Professional Documents
Culture Documents
Joint Appendix
Joint Appendix
No. 16-5366
_________
Plaintiff-Appellant,
v.
Defendant-Appellee.
__________
JOINT APPENDIX
__________
TABLE OF CONTENTS
1. Docket Sheet........1
V.
Defendant
NATIONAL ARCHIVES AND represented by David Michael Glass
RECORDS ADMINISTRATION U.S. DEPARTMENT OF JUSTICE
Civil Division
20 Massachusetts Avenue, NW
Room 7200
Washington, DC 20530
(202) 5144469
Fax: (202) 6168470
Email: [email protected]
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
1
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Attorney General. Date of Service Upon United States Attorney General 10/27/2015.,
RETURN OF SERVICE/AFFIDAVIT of Summons and Complaint Executed.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION served on
11/16/2015 (Attachments: # 1 Declaration of Cristina Rotaru)(Orfanedes, Paul)
(Entered: 11/16/2015)
11/24/2015 6 ANSWER to Complaint by NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION.(Glass, David) (Entered: 11/24/2015)
11/24/2015 7 ORDER. In accordance with the attached Order, it is hereby ORDERED that the
parties shall submit to the Court by December 4, 2015, a joint status report, proposing
a schedule for the filing of, if any, dispositive motions, oppositions thereto, and
replies. Signed by Judge Reggie B. Walton on November 24, 2015. (lcrbw2) (Entered:
11/24/2015)
11/25/2015 Set/Reset Deadlines: Joint Status Report, proposed schedule, dispositive motions,
oppositions, and replies due by 12/4/2015 (mpt) (Entered: 11/25/2015)
12/04/2015 8 Joint STATUS REPORT by JUDICIAL WATCH, INC.. (Orfanedes, Paul) (Entered:
12/04/2015)
12/04/2015 MINUTE ORDER. Upon consideration of the Joint Status Report, and in light of the
parties' consent, it is hereby ORDERED that: (1) the defendant shall file its motion for
summary judgment on or before January 19, 2016; (2) the plaintiff shall file its
opposition to the defendant's summary judgment motion and/or its crossmotion for
summary judgment on or before February 19, 2016; (3) the defendant shall file its
reply in support of its summary judgment motion and/or opposition to the plaintiff's
crossmotion for summary judgment on or before March 14, 2016; and (4) the
plaintiff shall file its reply in support of its summary judgment motion on or before
March 28, 2016. Signed by Judge Reggie B. Walton on December 4, 2015. (lcrbw2)
(Entered: 12/04/2015)
12/08/2015 Set/Reset Deadlines: Summary Judgment motions due by 1/19/2016; Opposition and
Cross Motions due by 2/19/2016, Reply and Opposition to Cross Motion due by
3/14/15, Reply due by 3/14/16. Response to Cross Motions due by 3/14/2016. Reply to
Cross Motions due by 3/28/2016. (mpt) (Entered: 12/08/2015)
01/15/2016 9 Unopposed MOTION to Modify Briefing Schedule by NATIONAL ARCHIVES AND
RECORDS ADMINISTRATION (Glass, David) (Entered: 01/15/2016)
02/02/2016 10 MOTION for Summary Judgment by NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION (Attachments: # 1 Mem. Supp., # 2 Prop. Order, # 3 Ex. A, # 4
LCvR 7(h)(1) Statement)(Glass, David) (Entered: 02/02/2016)
03/02/2016 11 Unopposed MOTION for Extension of Time to Modify Briefing Schedule by
JUDICIAL WATCH, INC. (Attachments: # 1 Text of Proposed Order)(Orfanedes,
Paul) (Entered: 03/02/2016)
03/03/2016 MINUTE ORDER granting 11 Motion for Extension of Time. Upon consideration of
the Plaintiff's Unopposed Motion to Modify Briefing Schedule; Memorandum of
Points and Authorities in Support Thereof, and in light of the parties' consent, it is
hereby ORDERED that the motion is GRANTED. It is further ORDERED that the
following briefing schedule shall govern future proceedings in this case: (1) the
plaintiff's opposition to the defendant's motion for summary judgment and the
plaintiff's crossmotion for summary judgment shall be filed on or before March 11,
2016; (2) the defendant's reply in support of its motion for summary judgment and
opposition to the plaintiff's crossmotion shall be filed on or before April 4, 2016; and
(3) the plaintiff's reply in support of its crossmotion for summary judgment shall be
filed on or before April 18, 2016. Signed by Judge Reggie B. Walton on March 3,
2016. (lcrbw2) (Entered: 03/03/2016)
03/04/2016 Set/Reset Deadlines: Plaintiff's CrossMotion/opposition to Motion for Summary
Judgment due by 3/11/2016; Defendant's Opposition to CrossMotion/Reply to
Opposition to Motion for Summary Judgment due by 4/4/2016; Plaintiff's Reply to
Opposition to CrossMotion due by 4/18/2016. (tg) (Entered: 03/04/2016)
03/11/2016 12 Memorandum in opposition to re 10 MOTION for Summary Judgment and Response
to Statement of Facts filed by JUDICIAL WATCH, INC.. (Attachments: # 1
2
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Declaration of Paul J. Orfanedes, # 2 Exhibit 2, # 3 Exhibit 3 Part 1, # 4 Exhibit 3
Part 2, # 5 Exhibit 3 Part 3, # 6 Exhibit 3 Part 4, # 7 Exhibit 3 Part 5, # 8 Text of
Proposed Order)(Orfanedes, Paul) (Entered: 03/11/2016)
03/11/2016 13 Cross MOTION for Summary Judgment and Statement of Material Facts by
JUDICIAL WATCH, INC. (Attachments: # 1 Declaration of Paul J. Orfanedes, # 2
Exhibit 2, # 3 Exhibit 3 Part 1, # 4 Exhibit 3 Part 2, # 5 Exhibit 3 Part 3, # 6
Exhibit 3 Part 4, # 7 Exhibit 3 Part 5, # 8 Text of Proposed Order)(Orfanedes,
Paul) (Entered: 03/11/2016)
03/21/2016 MINUTE ORDER finding as moot 9 Motion to Modify. In light of the Court's March
3, 2016 Minute Order, it is hereby ORDERED that the Defendant's Unopposed Motion
to Modify Briefing Schedule and Points and Authorities in Support Thereof is
DENIED AS MOOT. Signed by Judge Reggie B. Walton on March 21, 2016. (lcrbw2)
(Entered: 03/21/2016)
03/28/2016 14 Unopposed MOTION for Briefing Schedule (Modification of Existing Schedule) by
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION (Glass, David)
(Entered: 03/28/2016)
03/28/2016 MINUTE ORDER granting 14 Motion for Briefing Schedule. Upon consideration of
the Defendant's Unopposed Motion to Modify Briefing Schedule and Points and
Authorities in Support Thereof, and in light of the parties' consent, it is hereby
ORDERED the motion is GRANTED. It is further ORDERED that the briefing
schedule established by the Minute Order dated March 3, 2016, is modified to provide
that the defendant's combined reply in support of its motion for summary judgment
and opposition to the plaintiff's crossmotion for summary judgment shall be filed on
or before April 18, 2016, and that plaintiff's reply in support of its crossmotion for
summary judgment shall be filed on or before May 2, 2016. Signed by Judge Reggie
B. Walton on March 28, 2016. (lcrbw2) (Entered: 03/28/2016)
03/29/2016 Set/Reset Deadlines: Defendant's Response to Cross Motions due by 4/18/2016,
Plaintiff's Reply in support of its Cross Motion for Summary Judgment due by
5/2/2016. (hs) (Entered: 03/29/2016)
04/18/2016 15 REPLY to opposition to motion re 10 MOTION for Summary Judgment and
Opposition to Plaintiff's Cross Motion for Summary Judgment filed by NATIONAL
ARCHIVES AND RECORDS ADMINISTRATION. (Attachments: # 1 Ex. A, # 2
LCvR 7(h) Resp.)(Glass, David) (Entered: 04/18/2016)
04/18/2016 16 Memorandum in opposition to re 13 Cross MOTION for Summary Judgment and
Statement of Material Facts filed by NATIONAL ARCHIVES AND RECORDS
ADMINISTRATION. (See Docket Entry 15 to view document). (znmw) (Entered:
04/19/2016)
05/02/2016 17 REPLY to opposition to motion re 13 Cross MOTION for Summary Judgment and
Statement of Material Facts filed by JUDICIAL WATCH, INC.. (Attachments: # 1
Declaration (Second) of Paul J. Orfanedes)(Orfanedes, Paul) (Entered: 05/02/2016)
09/26/2016 18 ORDER. For the reasons to be set forth in the Memorandum Opinion to be issued by
the Court within the next thirty days, absent extraordinary circumstances, the Court
will grant the Defendant's Motion for Summary Judgment (ECF No. 10), and deny the
Plaintiff Judicial Watch, Inc.'s CrossMotion for Summary Judgment (ECF No. 13) in
a final Order that will be issued contemporaneously with the forthcoming
Memorandum Opinion. Accordingly, it is hereby ORDERED that the defendant
National Archives and Records Administration's Motion for Summary Judgment is
GRANTED. It is further ORDERED that the plaintiff Judicial Watch, Inc.'s
CrossMotion for Summary Judgment is DENIED. It is further ORDERED that this
Order is not a final Order subject to appeal. Signed by Judge Reggie B. Walton on
September 26, 2016. (lcrbw2) (Entered: 09/26/2016)
10/04/2016 19 ORDER. In accordance with the Memorandum Opinion, issued on this same date, it is
hereby ORDERED that the defendant National Archives and Records Administration's
Motion for Summary Judgment is GRANTED. It is further ORDERED that the
plaintiff Judicial Watch, Inc.'s CrossMotion for Summary Judgment is DENIED. It is
further ORDERED that this case is CLOSED. Signed by Judge Reggie B. Walton on
October 4, 2016. (lcrbw2) (Entered: 10/04/2016)
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10/04/2016 20 MEMORANDUM OPINION. Signed by Judge Reggie B. Walton on October 4, 2016.
(lcrbw2) (Entered: 10/04/2016)
12/03/2016 21 NOTICE OF APPEAL TO DC CIRCUIT COURT by JUDICIAL WATCH, INC..
Filing fee $ 505, receipt number 00904763913. Fee Status: Fee Paid. Parties have
been notified. (Orfanedes, Paul) (Entered: 12/03/2016)
12/05/2016 22 Transmission of the Notice of Appeal, Order Appealed, and Docket Sheet to US Court
of Appeals. The Court of Appeals fee was paid this date re 21 Notice of Appeal to DC
Circuit Court. (znmw) (Entered: 12/05/2016)
12/08/2016 USCA Case Number 165366 for 21 Notice of Appeal to DC Circuit Court filed by
JUDICIAL WATCH, INC. (zrdj) (Entered: 12/08/2016)
4
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COMP LAINT
COMPLAINT
Plaintiff Judicial
Judicia1 Watch, Inc.
mc. brings this
tnc. tills action against Defendant National Archives and
("FOIA").
). As grounds therefor, Plaintiff alleges as follows:
552 ("FOlA").
("FOIA"
I.
1.
l. The Court has jurisdiction over thi
thiss action pursuant to 5 U.S.c.
U.S.C. 552(0)(4)(8)
552(a)( 4)(B)
552(a)(4)(B)
552(a)(4)(8)
PARTIES
incorporated
incoll'Orated under the laws of the District of Columbia and headquartered at 425 Third Street
SW, Suite 800, Washington, DC 20024. Plaintiff seeks to promote transparency, integrity,
integrity. and
5
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regularly requests records from federal agencies pursuant to FOIA. Plaintiff analyzes the
agencies' responses and disseminates both its findings and the requested records to the American
United States Government and is headquartered at 8601 Adelphi Road, College Park, MD 20740.
STATEMENT OF FACTS
5.
5. IS,, Plaintiff served a FOIA
9, 20 IS
On March 9,2015, rOJA -request
request on Defendant seeking access
to certain draft indictments of Hillary Rodham Clinton prepared while Mrs. Clinton was First
All versions of indictments against Hillary Rodham Clinton, including but not
limited to, Versions 1,1,2,
2, and 3 in box 2250 of the Hickman Ewing Attorney Files,
the "HRCI_
""HRCI
HRC/ _ _ Draft Indictment" in box 2256 of the Hickman Ewing Attorney
orthe
Files, as well as any and all versions written by Deputy lndependeut
Independent Counsel
lndependent
Hickman Ewing, Jr. Jr. prior to September of 1996.
Specifically, Defendant admitted that it found 38 pages of responsive records in a folder entitled
enti tled
"Draft Indictment" in box 2250 and approximately 200 pages of responsive records in a folder
fo lder
denied Plaintiffs
Plaintiff's request in full, however, invoking FOIA
FOiA Exemption (b)(7)(C) to withhold al
alll
produced to Plaintiff.
Plaintiff.
Plaint iff.
6
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7.
7. On May 14,2015,
14, 2015.
2015, Plaintiff administratively appealed Defendant's denial of the
requesL On that date, Plaintiff sent aa written appeal, via email and certified mail,
request. mail. to the Deputy
Archivist or
of the National Archives and Records Administration at the email address and street
8. Pursuant to 5 U.S.C.
U.S.C. 552(a)(6)(A)(ii), Defendant was required to make a
right to seekj udicial review if the denial was upheld in whole or in part.
seek judicial part. More than twenty
Plaintiff has received no notification of any determination or its right to seek judicial review of
oraoy
appeal.
9. U.S.C.
fai led to comply with the time limit set forth in 5 U.S.C.
Because Defendant has failed
552(a)(6)(A)(ii), Plaintiff is deemed to have exhausted any and all administrative remedies
COUNTl
COUNT 1
U.S.c. 552)
(Violation of FOIA, 5 U.S.C.
II..
II
11. unlawfull y withholding records responsive to
Defendant is violating FOIA by unlawfully
Plaintiff'ss request.
Plaintiff
Plaintiffs request.
request .
12,
12.
12. hanned by reason of Defendant's violation of FOIA,
Plaintiff is being irreparably harmed
J3 .
7
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demonstrate that it employed search methods reasonably calculated to uncover all records
Plaintiff's request; (2) order Defendant to produce, by a date certain, any and all
responsive to Plaintiffs
non-exempt records responsive to the request and a Vaughn index of any responsive records
withheld under claim of exemption; (3) enjoin Defendant from continuing to withhold any and
and other litigation costs reasonably incurred in this action pursuant to 5 U.S.C. 552(a)(4)(E);
and (5) grant Plaintiff such other relief as the Court deems just and proper.
proper.
WArCH, INC.
JUDICIAL WATCH,
t,/
!rI
lsi Paul J. Orfanedes
Pau/.
Paul.! Orfimedes
Odanedes
Paul J. Orfanedes
D.C. BarNo.
Bar No. 4297
429716
16
425 Third Street SW, Suite 800
Washington, DC 20024
(202) 646-5172
8
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)
JUDICIAL WATCH, INC. )
)
Plaintiff, )
)
v. ) No. 1:15-cv-1740-RBW
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
ANSWER
Defendant, the National Archives and Records Administration, by and through its
undersigned counsel, respectfully submits the following as its answer to the numbered
paragraphs of the complaint, filed on October 20, 2015 (ECF No. 1):
FIRST DEFENSE
The complaint fails to state a claim upon which relief can be granted.
SECOND DEFENSE
Plaintiff seeks records under the Freedom of Information Act, 5 U.S.C. 552, that are
THIRD DEFENSE
Defendant responds to the numbered paragraphs of the complaint as set forth below:
9
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8601 Adelphi Road, College Park, MD 20740 but admits that defendant is headquartered at that
location and at 700 Pennsylvania Avenue, N.W., Washington, D.C. 20408. Sentence 2 consists
5. This paragraph characterizes a letter dated March 9, 2015, from Kate Bailey to
defendant, (Attachment A), to which the Court is respectfully referred for its contents.
6. Sentences 1-4 of this paragraph characterize a letter dated March 19, 2015, from
Martha Wagner Murphy to Ms. Bailey, (Attachment B), to which the Court is respectfully
7. Sentences 1-2 of this paragraph characterize a letter dated May 14, 2015, from Ms.
Bailey to the Deputy Archivist of the United States, (Attachment C), to which the Court is
respectfully referred for its contents. Sentence 3 consists of legal conclusions, to which no
response is required.
required. Admits that [m]ore than twenty working days have elapsed since Defendant received
Plaintiffs May 14, 2015 appeal but lacks knowledge or information sufficient to form a belief
as to the truth of the remaining allegations contained in Sentence 2 or the allegations contained in
Sentence 3.
10. Defendant repeats and re-alleges its responses to Paragraphs 1-9 above.
10
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The remaining paragraph represents plaintiffs prayer for relief to which no answer is
required, but to the extent an answer is required, defendant denies that plaintiff is entitled to the
Except to the extent previously admitted or qualified above, defendant denies each and
WHEREFORE, having fully answered the complaint, defendant asks this Court for a
judgment dismissing the complaint with prejudice, and for such further relief as the Court may
Respectfully submitted,
BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General
CHANNING D. PHILIPS
United States Attorney
ELIZABETH J. SHAPIRO
Deputy Director
s/ David M. Glass
DAVID M. GLASS, DC Bar 544549
Senior Trial Counsel
Department of Justice, Civil Division
20 Massachusetts Ave., N.W., Room 7200
Washington, D.C. 20530-0001
Tel: (202) 514-4469/Fax: (202) 616-8470
E-mail: [email protected]
Dated: November 24, 2015 Attorneys for Defendant
CERTIFICATE OF SERVICE
I hereby certify that on November 24, 2015, I served the within answer on all counsel of
s/ David M. Glass
11
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Judicial
Watch
tcfi
Becaus.e no one
is above the law!
March 9,2015
The records in question are located in the material submitted to the National
Archives and Records Administration by the Office ofIndependent Counsel In Re:
Madison Guaranty Savings & Loan Association, also known as "the records ofIC Starr."
Attachment A
12
425 Third St., SW, Suite 800, Washington, DC 20024 Tel: (202) 646-5172 or 1-888593-8442
FAX: (202) 646-5199 Email: [email protected] * www.JudiciaIWatch.org
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National Archives and Records Administration
March 9, 2015
Page 2 of4
The memo further provides that "The Freedom oflnformation Act should be
administered with a clear presumption: In the case of doubt, openness prevails."
For purposes of this request, the term "record" shall mean: (1) any written,
printed, or typed material of any kind, including without limitation all correspondence,
memoranda, notes, messages, letters, cards, facsimiles, papers, forms, telephone
messages, diaries, schedules, calendars, chronological data, minutes, books, reports,
charts, lists, ledgers, invoices, worksheets, receipts, returns, computer printouts, printed
matter, prospectuses, statements, Checks, statistics, surveys, affidavits, contracts,
agreements, transcripts, magazine or newspaper articles, or press releases; (2) any
electronically, magnetically, or mechanically stored material of any kind, including
without limitation all electronic mail or e-mail; (3) any aUdlo, aural, visual, or video
records, recordings, or representations of any kind; (4) any graphic materials and data
compilations from which information can be obtained; and (5) any materials using other
means <if preserving thought or expression.
Judicial Watch also hereby requests a waiver of both search and duplication fees
pursuantto 5 U.S.C. 552(a)(4)(A)(ii)(II) and (a)(4)(A)(iii). Judicial Watch is entitled
to a waiver of search fees under 5 U.S.C. 552(a)(4)(A)(ii)(II) because it is a member of
the.. news media.
. -
Cf NationalSecurity Archive v. Department ofDefense, 880 F.2d 1381,
- "".
1387(D.C. Cir. 1989)(defining news media within FOIA context). Judicial Watch has
also been recognized as a member ofthe news media in other FOIA litigation. See, e.g.,
Judicial Watch; Inc. v. U.S. Deparrment ofJustice, 133 F. Supp.2d 52 (D.D.C. 2000):
and, Judicial Watch, Inc. v. Department ofDefense, 2006 U.S. Dist. LEXIS 44003, *1
(D.D.C. June 28, 2006). Judicial Watch regularly obtains information about the
operations and activities of govermnent through FOIA and other means, uses its editorial
skills to turn this information into distinct works, and publishes and disseminates these
works to the public. It intends to do likewise with the records it receives in response to
this request.
