"Once Upon a Time in Arkansas"
Air date: October 7, 1997
PETER BOYER: Once upon a time in Arkansas, a local
wheeler-dealer had a vision and he decided to chase it.
He would involve his political friends. He'd require some
artful legal maneuvering, involving oneof the state's most
notable law firms. This compelling idea centered on a spread
of land outside of Little Rock. Hundreds of working-class
families would get a chance to own their own homes and
our dreamer and his political friends could make some
money. The project was called Castle Grande. But the dream
went badly wrong and a circle of friends -- some of Arkansas's
best and brightest --would find themselves ensnared by scandal.
Four have gone to prison, one is dead by his own hand and
two live in the White House.
TITLE: "ONCE UPON A TIME IN ARKANASAS"
It had never happened before. Hillary Rodham Clinton,
the only First Lady ever subpoenaed before a grand jury,
has just testified for hours.
HILLARY CLINTON: Well, you're all still here, I see.
PETER BOYER: Prosecutors want to know whether she or
her husband -- the president -- have committed perjury
and whether she has obstructed justice.
REPORTER: Would you rather have been somewhere else
HILLARY CLINTON: Oh, about a million other places
today, indeed. But now I am going home and I hope
all of you will, as well. Thank you.
PETER BOYER: The questions pose the Clintons' place in
history. The answers lie in what happened in the
aftermath of that long-ago dream called Castle Grande.
Lord knows, we all think we know enough about the
Arkansas scandals that have come to be called
Whitewater. But to really understand it all, you have
to understand the particular rhythms of this very
particular place, its business and political folkways.
I've been coming back here to Little Rock over the
years to find out how an old political culture has
shaped a new generation of Arkansas elites. They were
friends and their friendship fostered actions and
obfuscation that prosecutors may indeed find criminal.
Now, with the independent counsel weighing
indictments, we're trying to piece together what it is
he thinks the president, the First Lady and many of
their friends may have done. But I'm getting ahead of
The story begins in small-town Arkansas, where
friendship is the currency of daily life, like a place
called Hope, where a group of local boys grew up to
DAVID WATKINS, Former White House Official:
I guess I could jokingly say it's in the water, or in the
watermelons that we eat in Hope. But when we first got to the
White House, Vince Foster, Mac McLarty and I were talking
one day and they could-- if you counted the president as a
senior official, 20 percent of the senior officials in the White
House were from Hope, Arkansas.
PETER BOYER: Up north in Bradford, another son of
small-town Arkansas, Jim McDougal, was growing up.
JIM McDOUGAL: This is a town of 600. In towns of that
size, you have a town drunk, the village idiot and th
town Republican. And the town Republican, he kidded
me about being a Democrat.
PETER BOYER: Like many folks in the post-Depression
South, Jim's family revered Franklin Delano
PRES. FRANKLIN DELANO ROOSEVELT: There is a
mysterious cycle in human events--
PETER BOYER: --a reverence they passed on to their
precocious child, who memorized all the historic FDR
PRES. FRANKLIN DELANO ROOSEVELT: To some generations
much is given--
JIM McDOUGAL: --"of other generations"--
PRES. FRANKLIN DELANO ROOSEVELT: --of other
JIM McDOUGAL: --"much is expected."
PRES. FRANKLIN DELANO ROOSEVELT: --much is expected.
JIM McDOUGAL: "This generation of Americans has a
rendezvous with destiny."
PRES. FRANKLIN DELANO ROOSEVELT: --has a rendezvous
PETER BOYER: Jim McDougal's destiny would someday be
found at the intersection of politics and money, where
he began a fateful association with a young Bill
Clinton. Politics was Jim McDougal's muse. He worked in the
legislature as a teenager. In his 20s he was running
campaigns for legendary Arkansas Senator William
Fulbright. Eventually, he was drawn to the campus of a
small Baptist college that was the intellectual
epicenter of political Arkansas.
