. p. 55.
684. Lyon, 12/14/95 Dep. pp. 56-58.
685. Lyon, 1/23/96 Hrg. pp. 16-17.
686. Lyon, 12/14/95 Dep. pp. 56-58.
687. Lyon, 12/14/95 Dep. pp. 56-58.
688. Lyon, 12/14/95 Dep. pp. 56-58.
689. Lyon, 12/14/95 Dep. pp. 56-58.
690. Lyon, 1/23/96 Hrg. pp. 19-20.
691. Lyon, 1/23/96 Hrg. pp. 69-62.
692. Williams & Connolly Document DKSN026297.
693. Williams & Connolly Document DKSN026305.
694. Sidley & Austin Document 000637.
695. Sidley & Austin Document 000638.
696. Sidley & Austin Document 000637.
697. W. Clinton, 4/28/96 McDougal Trial Testimony p. 120.
698. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."
699. Associated Press, 4/22/94, "Text of First Lady Hillary Rodham Clinton's News Conference in the State Dining Room of the White House."
700. H. Clinton Interrogatory Answers to RTC 5/24/95 pp. 34-35, RTC Document DKSN000800-801.
701. Massey, 1/11/96 Hrg. p. 233.
702. Massey, 1/11/96 Hrg. pp. 18-19.
703. Massey, 1/11/96 Hrg. pp. 25-26.
704. Massey, 1/11/96 Hrg. pp. 29, 222-23.
705. Knight, 5/16/96 Hrg. p. 10.
706. Knight, 5/16/96 Hrg. p. 12.
707. Knight, 5/16/96 Hrg. p. 10.
708. Latham, 5/16/96 Hrg. p. 15.
709. Bunch Document, 5/14/96 (Not Numbered)(Minutes of the 11/27/86 Madison Bank & Trust Board Meeting).
710. Bunch Document, 5/14/96 (Not Numbered)(Minutes of the 11/27/86 Madison Bank and Trust Board Meeting).
711. Bunch, 05/16/96 Hrg. pp. 18-21.
712. H. Clinton, 2/14/96 FDIC Interview pp. 27-31.
713. H. Clinton, 2/14/96 FDIC Interview pp. 27-31.
714. Williams & Connolly Document DKSN028934.
715. RTC OIG Report Document RLF103184.
716. H. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 41.
717. Schaffer, 1/25/96 Hrg. pp. 24-28.
718. Massey, 1/11/96 Hrg. pp. 184-185.
719. Massey, 01/11/96 Hrg. p. 113.
720. Massey, 01/11/96 Hrg. p. 113.
721. 2/25/96 Pillsbury Report p. 27.
722. 2/25/96, Pillsbury Report p. 27.
723. Vinson & Elkins Document, RLF03182-03183.
724. Vinson & Elkins Document, RLF03182-03183.
725. Brady, 1/25/96 Hrg. p. 243.
726. Vinson & Elkins Document, RLF1 03186.
727. Brady, 1/25/96 Hrg. p. 243.
728. Brady, 1/25/96 Hrg. p. 244.
729. Brady, 5/18/94 RTC OIG Interview p. 84, ex. 81.
730. Brady, 1/25/96 Hrg. p. 244.
731. Brady, 5/18/96 RTC OIG Interview p. 84, ex. 81.
732. Brady, 1/25/96 Hrg. p. 244.
733. Brady, 1/25/96 Hrg. p. 246.
734. Brady, 5/18/94 RTC OIG Interview ex. 84.
735. Brady, 5/18/94 RTC OIG Interview ex. 84.
736. Vinson & Elkins Document RLF1 03184.
737. 12/29/95 Pillsbury Report p. 15.
738. 12/19/95 Pillsbury Report pp. 6-7.
739. 12/19/95 Pillsbury Report p. 29.
740. Williams & Connolly Document DKSN 028928-029043.
741. Clark, 6/10/96 FDIC OIG Interview p. 9.
742. Denton, 6/11/96 FDIC OIG Interview p. 3.
743. Denton, 6/11/96 FDIC OIG Interview p. 3.
744. H. Clinton Interrogatory Answers to RTC 5/24/95, p. 73; RTC Document 74.
745. 12/19/95 Pillsbury Report p. 6.