Judicial Watch also is entitled to a complete waiver of both search fees and
duplication fees pursuant to 5 U.S.C. 5S2(a)(4)(A)(iii). Under this provision, records:
1 Freedom of Information Act. Pres. Mem. of January 21,2009,74 Fed. Reg. 4683.
Attachment A
13
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National Archives and Records Administration
March 9, 2015
Page 3 of4
5 U.S.C. 552(a)(4)(A)(iii).
In addition, if records are not produced within twenty. (20) business days, Judicial
Watch is entitled to a complete waiver of search and duplication fees under Section 6(b)
of the OPEN Government Act of2007, which amended FOIA at 5 U.S.c.
(a)(4)(A)(viii).
In an effort to facilitate record production within the statutory time limit, Judicial
Watch is willing to accept documents in electronic format (e.g. e-mail, .pdfs). When
necessary, Judicial Watch will also accept the "rolling production" of documents.
If you do not understand this request or any portion thereof, or if you feel you
require clarification of this request or any portion thereof, please contact us immediately
at 202-646-5172 or [email protected]. We look forward to receiving the
Attachment A
14
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National Archives and Records Administration
March 9, 2015
Page 4 of 4
requested documents and a waiver of both search and duplication costs within twenty
(20) business days. Thank you for your cooperation.
Sincerely,
~fdIu(
Kate Bailey
Judicial Watch
Attachment A
15
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March 19,2015
Kate Bailey
Judicial Watch
425 Third Street, SW, Suite 800
Washington, DC 20024
This is in response to your Freedom of Information Act request of March 17,2015 for
records in the custody of the National Archives and RecordsAdministration, YOUf request
was received in this office on March 17, 2015 and assigned FOIA case number 46068.
You requested Independent Counsel Kenneth Starr records related to several versions of
indictments of Hillary Clinton.
We have examined the folders from Hickman Ewing's attomey files that you requested.
From box 2250 the folder "Draft Indictment" (38 pages) is denied in full under Exemption
(b)(7)(C). From box 2256 the folder "Hillary Rodham ClintonNVebster L. Hubbell Draft
Indicment" (approximately 200 pages) is denied in full under Exemption (b)(7)(C).
You requested a waiver for reproduction fees ordinarily charged to researchers, however,
records transferred to the custody of the National Archives are exempted from the fee and .
fee waiver provisions of the Freedom of InformationAct because there was alee
schedule in place prior to enactment of the FOIA. The applicable section states that
"nothing in this subparagraph shall supersede fees chargeable under a statute specifically
providing for setting the level of fees for particular types of records" (5 U.S.C. 552 .
(a)(4)(A)(vi)). The relevant fee statute authorizes the National Archives "to charge a fee
for making or authenticating copies or reproductions of materials transferred to the
Archivist's custody." (44 U.S.C. 2116(c)).
The inability to grant the requested f.ee waiver do.es not constitute a denial und.er the
terms of the Freedom of Information Act. However, if you consider this response to be a
denial of your request, or if you wish to appeal the document denials, you may appeal my
decision within 60 calendar days from the date of this letter. Appeals must be submitted in
writing and addressed to the Deputy Archivist of the United States, National Archives and
Records Administration, 8601 Adelphi Road, Room 4200, College Park, MD 20740. In
your letter, please cite your case number and clearly label both the letter and envelope as
a FOIA Appeal. As an alternative, you may e-mail your appeal to [email protected]. If you
choose this option, please use the words "FOIA appeal" in tHe subject line and also cite
your case number.
Attachment B
16
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This concludes the processing of your request. If you have any question about the way
we handled your request, or about our FOIA regulations or procedures, please contact
David Paynter at [email protected] or (301) 837-2041.
Sincerely,
Watc6
Because no one
is above the law!
Dear SirlMadam:
On March 9, 2015, Judicial Watch Inc. (hereafter "Judicial Watch"), filed a Freedom of
Information Act (hereafter "FOrA") request with the National Archives and Records
Administration requesting the following records:
All versions of indictments against Hillary Rodham Clinton, including, but not
limited to, Versions 1,2, and 3 in box 2250 of the Hickman Ewing Attorney Files,
the "HRC/_Draft Indictment" in box 2256 ofthe Hickman Ewing Attorney Files,
as well as any and all versions written by Deputy Independent Counsel Hickman
Ewing, .Jr. prior to September of 1996.
In a response letter dated March 19, 2015, Martha Wagner Murphy, Chief of Special
Access and FOIA Staff, stated that after examination of the requested records, 38 pages from box
2250 and approximately 200 pages from box 2256 were all "denied in full under Exemption
(b)(7)(C)." This letter respectfully appeals these denials.
Ms. Murphy's response amounts to no more than a barren assertion that the responsive
records are being withheld pursuant to ForA Exemption (b)(7)(C). Yet such a response "cannot
suffice to establish the fact." Founding Church o/Scientology o/Washington, D.C., Inc. v.
National Security Agency, 610 F.2d 824,831 (D.C. Cir. 1979). Moreover, it is longstanding
precedent that "an agency cannot meet its obligation simply by quoting the statutory language of
an exemption." Army Times Pub. Co. v. Department o/the Air Force, 998 F.2d 1067, 1070 (D.C.
425 Third St., SW, Suite 800, Washington, DC 20024 .Tel: (202) 646-5172 or 1888-593-8442
Attachment C
18
FAX: (202) 646-5199. Email: [email protected] www.JudicialWatch.org
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Cir. 1993) (remarking that affidavits "[p]arroting the case law" were insufficient); Voinche v.
Federal Bureau o/Investigation, 412 F. Supp. 2d 60,69 (D.D.C. 2006) (agency failed to satisfy
its burden where declaration "merely quote [ d] the statutory language" of an exemption).
Because the National Archives and Records Administration has done nothing more than
quote the statutory language ofthe claimed exemptions, it clearly has not met its burden under
ForA. To satisfy its burden, at a minimum, the National Archives and Records Administration
must provide sufficient identifying information with respect to each of the records that it
withheld to enable Judicial Watch to assess the propriety of the claimed exemption. Vaughn v.
Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977 (1974). Similarly, the National
Archives and Record Administration has failed to demonstrate that all non-exempt information
has been segregated. Sussman v. Us. Marshals Service, 494 F.3d 1106,1116 (D.C. Cir. 2007).
the Supreme Court suggested that the justification most likely to satisfy Exemption 7(C)'s
public interest requirement is that the information is necessary to show the investigative
agency or other responsible officials acted negligently or otherwise improperly in the
performance of their duties
Citizens for Responsibility & Ethics in Wash. v. Us. Dep 't ofJustice, 2012 U.S.
Dist. LEXIS 27298 (D.D.C. Mar. 2,2012) (citing Nat'! Archives & Records Admin. v. Favish,
541 U.S. 157, 172 (2004).
As a former First Lady, former U.S. Senator, former Secretary of State, and current
presidential candidate, Hillary Clinton is a highly public figure who has exercised vast political
power throughout her career. The public interest in records concerning possible unlawful
activity on her part far outweighs the privacy interest of (b)(7)(C).
Judicial Watch respectfully appeals and requests full access to all documents in
possession of the National Archives and Records Administration responsive to our ForA request
of March 17, 2015 for all versions of indictments against Hillary Rodham Clinton, including, but
not limited to, Versions 1,2, and 3 in box 2250 of the Hickman Ewing Attorney Files, the
"HRC/~Draft Indictment" in box 2256 of the Hickman Ewing Attorney Files, as well as any
Attachment C
19
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and all versions written by Deputy Independent Counsel Hickman Ewing, Jr. prior to September
of 1996.
If there are any questions regarding this appeal, please do not hesitate to contact me at
(202) 646-5172 or by email at [email protected]. Thank you for your attention to this
matter.
Sincerely,
Kate Bailey
FOIA Program Manager
Attachment C
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. 15-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
1. I currently serve as Chief of the Special Access and Freedom of Information Act
("FOIA") Branch, Research Services, National Archives and Records Administration ("NARA")
located in College Park, Maryland. I have held this position since 2009. Prior to this position, I
was an Archivist in the Special Access and FOIA Staff from 1995 to 2009, and I have worked as
an Archivist at NARA since 1991. I hold a Masters in U.S. History from Loyola University of
2. In my current position as the Chief of the Special Access and FOIA Staff, I
supervise a total of20 Archivists and one Government Information Specialist whose
responsibilities are focused on providing access - either through special access requests or
through FOIA - to thousands of pages of archival records. Each Archivist on my staff holds at
least a Bachelors' degree in either History or a related subject matter, and over the course of time
has become very familiar with the subject matters of the collections to which access is sought.
-1-
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3. Due to the nature of my official duties, I am familiar with the procedures followed
by NARA in responding to requests for material from its archival collection pursuant to the
provisions of the FOIA, 5 U.S.c. 552. I am also specifically aware of the handling of plaintiff
Judicial Watch's March 9, 2015 FOIA request to NARA for "[a]1I versions of indictments
against Hillary Rodham Clinton, including, but not limited to, Versions 1,2, and 3 in box 2250
of the Hickman Ewing Attorney Files, the "HRCI_Draft Indictment" in box 2256 of the
Hickman Ewing Attorney Files, as well as any all versions written by Deputy Independent
4. In accordance with Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973), I provide
this declaration in support ofNARA's motion for summary judgment and to provide
justifications for the withholding of information in full from the total of 451 pages of documents l
attached hereto, pursuant to FOIA Exemptions 3, 6 and 7(C), 5 U.S.c. 552 (b)(3), (b)(6) and
(b)(7)(C).
NARAfor:
1 The discrepancy in the total number of pages is attributable to the fact that at the administrative stage we
did not include identical duplicates in our page count.
2 Hickman Ewing was a lawyer who worked as Kenneth Starr's deputy in Little Rock.
-2-
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Hickman Ewing Attorney Files, as well as any and all versions written by
Deputy Independent Counsel Hickman Ewing, Jr. prior to September of
1996.
See Exhibit B.
8. By letter dated March 19,2015, we informed Judicial Watch that "[w]e have
examined the folders from Hickman Ewing's attorney files that you requested. From box 2250
the folder "Draft Indictment" (38 pages) is denied in full under Exemption (b)(7)(C). From box
2256 the folder "Hillary Rodham ClintonIWebster L. Hubbell Draft Indicment" (sic)
(approximately 200 pages) is denied in full under Exemption (b)(7)(C)." (See Exhibit C). Our
March 19, 2015 letter also provided Judicial Watch with administrative appeal rights.
9. By letter dated May 14, 2015, Judicial Watch appealed NARA's denial under
3 Plaintiff included a fee waiver request in its March 9, 2015 letter, but NARA did not address the request
since it withheld all documents in full. Plaintiff does not raise the fee waiver issue in its Complaint.
-3-
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10. By letter dated October 16, 2015, NARA acknowledged receipt of the appeal,
apologized for the delay in the acknowledgment, advised Judicial Watch that the request had
been assigned FOIA Appeal No. NGCI5-071A, and provided information on how Judicial
Watch might obtain an update on the status of the appeal. See Exhibit D.
NARA advised Judicial Watch it had administratively closed the appeal due to the filing of the
13. The National Archives was established in 1934 by President Franklin Roosevelt
to preserve and care for the records of the U.S. Govermnent, but its major holdings date back to
1775. They capture the sweep of the past: slave ship manifests and the Emancipation
Proclamation; captured German records and the Japanese surrender documents from World War
II; journals of polar expeditions and photographs of Dust Bowl farmers; Indian treaties making
transitory promises; and a richly bound document bearing the bold signature "Bonaparte" - the
Louisiana Purchase Treaty that doubled the territory of the young republic.
14. In 1985, the National Archives became an independent executive agency, and it
now has over 40 facilities nationwide including field archives, Federal Records Centers,
Presidential Libraries, the Federal Register, and the National Historical Publications and Records
Commission. NARA keeps only those Federal records that are judged to have continuing value
- about two to five percent of those generated in any given year. By now, they add up to a
formidable number, diverse in form as well as in content. There are approximately 10 billion
pages of textual records; 12 million maps, charts, and architectural and engineering drawings; 25
-4-
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million still photographs and graphics; 24 million aerial photographs; 300,000 reels of motion
picture film; 400,000 video and sound recordings; and 133 terabytes of electronic data. All of
these materials are preserved because they are important to the workings of Government, have
15. Among its many holdings, NARA maintains custody of the records of
independent counsels who have completed their investigations. 5 Title VI of the Ethics in
Govermnent Act of1978, Pub. L. No. 97-521, 92 Stat. 1867, "allow[ed] for the appointment of
Government officials for violation of federal criminal laws." Enacted originally for a period of
five years, the statutory authority was renewed several times thereafter, ultimately terminating in
1999.
the United States all records which hard] been created or received" by the independent counsel's
office upon termination of that office. 28 U.S.C. 594(k)(l). Access to records transferred to
the Archivist under Title VI was to be "governed by [FOIA]," except in the case of certain
17. Before transferring its records to the Archivist, an independent counsel was
required by Title VI to "clearly identify" which of the records was "subject to Rule 6(e) of the
Federal Rules of Criminal Procedure as grand jury materials." 28 U. S.C. 594(k)(1). "Rule
6(e) provides, in pertinent part, that the parties and witnesses to a grand jury proceeding may not
'disclose a matter occurring before the grand jury.'" See Rule 6(e)(2)(B.
4 See http://www.archives.gov/publications/general-info-Ieafletsll-about-archives.html.
5 See http://www.archives.gov/research/investigations/special-prosecutors-illdept-counsels.html.
-5-
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18. In August 1994, Kenneth W. Starr was named the independent counsel to lead the
investigation into the so-called Whitewater Affair. In 1999, Independent Counsel (IC) Starr
resigned. He was replaced by Robert W. Ray who resigned in March 2002. The Whitewater
investigation was then left for Ray's deputy to wrap up. The office officially ended operations in
2004, 6 and the records were transferred to NARA under Title VI in connection with the cessation
of operations.
19. As a result, the records of FonnerIC Starr and his successors are now part of
NARA's holdings ("IC Starr records"). The IC Starr records, which consist of approximately
3149 cubic feet of records, have been in NARA's custody since March 2004. A finding aid
reference to the Starr records has been available to the public, in redacted fonn, since
approximately June 2015 ("Index,,).7 The Index consists of two manifests - a Little Rock Office
File Manifest and a District of Columbia Office File Manifest - that together list over 3300
boxes of material, with specific box numbers, as well as many thousands of folder titles noted in
20. Both boxes identified by plaintiff in its request, Boxes 2250 and 2256, have the
same name, "Hickman Ewing Attorney Work Product." The boxes also have the same subject
heading, "HRC [Hillary Rodham Clinton]." Each box, on its face, has a note indicating that the
contents include material subject to Rule 6(e) of the Federal Rules of Criminal Procedure.
6 CNN.comlInside Politics, Whitewater Independent Counsel Robert Ray Resigns (Mar. 12,2002),
http://edition.cnn.com/2002/ALLPOLlTICS/03/12/indy.counseLresigns/index.html (accessed Nov. 16,
2015); UPI News Track, Whitewater Counsel Closes Doors (Mar. 23, 2004).
7 By letter dated June 11,2014, plaintiff Judicial Watch filed a FOIA request with NARA seeking access
to the Index. NARA released the Index to Judicial Watch on May 4, 2015.
-6-
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Within Box 2250 is a folder labeled "Draft Indictment," and within Box 2256 is a folder labeled
21. My staff also searched the "Box Contents" and "Subject" fields of the Index to
identify any other folders that might contain "Indictment" and "Hillary Rodham Clinton" or
"Hillary Clinton" or "HRC." Other than the folder in box 2256, we did not locate any other
responsive folders.
22. At the time NARA responded to the FOIA request, all the material in the "Draft
Indictment" folder in Box 2250, and the material in the "Hillary Rodham Clinton/Webster
Hubell Draft Indictment" folder in Box 2256, were considered responsive. For the purposes of
the instant lawsuit, and in accordance with the specific wording of the FOIA request for "[a]l1
versions of indictments against Hillary Rodham Clinton," only draft indictments are considered
responsIve.
23. Each of the responsive documents is a draft and is either clearly marked as such
these drafts contain marginalia or amlOtations, Doc. Nos. 6,10,15,17,19; some are identical
duplicates of each other, Doc. Nos. 1 - 4,7 - 9, 12 - 13; some are non-identical duplicates, Doc.
Nos. 5 - 6; some are accompanied by cover memos, Doc. Nos. 1 - 4,5,6, 10, 16; some are
accompanied by handwritten notes on separate pieces of paper, Doc. No. 14; and some are
accompanied by cover fax sheets, Doc. Nos. 5, 6. One draft consists merely of"[ s]craps of a
draft indictment," Doc. No. 11. The responsive documentsaie described in further detail in the
-7-
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Exemption 3
which is:
One commonly recognized (b)(3) statute is Rule 6(e) of the Federal Rules of Criminal Procedure,
which prohibits the disclosure of matters occurring before a Grand Jury. My office routinely
screens all responsive records for (b)(3) matters, including records that would reveal the
25. All the responsive documents are directly related to the Independent Counsel's
to testify before the grand jury, as well as information identifying specific records subpoenaed
during the grand jury process. They reflect and quote grand jury testimony, and reveal the inner
workings and direction of the grand jury. Disclosure would violate the secrecy of the grand jury
proceedings by disclosing the inner workings of the federal grand jury that was tasked with
considering these matters. Similarly, the consideration of possible witnesses before the Grand
Jury, and internal memoranda and notes about the strategy and considerations regarding possible
indictments reveal the direction of the grand jury investigation. Accordingly, all the documents
have been properly withheld in full pursuant to Exemption (b)(3). See Exhibit A.
-8-
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Exemption 7 Threshold
information compiled for law enforcement purposes, but only to the extent that disclosure could
reasonably be expected to cause one of the harms enumerated in the subparts of the exemption.
See 5 U.S.C. 552(b)(7). In this case, the harm that could reasonably be expected to result from
27. Before an agency can invoke any of the harms enumerated in Exemption 7, it
must first demonstrate that the records or information at issue were compiled for law
enforcement purposes. The records at issue in this case were compiled for criminal law
enforcement purposes during the course of the Independent Counsel's performance of its
high-ranking Government officials for violation offederal criminal laws. Given the function of
an Independent Counsel and the nature of the particular documents at issue, there is little doubt
that these materials were compiled for a law enforcement purPose. Since the records clearly
meet the Exemption 7 threshold, the remaining inquiry for Exemption 7 purposes is whether
personnel and medical files and similar files when the disclosure of
such information would constitute a clearly unwarranted invasion
of personal privacy.
29. 5 U.S.C. 552 (b)(7)(C) exempts from disclosure:
-9-
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30. Exemption 6 of the FOIA protects from mandatory disclosure personnel and
medical files records when disclosure would constitute a clearly unwarranted invasion of
personal privacy. For purposes of this case, NARA is asserting Exemption 6 in conjunction with
Exemption 7(C) to protect the responsive documents at issue here. Because the analysis and
31. The balancing test for Exemption 6 is whether disclosure "would constitute a .
clearly unwarranted invasion of personal privacy," whereas the test for Exemption 7(C) is the
invasion of personal privacy." Nevertheless, under the analysis of both exemptions, the privacy
interests are balanced against the public's interest in disclosure under the analysis of both
exemptions.
is required to balance the privacy interests of the individuals mentioned in these records against
determine the nature and strength of the privacy interest of every individual whose names and/or
identifYing information appears in the documents at issue. In making this analysis, the public
question would shed light on the Independent Counsel's statutorily-imposed law enforcement
mission to investigate and, if appropriate, prosecute individuals for violation of federal criminal
laws. In each instance where information was withheld, it was determined that individual
privacy rights outweighed the public interest. The only recognized public interest is that which
sheds light on the operations and activities of the Independent Counsel. In asserting Exemptions
-10-
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6 and 7(C), we have determined that the individuals' privacy interests, and in particular, the
interests of Hillary Rodham Clinton, are not outweighed by any public interest in disclosure.
33. With respect to the potential invasion of personal privacy, all individuals are
Independent Counsel determines not to bring an indictment, the subject of the investigation has a
significant privacy interest in not being associated with any underlying criminal activity.
NARA's policy is not to release records from investigations ifthe records clearly identify people
who, although they may have been investigated, never faced criminal charges.