CLAUDIA RILEY: It's a small enough state that if you
are integrally involved in the process, you begin to
PETER BOYER: Claudia Riley is the widow of one of
Arkansas's towering political figures, professor and
former governor Bob Riley. Their home in Arkadelphia
became a gathering place for the marquee Democrats of
CLAUDIA RILEY: Like a little gathering of eagles, (laughs)
you know, they were all here-- Senator William Fulbright--
Sen. WILLIAM FULBRIGHT, (D), AK: I don't mean to
suggest, of course, that I now agree with the course
of action we are following in Vietnam--
CLAUDIA RILEY: --George McGovern--
Sen. GEORGE McGOVERN, (D), SD: They make war and
they call it peace--
CLAUDIA RILEY: --Jimmy Carter--
Pres. JIMMY CARTER: And we share with you the
commitment of freedom, self-government and the
peaceful resolution of disputes.
PETER BOYER: And the Rileys also attracted the new
generation of rising political stars.
CLAUDIA RILEY: There was Bill Clinton, Jim Guy Tucker.
McDougal was always there with them. And, of course,
Jim McDougal was a friend of Bill Clinton's, I think a
very close friend.
PETER BOYER: The young Jim McDougal, who'd never
really left Arkansas, loved the gossip and buzz of the
backstage. Bill Clinton, home from Georgetown and
Oxford, was drawn to the spotlight. His natural
political allure was almost palpable. One member of
that Riley political salon, Paul Fray, met Bill
Clinton and was thunderstruck.
PAUL FRAY, Clinton Campaign Manager, 1974: I said, "I
have finally met the boy that I know is going to make
the next United States Senator from Arkansas, whenever
he comes of age." You know, I did that in the second
day that I had met the man. I knew that he had what it
took to make it happen. He was best man at my wedding.
He and I became that close. Yeah, I considered him as
good a friend as I've ever had in my lifetime.
PETER BOYER: Jim McDougal, meanwhile, stayed close to
political dean Bob Riley, trying his hand at teaching
politics. The young professor had an audacious nature.
SUSAN McDOUGAL: One of my funny stories about him was
I lost the key to the office, so I went to McDougal
and I said, "I've lost the key to the office. I can't
get in." He says, "No problem. I'll handle it." And I
thought, "Oh, this is-- this is great." So he walks
promptly over to the door and kicks it down, kicks it
down off of the-- you know, out of the frame, onto the
floor. And I thought-- I thought, "Oh, my God." But
you know, it's the story of my life with Jim.
PETER BOYER: Susan Henley married Jim McDougal. He was
a divorced professor. She was 15 years his junior.
Bill Clinton attended the wedding. The young woman he
had married came as a surprise to the Arkansas crowd.
PAUL FRAY: I never figured that Bill Clinton would
bring a person to Arkansas that did not fit somewhat
the mold. And she didn't. I mean, you know, when I
first met her, I thought, "Oh, my gracious. This
girl's a hippie," or you know, something like that.
CLAUDIA RILEY: This is going to be-- this is a touchy
thing for me, the Hillary-Bill thing. And I think that
you can-- you can read-- and he's-- you can ask me
whatever you want, I'll handle it, but he is so
charming and so outgoing and Hillary was-- all those
years was so pulled-in. She saw the potential in Bill
Clinton and she was going to take his future and mold
it. His destiny was in her hands. I believe this with
all my heart and soul, that Bill-- Bill is pretty laid
back. I mean, he's ambitious, but I don't think he
ever thought he was going to be elected to the
presidency. I don't think-- I think it was the biggest
surprise for him of anybody.
PETER BOYER: With Hillary at his side, Bill Clinton
was ready for his first test with voters: running for
Congress in 1974.
DAVID WATKINS: I was so impressed with the way he
dealt with people, the way he was one-on-one. And he's
the greatest seducer I've ever met. And he, through
his manners and through his one-on-one ability, he
seduced me sometime a long time ago.
PETER BOYER: He lost his race for Congress, but ran
for attorney general and won. Jim McDougal didn't have
that particular talent to seduce voters. He set his
sights on making money.
JIM McDOUGAL: Offices then paid nothing. When I grew
up, the governor paid $10,000 and you simply had to
have something else to make a living. Politics was
seen as an avocation, as something you do to pass the
PETER BOYER: So Jim turned his hand to land
developing-- "dirt dealing," as they say in Arkansas.