746. Ward, 2/12/96 Dep. pp. 10-11.
747. RTC Document SEN33127.
748. 12/19/95 Pillsbury Report p. 9.
749. Thrash, 1/31/96 Hrg. pp. 194-196, 289-290; Williams & Connolly Document DKSN028980.
750. Williams & Connolly Document DKSN028984.
751. Ward, 2/12/96 Dep. p. 13.
752. 12/19/95 Pillsbury Report p. 6.
753. 12/19/95 Pillsbury Report p. 9.
754. 12/19/95 Pillsbury Report pp. 8-9.
755. 12/19/95 Pillsbury Report p. 8; Ward, 2/12/96 Dep. p. 13.
756. 12/28/95, Pillsbury Report p. 56.
757. Reproduced in 12/28/95, Pillsbury Report p. 56.
758. Clark, 1/30/96 Hrg. pp. 9, 13.
759. Clark, 1/30/96 Hrg. p. 26.
760. RTC Document 99000942.
761. Clark, 6/10/96 FDIC OIG Interview p. 3.
762. Clark, 1/30/96 Hrg. p. 24.
763. Clark, 1/30/96 Hrg. pp. 17-18.
764. Clark, 6/10/96 FDIC OIG Interview p. 3.
765. Denton, 3/18/96 McDougal Trial Testimony p. 1023.
766. Denton, 6/11/96 FDIC OIG Interview p. 4.
767. RTC Document SEN34712.
768. Ward, 2/12/96 Dep. pp. 14-15, 42-43, 60.
769. RTC Document SEN22896.
770. Hubbell, 2/7/96 Hrg. p. 6.
771. Hubbell, 12/27/95 Dep. pp. 21-22.
772. Hubbell, 4/20/95 RTC OIG Interview p. 7.
773. 12/19/95, Pillsbury Report (appendix 9).
774. 12/19/95, Pillsbury Report pp. 7-29.
775. 12/19/95, Pillsbury Report p. 29.
776. 12/28/95, Pillsbury Report p. 31.
777. 12/19/95, Pillsbury Report pp. 9, 19.
778. Denton, 6/3/96 FDIC OIG Interview p. 5.
779. Denton, 6/11/96 FDIC OIG Interview p. 2.
780. Clark, 6/10/96 FDIC OIG Interview p. 1.
781. RTC Document SEN32911-32912.
782. Denton Document, 000000021.
783. 12/28/95, Pillsbury Report p. 31.
784. RTC Documents SEN33125, SEN33195.
785. Denton, 6/3/96 FDIC OIG Interview p. 9.
786. RTC Document SEN32838-32840, SEN32860-32865, SEN32912-32913.
787. Seth Ward v. Madison Guaranty Savings & Loan Association, No. 87-7580 (Pulaski County Cir. Ct.).
788. Jennings, 2/6/96 Dep. pp. 10-11.
789. RTC Document SEN32740 - SEN32741.
790. RTC Document SEN32867-32869.
791. RTC Document SEN33043.
792. White House Document S001766 - S001770.
793. RTC Document SEN30383-30384, SEN 33094-33096.
794. Ward, 2/12/96 Dep. pp. 18-23.
795. Strayhorn, 2/1/96 Hrg. pp. 22-23.
796. RTC Document SEN33094.
797. Ward, 2/12/96 Dep. pp. 21-22.
798. RTC Document SWI-063 - SWI-068.
799. RTC Production SEN33006-33007.
800. Denton, 6/3/96 FDIC OIG Interview p. 7.
801. Clark, 6/10/96 FDIC OIG Interview p. 8.
802. Clark, 6/10/96 FDIC OIG Interview p. 8.
803. Clark, 6/10/96 FDIC OIG Interview pp. 8-9.
804. Clark, 6/10/96 FDIC OIG Interview p. 8.
805. Clark, 6/10/96 FDIC OIG Interview p. 8.
806. Clark, 6/10/96 FDIC OIG Interview p. 8.
807. Clark, 6/10/96 FDIC OIG Interview p. 9.
808. Clark, 6/10/96 FDIC OIG Interview p. 9.
809. Clark, 6/10/96 FDIC OIG Interview p. 9.
810. Clark, 6/10/96 FDIC OIG Interview p. 9.
811. RTC Document SW1-063 - SW1-068.
812. RTC Document SWI063 - SWI068.
813. Williams & Connolly Document DKSN029026.
814. 12/28/95, Pillsbury Report p. 74.