34. In this case, all the responsive documents relate to the Independent Counsel's
other individuals. The documents reflect numerous drafts and internal discussions as to how to
they might proceed; ultimately, however, an indictment against Mrs. Clinton was never issued.
Despite the role that Mrs. Clinton occupied as the First Lady during President Clinton's
administration, Mrs. Clinton maintains a strong privacy interest in not having information about
her from the files of the Independent Counsel disclosed. As an uncharged person Hillary
Rodham Clinton retains a significant interest in her personal privacy despite any status as a
public figure.
35. In its administrative appeal, plaintiff argued that these "privacy concerns are
overwhelmed by the public interest in such records," and that the "public interest in records
considering possible unlawful activity on [Hillary Rodham Clinton's] part far outweighs the
privacy interest of (b)(7)(C)." While there may be a scintilla of public interest in these
documents since Mrs. Clinton is presently a Democratic presidential candidate, that fact alone is
not a cognizable public interest under FOIA, as disclosure of the draft indictments would not
-11-
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shed light on what the government is up to. Moreover, the fact remains that the responsive
records were compiled for law enforcement purposes and no charges were brought. The release
of the responsive records could reasonably be expected to constitute a clearly unwarranted and
an unwarranted invasion of personal privacy, while revealing little or nothing about the workings
of the government. As a result, FOIA Exemptions 6 and 7(C) are fully applicable to the
Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true
and correct, and that Exhibits A through F are true and correct copies.
~({IJ{L~~ L&~
MARTHA WAGN'tR MURPHY
Chief, Special Access and FOIA Branch
Research Services Division
National Archives and Records Administration
College Park, Maryland
-12-
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. 15-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
EXHIBIT A
34
RGUSCA Case #16-5366
449, Records Document
ofIndependent #1668146
Counsel Filed: 03/28/2017
Kenneth StarrIRobert Page Thomas
Ray/Julie 38 of 421
12-13 Draft indictment without a caption, listing 6 pages (3 (b)(3), (b)(6), (b)(7)(C) Withheld in Full
overt acts. (Two identical copies) pages each)
14 Draft indictment with two pages of 24 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
handwritten notes
IS Draft indictment; contains some annotations 22 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
16 One-page memorandum with attached draft 37 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
indictment
17 Draft indictment; contains some annotations 37 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
18 Draft indictment 36 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
19 Draft indictment; contains some annotations 40 pages (b)(3), (b)(6), (b)(7)(C) Withheld in Full
35
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. 15-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
EXHIBITB
36
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Judicial
Watcli
Becaus.e no one
is above the law!
March 9, 2015
Tbe records inquestion are located in the material submitted to the National
Archives and Records Administration by the Office of Independent Counsel In Re:
Madison Guaranty Savings & Loan Association, also known as "the records onc Starr."
425 Third St., SW, Suite 800, Washington, DC 20024 <Tel: (202) 646-5172 or 1888593-8442
FAX: (202) 646-5199 Email: [email protected] www.JudiciaIWatch.org
37
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FOIA.'
The memo further provides that "The Freedom ofInformation Act should be
administered .With a clear presumpti6n: In the case of doubt, openness prevails."
For pUrposes of this request, the term ''record'' shall mean: (I) any written,
printed, or typed materlal. of any kind, including without limitation all correspondence,
meIi1oranda, notes, messages, letters, cards, facsimiles, papers, forms, telephone
mt;s~ages; diiuies, sch~les, calendars, chronological data, minutes, books, reports,
c~,li!M, l\ll'ig<;:rs, invoicC$, worksheets, receipts, returns, computer printouts, printed.
matter,pro~ectuses, statements, checks, statistics, surveys, affidavits, contracts, .
~met1t$, trarisbiil"t$,nuigazine or newspaper articles, or press releases~ (2) any
electroniealLy, magnetically, or mechanically stOred material of any kind, inclUding
Without limi~()ri~ electrQmc mail or e-mail; (J)anyaudio,aural,vi,sQal, or video
records,re<rdipg$, Of repre:;e:rrtlltions Qf any kind; (4) any graphic materi~!l and data
c()mpilatiQUS frolllWbiebinformation can be obtained; and (5) anyroaterials using other
.meaps of we~rVingtb,qJlghtor eXpression.
Judicial. Watch alilohereby requests a waiver of both sea,rch and duplication fees
p~\llll1tto5 U,~.(].552{li)(4)(A)(ii)(II) and (a)(4)(A)(i:(iJ JJldicial W~tch is entitled
to awaiver!)fSew:cb.feesllll.der 5 U.S~C. 552(a)(4)(A)(ii)(lI) because it is a member of
the news.rnjaCf.l'fdtioiiaISecufity Archive 'Ii. Department ofDeJense, 880 F.2d 1381,
1387{D.C. Cird9S9)(definingnews media within FOIA context). Judicial Watch has
also been I'llcogniZed asa member ofthe news media in other FOIA litigation. See, e.g"
JudiciuIWatch;Jm:. v. U.S. DepartmentojJustice, 133 F. Supp.2d 52 (D.D.C. 20(0);
and, Judicial Watch, Ji'Ic. v. Department ofDefense, 2006 U. S. Dist LEXIS 44003,. *1
(D.D.C. June 28,2006). Judicial Watch regularly obtains infonnation about the
operations aod activities of government through FOIA and other means, uses its editorial
skills to tnrn this information into distinct works, and publishes and disseminates these
works to the public. It intends to do likewise with the records it receives in response to
thistequest " ..'
Judicial Watch also is entitled to a complete waiver of both search fees and
duplication fees pursuant to 5 U.S.C. 5S2(a)(4)(A)(iii). Under this provision, records:
38
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at
shall be furnished without any charge or a charge
reduced below the fees established under clause (ii) if
disclosure of the information is in the public interest
because it is likely to contribute significantly to public
understanding of the operations or activities of government
and is not primarily in the commercial interest of the
requester.
5 U.S.C. 5S2(a)(4)(A)(iii),
In addition, if records are not produced within twenty. (20) business days, Judicial
Watch is entitled to a complete waiver of search and duplication fees under Section 6(b)
of the OPEN Govennnent Act of2007, which amended FOIA at 5 U.S.C.
(a)(4)(A)(viii).
In an effort to facilitate record production within the statutory time limit, Judicial
Jur1icial
Watch is willingto accept documents
docurnents tn electronic fonnat (e.g. e-mail, .pdfs). When
necessary, Judicial Watch will also accept the "rolling production" of documents.
If you do not understand this request or any portion thereof, or if you feel you
require clarification of this request or any portion thereof, please contact us immediately
at 202-646-5172 or kbailey@judicialwatch_org. We look forward to receiving the
39
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requested documents and a Waiver of both search and duplication costs within twenty
(20) business days. Thank you for your cooperation.
Sincerely,
~&iIu(
Kate Bailey
Judicial Watch
40
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. l5-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
EXHIBITC
41
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~
\( .
www.arthlns.sov ARCHIYES
March 19,2015
Kate Bailey
Judicial Watch
425 Third Street, SW, Suite 800
Washington, DC 20024
This is in response to your Freedom of Information Act request of March 17,2015 for
records in the custody of the National Archives and Records Administratie.fl, YouI' request
was received in this office on March 17, 2015 and assigned FOIA case number 46068.
You requested Independent Counsel Kenneth Starr records related to several versions of
indictments of Hillary Clinton.
We have examined the folders from Hickman Ewing's attomey files that you requested.
From box 2250 the folder "Draft Indictment" (38 pages) is denied in full under EXemption
(b)(7)(C). From box 2256 the folder "Hillary Rodham ClintonlWebster L. Hubbell Draft
Indicment" (approximately 200 pages) is denied in full under Exemption (b)(7)(C).
You requested a waiver for reproduction fees ordinarily charged to researchers, however,
records transferred to the custody of the Natiomil-!\rchivEls are exempted from th'efee and'
fee waiVer provisions of the Freedom of Information'Act bEicausEdhere was a fee .
schedule in place prior to ena.ctment of the ForA. The applicable sectio'n states that
"nothing in this subparagraph shall supersede feeS chargeable under a statute specifically
providing for setting the level of fees for particular types of records" (5 U.S.C. 552
(a)(4)(A)(vi. The relevant fee statute authorizes the National Archives "to charge a fee
for making or authenticating copies or reproductions of materials transferred to the
Archivisfs custody: (44U.S.C. 2116(c.
The in<ibility to grant the requested fee waiver doesnot 'COnstitute a denial under the
terms of the Freedom of Information Act. However, if you consi,der this response to be a
denial of your request, or if you wish to appeal the document denials, you may appeal my
decision within 60 calendar days from the date of this letter. Appeals must be submitted in
writing and addressed to the Deputy Archivist of the United States, National Archives and
Records Administration, 8601 Adelphi Road, Room 4200, College Park, MD 20740. In
your letter, please cite your case number and clearly label both the letter and envelope as
a FOIA Appeal. As an alternative, you may e-mail your appeal to [email protected]. If yqu
choose this option, please use the Words "F01A appeal" in tHe subject line and also cite
your case number. . ,.
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This concludes the processing of your requesllfyou have any question about the way
we handled your request, or about our FOIA regulations or procedures, please contact
David Paynter at [email protected] (301) 837-2041.-
Sincerely,
NATIONAL ARCHIVES d -
RECORDS-ADMINISTRATION
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. 15-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
EXHIBITD
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NATIONAL
ARCHIVES
October 16, 2015
This is to advise you that your adinifiistrtt,tive appeal, dated May 14, 2015, from the initial decision of
the Special Access arid FOIA Staff, was receiwdby this office on behalf of the Deputy Archivist of
the United States on May 14, 2015. Your appeal has been assigned number NGCI5-07IA. We .
apologize for our delay in acknowledging your administrative appeal.
The Deputy Archivist of the United States has the reSponsibility to 3.djudicate such appeals. We
regret any delay in responding to your aPpeal. In an attempt to afford each appellant equal and
impartial treatment, we have adopted a general practice ofassigning appeals in the approximate order
of receipt, As Stated above, your appeal has been assigned uUItlber NGC15-01IA. Please provide
this ninnber in any future correspondence to this office regarding this matter. Please note, if you
provide an e-mail addressor anothet electronic means ofcolbtnunicationwithyour appeal, this office
may respond to you electronically even if yoU submitted your appeal via regular U.s. Postal Service.
We will notify you of the decision on your appeal as soon as we can. If you have any questions ..
about the status of your appeal, you may contact me at the number and/or email below. lf you have
through the FOIAonline electronic portal, you may also obtain an update on
appeaithrough
submitted your appeal
the status ';fyouf appeal by logging into your FOUanlrn accolffit
\~~~~
"""""--"''-~~
A. SCANLON
Officer
Office of General CoUnsel
(301) 837-0583
[email protected] .
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)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. lS-CV-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
EXHIBITE
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NATIONAL
ARCHIVES
December 4,2015
This is in response to your Freedom of Information Act (FOIA) letter in which you appeal the
initial decision of the Special Access and ForA Staff regarding your ForA request, RD 46068,
which asked for access to accessioned records within the holdings of the National Archives and
Records Administration (NARA).
I have been informed that you filed a lawsuit in the United States District Court for the District
of Columbia conceruing
concerning NARA's initial decision in this matter. As a result, and in accordance
with 36 C.F.R. 12S0.74(a)(2), I am closing your appeal file now that your request is the subject
of a FOIA lawsuit.
Siricerely
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Defendant, the National Archives and Records Administration (NARA), hereby states
pursuant to LCvR 7(h)(1) that no genuine issue exists as to the following material facts:
1. NARA maintains custody of the records of the independent counsels who served
under Title VI of the Ethics in Government Act of 1978. Decl. of Martha Wagner Murphy 15.
2. The records maintained by NARA include the records of Kenneth W. Starr and his
3. Mr. Starr served as an independent counsel under Title VI from 1994 until 1999; his
4. Included among the records of Mr. Starr and his successors are drafts of a proposed
5. The records of Mr. Starr and his successors fill approximately 3149 cubic feet of space
6. An index to those records was prepared by the second and last of Mr. Starrs
successors and her staff in connection with the transfer of the records to NARA. Id.
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7. A copy of that index was provided to plaintiff, Judicial Watch, by NARA in May
8. By letter dated March 9, 2015, plaintiff submitted a request to NARA under the
Freedom of Information Act (FOIA), 5 U.S.C. 552, for the following records:
All versions of indictments against Hillary Rodham Clinton, including, but not
limited to, Versions 1, 2, and 3 in box 2250 of the Hickman Ewing Attorney Files,
the HRC/__Draft Indictment in box 2256 of the Hickman Ewing Attorney Files,
as well as any all versions written by Deputy Independent Counsel Hickman
Ewing, Jr. prior to September of 1996.
Id. 6.
9. Hickman Ewing was a lawyer who worked as Kenneth Starrs deputy in Little Rock.
Id. 6 n.2.
10. Plaintiff said in its request that [t]he records in question are located in the material
submitted to [NARA] by the Office of Independent Counsel In Re: Madison Guaranty Savings &
11. NARA responded to plaintiffs request by locating the two boxes in the records of
Mr. Starr and his successors to which the request referred, Boxes 2250 and 2256. Id. 20-21.
12. Both boxes bear the name, Hickman Ewing Attorney Work Product; both boxes
bear the heading HRC, the initials of Hillary Rodham Clinton; and both boxes state on their
face that their contents include material subject to Rule 6(e) of the Federal Rules of Criminal
14. Box 2256 contains a folder labelled Hillary Rodham Clinton/Webster L. Hubbell
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15. Multiple drafts of the proposed indictment of Mrs. Clinton were located by NARA
16. NARA also responded to plaintiffs FOIA request by search[ing] the Box
Contents and Subject fields [of the index to the records of Mr. Starr and his successors] to
identify any other folders that could contain Indictment and Hillary Rodham Clinton or
17. This search did not locate any other responsive folders. Id.
18. Each of the drafts of the proposed indictment that NARA located is marked on its
face as a draft; is denominated as a draft in accompanying cover memos; or shows through its
19. Some of the drafts contain marginalia or annotations; some are identical duplicates of
each other; some are non-identical duplicates; some are accompanied by cover memos; some are
accompanied by handwritten notes on separate pieces of paper; and some are accompanied by
20. One of the drafts consists merely of scraps of a draft indictment. Id.
21. NARA is withholding each of the drafts in full pursuant to FOIA Exemption 3 and
Rule 6(e), id. 25, and, separately, pursuant to FOIA Exemptions 7(C) and 6. Id. 35.
22. No indictment of Mrs. Clinton was ever issued, id. 34, and no charges against her
23. By letter dated March 19, 2015, NARA advised plaintiff that it had examined the
folders from Hickman Ewings attorney files that you requested and was withholding the
following records in full pursuant to FOIA Exemption 7(C): From box 2250 the folder Draft
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Indictment (38 pages) . . . From box 2256 the folder Hillary Rodham Clinton/Webster L.
24. The records to which NARA referred in its letter included records other than drafts
25. By letter dated May 14, 2015, plaintiff appealed administratively the withholding of
26. By letter dated October 16, 2015, NARA advised plaintiff that its administrative
appeal had been placed into the processing queue. Id. 10.
27. On October 20, 2015, plaintiff commenced this action. Id. 11.
Respectfully submitted,
BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General
CHANNING D. PHILIPS
United States Attorney
ELIZABETH J. SHAPIRO
Deputy Director
s/ David M. Glass
DAVID M. GLASS, DC Bar 544549
Senior Trial Counsel
Department of Justice, Civil Division
20 Massachusetts Ave., N.W., Room 7200
Washington, D.C. 20530-0001
Tel: (202) 514-4469/Fax: (202) 616-847
Dated: February 2, 2016 E-mail: [email protected]
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EXHIBIT 1
to
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1. I am counsel for Judicial Watch, Inc. (Judicial Watch), Plaintiff in the above-
captioned matter. I also am an officer and director of Judicial Watch, and, as such, have personal
2. The following five (5) reports are publicly available on the U.S. Government
Code=GPO&browsePath=Independent+Counsel+Investigations%2FLewinsky&isCollapsed=tru
e&leafLevelBrowse=false&isDocumentResults=true&ycord=191:
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I am familiar with these reports based on my prior work at Judicial Watch and also reviewed the
reports in the course of my representation of Judicial Watch in this litigation. Each report
contains enormous quantities of investigative materials, including grand jury testimony. Each
report also appears to have been approved for publication by the U.S. Court of Appeals for the
District of Columbia Circuit (D.C. Circuit) pursuant to Section 594(h), Title 28 of the United
States Code.
become familiar with the January 5, 2001 Final Report of the Independent Counsel in In re
Madison Guaranty Savings and Loan Association (Final Report). In particular, I reviewed
Chapter 3 of Volume II, Part B of the January 5, 2001 Final Report, entitled Mrs. Clintons
Madison Guaranty Representation. A true and correct copy of Volume II, Part B, Chapter 3 of
the January 5, 2001 Final Report is attached to Plaintiffs Statement of Undisputed Material
sources of information relied on, cited, and quoted in the chapter. A true and correct copy of the
chart, entitled January 5, 2001 Final Report Sources of Information is attached hereto as
Exhibit A. The chart differentiates between non-grand jury information, grand jury information,
and documentary evidence. Each entry also includes a reference to the page(s) in the chapter
where the citation was found. As the chart demonstrates, Chapter 3 cites, references, and quotes,
-2-
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in some cases extensively, from as many as 44 different, non-grand jury sources of information,
not including numerous individual documents, gathered from various investigations. These non-
deposition testimony;
trial testimony;
congressional testimony;
regulatory reports;
media reports;
The chapter also cites, references, and quotes grand jury testimony from at least 25 grand jury
request to the National Archives and Records Administration (Archives) seeking access to a
binder of materials prepared by the Office of the Independent Counsel (OIC), as referenced in
The Death of American Virtue: Clinton vs. Starr (Broadway Books 2011) by Ken Gormley. The
6. Among the records produced by the Archives to Judicial Watch in response to the
June 2014 FOIA request was a 206-page memorandum, dated April 22, 1998, to All OIC
Attorneys, from the HRC Team and bearing the subject line Summary of Evidence: Hillary
-3-
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Rodham Clinton and Webb Hubbell. A true and correct copy of the memorandum is attached to
Judgment as Exhibit 3.
the Archives and, based on that review, prepared a second chart identifying the various sources
of information cited, referenced, and quoted in the memorandum. A true and correct copy of this
second chart, entitled April 22, 1998 Summary of Evidence Memorandum Sources of
Information; Non-Exhaustive is attached hereto as Exhibit B. Like the chart I prepared for
Volume II, Part B, Chapter 3 of the January 5, 2001 Final Report, this second chart differentiates
between non-grand jury information, grand jury information, and documentary evidence. Each
entry also includes a reference to the page(s) in the memorandum where the citation was found.
Because the memorandums citations are in different formats (e.g. GJ, G.J., vs. Grand Jury
and Deposition vs. Dep.) and I searched the memorandum electronically in preparing the chart,
I am not confident that I was able to identify all of the relevant citations in the memorandum.
The information I was able to gather nonetheless demonstrates that the memorandum cites,
references, and quotes from many of the same, non-grand jury sources of information cited in
Volume II, Part B, Chapter 3 of the January 5, 2001 Final Report. It also cites, references, and
quotes from a great many additional sources, including as many as 12 separate FBI 302s.
Although not an exhaustive count, it also cites, references, and quotes testimony from at least 34
grand jury appearances by some 27 witnesses between 1995 and 1998, including 12 witnesses
not referenced in Volume II, Part B, Chapter 3 of the January 5, 2001 Final Report. Id.
unredacted, is available to the public on Judicial Watchs website along with the other records
-4-
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produced by Archives in response to Judicial Watchs June 2014 FOIA request. Judicial Watch
did not pursue an administrative appeal of the Archives relatively few number of redactions for
reasons unrelated to whether Judicial Watch believes those redactions have merit.
All versions of indictments against Hillary Rodham Clinton, including but not
limited to Versions 1, 2, and 3 in box 2250 of the Hickman Ewing Attorney Files,
the HRC/___ Draft Indictment in box 2256 of the Hickman Ewing Attorney
Files, as well as any and all versions written by Deputy Independent Counsel
Hickman Ewing, Jr. prior to September of 1996.