Susan's brother, Bill, worked for Jim.
BILL HENLEY, Former McDougal Associate: It's a very
small state, limited population. Everybody knows just
about everybody else. I think Jim McDougal was a
master of the art of the deal. He wanted to make deals
and he wanted them to work and he was willing to
include anyone and everyone that was close to him.
PETER BOYER: And the people close to him were
SUSAN McDOUGAL: We literally had no friends. On a
Sunday, we would sit at home and look at each other
and we would say, "You want to go to a movie?" "No."
"Well, let's go see Jim Guy." You know, we'd go by Jim
Guy's house and have lunch and then we'd pop over to
Bill Clinton's house, because it was the only friends
that Jim had. And I say that because, in terms of
friends, Jim had to be on top somehow. He had to be in
control. And to control that friendship had to be the
business deal involved.
PETER BOYER: He made them partners in his deals and
used their stature to make it easier for banks to say
yes. And the politicians, like his friend, Bill
Clinton-- well, they were happy to go along.
JIM McDOUGAL: You do that like you'd say, to use the
golf analogy, "Hey, come on and play a round of golf
with us." You'd say to Bill, "You want to make some
money? We got a deal. You'll make some money. Come
BILL HENLEY: He had it all under control. He had the
plan from the beginning to the end. All they had to do
was sign the papers and that's what Bill and Hillary
did, they signed the papers. And then the association,
the friendship, the business relationship is what Jim
McDougal wanted from it.
PETER BOYER: And that's how they got involved in that
vacation property on the White River that Susan named
JIM McDOUGAL: That was spur of the moment. I think
Susan and I ran into the Clintons as we were in the
process of buying it and said, "Hey, you want to do
this deal with us?" I said, "What have we got to
PETER BOYER: They didn't have to do much. McDougal
arranged a loan and all they had to do was sign it and
then wait for the boom in Ozark vacation homes. Bank
officer Don Denton approved the loan.
DON DENTON, Former Madison Guaranty Loan Officer: The
transaction was presented to me by a lobbyist who
worked for the Union Bank. And at that time, the joint
backer was to be Bill Clinton, who had a very modest
income and no substantial assets.
PETER BOYER: Was there a time, as a bank officer, when
you had to sit down and assess the pros and cons of
making this transaction?
DON DENTON: It was described that Bill Clinton was an
up-and-rising star in Arkansas. It would be good
business for the bank to accommodate the attorney
general. There was talk around town at the time that
he was contemplating a run for the governorship.
PETER BOYER: By 1979, Bill and Hillary were living in
the governor's mansion and others in the Clinton crowd
were also taking their places in the Arkansas
Over at the venerable Rose law firm, Hillary Rodham
was something new and a couple of rising young
attorneys, Webb Hubbell and Vince Foster, welcomed her
as a breath of fresh air. The three of them became
fast pals. They were part of a crowd, the Arkansas
yuppies who lived in the fashionable neighborhood and
visited at the country club. Jim and Susan McDougal
weren't part of that world. McDougal had decided to
become a banker. To start his new career, he went back
to the kind of town he grew up in. He went to Kingston,
Arkansas. Kingston is a town of about 400 souls three hours
northwest of Little Rock. McDougal would use the town
folks' deposits to leverage deals all over Arkansas, especially
PAUL FRAY: Bankers do control the political process. I
don't care what you say about Arkansas, that's one,
you know, constant, static, number one linchpin of the
whole process, so if you can't be a kingpin, you'd
best be knowing one. And that's why that he took it
upon himself to get into the banking business, because
he knew that those people controlled the cash-flow
question. You know, he realized that that's the way
the game is played. Very simple.
PETER BOYER: And from his new base in Kingston,
McDougal played Arkansas-style politics, now as a
SUSAN McDOUGAL: The fun thing about politics with
McDougal was that you never were at the parties or the
gatherings or anything, you were in the back room with
the guys who are really doing things, you know, and
that was fun to me. I met all the old pols in
Arkansas, you know, the guys who smoked cigars and sat
and talked about, you know, the real things that were
PETER BOYER: But already Jim McDougal's business
dealings and his own special style of management was
attracting the attention of bank examiners
[interviewing] What kind of bank did he run?