815. RTC Document S-INTR0090.
816. Clark, 6/10/96 FDIC OIG Interview p. 9.
817. Denton Document, DD000000241.
818. Denton, 6/11/96 FDIC OIG Interview p. 2.
819. Denton, 6/11/96 FDIC OIG Interview p. 2.
820. Denton, 6/11/96 FDIC OIG Interview p. 2.
821. Denton, 6/11/96 FDIC OIG Interview pp. 2-3.
822. Denton, 6/11/96 FDIC OIG Interview p. 3.
823. Denton, 6/11/96 FDIC OIG Interview p. 3.
824. 6/13/96 letter from Senators Alfonse D'Amato, Richard Shelby, Christopher Bond, Connie Mack, Lauch Faircloth, Robert Bennett, Rod Grams, Pete Domenici, Orrin Hatch, and Frank Murkowski to David Kendall.
825. Affidavit of Hillary Rodham Clinton, June 17, 1996, p. 2.
826. 6/17/95 Letter from David Kendall to Alfonse D'Amato, p. 2.
827. Black, 8/10/95 House Hrg. p. 52.
828. Black, 2/5/95 Dep., Majority Exhibits 1 & 2.
829. Black, 2/5/95 Dep. Exhibit 1; Williams & Connolly Document DKSN029011.
830. Williams & Connolly Document DKSN029024.
831. 831.22
W lliams & Connolly Document DKSN029026.