10. On March 5, 2016, I performed a simple google search using the words Starr
Report. The search yielded 13,200,000 search results. A google search for Hillary Clinton
11. Judicial Watchs efforts to gain access to the draft indictments has been the
subject of news reports by CNN, Politico, The New York Post, Investors Business Daily, The
National Review, and even the United Kingdoms Daily Mail. See, e.g., Eric Bradner, Judicial
Watch sues for draft Whitewater indictments of Hillary Clinton, CNN (Oct. 20, 2015); Josh
Gerstein, Feds fight disclosure of Hillary Clinton Whitewater indictment drafts, Politico (Feb.
3, 2016); John Crudle, Skeletons in Hills closet are ready to rumble, New York Post (Feb. 16,
2016); Whitewater Indictment Haunts Hillary All the Way to Benghazi, Investors Business
Daily (Oct. 21, 2015); Brendan Bordelon, Lawsuit: Obama Administration Withholding Draft
of Clinton Whitewater Indictment, National Review (Oct. 20, 2015); and J. Taylor Rushing,
//
//
//
-5-
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"Indictment drafted against Hillary Clinton 20 years ago in Whitewater scandal must be
I1declare under penalty of perjury that the foregoing is true and correct. Executed on
ofpeIjury
~
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EXHIBIT A
to
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I. Non-Grand Jury.
4. Clinton, Hillary, April 22, 1995 Deposition Testimony (Report at 431-434, 435-
5. Clinton, Hillary, May 24, 1995 RTC Interrogatory Responses (Report at 437)
6. Clinton, Hillary, January 20, 1996 RTC Interrogatory Responses (Report at 483,
7. Clinton, Hillary, February 14, 1996 RTC/FDIC Interview (Report at 437-39, 470,
8. Clinton, Hillary, April 25, 1998 Deposition Testimony (Report at 430-431, 439-
9. Clinton, William J., April 22, 1995 Deposition Testimony (Report at 420 and 421)
10. Clinton, William J., April 28, 1996 Deposition Testimony (Report at 421-22)
11. Clinton, William J., April 28, 1996 Testimony at Jim McDougals criminal trial
(Report at 420)
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18. Hubbell, Webster, February 1, 1995 Interview (Report at 454 and 458)
19. Hubbell, Webster, October 26, 1995 Senate Whitewater Committee Testimony
(Report at 489)
22. Kennedy, William, January 16, 1996 Senate Whitewater Committee Testimony
(Report at 460)
23. Knight, David, May 16, 1996 Senate Whitewater Committee Testimony (Report
24. Latham, John, February 14, 1995 Interview (Report at 425 and 453)
25. Latham, John, May 15, 1996 Senate Banking Committee Testimony (Report at
26. Latham, John, May 15, 1996 Senate Whitewater Committee Testimony (Report at
27. Latham, John, May 16, 1996 Senate Whitewater Committee Testimony (Report at
28. Latham, John, July 12, 1995 RTC Interview (Report at 453)
29. Massey, Rick, January 11, 1996 Senate Whitewater Committee Testimony
30. McDougal, Jim, May 8, 1996 Criminal Trial Testimony (Report at 414, 415, 416
and 417)
-2-
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31. McDougal, Jim, June 22, 1995 Interview (Report at 417 and 422)
32. McDougal, Jim, August 96-June 97 Interview (Report at 415, 416, 417, 418, 419,
33. Moles, Rae Ann, August 4, 1994 and February 9, 1995 Interview (Report at 425-
26)
35. Schaufele, Mike, May 27, 1988 Deposition Testimony (Report at 472)
36. Ward, Seth, February 12, 1996 Senate Whitewater Testimony (Report at 470)
37. Pillsbury Madison & Sutro, LLP, A Report on Certain Real Estate Loans and
Instruments Made by Madison Guaranty Savings & Loan and Related Entities: Prepared for
38. Pillsbury Madison & Sutro LLP, A Supplemental Report on the Representation
of Madison Guaranty Savings & Loan by the Rose Law Firm: Prepared for Federal Deposit
40. Frantz, Rempel, Fallout form Collapse of S&L Shadows Clinton, Los Angeles
41. Maraniss, David and WeissKopf, Michael, Lawyer Will Review Arkansas Land
43. Prime Time Live: Diane Sawyer Interview of Susan McDougal (ABC Television,
-3-
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44. Larry King Live: Larry King Interview of Susan McDougal (CNN, September 6,
1. Bunch, Gary, January 20, 1998 Grand Jury Testimony (Report at 462)
3. Clinton, Hillary, January 26, 1996 Grand Jury Testimony (Report at 428-30 and
491)
4. Denton, Don, August 20, 1996 Grand Jury Testimony (Report at 472, 474, 475,
5. Denton, Don, March 19, 1998 Grand Jury Testimony (Report at 482)
7. Giroir, Joe, July 18, 1996 Grand Jury Testimony (Report at 436, 456, and 460)
8. Gregory, Watt, January 3, 1996 Grand Jury Testimony (Report at 459 and 460)
9. Handley, Sarah, October 31, 1995 Grand Jury Testimony (Report at 427)
10. Henley, William, June 18, 1996 Grand Jury Testimony (Report at 422 and 423)
11. Hubbell, Webster, December 19, 1995 Grand Jury Testimony (Report at 457, 458,
and 491)
12. Hubbell, Webster, May 7, 1996 Grand Jury Testimony (Report at 455 and 473)
13. Hubbell, Webster, August 22, 1996 Grand Jury Testimony (Report at 471-72)
14. Knight, David, December 6, 1995 Grand Jury Testimony (Report at 457)
15. Lynch, Loretta, February 1, 1996 Grand Jury Testimony (Report at 453 and 454)
16. Massey, Rick, November 7, 1995 Grand Jury Testimony (Report at 449, 450, 456,
-4-
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17. Massey, Rick, December 3, 1997 Grand Jury Testimony (Report at 449, 450, 451,
and 454)
18. McDougal, Jim, April 2, 1997 Grand Jury Testimony (Report at 415, 416, 417,
19. Moles, Rae Ann, October 19, 1995 Grand Jury Testimony (Report at 426 and
427)
20. Randoph, R.D., September 17, 1996 Grand Jury Testimony (Report at 427)
21. Schaufele, Mike, January 30, 1996 Grand Jury Testimony (Report at 482 and 495)
22. Selig, John, July 18, 1996 Grand Jury Testimony (Report at 466)
23. Thomases, Susan, February 29, 1996 Grand Jury Testimony (Report at 454)
24. Tucker, Jim Guy, March 18, 1998 Grand Jury Testimony (Report at 467 and 482)
25. Ward, Seth, January 17, 1996 Grand Jury Testimony (Report at 470 and 482)
Report at 419, 420, 430, 431, 436, 439-40, 441, 444, 449, 452, 453-54, 454, 463, 466,
469, 470, 471, 473, 474, 475, 478, 480, 481, 482, 483, and 490.
-5-
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EXHIBIT B
to
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I. Non-Grand Jury.
3. Breslaw, April, July 28, 1994 Senate Banking Committee Deposition Testimony
(Memo at 55)*
8. Castleton, Thomas, June 27, 1995 Senate Deposition Testimony (Memo at 102)*
10. Clinton, Hillary, April 22, 1995 Deposition Testimony (Memo at 24)
11. Clinton, William J., April 22, 1995 Deposition Testimony (Memo at 31)
13. Hubbell, Webster, August 10, 1995 House Banking Committee Testimony
14. Hubbell, Webster, December 1, 1995 Senate Testimony (Memo at 55 and 63)*
15. Hubbell, Webster, February 7, 1996 Senate Testimony (Memo at 58 and 61)
16. Latham, Rick, May 15, 1996 Senate Deposition Testimony (Memo at 37)
* Indicates source was not included in Chapter 3, Vol. II, Part B of 2001 Final Report.
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17. Latham, Rick, May 16, 1996 Senate Hearing Testimony (Memo at 37)
18. Margolis, David, August 10, 1995 Senate Hearing Testimony (Mem at 98)*
19. Massey, Rick, January 11, 1996 Senate Hearing Testimony (Memo at 24 and 33)
20. Neuwirth, Steve, July 10, 1995 Senate Deposition Testimony (Memo at 101)*
21. Salter, FNU, June 30, 1995 Deposition Testimony (Memo at 98)*
22. Thomases, Susan, August 8, 1995 Senate Hearing Testimony (Memo at 101)*
23. Vernon, Jordan, July 24, 1997 House Testimony (Memo at 161, 162 and 163)*
75)*
3. Breslaw, April, June 16, 1994 Grand Jury Testimony (Memo at 51)*
5. Clark, Ron, March 30, 1994 Grand Jury Testimony (Memo at 23)*
7. Donovan, Rick, January 6, 1998 Grand Jury Testimony (Memo at 56, 69, 70 and
72)*
8. Donovan, Rick, January 21, 1998 Grand Jury Testimony (Memo at 56, 59 and
66)*
9. Giroir, Joe, July 18, 1996 Grand Jury Testimony (Memo at 15, 24 and 38)
10. Gregory, Watt, January 3, 1996 Grand Jury Testimony (Memo at 40)
* Indicates source was not included in Chapter 3, Vol. II, Part B of 2001 Final Report.
-2-
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11. Handley, Sarah, October 31, 1995 Grand Jury Testimony (Memo at 32)
12. Henley, William, June 18, 1996 Grand Jury Testimony (Memo at 27)
13. Heuer, Sam, April 1, 1997 Grand Jury Testimony (Memo at 70 and 71)*
14. Heuer, Sam, October 8, 1997 Grand Jury Testimony (Memo at 70)*
15. Heymann, Phillip, June 13, 1995 Grand Jury Testimony (Memo at 97 and 98)*
16. Hubbell, Webster, December 19, 1995 Grand Jury Testimony (Memo at 23 and
90)
17. Hubbell, Webster, August 22, 1996 Grand Jury Testimony (Memo at 65)
18. Kennedy, Gail, January 24, 1995 Grand Jury Testimony (Memo at 96)*
19. Kumpe, Peter, February 3, 1998 Grand Jury Testimony (Memo at 69 and 77)*
20. Lynch, Loretta, February 1, 1996 Grand Jury Testimony (Memo 79, 80, 81, 82
and 83)
21. Margolis, David, June 14, 1995 Grand Jury Testimony (Memo at 98)*
22. Massey, Rick, November 7, 1995 Grand Jury Testimony (Memo at 33, 37 and 38)
23. Massey, December 3, 1997 Grand Jury Testimony (Memo at 89 and 90)
24. McDougal, James, April 2, 1997 Grand Jury Testimony (Memo at 15)
25. McLarty, Mack, April 17, 1997 Grand Jury Testimony (Memo at 156, 157 and
158)*
26. Moles, Rae Ann, October 19, 1995 Grand Jury Testimony (Memo at 31)
27. Neuwirth, Steve, February 28, 1995 Grand Jury Testimony (Memo at 97 and
101)*
28. Neuwirth, Steve, April 2, 1996 Grand Jury Testimony (Memo at 101)*
29. Nussbaum, Bernard, June 13, 1995 Grand Jury Testimony (Memo at 97)*
* Indicates source was not included in Chapter 3, Vol. II, Part B of 2001 Final Report.
-3-
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30. ONeill, Henry, June 6, 1995 Grand Jury Testimony (Memo at 97)*
31. Sloan, Cliff, April 4, 1995 Grand Jury Testimony (Memo at 97)*
32. Thomases, Susan, February 29, 1996 Grand Jury Testimony (Memo at 40, 84, 86,
87 and 88)
33. Ward, Seth, January 17, 1996 Grand Jury Testimony (Memo at 11)
34. Ward, Seth, January 21, 1998 Grand Jury Testimony (Memo at 76)*
8. McDougal, Jim (Memo at 15, 18, 21, 22, 27, 28, 29 and 30)*
* Indicates source was not included in Chapter 3, Vol. II, Part B of 2001 Final Report.
-4-
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EXHIBIT 2
to
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PART B
Chapter 3:
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I. INTRODUCTION
Mrs. Clinton represented Madison Guaranty between April 1985 and July 1986, a time
when the institution was in severe financial trouble and when insiders committed numerous
criminal and otherwise fraudulent acts. The most serious of those fraudulent and criminal acts
are the subject of Chapter 1 of this Part. Several individuals were eventually convicted of or
pleaded guilty to federal crimes for their roles in connection those transactions. As Chapter 1
showed, Mrs. Clinton represented Madison Guaranty in regard to some of the fraudulent
transactions, and Madison Guaranty insiders used and misused her legal services to thwart
federal examiners.
After July 14, 1986, when federal regulators had demanded that the McDougals be
removed from control of Madison Guaranty and Mrs. Clinton ended Madison Guaranty's retainer
arrangement, it was clear that the insiders had engaged in substantial misconduct, including
possibly having committed crimes. The Clintons' association with the McDougals, and in
political liability. Moreover, Mrs. Clinton's representation of Madison Guaranty could have been
a civil liability for Mrs. Clinton and the Rose Law Firm.
Rose, and in particular Webster Hubbell, also represented Madison Guaranty and its
conservators, the FDIC and the RTC, beginning in 1989. Hubbell concealed numerous potential
conflicts of interest from the FDIC and RTC during that representation. That representation and
Hubbell's acts of concealment are discussed in Chapter 2 of this Part. Hubbell eventually
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When Governor Clinton ran for president in 1992, Mrs. Clinton's representation of
Madison Guaranty, including how the representation had come about, became matters of public
inquiry. At that time, Madison Guaranty had failed, a failure that ultimately cost the American
tax payers about $73 million. Mrs. Clinton and the Clinton campaign made public statements
After 1993, the conduct of insiders at Madison Guaranty and the Rose Law Firm became
the subject of multiple federal investigations. The RTC investigated whether insiders had
committed criminal acts, and also examined whether the agency had viable civil claims against
any insiders or professionals who had represented Madison Guaranty, including the Rose Law
Firm. Also, the FDIC and RTC investigated whether Rose attorneys had concealed potential
conflicts of interest from the agencies. The FBI and the United States Department of Justice also
conducted criminal investigations of the conduct of the Madison Guaranty insiders and others,
including Rose attorneys, who had been associated with the institution. Beginning in 1994, those
In the course of the federal investigations, Mrs. Clinton made numerous statements and
gave sworn testimony regarding her representation of Madison Guaranty. This Office
investigated whether Mrs. Clinton had committed perjury, made false statements, or obstructed
justice during those investigations. The Independent Counsel concluded that there was
insufficient evidence to prove beyond a reasonable doubt that Mrs. Clinton had committed any
federal criminal offense. While the evidence did show that some of Mrs. Clinton's statements
had been factually inaccurate, the evidence did not establish beyond a reasonable doubt that she
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knew that they were factually inaccurate when she made them.
This Chapter details the results of the investigation of Mrs. Clinton's statements regarding
II. ANALYSIS
In April 1985, Madison Guaranty retained the Rose Law Firm, and that relationship
continued until July 1986, when the federal regulators removed the McDougals from Madison
Guaranty and Mrs. Clinton terminated the retainer. The circumstances leading to Rose's being
retained were later disputed by the individuals involved -- Jim McDougal stated that he hired
Rose and Mrs. Clinton as a favor to Governor Clinton, while Mrs. Clinton stated that Madison
Guaranty hired Rose because a Rose associate, Rick Massey, was a friend of Madison Guaranty's
numerous federal bodies, including this Office, the FDIC, the RTC, and Congressional
committees. The FDIC and RTC investigation included determining whether Madison
Guaranty's retaining Rose had been proper, or whether it had caused any losses to the institution.
This Office's investigation included determining whether anyone had committed perjury, made a
The principals involved in the retention disagreed as to how it came about. Jim
McDougal said he hired Rose as a favor to Governor Clinton. Mrs. Clinton said Rick Massey
brought in the work and her only role was to collect on an old bill still owed by Madison Bank
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and Trust, McDougal's other institution. President Clinton said he could not remember asking
McDougal to give his wife business, but did not say that McDougal's recollection was false.
Massey testified he did not remember bringing Madison Guaranty to Rose, asking Mrs. Clinton
to act as billing partner, or discussing McDougal's unpaid bill. Massey said that when partner
David Knight had asked Latham for business, Latham said he wanted to give Knight and Massey
the business, but Jim McDougal hired Madison Guaranty's lawyers. Latham said McDougal was
satisfied with Madison Guaranty's principal counsel, Mitchell Williams, which was the firm of
Documents establish that some of Mrs. Clinton's statements were factually inaccurate.
Mrs. Clinton stated that in April 1985, Rick Massey tried to bring Madison Guaranty to Rose as a
client, but was told by some partners that he could not do so until McDougal agreed to pay the
outstanding bill owed to Rose by Madison Bank and Trust. Mrs. Clinton stated that on April 23
she arranged for McDougal to have the old bill paid so that Massey could bring Madison
Guaranty in as a client. That statement was factually incorrect. The evidence uncovered by this
Office conclusively established that the old bill had been settled in October 1984, six months
before Mrs. Clinton's supposedly having arranged for it to be paid. In October 1984, Madison
Bank and Trust paid $5,000 of the outstanding balance of $5,893. Rose never attempted to
collect the remaining $893, and Madison Bank and Trust never paid it; the understanding was
apparently that the $5,000 payment was a final settlement of the debt.
Although the evidence thus conclusively established that Mrs. Clinton's statements had
been to some extent factually inaccurate, the Independent Counsel concluded that the evidence
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did not establish beyond a reasonable doubt that Mrs. Clinton knew the statements were factually
Jim McDougal said Rose hired Madison Guaranty after Governor Clinton jogged by
Madison Guaranty early one morning in August or September 1984, and sat in a new leather
chair in McDougal's office, leaving a sweat stain. Governor Clinton had complained about Mrs.
Clinton's earnings at Rose. McDougal offered to send her some legal work, putting Rose on
retainer of $2,000 per month. Mrs. Clinton came by McDougal's office later that day to finalize
the arrangement.
McDougal's version of events -- sometimes called the "jogging incident" -- was first
reported by the national media during the 1992 Presidential campaign. McDougal related the
incident to Jeff Gerth, but it was excluded from Gerth's initial article by his editors. But other
articles soon reported McDougal's story within the next few weeks, and Madison Guaranty's
McDougal's initial statements to the press during the '92 campaign were consistent with
his later sworn testimony and statements to this Office about the retainer. There were some
inconsistencies in the details of McDougal's recollection, and McDougal conceded at his 1996
criminal trial that his memory of the specifics of the jogging incident may have become
jumbled.1735
1735
Tr. at 7299, United States v. McDougal et al., No. LR-CR-95-173 (E.D. Ark. May 8,
1996) (testimony of James McDougal) ("I've been asked about it so many hundreds of times, it's
414
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Regarding the time that the jogging incident happened, McDougal said Governor Clinton
jogged to McDougal's office between 6:00 a.m. and 7:00 a.m. one morning near the end of
August, or the first part of September 1984, but before Madison Bank & Trust's September 25
board meeting.1736 McDougal said he and Susan McDougal's brother Bill Henley were at the
I remember it was very early in the morning, or early for office hours, probably
about 6:30. My brother-in-law and I were down at the office trying to catch up on
the paperwork because we were running such a huge volume of sales at these
various subdivisions. And we were in there very early, and the governor came by
obviously jogging. He was wearing jogging clothes and was -- you know, it was
hot weather. He was sweating.1738
McDougal placed the date of the jogging incident using three events: 1) he said it
happened soon after he received a leather chair, which Susan McDougal gave him as a birthday
gift on August 25, 1984;1739 2) McDougal said it happened four to five months before Rose did
work for Madison Guaranty in front of the Arkansas Securities Department -- work Rose started
415
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April 23, 1985;1740 and (3) McDougal said it happened before an April 5, 1985 fundraiser
McDougal said he was annoyed when Governor Clinton stained his chair because
McDougal had just received it as a birthday gift from his wife.1742 McDougal described the event
I had this new chair that Susan had just given me that was expensive because it
was designed to take care of a back problem. And he plopped down in that chair,
and when he got up, the outline of his body was there in sweat.1743
On how the topic of Rose's and the Clintons' finances came up, McDougal said he
casually asked Governor Clinton how things were going, and Governor Clinton responded that
Well, I think we had . . . just the general polite conversation you usually have
among friends, you know. But when I said, "How are y'all doing," he said that
they weren't doing too well because they had run into some kind of big expense at
the Rose Law Firm which had cut down on Mrs. Clinton's income. I don't
remember what it was.1744
1740
Id. at 11.