DON DENTON: Very sloppy, very poorly managed, made a
lot of "buddy loans" or loans to friends, business
associates. The bank very quickly got into financial
JIM McDOUGAL: My politics was dictating my business
practice then and causing me, really, through my
idealism on that, to do some very dumb things because
I was wandering into a field I did not understand.
PETER BOYER: Such as? Help me to understand that.
JIM McDOUGAL: Banking-- well I didn't really
understand the intricacies of banking.
PETER BOYER: The Kingston bank was in trouble.
Examiners were hounding him and Jim McDougal doubled
his bet. He bought a savings and loan, moved it to
Little Rock and named it Madison Guaranty. Susan
remodeled the building in the Art Deco style. It was a
perfect fit. In the '80s, the possibilities for an S&L
were limited only by the daring of the operator.
DON DENTON: Jim was always wound up. There was a new
deal every day.
PETER BOYER: McDougal even talked former bank examiner
Don Denton into joining him.
DON DENTON: We'd go to lunch and Jim would tell me a
new deal and I was shocked and I just kind of backed
up and explained to Jim, "You can't do this in a
financial institution. This doesn't make any sense.
The regulators will come unglued." And McDougal
grinned with all his confidence, explained that, "Hey,
Denton, this is a candy store. This is not a
PETER BOYER: One day Bill Clinton jogged over to Jim
JIM McDOUGAL: Bill had been jogging and it was warm
weather and he was perspiring and he sat down in the
chair. And after he had been there 30 minutes and got
up and left, the outline of Bill Clinton was in salt
on my new chair.
PETER BOYER: He came to ask for some help for his
JIM McDOUGAL: I said, "Yeah. Sure. We'll give Hillary
some of this legal work." And it was probably 6:30 in
the morning and within a couple of hours, she came by
and we talked a little bit and agreed to put her on
retainer at $2,000 a month.
PETER BOYER: So Hillary became a McDougal lawyer.
McDougal had a grand design: use his S&L to pay for
his dirt dealing. He started buying up thousands of
acres of land south of Little Rock. His biggest deal
was here, "Castle Grande." The idea was simple. Cut
half-acre plots out of the scrub pine, plant a double-
wide trailer on it and charge 3 percent down.
JIM McDOUGAL: Or they could do a certain amount of
work themselves, which counted as "sweat equity," and
get in with nothing down. And so this had a tremendous
appeal to me.
PETER BOYER: He cast it as FDR populism: low-cost
housing for the masses. But he had a problem. It was
against the law for him to use money from Madison
Guaranty to finance the entire project. To make it all
happen, he had to employ creative financing.
But the auditors would catch up with him. Here's
what they found. McDougal needed nearly $2 million to
buy the land, so he lent this man -- Seth Ward --
$1.15 million dollars to buy the land on his behalf.
DON DENTON: The state regulation prohibited him from
simply buying all of the land to start with. So Seth's
involvement was a tool that McDougal attempted to use
to legalize the transaction.
PETER BOYER: But by now bank examiners were taking an
ominous interest in Madison Guaranty. McDougal had to
hide the dubious loan to his straw man, Seth Ward, so
he concocted a complicated series of deals rooted in a
transaction that came to be called "the Dean Paul
loan." Dean Paul was a local businessman. McDougal
offered to lend Paul $825,000 to buy some land from a
local judge, David Hale. But the money never went to
Paul. It went straight to Judge Hale.
[interviewing] You knew intimately well the details
of this so-called "Dean Paul loan."
DON DENTON: Yes.
PETER BOYER: Did anything about it cause you concern?
DON DENTON: Yes.
PETER BOYER: And you convey them to whom?
DON DENTON: McDougal.
PETER BOYER: What did he say?
DON DENTON: I recall rather specifically McDougal
said, "I didn't ask you what you thought about the
loan, I asked you to close it. Get it closed and shut
PETER BOYER: Then McDougal involved some of his
political friends in the scheme. Judge Hale lent some
of the Dean Paul money to former Congressman Jim Guy
Tucker and to another close McDougal friend, R.D. Randolph.