832. RTC Document RIC-039285.
833. Vinson & Elkins Document RLF2 03583-84.
834. RTC Document RIC-039286.
835. RTC Document RIC-039286.
836. Williams & Connolly Document DKSN028962.
837. Williams & Connolly Document DKSN028960.
838. H. Clinton, Interrogatory Answers to RTC, 5/24/95 p. 73.
839. RTC Document S-INTR00096 - S-INTR00097.
840. RTC Document S-INTR0000091.
841. Denton, 3/18/96 McDougal Trial Testimony p. 1029.
842. McDougal, 5/7/96 McDougal Trial Transcript p. 7016.
843. American Broadcasting Company, Nightline, Transcript # 3832, January 30, 1996.
844. Clark, 1/30/96 Hrg. p. 160; Pulcer, 1/30/96 Hrg. p. 160.
845. Fitzhugh, 1/15/96 Dep. p. 109.
846. Fitzhugh, 1/31/96 Hrg. pp. 18-19, 170.
847. RTC Document FDICHRC0162.
848. Hubbell, 2/7/96 Hrg. p. 97.
849. Strayhorn, 2/1/96 Hrg. p. 56.
850. Strayhorn, 2/1/96 Hrg. p. 56.
851. Hubbell, 2/7/96 Hrg. p. 6.
852. Hubbell, 2/7/96 Hrg. p. 184.
853. Hubbell, 12/27/95 RTC OIG Interview pp. 21-22.
854. Hubbell, 4/20/95 RTC OIG Interview p. 7.
855. Hubbell, 2/7/96 Hrg. pp. 191-192, 212.
856. Hubbell, 2/7/96 Hrg. p. 212.
857. Hubbell, 2/7/96 Hrg. p. 212.
858. Hubbell, 12/27/95 RTC OIG Interview p. 22.
859. Hubbell, 2/7/96 Hrg. p. 108.
860. Hubbell, 6/4/96 Dep. p. 46.
861. Hubbell, 6/4/96 Dep. pp. 46, 49.
862. Hubbell, 6/4/96 Dep. pp. 46, 49.
863. Hubbell, 6/4/96 Dep. pp. 51-52.
864. Patten, 12/8/94 RTC OIG Interview p. 2.
865. Patten, 12/8/94 RTC OIG Interview p. 2.
866. Hubbell, 2/7/96 Hrg. p. 11.
867. Jennings, 2/6/96 Dep. pp. 123, 135.
868. RTC Document, 005222.
869. Clark, 6/10/96 FDIC OIG Interview p. 9.
870. Denton, 6/11/96 FDIC OIG Interview pp. 3, 5; Denton, 6/3/96 FDIC OIG Interview pp. 4, 6, 8.
871. Denton, 6/3/96 FDIC OIG Interview p. 4.
872. Denton, 6/3/96 FDIC OIG Interview p. 6.
873. Denton, 6/11/96 FDIC OIG Interview p. 3.
874. Denton, 6/11/96 FDIC OIG Interview p. 3.
875. Denton, 6/11/96 FDIC OIG Interview p. 3.
876. Hubbell, 2/7/96 Hrg. pp. 14-15.
877. Hubbell, 2/7/96 Hrg. pp. 15-16.
878. Breslaw, 11/30/96 Hrg. p. 129.
879. Hubbell, 2/7/96 Hrg. p. 16.
880. Hubbell, 2/7/96 Hrg. pp. 17-26.
881. Hubbell, 2/7/96 Hrg. p. 21-22.
882. Hubbell, 2/7/96 Hrg. p. 21-22.
883. Locke, 4/25/96 Dep. pp. 27-28.
884. Locke, 4/25/96 Dep. p. 9.
885. Locke, 4/25/96 Dep. p. 27.
886. Locke, 4/25/96 Dep. p. 29.
887. Locke, 4/25/96 Dep. p. 27.
888. Lasater, 2/22/96 Dep. 68.
889. Lasater, 5/1/96 Hrg. p. 10.
890. Lasater, 5/1/96 Hrg. p. 10.
891. Lasater, 2/22/96 Dep. p. 72.
892. Lasater, 5/1/96 Hrg. pp. 10, 30.
893. DOJ Document FBI-00003588.
894. Thomasson, 2/23/96 Dep. pp. 16-17.
895. Thomasson, 2/23/96 Dep. pp. 85-87.
896. Williams & Connolly Document DKSN017642-DKSN017643.
897. Thomasson, 2/23/96 Dep. p. 88.
898. Lasater, 2/22/96 Dep. p. 132.
899. Lasater, 2/22/96 Dep. p. 132.
900. Drake, 5/1/96 Hrg. p. 16.
901. Lasater, 5/1/96, Hrg. p. 19.
902. Judgement and Probation/Commitment Order LR-CR-86158(1), 12/18/86.