1741
Id.
1742
Id. at 10; J. McDougal 4/2/97 GJ at 99:
Q. Now, at some point, have you made a statement that the President actually
sweated on your new chair?
A. Well, that's why it kindly burned at my mind, because the chair was brand new
and he was sweating pretty profusely. So when he got up, I had a salty outline of
Bill Clinton on my new chair.
J. McDougal 4/2/97 GJ at 99; see also Tr. at 7299, United States v. McDougal et al.,
1743
416
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McDougal said he asked Governor Clinton if it would help if Madison Guaranty sent
work to Hillary,1745 and agreed to when Governor Clinton said yes.1746 At his 1996 criminal trial,
McDougal testified that after hearing about Rose's problems, "I said to Bill something to the
effect of, 'We're needing more legal work. Would it help Hillary if we gave some of the work to
On the $2,000 monthly retainer, McDougal said though he had never paid a retainer, he
suggested the retainer and the $2,000 monthly amount when he spoke with Mrs. Clinton after the
meeting with Bill Clinton.1748 McDougal also remembered telling John Latham, then president of
at the Rose Law Firm"). McDougal did, however, at one point suggest that Governor Clinton,
not McDougal, initiated the conversation about financial problems. J. McDougal 6/22/95 Int. at
6-7 ("Clinton came in claiming he had financial problems"). When asked about the notes from
his 1995 interview during his 1996 criminal trial, McDougal said the notes were wrong:
"[Governor Clinton] did not specifically raise the question of needing money or elaborate beyond
responding to what I asked him. . . . I did not say [in the '95 interview] that Clinton came in
claiming he had financial problems." Tr. at 7300-02, United States v. McDougal, et al., No. LR-
CR-95-173 (E.D. Ark. May 8, 1996) (testimony of James McDougal); see also Rempel Frantz,
Fallout from Collapse of S&L Shadows Clinton, L.A. Times, Nov. 7, 1993, at A17 (McDougal
quoted saying, "I hired Hillary because Bill came in whimpering they needed help").
J. McDougal 8/96-6/97 Int. at 9. McDougal says Madison Guaranty's retainer of Rose
1745
had nothing to do with the Clintons' needing money to meet any obligation related to
Whitewater. Id. at 12.
1746
J. McDougal 6/22/95 Int. at 7; J. McDougal 8/96-6/97 Int. at 9.
1747
Tr. at 7298, United States v. McDougal et al., No. LR-CR-95-173 (E.D. Ark. May 8,
1996) (testimony of James McDougal); see also J. McDougal 4/2/97 GJ at 98 ("And I said,
'Would it help Hillary if we gave her some of this legal work,' and he said, 'Yes'").
1748
J. McDougal 8/96-6/97 Int. at 10; J. McDougal 4/2/97 GJ at 98-99 (McDougal did not
agree with Governor Clinton on the amount of the retainer). But see Rempel Frantz, Fallout
from Collapse of S&L Shadows Clinton, L.A. Times, Nov. 7, 1993, at A17 ("I asked him how
much he needed, and [Governor] Clinton said 'about $2,000 a month,' McDougal said"); J.
McDougal 8/96-6/97 Int. at 10 ("McDougal could not initially recall whether he or Hillary
417
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Madison Guaranty, to write a $2,000 check to Rose the same day as McDougal's meeting with
Mrs. Clinton.1749 McDougal could not explain why Rose's first retainer check was issued in May
Finally McDougal said Mrs. Clinton came to Madison Guaranty about an hour after Bill
Q. And [after Bill Clinton's visit] did you then talk to Mrs. Clinton?
A. Yes, sir. She came by, I would say, about between 8:00 and 8:30. It was
before the opening of business. She came by and said, "Bill asked me to
stop, said you wanted to visit about some legal work or whatever."
Q. And did you agree with her to give her and the Rose Law Firm some legal
work?
A. Yes, sir.
Q. And was this as a result of the President . . . or the governor at the time
and you having a conversation earlier in the day?
A. Yes, sir.1752
McDougal requested Latham to prepare a $2,000 check to Rose for the first month's retainer.
McDougal never saw the check that he instructed Latham to prepare. If Latham did not prepare
the check on the day of Hillary Clinton's visit, then Latham failed to follow his instruction").
1750
Id. at 11 ("McDougal was informed that the first retainer check to Rose was not
issued until May 2, 1985. McDougal thought the checks should have started the same day as
[Hillary] Clinton's visit which McDougal thought was in approximately September 1984.
McDougal could not explain why he thinks the retainer was in September 1984 and yet no checks
were issued to the Rose Law Firm until May 1985").
1751
Id. at 9.
1752
J. McDougal 4/2/97 GJ at 99.
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McDougal said he told Mrs. Clinton he needed her help on some real estate abstract
work.1753 McDougal said the meeting with Mrs. Clinton lasted about five minutes, and Mrs.
Clinton left Madison Guaranty before 8:30 a.m.1754 McDougal said that day was the last time he
Tax records showed Mrs. Clinton's Rose income dropped from 1983 to 1985, consistent
with McDougal's testimony that Governor Clinton told him Mrs. Clinton's Rose earnings had
fallen. The Clintons' tax returns for 1983-85 show the following earnings for Mrs. Clinton at
Rose:
1983 $ 82,7411756
1984 $ 72,9891757
1985 $ 55,3821758
1753
J. McDougal 8/96-6/97 Int. at 10.
Id. ("McDougal was fairly certain that Hillary Clinton left just prior to 8:30 a.m.
1754
because he wanted to introduce Hillary Clinton to John Latham who had not yet arrived to work.
Latham arrived shortly after Hillary Clinton left").
McDougal did remember speaking to Mrs. Clinton by phone in 1986 about a
1755
No. DEK001329).
Tax Return and W-2 Statements for William J. and Hillary R. Clinton (1984) (Doc.
1757
No. DEK000753).
419
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President Clinton -- President Clinton testified he had been to Madison Guaranty "[l]ess
than 10 times, more than two, three"1759 and agreed that while jogging by Madison Guaranty he
had "once or twice actually went in."1760 When asked about the jogging incident, President
Clinton said he had "tried to remember" and was not accusing McDougal of lying, but he did not
remember it: "I don't recall that. I am aware that he has recounted a conversation about that.
But I don't have any specific recollection of doing that."1761 President Clinton said he did not
remember asking McDougal to send Mrs. Clinton legal work.1762 President Clinton also said he
did not remember complaining to McDougal about finances or saying "Hillary and I need some
money."1763 The President was asked whether he thought McDougal was lying:
Q. Do you have any reason to believe that Jim McDougal is not being
truthful--
A. No.
Q. -- about [the jogging incident]?
A. I have absolutely -- I have no reason to believe that. And I have really
tried to search my memory to see if there was anything remotely similar to
what he said. I mean, I really tried to remember the conversations that I've
Tax Return and W-2 Statements for William J. and Hillary R. Clinton (1985) (Doc.
1758
No. DEK001371).
1759
W. Clinton 4/22/95 Depo. at 66.
1760
Tr. at 70, United States v. McDougal et al., No. LR-CR-95-173 (E.D. Ark. Apr. 28,
1996) (testimony of William J. Clinton).
1761
W. Clinton 4/22/95 Depo. at 67. President Clinton testified, "I don't recall that I did
know [in 1985 that Hillary was doing some work for Madison Guaranty]. Normally Hillary
didn't discuss her legal work with me." Id. at 65-66.
1762
Id. at 69.
1763
Id. at 72.
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had with him to try to figure it out, because I am not accusing him of not
telling the truth. I do not I simply do not remember the conversation he
says occurred. 1764
President Clinton gave similar testimony in 1996 for the McDougals' and Governor
Q. And you are aware, sir, that Mr. McDougal has a recollection of an event
in which you jogged by and asked Mr. McDougal to place Ms. Clinton's
law firm on a retainer. Do you remember that, sir? I'm saying, do you
remember that that's one of Mr. McDougal's recollections?
Q. And you're now aware that Mr. McDougal remembers that event occurring
and you don't remember it; is that correct, sir?
Q. Okay. But you don't recall asking him to place Ms. Clinton on a retainer;
is that correct?
A. I do not, no.
Q. You don't recall -- do you recall asking him to give her a specific amount
per month in reference to that retainer?
A. No, I don't.
Q. Do you recall any -- you say you remember going in to see him. Do you
remember going in to see him and discussing Ms. Clinton and law
business for Madison Guaranty Savings & Loan?
A. I do not.
1764
Id. at 83.
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Q. Is there any -- I just want to make sure I'm asking you the right question,
I'm not asking you a question that you don't understand. Is there any
combination of facts that I can ask you that comes anywhere close to what
Mr. McDougal recalls as far as that particular conversation is concerned?
Bill Henley -- Susan McDougal's brother Bill Henley supported aspects of Jim
McDougal's testimony. McDougal said Henley had been at the office when the jogging incident
occurred.1766 Henley testified that one morning between 6:30 a.m. and 8:30 a.m. he met
McDougal at Madison Guaranty.1767 The door to McDougal's office was closed, so Henley
waited about fifteen minutes. Henley said Governor Clinton, in jogging clothes and sweating,
left McDougal's office. Henley and Governor Clinton said hello, and Governor Clinton left.
Henley said that once Governor Clinton was gone, McDougal commented, "I don't mind the son
of a bitch coming by here and taking up my time, but I wish he wouldn't sweat through my
chairs."1768 Henley said he and McDougal went into McDougal's office. Henley noticed a fresh
Henley said the only conversation he had with McDougal about the jogging incident was
W. Clinton 4/28/96 Depo. at 119-20, United States v. McDougal et al., No. LR-CR-
1765
422
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at the McDougals' and Governor Tucker's 1996 criminal trial.1770 McDougal told Henley that he
did not refer to Governor Clinton as a "son of a bitch," as a recent book seemed to indicate
Henley remembered one detail not consistent with McDougal's statements. Henley
thought that McDougal's secretary, Sue Strayhorn, was sitting at her desk outside McDougal's
office when the jogging incident happened.1772 If true, this would contradict McDougal on the
date of the incident, because Strayhorn started at Madison Guaranty in February 1985, after
McDougal said the incident happened.1773 Henley could only place the incident as sometime in
1984 or 1985.1774
Susan McDougal -- Jim McDougal was certain he discussed the jogging incident with
Susan McDougal.1775 She refused to give a statement to this Office, and spent eighteen months in
1770
Id. at 50
1771
Id. at 50-51.
The quote in the book read:
McDougal gently steered [Clinton] out of the office. Susan's brother Bill Henley
was standing nearby. With the governor safely out of earshot, McDougal turned
to Henley. "I don't mind the fat little son of a bitch coming by and taking up my
time. I just wish he wouldn't ruin my chair."
James B. Stewart, Blood Sport 124 (1996).
1772
W. Henley 6/18/96 GJ at 24, 30.
1773
Strayhorn 3/30/94 Int. at 1.
1774
W. Henley 6/18/96 GJ at 33. Just as McDougal had, Henley also testified he thought
the event happened in the "summertime," because Clinton was sweating and it must have been
hot. Id. at 33-34.
1775
J. McDougal 8/96-6/97 Int. at 10-11; J. McDougal 4/2/97 GJ at 103-04:
Q. Susan was also quoted in the Washington Post and other publications, I
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jail for contempt because she refused to testify pursuant to a grand jury subpoena, even after
being given immunity. She did give statements to print and television media that agreed with
Jim McDougal. In March 1992 the Washington Post quoted Susan McDougal saying:
Hillary came in one day and was telling us about the problem. The problem was
finances, her finances. . . . She came to Jim's office. I remember Jim laughing and
saying afterward, 'Well, one lawyer's as good as another, we might as well hire
Hillary.' . . . She was on retainer. I remember everyone sitting around laughing
and saying: 'We need to hire Hillary Clinton.'1776
Q. There are things that you can help clear up a little bit from -- for some of
us. The decision to have Mrs. Clinton help with some of the legal affairs
for Madison Guaranty.
A. I'll tell you what I know about it. As I wasn't present at the time. But I do
know that Bill came by the bank one day. He was jogging. And . . .
sweating. The famous story of the sweat in the chair I didn't see that. But
I did see that he was running, and he was sweating. And he came by the
bank. And he did talk with Jim. After that, Jim came to me and said, I've
just given Hillary some work from the bank. Is that all right with you? I
was at the bank that day.
....
Q. And did he say then that -- that Mr. Clinton had asked for her?
A. What he said was, she needs the work. And I said, that's fine with me.
think, saying, "Yes, I know about this." Do you recall talking to her about
this? Would that have been something you would have told her about?
A. I'm sure I -- yes. It would have been something I would have told her
within the business day, I would think.
1776
Maraniss & Weisskopf, Lawyer Will Review Arkansas Land Deal, Wash. Post, Mar.
12, 1992, at A1. In an interview with the Independent Counsel's Office, Jim McDougal was read
Susan's quote from the Washington Post. McDougal agreed with Susan McDougal's statement
but added that either Bill Henley or he must have told her about the jogging incident. J.
McDougal 8/96-6/97 Int. at 10-11.
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Those were his exact words. At that time, at that day, she needs the work.
And I said, that's fine, Jim.
Q. Because, again, she has talked about the business coming in a different
way -- coming through a connection between someone who was in her
office and someone who knew your husband.
A. Oh, yes.1777
On the eve of being incarcerated for refusing to discuss these subjects with the grand jury,
Susan told talk show host Larry King she did not witness the jogging incident and her only
I only know that Jim came to me and said, "They need the money. I'm going to
give her the work. Is that all right with you?" And I said yes. That's all I know
about how that came to be.1778
John Latham -- Latham said although he was Madison Guaranty's president, Jim
McDougal hired the attorneys.1779 Latham said McDougal never mentioned the jogging incident
to him.1780
Rae Ann Moles -- Madison Guaranty hired Moles in April 1983 to perform clerical
1777
Prime Time Live: Tr. of Diane Sawyer Interview of Susan McDougal at Doc. Nos.
2053-000000069 through 72 (ABC television broadcast, Aug. 30, 1996) (transcript contains
additional interview portions not included in the public broadcast).
1778
Larry King Live (CNN television broadcast, Sept. 6, 1996) (videotape).
Latham 2/14/95 Int. at 1; Latham 5/15/96 Senate Banking Comm. Depo. at 12-13;
1779
Senate Whitewater Comm. Hearing, supra note 147, at 14-15 (May 16, 1996) (testimony of J.
Latham).
1780
Latham 2/14/95 Int. at 2; Latham 5/15/96 Senate Whitewater Comm. Depo. at 18.
425
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work.1781 Moles said that late one afternoon in August or September 1984, Governor Clinton
rushed into Jim McDougal's office wearing jogging clothes, and she heard most of their
conversation because McDougal's office door was open.1782 McDougal complained to Governor
Clinton that they - the Clintons - needed to pay their fair share on a Whitewater loan.1783
Governor Clinton told McDougal that Webb Hubbell was telling Rose attorneys to get more
savings and loan business, and asked McDougal to put Mrs. Clinton on a $2,000 per month
retainer.1784 Moles said McDougal told Clinton "he really didn't have anything for the Rose Law
Firm to do [and] that the Mitchell law firm was representing the institution and performing as he
expected."1785 Moles said McDougal asked Clinton how Rose would credit the new business, and
Clinton said Hubbell would likely credit a young associate for the business.1786
Moles said Clinton and McDougal met for over an hour and a half and she left before the
meeting ended.1787 Moles said when she came to work the next morning, Jim McDougal said,
"Well, we've put Hillary on the payroll. Susan will be in shortly. She doesn't know about it.
1781
Moles 8/4/94 & 2/9/95 Int. at 3.
1782
Moles 10/19/95 GJ at 18. But see Moles 8/4/94 & 2/9/95 Int. at 7 ("McDougal had
Moles into his office and he introduced her to Clinton").
1783
Moles 8/4/94 & 2/9/95 Int. at 8.
1784
Moles 10/19/95 GJ at 22 ("Mr. Clinton asked him to hire the Rose Law Firm"); Moles
8/4/94 & 2/9/95 Int. at 8 (uppercase in original) ("CLINTON said that he and HILLARY
CLINTON were in need of some money and because he was a government servant, he only made
so much. CLINTON then asked McDOUGAL to have MGSL put HILLARY RODHAM
CLINTON of the ROSE LAW FIRM on a $2,000 per month retainer").
1785
Moles 10/19/95 GJ at 22.
1786
Id. at 24.
1787
Id. at 26
426
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When I tell her, she's going to be really upset. There may be quite an incident. If you get
uncomfortable, go downstairs."1788 Moles asked Jim McDougal if Madison Guaranty was going
to split the legal work between Mitchell Williams and Rose, and McDougal responded, "You are
Moles' testimony was partly corroborated by her sister, Sarah Handley, a former financial
examiner for the Arkansas Securities Department. Handley testified that her sister told her
"Clinton had come by [Madison Guaranty] and that at the conclusion of that visit, . . . McDougal
R.D. Randolph -- Jim McDougal said he might have told R.D. Randolph about Governor
Clinton's sweating in his chair.1791 Randolph testified that he remembered McDougal telling him
about retaining Mrs. Clinton, but not about the jogging incident.1792
Mrs. Clinton has made numerous statements about Madison Guaranty's hiring Rose.
During the 1992 campaign, Mrs. Clinton drafted a statement contradicting Jim McDougal's press
statements. Her statement was never released. In April 1994, Mrs. Clinton discussed the issue at
a press conference. Mrs. Clinton gave several more statements on the subject to federal
1788
Id.
1789
Id. at 27.
1790
S. Handley 10/31/95 GJ at 22.
1791
J. McDougal 8/96-6/97 Int. at 12.
1792
R.D. Randolph 9/17/96 GJ at 69-70.
427
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Mrs. Clinton's version of how Madison Guaranty hired Rose was essentially as follows.
In the spring of 1985, Rose associate Rick Massey, a friend of Madison Guaranty president John
Latham, spoke with Latham about Madison Guaranty sending legal work to Rose. Latham
agreed, but partners at Rose were opposed. McDougal's Madison Bank and Trust still had an
outstanding bill for work Rose had done in 1981-82. The partners did not want Rose to do any
work until the old bill was paid. Massey knew that Mrs. Clinton knew Jim McDougal, and asked
her to help get the bill paid. Mrs. Clinton spoke with several Rose partners who said if
McDougal paid the old bill, and paid new fees in advance, Massey could do the work. Mrs.
Clinton saw McDougal on April 23, 1985, and told him Rose would not let Massey work until
his old bill was paid and a prepayment arrangement was agreed to. McDougal agreed to the
retainer and paid the old bill. Massey asked Mrs. Clinton to act as billing partner on the account
The following discussion sets forth Mrs. Clinton's statements regarding Madison's
retention of Rose.
Mrs. Clinton drafted her most detailed statement about Rose's retention by Madison
Jim McDougal became a client of the Rose Law Firm in 1981. He engaged the
firm for a matter related to litigation arising out of the decision to move the Bank
of Kingston. At the conclusion of the representation 198_, Mr. McDougal
disputed the amount of his final bill and refused to pay [in] the entire amount
requested.
1793
H. Clinton 1/26/96 GJ at 53-55.
428
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In March or April of 1985, Rick Massey, an associate of the firm began talking
with John Latham, the CEO of Madison Guaranty S & L, and a friend of
Massey's, about some legal work Latham wanted Massey to do for Guaranty. In
April of 1985, Massey went to the partners in the securities section and asked if
they would help him with the work Latham wanted him to do. They advised him
that the firm could not do any further work for McDougal until he paid the bill he
owed for the previous work and that, even if he did, the firm could not permit
Massey to do any work unless McDougal agreed to pay a monthly advance against
which fees and expenses could be billed.
Massey also discussed the situation with one of the litigation partners who had
worked on McDougal's previous work and who gave Massey the same advice.
Massey then came to see me because he knew that I knew McDougal; he
explained his interest in working with Latham on the project and asked if I had
any ideas about what he could do. After talking with Massey, I told him I would
talk with McDougal for him and see if McDougal would be willing to pay his past
due bill and agree to stay current on any fees and expenses incurred for the new
project.