McDougal loaned more money to his old mentor, Senator
Fulbright. Together Tucker, Randolph and Fulbright
then bought out Seth Ward's share of Castle Grande.
The dubious loan was off the books.
McDougal designed it to be complicated and he
succeeded. To disguise a questionable loan, McDougal
created a number of complex and supposedly separate
financial transactions with his friends. In reality,
he was simply moving the same money around in a
[interviewing] As you know, it came to be-- this
transaction, which I have called "circular," came to
be referred to by federal regulators as, on its face,
being a sham deal. Was it?
DON DENTON: I have understood that regulators refer to
it that way, yes.
PETER BOYER: Do you recognize it on its face as being
a sham deal?
DON DENTON: I hesitate to respond to that. I'm not
sure what a "sham deal" means.
PETER BOYER: A deal constructed and designed
specifically with the purpose of getting around
DON DENTON: I think that would probably-- if that is
the definition of "sham," I think that would fit. This
particular transaction would fit that definition.
PETER BOYER: The deal had all manner of benefits for
the McDougals. Judge Hale ran a side business that
passed out grants from the Small Business
Administration in Washington. Hale took some of the
cash from the Dean Paul loan, matched it with more
from the SBA and gave $300,000 to Susan, who had
applied under a special grant for minorities and
women. She said she wanted to open an ad agency.
Actually, it went straight into the McDougals' bank
Then the auditors uncovered it all and Jim
McDougal's world began to come apart.
SUSAN McDOUGAL: Our separation came the day that Jim
told me, he said, "You are no fun. You are really
getting to be a drag." And I could see that he wasn't
listening to me anymore. And Madison was out of
control. There wasn't anyone there who had any sense
who wasn't worried and everyone was coming to me and
saying, "What do we do? Jim is saying this. Jim is
telling me to do that." And I was the control. And
after I left, it only was worse.
PETER BOYER: And then the Federal Home Loan bank board
told Jim McDougal he could no longer run Madison
Guaranty. McDougal lost his house, his Jaguar and
Susan. And then he had a stroke.
CLAUDIA RILEY: And he came here to be with us. He
brought his worldly possessions with him and a cat and
a Piggly Wiggly sack and, I think, sleeping garments
and shaving equipment. And Jim was here with us, not
to return to Little Rock. This was a fallen man.
PETER BOYER: And then McDougal was put on trial for
fraud. More than $60 million dollars had been lost at
Madison Guaranty. Jim McDougal had hit bottom.
JIM McDOUGAL: I was so depressed, so ashamed to be
accused of a crime, so worried about the effect it was
having on my aged mother. But some miracle occurred
when I got on the stand. The prosecution had written
out to 280-some questions to ask me, but I was able to
send them into a complete rout after about 20 minutes
and was allowed to step down and I'm still absolutely
astonished. When they read the verdict "not guilty," I
was the most surprised man in the state of Arkansas.
PETER BOYER: By all accounts, it was a bravura
performance, Jim McDougal as the populist, appealing
to the jury. He was a free man. Acquittal brought
McDougal a genuine thread of hope, the prospect of
personal redemption. He was broke, but he still had
friends, powerful friends in a position to help. One
of them, Bill Clinton, even promised that he would.
SUSAN McDOUGAL: He did call and ask how Jim was doing
and I told him he was doing better. And I said, "You
know, a good thing to do would be to call Jim's
mother." She was very ill and she loved Bill very
much. And he did call Jim's mother and in a
conversation with Jim's mother, said -- and I wasn't
there, but from what I understand -- that he would
CLAUDIA RILEY: Jim didn't talk about this to us, but
his mother was living at the time and she did, and she
said that Jim was going to go back to work with the
governor and she said it repeatedly. And that was her
hope and her dream because she thought that was-- she
loved Bill Clinton.
JIM McDOUGAL: And he called her up and he said, "Well,
I think I've got something for Jim to do."
CLAUDIA RILEY: So she was banking heavily on that. He
was her only child and she thought that would be--
"This is going to be marvelous."