903. Id.
904. Lasater, 5/1/96 Hrg. p. 5.
905. Arkansas Gazette, "Judge sees 'clear pattern of fraud' by Locke." January 1985.
906. Arkansas Gazette, "Judge sees 'clear pattern of fraud' by Locke." January 1985.
907. Arkansas Gazette, "Judge sees 'clear pattern of fraud' by Locke." January 1985.
908. Lasater, 5/1/96 Hrg. pp. 21-23.
909. Lasater, 5/1/96 Hrg. pp. 24-25.
910. Lasater, 2/22/96 Dep. 83; Thomasson, 2/23/96 Dep. pp. 55-58
911. Lasater, 2/22/96 Dep. pp. 86-87.
912. Lasater, 2/22/96 Dep. pp. 144-145.
913. Lasater, 2/22/96 Dep. p. 144.
914. FDIC OIG Report of Investigation, Vol. 3, Exhibit 51.
915. FDIC OIG Report of Investigation, Vol. 3, Exhibit 51.
916. Lasater, 2/22/96 Dep. p. 114; Wright, 2/27/96 Dep. p. 112.
917. Lasater, 2/22/96 Dep. pp. 112-113.
918. Lasater, 2/22/96 Dep. p. 106.
919. Spivey, 8/9/95 Civil Dep. p. 6.
920. Spivey, 8/9/95 Civil Dep. p. 24.
921. Spivey, 8/9/95 Civil Dep. p. 23.
922. Spivey, 8/9/95 Civil Dep. pp. 25-26.
923. Spivey, 8/9/95 Civil Dep. p. 24.
924. Spivey, 8/9/95 Civil Dep. p. 24.
925. Lasater, 2/22/96 Dep. pp. 103-104.
926. Lasater, 5/1/96 Hrg. p. 8.
927. Williams & Connolly Document DKSN026466.
928. Williams & Connolly Document DKSN026466.
929. Williams & Connolly Document DKSN027456-7, DKSN026479, DKSN027455, DKSN027455-57, DKSN027573-74.
930. Williams & Connolly Document DKSN27574.
931. Lasater, 5/1/96 Hrg. p. 26-7.
932. Williams & Connolly Document DKSN027573.
933. Williams & Connolly Document DKSN027573-DKSN027574.
934. Williams & Connolly Document DKSN027472.
935. Williams & Connolly Document DKSN027472, DKSN027490.
936. Williams & Connolly Document DKSN027473.
937. Stout, 5/1/96 Hrg. p. 186; Chandler, 5/1/96 Hrg. p. 190; Williams & Connolly Document DKSN026171-26172.
938. ADFA Document 2/17/83 (Not Numbered) (Minutes from February 17, 1983 Arkansas Housing Development Agency Board of Directors Meeting).
939. Stout, 4/30/96 Dep. p. 13.
940. Stout, 4/30/96 Dep. pp. 13-14.
941. Stout, 4/30/96 Dep. p. 17.
942. Stout, 5/1/96 Hrg. p. 186.
943. Chandler, 5/1/96 Hrg. p. 191.
944. Stout, 4/30/96 Dep. p. 22.
945. Stout, 4/30/96 Dep. p. 23.
946. Stout, 5/1/96 Hrg. p. 184.
947. Stout, 4/30/96 Dep. pp. 43-44.
948. Stout, 4/30/96 Dep. p. 80.
949. Stout, 4/30/96 Dep. 15-16.
950. Hardwicke, 2/15/96 Dep. p. 44.
951. Hardwicke, 5/1/96 Hrg. p. 209.
952. Stout, 4/30/96 Dep. pp. 24-25.
953. Stout, 4/30/96 Dep. p. 20.
954. ADFA Document 2/17/83 (Not numbered) (Minutes of February 17, 1983 Arkansas Housing Development Agency Board of Directors Meeting.)
955. Stout, 4/30/96 Dep. pp. 13-14.
956. Stout, 4/30/96 p. 14.
957. Williams & Connolly Document DKSN027286.
958. ADFA Document 4/12/83 (Not Numbered) (Minutes of Arkansas Housing Development Agency Executive Board's April 12, 1983 Meeting).
959. ADFA Document 4/19/83 (Not numbered) (Minutes from April 19, 1983 Arkansas Housing Development Agency Special Executive Board meeting).