On April 23, 1985, I called McDougal and asked if I could drop by to see him at
his office. When I visited him, I told him that I understood Latham wanted
Massey to do some work for them, but that our firm would not let Massey proceed
until the previous bill was paid. McDougal called Latham into the meeting and
asked Latham if he wanted Massey to do the work. As I recall, Latham explained
that he and Massey had met already to discuss the matter and he wanted to engage
Massey. After that explanation, McDougal told Latham he could proceed with
Massey, and he told me that he would arrange to pay the past due bill.
429
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I also placed a call to the Securities Commissioner to ask for information; I do not
recall talking to her (as she independently does not recall talking to me) but I may
have called her or someone in her office, to ask the person to whom I spoke who
in the office handled matters related to s&ls since I knew that the office had very
little supervisory authority since most of their authority related to brokers. I was
advised to send anything to the Commissioner. I relayed that information to
Massey.
Massey has stated he does not know why he included my name in the
letter to the Securities Commissioner, and I do not know either and do not recall
ever seeing it before it was sent. I also do not recall receiving the letter addressed
to me from the Commissioner, because if I had seen it I would have immediately
sent it to Massey. Massey has said his secretary may have included my name in
error; that is understandable since I was listed as the billing attorney because of
my intervention with McDougal. I realized no financial benefit from that listing;
it was done as an accommodation to Massey and the firm.
In addition to the matter Massey did for Madison, the firm did two other matters
that were unrelated to the state. [T]he [sic] total billed for all matters was
21,202.25.
As I have said repeatedly, I did not have any substantive involvement in the work
our firm did for Madison that involved the Securities Commissioner. I did not
discuss the merits of the matter with the Commissioner or anyone in her office. I
can see how in retrospect I should not have become involved at all in helping Rick
Massey work out the problems he encountered, but I knew I was not attempting to
influence anyone other than McDougal whom we wanted to pay his bill. I have
practiced law in Arkansas for nineteen years and so far as I know this is the only
question that has ever been raised about even the appearance of conflict between
my practice and my husband's official positions. I regret that this incident could
be misconstrued by anyone and would only point to my record and to the results in
this case in which clearly the Commissioner's actions do not suggest any influence
or attempt to influence her by me or anyone in my firm.1794
1794
H. Clinton Campaign Statement (1992) (Doc. Nos. DEK200962 through 200963)
(strikethrough in original). In July 1997, a copy of Mrs. Clinton's statement, among other things,
was found in a brief case in the attic of Vince Foster's home. The copy had numerous
handwritten changes. Mrs. Clinton testified that the writing on the document was Foster's and
that he and she had worked together on the document. H. Clinton 4/25/98 Depo. at 28-30.
430
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In a press conference held April 22, 1994, Mrs. Clinton said the following:
There was a very bright, young associate in our law firm who had a relationship
with one of the officers at Madison Guaranty, a young man whom he had known.
They began talking . . . . Those two young men thought that it would be legal
under Arkansas law for a savings and loan to issue preferred stock, but there was
absolutely no law on that. And so they couldn't be sure. But they decided that
what they wanted to do was to ask the person who regulated savings and loans
whether it was legal, not if Madison Guaranty could do it . . . .
When they talked about doing that, the young attorney in question needed a
partner to serve as his backstop, and that was one of the rules we had in our firm.
He knew that I knew Jim McDougal. He also knew that Jim had been a client of
our firm in the past. This was not a new representation. So he came to me and
asked me if I would talk with Jim to see whether or not Jim would let the lawyer
and the officer go forward on this project. I did that, and I arranged that the firm
would be paid a $2,000 a month retainer. And that was ordinary and customary.
That would be billed against . . . . That was arranged. The young attorney, the
young bank officer did all the work, and the letter was sent. But because I was
what you call the billing attorney, in other words I had to send the bill to get the
payment made, my name was put at the bottom of the letter. It was not an area
that I practiced in. It was not an area that I really know anything to speak of
about.1795
This Office deposed Mrs. Clinton at the White House, on April 22, 1995, which was
before the Office obtained her billing records in January 1996. Mrs. Clinton gave the following
Investigators later discovered another document that was archived on Rose computer systems: a
draft, created by Vince Foster, that was Mrs. Clinton's statement with Foster's handwritten
changes typed in. In 1998, Mrs. Clinton acknowledged Foster's editing of her statement. H.
Clinton 4/25/98 Depo. at 30-31.
1795
Statement of Hillary R. Clinton, Press Conference, Federal News Service (Apr. 22,
1994).
431
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sworn testimony:
A. At some point in 1985, in the spring, an associate with our firm by the
name of Rick Massey made it known in the firm that he was interested in
doing some work with Madison Guaranty, and particularly with a young
man that he knew there named John Latham, who was an officer at
Madison.
As I have tried to remember and reconstruct this, Rick Massey raised that
with the partners in the securities department of our firm, and was told that
Mr. McDougal who was at Madison Guaranty had an outstanding bill that
he had not paid for previous legal work done by our firm on his behalf.
And Mr. Massey consulted broadly with a number of partners, and was
advised that he could not go forward unless the past due bill was paid.
At some point Mr. Massey came to see me because he knew that I knew
Jim McDougal and asked if I had any ideas about how he could get the bill
paid that was pending, so that he could then go forward to try to do this
work on behalf of Madison Guaranty. I discussed it with several partners
and they all said, well, if McDougal pays the bill, then we will consider
letting Massey do the work.
At some point I talked with Jim McDougal and told him that Rick Massey
had an interest in doing some work for Madison Guaranty with John
Latham, but that the firm would not let Rick do it unless his previous bill
was paid. And then at some point after that McDougal paid the money
that he had owed the firm for a number of years. Massey then was told
that he could proceed with the work.
Massey came to me and asked if I would be the billing partner since I had
helped him by getting the past due bill paid, and I told him that I would.
But the firm decided, unlike most of our clients where we do not have any
retainer arrangement, that because of the previous experience with Mr.
McDougal, Madison Guaranty would be asked to pay in advance against
fees and expenses of a monthly amount, and the firm decided $2,000
would be fair. Mr. McDougal was told that. He agreed. And so the
$2,000 was deposited . . .
And then at some point Mr. Massey began work and the retainer was paid.
Q. So, from your standpoint, whose idea was the figure of $2,000 a month?
432
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Q. When you say that Mr. Massey would have talked with partners, are you
talking about partners in the securities section of your firm?
Q. Can you recall here today any partner at the Rose Law Firm whose name
you can give us that would confirm that?
A. Well, I know that I talked with Vince Foster about it -- I cannot tell you
who Rick Massey talked with -- because Mr. Foster had been one of the
lawyers who had done the work that Mr. McDougal had not paid for. And
so before I did anything to help Rick Massey, I talked with Mr. Foster to
be sure that he thought it was appropriate that we try to collect this past
due bill, with the idea that if we did Mr. Massey would then be able to
represent Madison.
....
Q. Let's go then to this matter of how it started. Do you know any reason why
Rick Massey would say that he does not think he brought any business into
the Rose Law Firm like this?
A. No, I do not.
Q. Do you know whether or not the supposed back money that was owed was
ever paid?
A. I assume it was paid. I can't tell you that for sure. I don't know for sure,
but I assume it was since that was the reason that Rick Massey came to
me, and he was then permitted to go forward.
Q. Did you ever see any back bill that supposedly he owed?
A. No.
....
433
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Q. And, again, I believe you stated the reason you were going to be the billing
partner was because you knew Mr. McDougal? Is that correct?
A. Well, I knew him and I had been enlisted to try to help get the bill paid, to
clear the way for Mr. Massey to represent Mr. McDougal. And as an
accommodation to Mr. Massey, I agreed to be the billing attorney on the
matter that he was going to handle.
Q. On the front end, were you to be anything other than the billing attorney?
In other words, were you supposed to do any legal work for Madison
Guaranty yourself?
A. Not that I can think of right now. I was supposed to be the billing attorney
because an associate could not represent a client without a partner as a
billing attorney.
Q. Would you say that normally on a securities matter the billing attorney
would be a securities partner?
A. I think I did stop by to see him, to have the conversation about paying the
past due bill so that Mr. Massey could do the work that he had discussed
with Mr. Latham.
Q. Can you tell us approximately how many times you ever went into
Madison Guaranty?
1796
H. Clinton 4/22/95 Depo. at 8-16. This statement was consistent with McDougal's
statement that he only met in person with Mrs. Clinton once. J. McDougal 8/96-6/97 Int. at 13.
434
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Mrs. Clinton was then asked specifically about McDougal's version of events:
"He has contacted the campaign for a response to the story that BC
requested that McD retain the Rose Firm/HRC and the timing and
specifics of that retainer. At various times I have spoken with Webb
Hubbell about this retainer issue over the last three weeks "in part to solve
the 'how did the Madison Guaranty business come in' question and in part
to determine if McD's allegation that he put HRC on retainer was in fact
accurate. Both Jim McD (in Sam Heuer's office to Jim Blair and myself)
and Susan McD (in the Post) have recounted that BC came into Jim's
office in the summer of 1984; told him the Cs" "I assume the Clintons",
"needed $ and asked him to hire HRC. The same day HRC allegedly came
by re: a retainer. HRC was then hired in the summer of 1984. Supposedly
there were other witnesses. Note that we have heard generally that 'people'
are talking about this story to a variety of press."
Now, first I would ask you, in March of '92, do you recall this matter coming up?
Q. Did you hear anything along these lines back in '84 or '85?
Q. Did your husband ever say anything about talking to Jim McDougal about you and
your husband needing money?
Q. Do you know whether or not your husband ever did, in fact, jog by Madison
Guaranty and go in and talk to Mr. McDougal?
435
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A. I do not know.1797
In 1995, prior to the Rose billing records being produced, Mrs. Clinton was asked
specifically about her work for Madison Guaranty in the spring of 1985. Mrs. Clinton said she
"probably would have billed for every conversation I had about this matter, including the
conversations with Rick Massey or whatever partners I talked to about paying back the past due
bill. I would have billed for going to see Jim McDougal. But I can't be more specific than
that."1798 The Rose billing records produced to the OIC in January 1996 show that in the first five
months of Rose's representation, Mrs. Clinton billed for speaking to only two partners: Watt
The RTC served written interrogatories on the Clintons, which Mrs. Clinton answered in
Interrogatory No. 17: With respect to the Rose Law Firm's representation of
Madison Guaranty in 1985 and 1986:
(a) Was Mrs. Clinton the lawyer responsible for obtaining this business for the
Rose Law Firm? If not, who was?
1797
H. Clinton 4/22/95 Depo. at 17-19.
1798
Id. at 40.
1799
Rose Law Firm Billing Records (May 6, 1985) (Doc. No. DEK014947).
1800
Rose Law Firm Billing Records (July 15, 1985) (Doc. No. DEK014972). Giroir
testified that he did not remember any discussion of payment of the old bill. Giroir 7/18/96 GJ at
25-26.
436
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who was a friend of an associate at the Rose Law Firm, Richard Massey, became
interested in having Madison Guaranty issue some kind of preferred stock to raise
capital. Latham had spoken to Massey about doing the related legal work. In the
spring of 1985, Massey came to see me because he had learned that certain
lawyers at the law firm were opposed to doing any more work for Jim McDougal
or any of his companies until he paid his bill and then only if Madison Guaranty
agreed to prepay a certain sum to the firm once a month to cover fees and
expenses. Under such an arrangement, the firm could be assured that Madison
Guaranty was staying current with regard to paying for the new work that the firm
might do for it.
On February 14, 1996, the FDIC interviewed Mrs. Clinton. (The RTC merged into the
FDIC on January 1, 1996, and the FDIC continued the RTC's investigation.) This unsworn
interview occurred following the public release of Mrs. Clinton's billing records, and after the
public testimony of Rick Massey, and others, before the Senate Whitewater Committee. Mrs.
Clinton's colloquy with the attorney for the FDIC was as follows:
1801
H. Clinton 5/24/95 RTC Interrog. Resp. at 34-35.
437
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recollection that he did not ask you to be billing partner, nor did he raise
the subject of fees or retainer with other members of the firm. I'd like to
ask you about your own recollection of how the client came in the door,
how your recollections compare with those of Mr. Massey.
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. We had a
very high regard for Mr. Massey, who was quite an energetic and
accomplished first-year associate, already teaching a securities course at
the law school and attracting people who wanted his advice, like Mr.
Latham.
So I talked with Mr. Massey about that 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.
And as I recall, Mr. McDougal said well, if Latham wants him to do the
work, that's fine. And because of the request of other partners in the firm,
I advised Mr. McDougal that the work that Mr. Latham wanted Mr.
Massey to do could not be done unless Madison [Guaranty] entered into a
retainer agreement with the Rose Firm that would be payment against
which fees and expenses could be billed on a monthly basis. Mr.
McDougal agreed to that. I informed Mr. Massey. Mr. Massey undertook
the work.
438
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circumstances.
Q. You said you were asked to approach Mr. McDougal about the things
you've described. Who asked you?
A. I don't have a specific recollection. I believe it was Vince Foster, but I'm
not positive about that.1802
This statement by Mrs. Clinton's differs from her earlier statements. She said that Vince
Foster rather than Rick Massey had approached her about Massey doing the work, and that she
discussed with Foster, not Massey, that Rose partners were unhappy about Madison Guaranty's
outstanding bill.
In 1998, Mrs. Clinton was again deposed by this Office. In light of evidence that had
emerged about Madison Guaranty's retainer of Rose -- including the billing records and Massey's
testimony since her 1995 deposition -- Mrs. Clinton was asked to review the matters again:
1802
H. Clinton 2/14/96 RTC Int. at 27-30. Mrs. Clinton's testimony was consistent with
representations made to Bruce Ericson, an attorney with the law firm of Pillsbury Madison &
Sutro, counsel to the RTC, by David Kendall, counsel to the Clintons. Ericson's memorandum of
his conversation with Kendall noted that, according to Mrs. Clinton, the outstanding bill had
been paid in the spring of 1985:
Kendall told me the following: McDougal had complained about the bill and had
refused to pay it. The bill had remained unpaid until the spring of 1985, when it
was paid. The Rose Law Firm's trouble in collecting this receivable accounted for
the firm's reluctance to accept new business from McDougal unless he paid for it
in advance. Hence the retainer. . . . Kendall does not think the bill was adjusted
downward or otherwise compromised in an attempt to get McDougal to pay.
Kendall also does not think that McDougal paid it in 1983. Mrs. Clinton agrees.
The bill probably remained unpaid until 1985.
Memo from Bruce Ericson, Pillsbury, Madison & Sutro attorney, counsel to the RTC, of
telephone conversation with David E. Kendall, personal attorney for the Clintons at 1-2 (July 25,
439
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A. Well, I can tell you what I remember, and I know this has been the subject
of, you know, many discussions by many people. But based on my best
memory in 1992, when I first tried to respond to questions about this
matter, I recalled that we had a young, very intelligent, aggressive
associate by the name of Rick Massey, who was friends with a young man
named John Latham, who was maybe the president, but certainly a high-
ranking officer at Madison Guaranty.
And they had been talking about perhaps Mr. Massey doing some legal
business for Mr. Latham in the securities area. I think that Mr. Latham
and Mr. Massey lunched together. They had a number of conversations.
Mr. Massey was interested in doing this work.
But when he spoke with his securities partners about doing the work, he
was discouraged from doing so because Mr. McDougal did not have a
good reputation for paying his bills in the Rose Law Firm. He had been
represented by the Rose Firm some years earlier and had not paid his bill.
And so Mr. Massey was told that he should not get involved in
representing a client, such as Mr. McDougal, for whom there would likely
be payment problems.
So, after talking with people in the firm, I asked if I were able to persuade
Mr. McDougal to pay his bill and to promise to keep current with costs
and expenses, if Mr. Massey could do the work. Based on that
understanding, I went and visited with Mr. McDougal and Mr. Latham,
1995).
440
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and they said that they would pay a retainer on a monthly basis.
They never completely paid their last bill. I think they ended up still
owing nearly $900, but I later learned that they had paid the bulk of the bill
that they hadn't paid for several years.
That's my, that's my memory today. That was my memory in 1992 of what
happened to bring this business into the Rose Law Firm.1803
Mrs. Clinton was questioned about the 1992 draft press statement, which tracked the
recently produced billing records by referring to an April 23, 1985 meeting with John Latham
and Jim McDougal, and stated the total amount billed as $21,202.25.1804 Mrs. Clinton discussed
Q. Now, in 1992, when you prepared this statement, how did you go about
that?
A. Well, I thought a lot about this . . . because I've had to sort of reconstruct
what probably happened, since I don't have any vivid memory of actually
doing it.
1803
H. Clinton 4/25/98 Depo. at 22-24.
1804
H. Clinton Draft Campaign Statement (1992) (Doc. Nos. DEK 200962 through 963).
441
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Q. And in typing that, did you have the billing records to assist you in putting
the date down when you talked to McDougal and went by to see him at his
office? As you see in the billing records, it says you had a conference with
Jim McDougal on April 23rd. Did you have that when you came up with
this 21,000 figure?
Mrs. Clinton was asked about McDougal's outstanding bill paid by him in October 1984:
Q. Now, I direct your attention to the billing records again. It's the first page
after the client billing and payment history. This would be DEK014941.
This -- can you identify that document?
Q. Who is it to?
Q. . . . . The document there has a Paid stamp down there. It says Bank of
Kingston, date, 12/31/81. Do you see that?
A. Yes.
Q. Then we went through this last time, but there was a note there. It says,
"HRC. I believe there was a subsequent bill." And that was Mr. Foster's
handwriting, correct?
A. Yes.
Q. . . . . Now, you stated during your campaign statement, and then you stated
to us in April of '95 that Massey came to you. He wanted to do the work.
There was an old bill outstanding that was due and owing. And you were
1805
H. Clinton 4/25/98 Depo. at 26-27.
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asked to intervene with McDougal to get the old bill, plus then arrange for
this advance against fees or retainer.
A. Yes, I did.
Q. Now, and I believe we asked you in April of '95, was the bill ever paid.
And I believe your answer at that point was, I don't know. Now, is that
your answer today?
A. No. Since then, I have learned that $5,000 of the $5,900 bill had been paid
at some point. I don't know when.1806
Mrs. Clinton was also asked about a recently produced chronology drafted by Foster
Q. This document was found in the briefcase of Mr. Foster and produced to
the Independent Counsel's Office in late July 1997.
Q. All right. Did Mr. Foster tell you in 1992 that the old bill had been paid,
or $5,000 had been paid on the old bill?
A. No, he did not. And also when he edited my two-page statement, he didn't
change my understanding which I typed about his not paying the bill. And
also, as we can see with his writing on this copy of the bill, he said, "I
believe there was a subsequent bill."
So, either he didn't think that the fact that $5,000 was paid on a $5,900 bill
constituted full payment, or for some reason he didn't know. Or he
neglected to tell me.
1806
Id. at 31-32.
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Mrs. Clinton was asked about the old bill found in Foster's attic, marked "Paid"
and dated October 23, 1984, in addition to documents related to the payment of the old
The minutes of the November 1984 Madison Bank board meeting, noting
that earnings would be down because a legal bill had been paid.1811
Mrs. Clinton responded, "I don't know anything about the letter [from Foster to Bunch] or
Mrs. Clinton was asked if she agreed that these documents established that the bill was
1807
H. Clinton 4/25/98 Depo. at 32-33.
Minutes of the Madison Bank and Trust Board Meeting (Sept. 25, 1984) (Doc. Nos.
1808
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Q. Taking that [letter from Foster to Bunch], with a copy of the old bill that
we now have marked paid 10/23/84, does it appear to you that the old bill
was paid in October of 1984?
A. Well . . . again, I've never seen these before. But my reading of Mr.
Foster's letter is that the firm agreed to a $5,000 fee limitation. But, of
course, they would expect their expenses to be paid. That would, that -- in
the way that is written, that does not refer to costs and expenses.
So, from my perspective, the bill, which was for $5,893.63, was not paid
in full. And, instead, the firm had to take a diminution of the fee and
allocate money to the expenses. And then, if I look back at the chronology
you've provided me from Mr. Foster, as you identified it, it says that
$5,000 paid on Bank of Kingston bill which, again, suggests to me that
Mr. Foster at least did not consider this account to be paid in full.
So, from my memory of what I knew at the time, at least in the minds of a
number of lawyers in the Rose Law Firm, Mr. McDougal was a deadbeat
who was a very difficult client to collect from, that you had to threaten to
sue to get paid and then, even if you made an agreement with him of a
$5,000 fee limitation, he didn't fulfill the agreement.