JIM McDOUGAL: Every day for the next year or whatever,
Mother would say, "Have you heard from Bill? Has Bill
called you about a job?" And of course Bill hadn't
SUSAN McDOUGAL: That would've been extremely
embarrassing, to have to face his mother and for
nothing to have happened.
PETER BOYER: Eventually, Bill Clinton did call
McDougal, who was here in the Rileys' living room. It
was not the call McDougal had been waiting for. For
one thing, Hillary was on the line, too. And the
governor didn't say anything about a job for Jim. But
he did ask for money.
JIM McDOUGAL: The real purpose of the call was to get
some money in connection with Whitewater. But
obviously, Hillary was on the extension, prompting
him. And it was very awkward for him. I really--
although I became quite angry, about the context of
the conversation, I felt quite sorry for him because
it was so belittling. But he called up to ask for
PETER BOYER: It seems that there were some unpaid bills on
Whitewater, some tax costs.
CLAUDIA RILEY: Something changed in Jim at that time,
a quietness, a retreat.
PETER BOYER: Alone and friendless, McDougal retreated
to a trailer house on the Riley property.
BILL HENLEY: Total seclusion. He would sit in his
apartment in the dark, one chair in the middle of the
room, cigarettes in one-- on one side and his favorite
candy on the other. And he would not move and he would
not open the door and he wouldn't answer the
telephone. And he would brood and watch television.
Gov. BILL CLINTON: And that is why today I proudly
announce my candidacy for president of the United
States of America.
PETER BOYER: Bill Clinton, meanwhile, was drawing
nearer to his dream, a campaign, as we remember, that
was marked by some unwelcome Arkansas memories.
GENNIFER FLOWERS: The truth is I loved him.
PETER BOYER: A former lover emerged--
REPORTER: What's your relationship with Gennifer
BILL CLINTON: There really isn't one, obviously.
PETER BOYER: --questions about how he avoided serving
his country in Vietnam--
BILL CLINTON: I certainly didn't know what my number
would be or whether I would be called. That is clear. I put
myself into the draft.
PETER BOYER: --even that Whitewater deal with Jim
McDougal. "The New York Times" was asking questions
about Hillary's ties to McDougal. Over at the Rose law
firm, her friends, Webb Hubbell and Vince Foster,
undertook a preemptive examination of that
relationship. Hillary had destroyed her Madison
records back in 1988, but there remained some billing
records on the computer, which they printed out for
the campaign. And then these records disappeared. But
Clinton prevailed. Arkansas shared the triumph.
CLAUDIA RILEY: It was a really wonderful moment for
us, for my husband, in particular.
PETER BOYER: Jim was down in the trailer?
CLAUDIA RILEY: Uh-huh. Uh-huh.
PETER BOYER: Watching his friend Bill Clinton get
The president-elect and Mrs. Clinton had their
friends to thank.
DAVID WATKINS: I was one of the very few people back
in sort of the staging area before the Clintons came
out on the stage and when he first saw me, he came up
to me and hugged me and put his arms around me and
said, "Well, David, I want you to know I couldn't have
done it without you-- for many years. This is not just
this time, but for many times." And that, you know--
shoot, that was a big deal to me. It's still a big
PETER BOYER: The new first couple surrounded
themselves with trusted friends: Mac McLarty from
Hope, chief of staff; another Hope boy, Vince Foster,
to the White House as deputy counsel and minder of
Clinton files; Webb Hubbell went to the Justice
Department and David Watkins would run the White House
day to day.
DAVID WATKINS: I think they needed trusted aides,
people that he knew back and had a feel good for, that
had had shown before an amount of loyalty and support for
him and had been in his foxhole.
PETER BOYER: But as we all know, the morning after was
painful for the Arkansans-- a chorus of complaints on
the airwaves of America--
RADIO TALK SHOW HOST: This man has absolutely no
convictions, no principles--
CALLER: Lee Harvey Oswald, where are you?
PETER BOYER: --reports of domestic unrest in the
private quarters, "Travelgate," "Nannygate."