960. Chandler, 5/1/96 Hrg. pp. 200-201.
961. Chandler, 5/1/96 Hrg. pp. 201-202.
962. Chandler, 5/1/96 Hrg. p. 202.
963. Chandler, 5/1/96 Hrg. pp. 203-204.
964. Chandler, 5/1/96 Hrg. p. 204.
965. Nash, 4/30/96 Hrg. p. 121.
966. Goodwin, 2/26/96 Dep. pp. 9-10.
967. Goodwin, 2/26/96 Dep. p. 13.
968. Goodwin, 2/26/96 Dep. pp. 9-10.
969. Goodwin, 2/26/96 Dep. 10.
970. Williams & Connolly Document DKSN018193-DKSN018199.
971. FDIC Report of Investigation Vol. Exhibit XXX.
972. Williams & Connolly Document DKSN027189-027191.
973. TJ Raney Document 1.
974. Snider, 2/7/96 Dep. pp. 70-71, 75, 80.
975. Williams & Connolly Document DKSN027162.
976. Arkansas State Police Document 4/25/96 (Not Numbered).
977. Arkansas State Police Document 4/25/96 (Not Numbered).
978. Drake, 1/24/96 Dep. p. 85.
979. Snider, 2/7/96 Dep. pp. 70-71.
980. Snider, 2/7/96 Dep. p. 76.
981. Drake, 1/24/96 Dep. p. 86.
982. Snider, 2/7/96 Dep. p. 159.
983. Drake, 1/24/96 Dep. pp. 87-88.
984. Drake, 1/24/96 p. 88.
985. Wright, 4/25/96 Hrg. pp. 203-204.
986. Wright, 4/25/96 Hrg. pp. 202-203.
987. TJ Raney Document 74, 81, 83, & 84.
988. Williams & Connolly Document DKSN027566.
989. Young, 4/30/96 Hrg. p. 25.
990. In connection with the underwriting contract for the police radio financing, the ASP originally received proposals from eight financial firms, and this field was reduced to four finalists during an ASP Financial Screening Committee meeting that occurred on May 3, 1985. The four finalists were Dabbs Sullivan, Stephens, Inc., First Capital Resources ("First Capital") and the Lasater syndicate. Williams & Connolly Production DKSN027166.
991. Williams & Connolly Document DKSN027190.
992. Williams & Connolly Document DKSN027214.
993. Mitchum, 2/9/96 Dep. p. 72.
994. Arkansas State Police Document 4/25/96 (Not Numbered).
995. Mitchum, 2/9/96 Dep. p. 87.
996. Mitchum, 2/9/96 Dep. p. 72.
997. Arkansas State Police Document 4/25/96 (Not Numbered).
998. Mitchum, 2/9/96 Dep. p. 87.
999. Williams & Connolly Document DKSN027162.
1000. Williams & Connolly Document DKSN027162.
1001. Williams & Connolly Document DKSN027162 (emphasis in original).
1002. Williams & Connolly Document DKSN018182.
1003. Williams & Connolly DKSN018182.
1004. Wright, 2/27/96 Dep. p. 132.
1005. Williams & Connolly Document DKSN018184.
1006. Williams & Connolly Document DKSN018184.
1007. Williams & Connolly Document DKSN017636.
1008. Williams & Connolly Document DKSN017635.
1009. Goodwin, 4/30/96 Hrg. p. 21-22.
1010. Goodwin, 4/30/96 Hrg. p. 21.
1011. Goodwin, 2/26/96 Dep. p. 31.
1012. Goodwin, 4/30/96 Hrg. p. 14.
1013. Goodwin, 4/30/96 Hrg. p. 13.
1014. Goodwin, 4/30/96 Hrg. p. 14.
1015. Goodwin, 4/30/96 Hrg. p. 14.
1016. Goodwin, 4/30/96 Hrg. pp. 14-15.
1017. Goodwin, 2/26/96 Dep. p. 32.
1018. Wright, 2/27/96 Dep. p. 151.
1019. Williams & Connolly Document DKSN027455-DKSN027457
1020. Williams & Connolly Document DKSN027455.
1021. Garner, 6/13/96, Dep. p. 8.
1022. Williams & Connolly Document DKSN027455.
1023. Garner, 6/13/96, Dep. p. 18.
1024. Garner, 6/13/96, Dep. pp. 22-23.
1025. Garner, 6/13/96, Dep. p. 25.
1026. Garner, 6/13/96, Dep. p. 26.
1027. Garner, 6/13/96, Dep. pp. 26-27.
1028. 12/4/95, Letter from the Office of Independent Counsel to Robert J. Giuffra, Jr. and Neal E. Kravitz.
1029. 12/4/95, Letter from the Office of Independent Counsel to Robert J. Giuffra, Jr. and Neal E. Kravitz.
1030. 5/17/96, Letter from Robert J. Giuffra, Jr. to Theodore B. Olson.
1031. 5/23/96, Letter from Theodore B. Olson to Michael Chertoff and Richard Ben-Veniste.
1032. 5/23/96, Letter from Theodore B. Olson to Michael Chertoff and Richard Ben-Veniste.
1033. 5/23/96, Letter from Theodore B. Olson to Michael Chertoff and Richard Ben-Veniste.
1034. 6/6/96, Letter from John A. Mintz to Senator D'Amato and Paul Sarbanes.
1035. 6/6/96, Letter from John A. Mintz to Senator D'Amato and Paul Sarbanes.