Q. Now, we've heard from Mr. Bunch. He said this was the final payment. It
was settled with Mr. Foster. He was authorized to negotiate a settlement.
He paid the $5,000.
You're right, it diminished the fee allocation. There was never anything
else paid on this bill. So, if you went over there to see Mr. McDougal to
get the $893, do you remember talking to him, you need to pay the rest of
the money?
A. [M]y memory in 1992 was that in 1985, seven years earlier, Mr. Massey
wanted to do work for Mr. Latham at Madison, and was being frustrated in
doing so because members of our firm said that Mr. McDougal was not
someone they wanted to do business for again because he didn't pay his
bills, and that he hadn't paid everything that was owed to the firm.
445
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A. And also, I would add that the story that Mr. McDougal was telling at the
time made no sense, because everyone who did any business with the Rose
Law Firm knew that you didn't get credit for bringing in business. You
didn't get any extra money for bringing in new clients. And so this, this
whole matter just never, you know, rung true to me.
Q. Mrs. Clinton, let me just ask you, was your stating that this came about
through Massey, was it an effort to keep the media away from your
husband perhaps requesting work for you from an S&L that was in
trouble?
Q. Mr. Foster died on July the 20th, 1993, which was some two years before
we interviewed you on the subject, when you talked about the old bill. Is
it your testimony he never told you that the $5,000 was paid?
A. I have no memory of Mr. Foster telling me that. I'm not going to tell you
that he absolutely didn't, but I have no memory of that.1813
Finally, Mrs. Clinton was asked about her statement (in the 1992 press draft) that she
reported this April 23, 1985 meeting with McDougal to her partners:
Q. You then state in your statement that you reported your meeting with Mr.
McDougal to your partners. This is the first sentence of the next
paragraph. Which partners did you report the meeting to?
A. Again, I don't have any memory. But if you will let me, I will do my best
to put this in some context for that question.
1813
Id. at 42-45.
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with him on that day, and Watt was a senior securities lawyer and would
have, I believe, been responsible for working with Mr. Massey and
supervising him.
I believe I also would have reported back to Vince Foster because I have a
feeling that Vince Foster had hard feelings about Jim McDougal and about
what McDougal had put him through, and about the insulting attitude
about Carol Arnold, who was a particular associate in the firm that Mr.
Foster did a lot of work with. So, I think I would have had to go to some
lengths to persuade Mr. Foster that it was a good idea for us to become
involved with Mr. McDougal again.
A. Not once we had the retainer. I think once there was an agreement that
Madison would pay a retainer that would be billed again -- it wasn't a
retainer that we would keep; it would be an advance against fees and
expenses -- then I think the partners felt that it was all right for Mr.
Massey to go forward. But they certainly wanted me to make sure that that
retainer came in every month, and that there wasn't any slippage between
the agreement that had been reached and what actually happened.
A. Well, my memory is that that was part of the arrangement, that since I had
gone to Mr. McDougal and had actually gotten him to agree to a retainer,
that I would be responsible for making sure that the bills for the work that
was done would be paid completely, fees and expenses, without any
question.
Q. What was your understanding of the work that was going to be done?
A. My understanding was that it was going to be securities work and that Mr.
Massey would do it pursuant to his discussions with Mr. Latham.
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Q. Mr. Gregory has told us that there was a -- of course, he was a securities
lawyer; you were not -- but that at that time it was well-known in the Little
Rock community that Madison was not financially healthy in particular,
and that savings and loans in general were not financially secure.
A. Well, I certainly knew that savings and loans were going through some
financial difficulties. I don't know that I knew that any particular one,
specifically Madison, was.1814
Mrs. Clinton's statements and testimony about the Rose-Madison Guaranty retainer are
summarized as follows:
1) Rick Massey was a friend of Latham, and Latham agreed to have Madison
Guaranty hire Rose at Massey's request.
2) Some Rose partners objected because McDougal had not paid a prior bill.
3) Massey asked Mrs. Clinton to get McDougal to pay the old bill.
4) Mrs. Clinton spoke with McDougal, who then paid the bill, and agreed to a
"retainer" against future fees.
5) Mrs. Clinton acted as billing partner because associate Massey could not, and
because she had worked out the payment of the old bill.
Mrs. Clinton's testimony varied insofar as in 1996 she testified that a Rose partner,
probably Vince Foster, approached her about Massey getting the work, but there was an objection
because of the old bill, while her pre-1996 version was that Massey, not Foster, or another
partner, came to her. In 1998, her testimony reverted to the Massey version. Also in 1998, she
testified that the amount outstanding on the bill might have been the remaining $893, rather than
the entire amount. Other evidence regarding the five aspects of Mrs. Clinton's statements is
448
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Rick Massey -- After graduating from law school in May 1984, Massey started at Rose as
a law clerk.1815 After passing the bar in August 1984, he became an associate assigned to the
securities section. Massey's mentor was partner David Knight. Massey knew Madison
Guaranty's president, John Latham, from college.1816 Massey and Knight had lunch with Latham
and asked him to send some legal work to Rose.1817 Latham said he would like to, but that Jim
1814
Id. at 50-53.
1815
Massey 11/7/95 GJ at 5.
1816
Massey 12/3/97 GJ at 24.
1817
Id.; Senate Whitewater Comm. Hearing, supra note 147, at 45 (Jan. 11, 1996)
(testimony of R. Massey). ("I actually pitched the business to him. I think the pitch was
basically, gee, I'm . . . you're asking me all these questions. Why don't you hire us and put us to
work on some of these things"). Massey agreed that as an associate he could not bring in a new
client without a partner as billing attorney. Id. at 153.
It is unclear when this lunch occurred. Massey thought that he taught a class on securities
regulation with Knight in the fall of 1984, which Latham audited. Massey 12/3/97 GJ at 24;
Senate Whitewater Comm. Hearing, supra note 147, at 18, 23 (Jan. 11, 1996) (testimony of R.
Massey); Massey 11/7/95 GJ at 21-23. Massey testified that he became reacquainted with
Latham, who frequently approached him after class to ask about securities issues. Massey
11/7/95 GJ at 23. Documents from UALR Law School indicate that Latham took securities
regulation in the fall of 1983, and took corporations taught by David Knight in the spring of
1984. Law School Transcript of John Latham (June 17, 1996) (Doc. Nos. 2031-00000027
through 29).
Massey thought that he pitched the business to Latham in early 1985. Senate Whitewater
Comm. Hearing, supra note 147, at 151 (Jan. 11, 1996) (testimony of R. Massey). Latham's
memory is also different from Massey's. Latham testified that Massey's pitch about Rose came
while he and Massey were studying for the bar examination in the summer of 1984. Latham
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McDougal hired the lawyers and McDougal was happy with Jim Guy Tucker's firm, Mitchell
Williams.1818 Massey said it was "at least weeks later" when Rose was hired by Madison
Guaranty on the preferred stock offering.1819 Massey testified that he did not think that he
brought Madison Guaranty's business into Rose.1820 In his grand jury testimony, Massey said he
"d[id] not know how Madison Guaranty came to be a client of the firm."1821 In his Senate
testimony, Massey said that although he did not remember how the business came in, "I don't
recall feeling like this was my . . . that I killed this deer . . . I didn't have a big part when they
arranging the retainer); Massey 12/3/97 GJ at 26 (confirming that he did not know how the
business got to Rose).
1821
Massey 11/7/95 GJ at 21. Massey also said, "My position has been that I'm not -- and
it is today that I'm not aware of how -- what their motivation was for hiring us. I have -- I had a
relationship with their president, which might have been a factor. But I don't -- you know, I don't
know that I -- you know, I don't know. You'd have to ask them why they came to us." Id. at 82.
Senate Whitewater Comm. Hearing, supra note 147, at 78 (Jan. 11, 1996) (testimony
1822
of R. Massey).
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A. That's correct.
A. That's correct.
But Massey stated that he did not have all the facts:1824 "[I]t's outside my knowledge about
whether I brought the Madison Guaranty matter in or not."1825 Consistent with his grand jury
testimony, Massey said the reason he thought that Latham did not offer Madison Guaranty's work
to him was because McDougal, not Latham, hired the attorneys: "John told me it was up to his
David Knight -- Knight remembered lunch with Latham and Massey: "We took Mr.
Latham to lunch, and I can't remember certainly the specific conversation but the gist of it was
we told him a little bit about the types of work that Rick and I did. Representative clients for the
firm. And then asked him for business."1827 Like Massey, Knight remembered Latham said
1823
Id. at 232-33, 240-41 (testimony of Massey). By way of contrast, when he was later
asked if he remembered the first client he brought in, Massey testified that he remembered
bringing in his first client in 1988, shortly before he made partner. Massey 12/3/97 GJ at 64.
Senate Whitewater Comm. Hearing, supra note 147, at 77 (Jan. 11, 1996) (testimony
1824
of R. Massey).
1825
Id. at 29 (testimony of Massey).
1826
Id. at 26 (testimony of Massey).
Senate Whitewater Comm. Hearing, supra note 147, at 10 (May 16, 1996) (testimony
1827
of D. Knight).
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McDougal decided which law firm to hire: "My recollection is that he said that Mr. McDougal
was really the one that made decisions about hiring lawyers . . . . He also said that Madison
Guaranty regularly used another law firm and that he thought they were satisfied with the
services provided by the law firm."1828 Knight said he left the lunch with the impression Rose did
John Latham -- Latham did not remember taking a class taught by Knight and Massey,
nor did he remember lunch with them.1830 Latham remembered Massey expressing interest in
Madison Guaranty's legal work: "I do recall that Rick pitched the business in the sense that he
wanted us to hire them to do legal work for us. I do not remember the lunch."1831 Latham
testified in the Senate that Massey approached him, but that he told Massey it was McDougal's
Rick Massey and I ran into each other when we were studying for the bar, and
Rick went to work for the Rose Law Firm after that, and had talked with me about
us using the Rose Law Firm. And I think I probably mentioned that to McDougal
at some point. At some later point, Jim came back to me and said let's use the
Rose Law Firm, and he wanted to put them on retainer . . . . I think he wanted to
use them because he had friends over there, and one of those friends, of course,
was Hillary. He had used the Rose Law Firm there before. What's open there, of
course, is what prompted Jim to make that decision. Was it a conversation with
Hillary or was it just because I had suggested that at some point I would like to
work with the Rose Firm at some point. I don't know.1832
1828
Id. (testimony of D. Knight).
1829
Id. at 11, 13 (testimony of Knight).
Latham 5/15/96 Senate Whitewater Comm. Depo. at 10-11. Latham remembered
1830
of J. Latham).
1832
Latham 5/15/96 Senate Whitewater Comm. Depo. at 7-8. Latham graduated from law
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Latham said McDougal decided which law firm to hire.1833 When asked who hired Rose, Latham
testified, "Jim McDougal did."1834 Latham did not remember any discussions about an unpaid
bill.1835
Webb Hubbell -- Hubbell's earliest statements on Rose and Madison Guaranty were
made during the 1992 presidential campaign. Hubbell was the campaign contact on Rose
issues.1836 Campaign staff member Loretta Lynch's notes show that a reporter called Hubbell on
February 18, 1992, and asked how Rose was hired by Madison Guaranty.1837 Lynch's notes
school in May 1984, and studied for the bar the summer of 1984. John Latham's UALR grade
transcript (June 17, 1996) (Doc. No. 2031-00000027). In a FDIC interview Latham said
McDougal suggested that Madison Guaranty use Rose. Latham 7/12/95 RTC Int. at 1
("LATHAM said that at one time, date not recalled, JAMES MCDOUGAL suggested that
Madison Guaranty use ROSE for some of the legal work at the institution. LATHAM said that,
'MCDOUGAL had friends over there, he suggested we use them.' LATHAM said when asked
who the friends were that it was HILLARY RODHAM CLINTON and others").
1833
Latham 2/14/95 Int. at 1; Latham 5/15/96 Senate Banking Comm. Depo. at 12-15.
Senate Whitewater Comm. Hearing, supra note 147, at 15 (May 16, 1996) (testimony
1834
of J. Latham). When asked if it is "safe to say you personally did not hire the Rose Law Firm to
work for Madison Guaranty," Latham responded, "Yes, in the sense . . . that I didn't make the
decision to hire them and move that forward." Latham 5/15/96 Senate Whitewater Comm. Depo.
at 8-9. Pat Heritage-Hays, an assistant to Latham, said when she learned Madison Guaranty was
paying Rose $2,000 per month, she asked Latham about it, and he responded, "Oh, it's one of
Jim's deals." Heritage-Hays 1/6/95 Int. at 1.
1835
Latham 2/14/95 Int. at 2; see also Latham 5/15/96 Senate Whitewater Comm. Depo.
at 22.
1836
Lynch 2/1/96 GJ at 9.
See Memo (draft) from Loretta Lynch, Clinton Campaign Staff, to David Wilhelm,
1837
Clinton Campaign Manager, and Bruce Reed, Clinton Campaign Staff in charge of Issues at 5
(Feb. 18, 1992) (Doc. Nos. 263-00000348 through 360).
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reflected Hubbell told her that "HRC brought [Madison Guaranty] to the firm."1838
Susan Thomases's notes reflect a conversation with Hubbell on February 24, 1992, where
Massey had relationship w/ Latham & HC had relationship w/ MacD. Rick will
say he had rel[ationship] w/ Latham & had a lot to do w/ getting the client in. She
did all the billing. According to time recs, HC had numerous conf[erences] with
Latham, Massey, and McDougal on both transactions. She reviewed some docs.
She had one TC in 4-85 at the beginning of the deal w/ Bev. [Bassett]. Neither
deal went through. Broker/dealer was opposed by staff but approved by Bev
under certain condition which they never met. Preferred stock?! But for Massey,
it would not have been there. But HC was billing partner and attended
conferences.1839
Massey testified that during the 1992 campaign he never told Hubbell he would say he
brought in the business.1840 Massey testified that he never spoke with Hubbell about it.1841
Massey said he spoke to reporter Jeff Gerth, and told him he did not know why Rose was hired
HUBBELL notes that Madison [Guaranty] was HILLARY's client, as she is the
one who brought Madison [Guaranty] into the firm as a client, that is why she
became the billing partner.1843
1838
See id.; see also Lynch 2/1/96 GJ at 10-11.
Susan Thomases's notes of conversation with Webb Hubbell (Feb. 24, 1992) (Doc.
1839
454
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In December 1995, Hubbell was asked questions in the grand jury about this:
Q. I'm looking back over some notes of interviews with you, and I ask you, do
you recall ever saying that Madison Guaranty was Hillary's client as she is
the one who brought Madison Guaranty into the firm as a client, that is
why she became the billing partner? Do you ever remember making a
statement to that effect?
A. I don't remember it. I don't doubt that I could have, but I don't remember
it.1844
Hubbell told the Senate in 1995 that "Massey was the one who wanted them as a client
and that Mrs. Clinton was one of those who helped him accomplish that task."1845 Hubbell was
read a March 12, 1992 article that said: "Webster L. Hubbell, a partner and spokesman at Rose,
said that nothing in the law firm's records indicates that Hillary Clinton brought in the Madison
Guaranty business. 'That's a new one on me,' he said." Asked whether the quote was accurate,
Hubbell replied, "I don't know if I said that, but there is nothing in the records -- this is where
lawyers are being lawyers . . . . There is nothing in the records of the firm that show that Hillary
inconsistent with his denial, Hubbell had earlier testified that Massey approached him in 1984
and asked for help getting Madison Guaranty's business.1848 Hubbell testified that Massey had
1844
Hubbell 12/19/95 GJ at 187.
1845
Hubbell 10/26/95 Senate Whitewater Comm. Depo. at 122.
1846
Hubbell 12/19/95 GJ at 108.
1847
Hubbell 5/7/96 GJ at 74-75 ("I don't know for sure who brought it in. . . . I don't have
personal knowledge, right").
1848
Hubbell 10/26/95 Senate Whitewater Comm. Depo. at 134.
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spoken to John Latham, and felt Rose could get some of Madison Guaranty's work.1849 Hubbell
Rick Massey -- Massey testified in 1995 that he did not remember discussing Madison
[D]o I remember going to the partners and saying, "We want to represent the
"Madison [Guaranty]," and other partners saying, "You're not going to do that
until they catch up on their bill, and maybe there ought to be a retainer." I have
read that [Joe] Giroir said that. I don't recall Giroir ever having said that to me. I
don't remember me being in any of that discussion, and it frankly would not have
been a matter in which I normally would be involved because I was a first year
associate, and we didn't have much input on billing arrangements of that kind. It's
possible, however. I just don't remember it.1851
Massey remembered no such discussion with either securities partners or Mrs. Clinton:
Q. Mr. Massey, do you remember anything about your going to the securities
partners and saying, "I want to work on a case for Madison [Guaranty],"
and they said, "We're not going to approve that until Madison [Guaranty]
has paid us what they owe us on some other case"?
1849
Id. at 134-36.
1850
Id. at 135.
1851
Massey 11/7/95 GJ at 85. Giroir testified that he did not remember Rose representing
Madison Guaranty in 1985 and 1986 or any discussions in the firm about any representation.
Giroir 7/18/96 GJ at 23-27.
1852
Massey 11/7/95 GJ at 32. Massey said that although he does not remember it, it is
"possible" he told Knight he thought he was going to get Madison Guaranty as a client. Id. at 84-
456
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David Knight -- David Knight remembered "some discussion" about Madison Guaranty
not paying an old bill but could not remember the details.1854
Webb Hubbell -- Hubbell said he remembered Rose partners were reluctant to work for
There was an issue in the fact that the firm had represented one of -- Mr.
McDougal prior to this issue, before Madison Guaranty, and Mr. McDougal still
owed the firm some money. And several of the partners were not anxious for us
to work for McDougal until that outstanding balance was still paid."1855
Hubbell said he did not remember if he was part of the discussions about the old bill, just
Q. You have told us about the talk within the firm that they've got to pay their
old bill first, and then some arrangement whereby there's going to be the
new. But I take it you're telling us today you don't remember if you were
in on that or not?
85. Before the Senate Whitewater Committee in 1996, Massey also testified that he did not
remember a discussion with any Rose partner about Madison Guaranty's outstanding bill or
partners objecting to bringing Madison Guaranty in again as a client because of the billing
problems: "I've heard that there were discussions, that there was some disgruntlement. And
discussions like this could have gone on. I don't believe I was a party to them." Senate
Whitewater Comm. Hearing, supra note 147, at 23-24 (Jan. 11, 1996) (testimony of R. Massey).
1853
Massey 11/7/95 GJ at 84.
1854
Knight 12/6/95 GJ at 15-16 ("That rings a bell. I just recall some discussion about a
prior problem with Madison Guaranty or McDougal not paying a bill or, you know, some -- with
respect to some earlier representation. But I don't remember it in the sense of kind of a formal
declaration or consideration -- you know, consideration of the thing. I don't recall being involved
in any lengthy discussion or, you know, policy statement or anything like that about it. I just do
generally recall that topic coming up").
1855
Hubbell 12/19/95 GJ at 43-44. When asked which partners he remembered being
upset about McDougal's past non-payment Hubbell identified Foster and Gregory. Id. at 46.
457
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A. No, I don't. I was aware of it, but I don't remember any specific, you
know, "It's got to be paid," and things of that sort. I mean, I was aware
that there was a concern.1856
Hubbell said he did not remember talking to Mrs. Clinton about a retainer for Madison
Guaranty, but did remember talking to her about other firms' use of retainers.1857 Hubbell said he
spoke to Mrs. Clinton in the mid-1980s about Madison Guaranty's billing problems and the old
A. I know that I had conversations with her when we first took on the
Madison Guaranty representation, that was in '84 or '85.
Q. What do you recall about those conversations in '84-85 about the Madison
Guaranty representation?
A. The law firm did not want to -- some of the members of the law firm did
not want to represent Madison Guaranty until Mr. McDougal had paid an
old bill owing the firm.
Q. And what was Mrs. Clinton's position with regard to whether the firm
should represent McDougal?
A. She thought that if he got right with the firm, that she didn't see any reason
why we shouldn't represent him.
1856
Id. at 61-62.