SUSAN McDOUGAL: I remember very well Jim looking at me
one day and saying, "I don't think they're having very
much fun up there, do you?" talking about the Clintons
being in the White House and especially bitter that they
might be having a good time and happy that they
PETER BOYER: The Clinton White House seemed to turn in
on itself and even the comforting bonds between that
trusted group of Arkansans began to fray. The pressure
was most keenly felt by Vince Foster.
DAVID WATKINS: The pressure was horrendous, much more
so on Vince and probably the type of person that he
was, probably more than anybody else in the White
PETER BOYER: He had cast himself in an impossible
role, as Hillary's protector, and the more events
careened beyond control, the harder he tried to
contain them. His journal entries on the "Travelgate"
affair reveal a meticulous legal mind nearing the
point of obsession. Over and over, he scrawled out a
line of defense, Hillary's defense. And in the
background always was the shadow of Whitewater. It all
took a toll on Foster. His wife and friends sensed his
ILEENE WATKINS: I mean, Lisa shared some things with
me, that, you know, how disturbed he was. And I don't
know if it was right to say exactly how she shared it,
but he was under more stress than I can imagine any
man being. I mean he was showing great signs that---
she did, she said, "Vince wants me to hold him in bed
at night." I mean that just-- it's something that is
hard for me to discuss. It is-- if you don't understand that,
you just don't get it.
PETER BOYER: Vince Foster's suicide had an unexpected
consequence. It brought Whitewater back to life
because it was learned that Foster had been handling
Whitewater for the first family.
VIET DINH, Former Federal Investigator: Vince Foster
actually played a significant role in acting as the
Clintons' personal lawyer, rather than as a deputy
White House counsel representing the President.
PETER BOYER: Viet Dinh was a lead investigator for the
Senate Whitewater Committee. His assignment: What
happened to the Clintons' Whitewater files in Vince
VIET DINH: We will never know, I don't think, what
records were in Mr. Foster's office at the time of his
PETER BOYER: The Clintons' personal files were removed
from Foster's office before investigators could review
them. They were moved temporarily to a closet in the
private quarters of the White House. Whitewater became
a national mystery. Then, two years later, in early 1996, a
long-missing piece of evidence suddenly appeared here
in the First Lady's book room, just across the hall from that
closet-- the billing records from the Rose law firm, the documents
Webb Hubbell and Vince Foster reviewed back in the
This is what they say: that as a lawyer, Hillary
Clinton did some work on a big land deal, a dirt deal
Jim McDougal did once upon a time in Arkansas.
Remember that sham deal created by Jim McDougal to buy
Castle Grande with Seth Ward? Seth Ward's son-in-law
is Webb Hubbell. Hubbell accompanied the Clintons to
Washington and later would go to prison for fraud.
Hillary Clinton worked with Hubbell at the Rose law
firm and one of her clients was Jim McDougal's savings
Those long-missing billing records indicate that
over a 15-month period, Mrs. Clinton billed McDougal
for some 60 hours of work, half of it on Castle Grande
matters, including a dozen conferences with Seth Ward,
who was described by federal regulators as a straw man
in the Castle Grande deal. According to the billing
records, Hillary Clinton wrote an agreement between
McDougal and Ward. Federal investigators would later
determine that the agreement was used by McDougal to
further conceal the sham transactions.
[interviewing] Would it have required an
extraordinary level of discernment on Hillary
Clinton's part to have recognized its purpose, this
VIET DINH: Well, I don't even know that it requires
very much discernment to recognize this because we now
know from the testimony of Don Denton, who was then
Madison Guaranty's loan officer, that on April 7th he
and Hillary Clinton had a conversation.
DON DENTON: She called me on the telephone.
PETER BOYER: Said?
DON DENTON: As I recall, her understanding of the
transaction was to set up a situation where Seth would
be assured of money to repay that loan to Madison
Guaranty Savings and Loan.
VIET DINH: The telephone call that now we know from
Don Denton's testimony was the one where he warned
Mrs. Clinton of the possible impropriety of this
transaction and where she summarily dismissed his
DON DENTON: As I recall, she left me with the
impression that I was to take care of the S&L and
she'd take care of the legal aspects of that
PETER BOYER: Briefly put, Hillary Clinton either knew
or should have known that that instrument was of at
least a suspicious nature.
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