1036. Hale, 4/1/96 McDougal Trial Transcript p. 3052.
1037. Hale, 4/1/96 McDougal Trial Transcript, p. 3054, 3058.
1038. Hale, 4/1/96 McDougal Trial Transcript p. 3061.
1039. Hale, 4/1/96 McDougal Trial Transcript p. 3069.
1040. Hale, 4/1/96 McDougal Trial Transcript p. 3069.
1041. Hale, 4/1/96 McDougal Trial Transcript p. 3083.
1042. Hale, 4/1/96 McDougal Trial Transcript p. 3084.
1043. Hale, 4/1/96 McDougal Trial Transcript p. 3098.
1044. Hale, 4/1/96 McDougal Trial Transcript p. 3106.
1045. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1046. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1047. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1048. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1049. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1050. Hale, 4/1/96 McDougal Trial Transcript p. 3102.
1051. Hale, 4/1/96 McDougal Trial Transcript p. 3123.
1052. Hale, 4/2/96 McDougal Trial Transcript p. 3221.
1053. Hale, 4/2/96 McDougal Trial Transcript p. 3222.
1054. Hale, 4/2/96 McDougal Trial Transcript p. 3223.
1055. Hale, 4/2/96 McDougal Trial Transcript p. 3223.
1056. Hale, 4/2/96 McDougal Trial Transcript p. 3223.
1057. Hale, 4/2/96 McDougal Trial Transcript p. 3224.
1058. Hale, 4/2/96 McDougal Trial Transcript pp. 3293-99.
1059. Hale, 4/2/96 McDougal Trial Transcript p. 3294.
1060. Hale, 4/2/96 McDougal Trial Transcript p. 3305.
1061. Hale, 4/2/96 McDougal Trial Transcript p. 3314.
1062. Hale, 4/2/96 McDougal Trial Transcript p. 3314.
1063. Hale, 4/2/96 McDougal Trial Transcript p. 3308.
1064. Hale, 4/3/96 McDougal Trial Transcript p. 3375.
1065. Hale, 4/3/96 McDougal Trial Transcript p. 3375.
1066. Hale, 4/3/96 McDougal Trial Transcript p. 3378.
1067. Hale, 4/3/96 McDougal Trial Transcript pp. 3378-3380.
1068. White House Document S12532.
1069. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1070. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1071. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1072. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1073. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1074. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1075. Watt, 3/27/96 McDougal Trial Transcript p. 2475.
1076. Palmer, 3/26/96 McDougal Trial Transcript p. 2178.
1077. Palmer, 3/26/96 McDougal Trial Transcript p. 2178.
1078. Palmer, 3/26/96 McDougal Trial Transcript p. 2178.
1079. Palmer, 3/26/96 McDougal Trial Transcript p. 2179.
1080. Palmer, 3/26/96 McDougal Trial Transcript p. 2178.
1081. Palmer, 3/26/96 McDougal Trial Transcript p. 2179.
1082. Palmer, 3/26/96 McDougal Trial Transcript p. 2179.
1083. Palmer, 3/26/96 McDougal Trial Transcript p. 6775.
1084. Patkus, 5/3/96 McDougal Trial Transcript p. 6781.
1085. Patkus, 5/3/96 McDougal Trial Transcript p. 6781.
1086. Patkus, 5/3/96 McDougal Trial Transcript p. 6781.
1087. Patkus, 5/3/96 McDougal Trial Transcript p. 6781.
1088. W. Clinton, 4/28/96 McDougal Trial Testimony p. 22.
1089. W. Clinton, 4/28/96 McDougal Trial Testimony p. 23.
1090. W. Clinton, 4/28/96 McDougal Trial Testimony p. 23.
1091. W. Clinton, 4/28/96 McDougal Trial Testimony p. 24.
1092. W. Clinton, 4/28/96 McDougal Trial Testimony p. 37.
1093. James McDougal, 5/8/96 McDougal-Tucker Trial Testimony p. 7327.
1094. McDougal, 5/8/96 McDougal Trial Testimony p. 7327.
1095. James McDougal, 5/8/96 McDougal-Tucker Trial Testimony p. 7328.


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