The Special Committee's Whitewater Report

PHASE 2 THE WASHINGTON PHASE

CONTENTS

CONCLUSIONS OF THE SPECIAL COMMITTEE 259

1. By mid-1993, the Clintons and their associates had already taken steps to minimize their potential liability from investigations of Whitewater and Madison Guaranty. 262
2. The White House concealed damaging evidence about Whitewater and Travelgate from career law enforcement officials investigating Vincent Foster's death. 264
3. Senior White House officials improperly gathered confidential information about investigations involving Whitewater and Madison Guaranty. 265
4. A pivotal event: senior White House officials and private counsel for the Clintons participate in an improper Whitewater defense meeting. 267
5. Senior White House officials did not pass the torch to the Clintons' new private counsel, but continued to take highly improper steps to advance the Clintons' private interests. 269
6. Senior White House officials held formal "Whitewater Response Team" meetings to protect the Clintons' private interests in ongoing federal investigations. 270
7. In early 1994, senior White House officials sought to manipulate the RTC investigation of Madison Guaranty and the Rose Law Firm. 272
8. Jay Stephens was removed from the investigation of possible civil claims against parties associated with Madison Guaranty, including the Clintons. 274
9. Senior RTC officials sought to impede the criminal investigation of Madison. 276
10. U.S. Attorney Paula Casey mishandled the RTC criminal referral referencing the President and Mrs. Clinton. 278
11. Senior Administration officials improperly sought to manipulate the investigation of the RTC and Treasury Inspectors General into the propriety of White House-Treasury contacts. 281
12. The White House delayed in producing documents to the Special Committee. 283
13. Senior Administration officials provided inaccurate and incomplete testimony to the Senate. 285
14. The Office of the White House Counsel was frequently and improperly put in the service of the personal legal interests of the President and Mrs. Clinton. 288
CONCLUSIONS OF THE SPECIAL COMMITTEE ON THE DISCOVERY OF THE ROSE LAW FIRM BILLING RECORDS 291

1. The Rose billing records provide the best evidence of the legal services performed by Mrs. Clinton for Madison Guaranty. 291
2. The disappearance and mysterious reappearance of the Rose Law Firm billing records was part of a larger patten of removal, concealment and, at times, destruction of records concerning Mrs. Clinton's representation of Madison. 297
3. Vincent Foster is the last person known to have the billing records in his possession. 298
4. The billing records mysteriously reappear in the Book Room of the White House Residence in August 1995. 298
5. Only a limited number of people had access to the Book Room of the White House Residence. 299
6. Very few people had motive to be handling or reading the Rose billing records in August 1995. 300
7. Only a limited number of people were definitely within the chain of custody of the billing records. 301
8. Mrs. Clinton is more likely than any other known individual to have placed the billing records in the Book Room in August 1995. 301

BACKGROUND 303
I. Whitewater Development Corporation and Madison Guaranty S&L 303
II. Capital Management Services and David Hale 305
SUMMARY OF THE EVIDENCE 309
PART I: THE HANDLING OF FEDERAL INVESTIGATIONS 309
I. Mrs. Clinton Learns of the RTC Criminal Referral on Madison 309


A. The RTC begins its criminal investigation of Madison. 309
B. The first RTC criminal referral: C0004. 311
C. Betsey Wright informs Mrs. Clinton of the RTC criminal referral 314


II. Criminal Referral C0004 Languishes at the Justice Department 315


A. The U.S. Attorney sends Criminal Referral C0004 to the main Justice Department . 315
B. Criminal Referral C0004 gets lost at the Justice Department 318


III. Interference with the RTC's Ongoing Investigation of Madison 322


IV. Paula Casey Delays her Recusal from Madison, Handles the Hale Pleas Negotiations, and Declines to Prosecute Criminal Referral C0004 339


A. Investigations of Capital Management and David Hale 339
B. Plea Negotiations with David Hale. 342
C. Ms. Casey's declination of Criminal Referral C0004. 352


PART II: WHITE HOUSE INTERVENTION IN FEDERAL INVESTIGATIONS 359


I. White House Contacts Relating to Investigations of Madison and David Hale. 359


A. The White House receives information on the ongoing SBA investigation of Mr. Hale. 359
B. Mr. Hale's lawyers contact the White House about Mr. Hale's "mutual interest" with President Clinton 365
C. The White House obtains more information about the Hale investigation. 371


After Treasury and RTC Officials improperly advised the White House about RTC Referrals mentioning President Clinton and Governor Tucker, President Clinton meets with Governor Tucker at the White House. 376


III. A Pivotal Event: The November 5, 1993 Meeting Between White House Officials and the Clintons' Private Lawyers. 381


IV. The White House Obtains Confidential SBA Documents Relating to Mr. Hale and Capital Management 390


V. The White House Begins to Hold Whitewater Defense Meetings 398


A. Senior White House officials debated the appointment of a Special Counsel 399
B. White House contacts with former Arkansas Securities Commissioner Beverly Bassett Schaffer 405
C. The Whitewater Response Team assigns defense tasks to White House officials 411


VI. The Retention and Investigation of Pillsbury Madison & Sutro 413


A. The White House expresses concern over the retention of Jay Stephens 413
B. Mr. Stephens is removed from the RTC investigation 414
C. The White House makes inaccurate claims about the Pillsbury report 416


PART III. WHITE HOUSE INTERFERENCE WITH CONGRESSIONAL INQUIRIES 420


I. Mr. Ickes Provided Incomplete and Inaccurate Testimony to the Senate Banking Committee 420


II. The White House Interfered with Treasury IG and RTC IG Investigations into White House-Treasury Contacts. 423


A. Independence of IG investigation is compromised 424
B. Confidential information is provided to the White House 431


III. The White House Interfered with the Special Committee's 1995-96 Investigation 441


A. The refusal of William Kennedy to comply with the Special Committee's subpoena for his notes of the pivotal November 5, 1993 White House defense meeting. 442
B. White House delays in producing highly relevant documents to the Special Committee 443


PART IV. THE ROSE LAW FIRM BILLING RECORDS 446


I. The Destruction and Mishandling of Rose Law Firm Files. 446


II. The "Disappearance" and "Discovery" of the Rose Law Firm Billing Records 448


III. Mrs. Clinton's Statements in Light of the Rose Law Firm Billing Records 456


A. Madison's retention of the Rose Law Firm 456
B. Mrs. Clinton's contacts with regulator Beverly Bassett Schaffer 462
C. Mrs. Clinton's role in Madison's proposed preferred stock deal 463
D. Mrs. Clinton's role in the Castle Grande transaction 465


IV. The Federal Investigations into the Rose Law Firm's Representation of Madison 470


V. The Special Committee's Investigation into the Circumstances Surrounding the Discovery of the Rose Law Firm Billing Records 477



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