1857
Id. at 67. Mrs. Clinton said she did not remember any conversations with Hubbell
about Madison Guaranty's business or retainers. H. Clinton 4/22/95 Depo. at 13-14 ("I don't
recall any [conversations with Hubbell], but I might very well have had conversations with
him"); see also Hubbell 2/1/95 Int. at 6 ("HUBBELL does not know if HILLARY CLINTON
talked to the firm regarding the MADISON retainer, nor does he have any memory of HILLARY
CLINTON talking to HUBBELL personally about the retainer").
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A. Yes, he did.1858
Watt Gregory -- Watt Gregory, a senior member of Rose's securities section, said he
remembered "some general discussion" about whether Rose should work for Madison
shouldn't [represent Madison Guaranty], or what some of the issues might be in connection with
the ability of the savings and loan to raise capital by that particular method."1860 Gregory testified
"that Mrs. Clinton was instrumental in introducing the client to the lawyers in the firm."1861
Gregory remembered two specific concerns about Madison Guaranty.1862 Gregory felt that
Rose, which had represented no savings and loans, did not have the expertise.1863 Gregory
thought the business potential was small and the risks were great; he understood that savings and
loans in general (and Madison Guaranty in particular) were having financial difficulties and he
"didn't perceive Madison [Guaranty] to have a particularly attractive risk/reward ratio for our
1858
Hubbell 10/26/95 Senate Whitewater Comm. Depo. at 131-32.
1859
Gregory 1/3/96 GJ at 7. Gregory testified that although he remembers some
discussion, he cannot remember "names, places, or dates." Id. Gregory remembered one party to
the discussions was David Knight. Gregory 5/24/95 Int. at 2.
1860
Gregory 1/3/96 GJ at 25-26.
Id. at 6. Gregory's 1995 OIC interview reads: "RLF's opportunity to represent
1861
Madison Guaranty Savings & Loan (MGSL) came through Hillary Clinton in the mid 1980's."
Gregory 5/24/95 Int. at 2.
1862
Gregory 1/3/96 GJ at 13, 15-16 ("But I do know that there was an open discussion
about the client, or the potential client, as well as the substantive issue, could a state-chartered,
stock-owned savings & loan association have two classes of stock . . . But to my way of thinking,
the discussions about, 'Should we be doing this,' took place before we undertook the particular
project").
1863
Id. at 9-10
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firm as a new client."1864 He was also concerned that "there was no bright-line, black-letter
statement in the Arkansas statutes that would say you can have two classes of stock."1865 Gregory
did not remember any discussion about Madison Guaranty's outstanding bill.1866 When asked
about how Massey was assigned to the project, Gregory said, "I have some recollection that he, at
Four other Rose partners -- William Kennedy, George Campbell, Joe Giroir, and Wilson
Jones -- were asked about any discussions within the firm or with Mrs. Clinton about Madison
As previously discussed, in 1994, 1995, and 1998, Mrs. Clinton said Massey asked her
help to resolve McDougal's old bill. In contrast, Massey testified in 1995 that he did not
remember speaking with Mrs. Clinton or any other Rose partners about the bill.1869 Massey told
the Senate in 1996 that he did not remember approaching Mrs. Clinton about representing
Madison Guaranty:
Q. [A]m I correct that you did not go to Mrs. Clinton and say I have a
proposal to do work, can you go to Mr. McDougal and get him to agree to
prepay?
1864
Id. at 8-10.
1865
Id. at 13-14.
1866
Id. at 18.
1867
Id. at 29.
Senate Whitewater Comm. Hearing, supra note 147, at 277 (Jan. 16, 1996) (testimony
1868
of W. Kennedy); Campbell 6/28/96 Int. at 2; Giroir 7/18/96 GJ at 24-26; Jones 6/27/96 Int. at 3.
1869
Massey 11/7/95 GJ at 33-34.
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When asked if he remembered approaching Mrs. Clinton about getting Madison Guaranty
It's possible that I had a casual conversation with her that I don't remember from
11 years ago, sir, but I don't recall a conversation in which I went to her and asked
her to help me bring in the client.
....
Now, it's possible -- and I think I knew at that time that Mrs. Clinton had some
relationship with Mr. McDougal, and so it's possible that I could have had a casual
conversation with her in a hallway and said gee, we'd really like to try to get these
folks' business, and maybe you could have a word with Mr. McDougal. It's very
possible.
....
It's possible that I had a conversation with her about gee, I think we might be able
to get these folks' work, you know McDougal, maybe you could go talk to her.
[D]id I talk to her with respect to how we were going to bill them, whether we get
a retainer, did I have a specific engagement agreement of some kind. Sir, I don't
have any recollection of that happening. I don't believe it happened that way.
Could I have had a conversation with her, can you have a talk with Mr.
McDougal, that's very possible. I want to -- that's my testimony.1871
The McDougal-controlled Madison Bank & Trust did at one time have a long-outstanding
old bill from Rose. Rose billed Madison Bank in July 1982 for $5,000 in legal fees, and $893 in
1870
Senate Whitewater Comm. Hearing, supra note 147, at 26, 135-36 (Jan. 11, 1996)
(testimony of R. Massey) ("I do not remember, as you said earlier, a proposal in hand to her and
discussing with her that there were partners in the firm that were dissatisfied with McDougal and
here is a proposal and let's work it out. I have no recollection of that").
1871
Id. at 20, 25, 136, 234 (testimony of Massey).
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expenses. Rose had lost the case it was billing for, and McDougal refused to pay. The
When the Madison Bank & Trust board of directors met on September 25, 1984, the old
bill was on the agenda. Under the heading "Rose Law Firm," the meeting minutes recorded: "We
owe $5,000 for Huntsville move appeal, according to firm. Mr. Vaughn moved, Mr. McDougal
seconded that Mr. [Gary] Bunch [president of Madison Bank] will negotiate settlement with
Rose Law Firm. Approved unanimously."1872 On October 9, 1984, Vince Foster wrote to Bunch,
referring to their conversation the week before, saying Rose would sue if Madison Bank did not
pay its bill by October 22.1873 Madison Bank sent a $5,000 check to Rose on October 22, 1984,
On November 27, 1984, the Madison Bank and Trust board met again. The minutes
reported earnings would be down because of "heavy accounting fees . . . and a payment of legal
fees."1875 Bunch said he understood the $5,000 payment settled the debt, even though the costs
portion had gone unpaid and Rose never sent another bill.1876
The evidence established that Mrs. Clinton was wrong when she said she met with Jim
McDougal on April 23, 1985 to discuss the old bill and that he thereafter paid that bill.
According to the chronology Vince Foster created during the 1992 campaign, $5,000 was paid on
1872
Bunch 1/20/98 GJ at 16 (discussing minutes).
1873
Id. at 23-24, 26 (discussing letter).
1874
Id. at 26-27 (discussing check and endorsements).
1875
Id. at 17.
1876
Id. at 30.
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the Bank of Kingston bill on October 23, 1984,1877 and this was confirmed by the original copy of
the bill stamped "Paid" on October 23, 1984 found in 1997 in Foster's attic. Mrs. Clinton
acknowledged in her 1998 testimony that her earlier testimony was not entirely accurate. She
noted that even though $5,000 had been paid by the date of her meeting with McDougal, there
still was $893 outstanding. Even if Mrs. Clinton was referring to this $893 difference when she
said she went to discuss an old bill with McDougal in April 1985, the evidence shows that the
balance was not expected to be paid and that payment of that portion the bill was not a
In 1995, Massey testified that he did not ask Mrs. Clinton to become the billing partner:
Q. All right. Mr. Massey, do you remember anything about you, Rick
Massey, affirmatively going to Hillary Clinton and asking Hillary if she
would become the billing partner?
A. No, I do not.1878
Massey testified, consistent with his prior testimony, before the Senate Whitewater
Committee:
Q. Did you approach Mrs. Clinton and ask her to be the billing attorney on
the Madison Guaranty account?
Savings & Loan (Mar. 26, 1992) (Doc. Nos. 1180-00000236 through 240).
1878
Massey 11/7/95 GJ at 95-96.
Senate Whitewater Comm. Hearing, supra note 147, at 29 (Jan. 11, 1996) (testimony
1879
of R. Massey).
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Massey was asked whether he would have remembered asking Mrs. Clinton to be the
billing partner:
Counsel. And do you know how Mrs. Clinton came to be the billing
partner?
Massey. No.
Chairman D'Amato. Mr. Massey, . . . If you asked Mrs. Clinton to be the billing
partner, wouldn't that be a thing -- notwithstanding that it
was 10 or 11 years ago -- that you would recall?
Mr. Massey. I should remember it. It could have happened. I don't think I did.
That's the best I can do.
Chairman D'Amato. And you had to slip in it could have happened. I mean, Mr.
Massey, you get this matter. Mrs. Clinton is not in your
section. Now you're going to bring me to develop how it is
that that would not be consistent at all. Mrs. Clinton is not
in this section. She doesn't do securities work. She's not in
the area, the general area of the firm that handles this work;
is that correct?
464
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income had declined in the years prior to the alleged jogging incident -- a fact which McDougal
should not have known independently. One witness, Bill Henley, partially corroborated
Governor Clinton. Similarly, Susan McDougal's unsworn press interviews also show McDougal
contemporaneously told her about the meeting. President Clinton did not contradict McDougal,
McDougal was a confessed perjurer, and no independent witness could entirely corroborate his
testimony.
Mrs. Clinton's various descriptions of events about the Rose retainer had substantial
inconsistencies. Latham, Massey, and Knight disagreed with Mrs. Clinton's statement that
Massey brought in the business through Latham. Latham, Massey, and Knight consistently said
that McDougal, not Latham, hired the lawyers. Massey told the grand jury that he was not the
1880
Id. at 170-72 (testimony of Massey).
1881
This Office discounted the testimony of Moles as so at variance with other known
facts as lacking in significant probative value.
465
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regular firm, Mitchell Williams, had already begun work on the broker-dealer and preferred stock
matters prior to Rose's retention.1883 A Mitchell Williams attorney had already contacted the
ASD about the matter before it was turned over to Rose -- a sequence of events unlikely for
Latham to have caused.1884 John Selig, the Mitchell Williams partner who did Madison
Guaranty's legal work was formerly head of the ASD.1885 Beverly Bassett, then the current ASD
head, had been a lawyer at Mitchell Williams.1886 In addition, Jim Guy Tucker, the billing partner
at Mitchell Williams, was a long-time friend and business partner of McDougal.1887 It seems
unlikely that Latham sought to have a new associate at Rose represent Madison Guaranty before
the ASD rather than Selig, a former head of the ASD for whom Bassett had previously worked
1882
Massey's testimony before the Senate Whitewater Committee was more equivocal,
raising doubts about the accuracy of either statement. The balance of the evidence (including the
unlikelihood that Massey would forget his first client ever) supports the conclusion that Massey
was not the source of Madison's business, though his confirmed lunch approach to Latham could
have played some role in McDougal's decision to hire Rose.
1883
Letter from Mitchell, Williams, Selig, Jackson & Tucker Law Offices to Sarah
Hawkins, Senior Vice-President, Madison Guaranty, enclosing a Preliminary Offering Circular
(Dec. 3, 1985) (Doc. Nos. 155-00001504 through 1506). More than one month later, Mitchell
Williams opened another matter on Madison Guaranty's account, entitled "Broker-Dealer." (Doc.
Nos. 155-00001507 through 1509). The broker-dealer file was also empty. These were the ninth
and tenth matters opened by Mitchell Williams for Madison Guaranty.
1884
Id.
1885
Selig 7/18/96 GJ at 3-4.
1886
Letter from Bill Clinton, Governor of Arkansas, to Beverly Bassett, Wright, Lindsey,
and Jennings attorney (Jan. 22, 1985) (Doc. No. DEK219149). The Governor's Office issued a
press release announcing Bassett's appointment (Jan. 18, 1985) (Doc. No. 319-00028649).
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simply as a favor to his friend Massey. McDougal offered a simpler and more direct explanation:
He hired Rose because he thought the Governor's wife would have influence in front of a state
agency.1888
Also significant is the documentary evidence showing that McDougal's "unpaid" bill had
been paid and settled six months before Mrs. Clinton met with McDougal in April 1985. If Mrs.
Clinton's testimony reflected her view that the entire bill was not paid, $5,000 had been paid. If
Mrs. Clinton's account testimony reflected her view that only the unpaid $893 expense portion of
the bill remained unpaid, that portion was never expected by Rose to be paid.
There is a plausible explanation for Mrs. Clinton's testimony. In late 1983, Mrs. Clinton
was asked by her fellow partners at Rose to intercede with McDougal about payment of the Bank
of Kingston bill.1889 This earlier contact with McDougal may have been the contact Mrs. Clinton
remembered, though she mistakenly confused it with the 1985 meeting she and McDougal agreed
occurred. In the judgment of the Independent Counsel, this plausible explanation for Mrs.
Clinton's confusion would create a reasonable doubt in a trier of fact's mind about the willfulness
of Mrs. Clinton's factually inaccurate statements about going to see McDougal in April 1985
On balance, the weight of evidence supports McDougal's version of events. But in the
judgment of the Independent Counsel, the weight of the evidence simply is not sufficient to
1887
See Tucker 3/18/99 GJ at 21-23.
1888
J. McDougal 8/1/96-6/1/97 Int. at 15.
1889
See H. Clinton 4/25/98 Depo. at 23-24.
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warrant prosecution of Mrs. Clinton. Moreover, with McDougal's death in March 1998, the most
important percipient witness became unavailable. For these reasons and in the exercise of
discretion, the Independent Counsel declined prosecution as to Mrs. Clinton's testimony and how
The legal work that Rose and Mrs. Clinton did for Madison Guaranty was also
scrutinized by federal investigators. Rose's legal work for Madison Guaranty coincided with
some of the most serious frauds perpetrated by the Madison Guaranty insiders, including the
IDC/Castle Grande transactions, which eventually caused losses of more than $4 million to the
institution.1890
Rose billing records sought for many years by this and other federal investigators were
finally produced by Mrs. Clinton's attorneys in January, 1996. These long sought records
provided more detail about Mrs. Clinton's legal work for Madison Guaranty than was previously
known. The Rose billing records showed six separate "matters" worked on by its lawyers for
Madison Guaranty. Matter 5 was called "IDC," for Madison Financial's purchase, development,
and resale of a 1,050-acre parcel of land from the Little Rock IDC. The IDC property was
developed under the name "Castle Grande." As addressed in detail in Volume II, Part B, Chapter
1 of this Final Report, these transactions involved substantial misconduct, discovered by federal
Pillsbury Madison & Sutro LLP, A Report on Certain Real Estate Loans and
1890
Investments Made by Madison Guaranty Savings & Loan and Related Entities: Prepared for
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regulators in 1986.
The billing records showed that Mrs. Clinton billed Madison Guaranty for time working
on various aspects of these transactions, such as billing for her conferences with Seth Ward, the
admitted straw man for the original purchase of the IDC property who executed a series of
"loans" compensating him for that criminal role, while disguising the payments as "loans" to
The billing records show Mrs. Clinton's legal work on the IDC transactions between
November 14, 1985 and June 10, 1986.1891 Her greatest number of billing entries occurred
between November 14, 1985 and January 7, 1986.1892 During that seven-week period, Mrs.
Clinton billed Madison Guaranty for twelve conferences with Seth Ward on the IDC
transaction.1893 She also billed for two conferences with Webb Hubbell in November 1985.1894
The billing entries for these conferences do not say what was discussed. Mrs. Clinton later said
she did not remember the details of these conferences, though she thought they were related to
DEK015013 through 15019, 015021 through 15022, 015029 through 15032, 015038).
Rose Law Firm Billing Records (Nov. 1985 through Jan. 1986) (Doc Nos.
1892
469
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legal research concerning Castle Grande's proposed brewery and the sewer and water utilities.1895
Seth Ward testified that he did not remember having any discussions with Mrs. Clinton.1896
Before January 30, 1986, Mrs. Clinton charged Madison Guaranty for an additional 14.5
hours of legal work on the IDC matter that was otherwise unrecorded on Rose's other records.
On January 30, 1986, Rose (by Mrs. Clinton as the billing partner) sent Madison Guaranty five
bills for legal services -- one for each open matter.1897 The IDC draft bill computerized billing
memorandum stated that Mrs. Clinton performed $912.50 worth of legal work on the IDC
matter.1898 Mrs. Clinton made a handwritten change to the draft billing memorandum to increase
billing for her work to $2,731.25.1899 Mrs. Clinton did not write down what additional work she
had performed to justify this additional charge or when that work had been performed. No
supporting details for this increase were ever entered into the Rose billing computer and Mrs.
Clinton's personal timesheets for 1985 to 1986 were never produced to this or any other
The additional work Mrs. Clinton might have performed could possibly be determined by
comparing the computerized billing memorandum with the invoice Rose sent to Madison
1895
H. Clinton 2/14/96 FDIC Int. at 72.
1896
Ward 1/17/96 GJ at 62; Ward 2/12/96 Senate Whitewater Comm. Depo at 44.
Rose Law Firm Billing Records (Jan. 1986) (Doc. Nos. DEK015008, 015011,
1897
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Guaranty. The original draft billing memorandum entry for November 14, 1986 stated:
"Conference with Seth Ward regarding purchase from Brick Lile."1901 That entry was initially
billed to Matter #4 (General), but Mrs. Clinton edited the draft memorandum to move it to
Matter 5 (IDC).1902 The final January 30, 1986 invoice for Matter #5 contained the description
"Conference with Seth Ward regarding purchase from Brick Lile and proposed industrial
development on site." Some of the 14.5 missing hours of work could have been for the
"proposed industrial development on site." This Office was unable to determine the basis for the
$1,818.75 increase in Mrs. Clinton's IDC billings for work performed through January 30, 1986.
It is possible that the billing records do not accurately reflect Mrs. Clinton's work. Mrs. Clinton
This Office also examined whether Hubbell's IDC work was billed under Mrs. Clinton's
name. Hubbell had substantial contact with Ward on the IDC matter. File storage records at
Rose show Hubbell maintained a file entitled "IDC: UNION TOWNSHIP RESEARCH."1903 In
his August 1996 testimony, Hubbell admitted advising Ward on most significant aspects of the
IDC transaction.1904 Don Denton1905 and Ward's accountant, Mike Schaufele, corroborated
1901
Rose Law Firm Billing Records (Nov. 22, 1985) (Doc. No. DEK014991).
1902
Id.
Rose Law Firm Computer Printout by file name and attorney name (undated) (Doc.
1903
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Hubbell's testimony.1906
Hubbell denied billing time or doing legal work for Madison Guaranty through another
Q. Did you ever bill for any work for Madison Guaranty Savings & Loan or
Madison Financial in 1985 and 1986?
A. Not that I remember, and I haven't seen anything that shows that I did. I
mean, I'm hesitant to be 100 percent sure of anything anymore, but if I
could [sic] 100 percent sure, I don't remember ever billing Madison. I've
never seen anything or heard anybody say that I did.
Q. Would you ever have billed Madison -- and that would include Madison
Guaranty and Madison Financial Corporation -- indirectly, that is, through
someone else? That is, you do work and you put it under someone else's
name or in some other category on the bill, not under Web Hubbell legal
services?
Mrs. Clinton testified in 1995 that she remembered performing no legal work that she did
Q. [F]rom the time of the advance against fees or retainers started in May of
'85 until it was terminated in July of '86, do you recall today doing any
other work on anything other than the matter with the Arkansas Securities
Department?
A. I have a recollection of the firm during that time doing some other minor
matters for Madison [Guaranty], but I couldn't tell you what they were
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right now.1908
In 1993, Rose recreated the Madison Guaranty representation from fee allocation
documents in the firm's files.1909 Mrs. Clinton was questioned using the recreated fee allocation.
For January 1986, the allocation showed Mrs. Clinton was credited with earning a fee of
$2,731.25 for Stock Offering & IDC and $802.50 for Stock Offering.1910 Mrs. Clinton was asked
if she had worked on the stock offering matter, and she said: "I must have done something or it
could have gotten misallocated. There was a -- I think IDC was something different from the
stock offering, but I don't have any memory of that."1911 This exchange followed:
Q. I believe -- and I'm sorry that I don't have a copy, Mrs. Clinton, but the
IDC, I think, had to do with Castle Grande. And there was a memo in
there or something on a wet/dry issue.
A. Uh-huh.
Q. And there is actually a memo from Rick Donovan to you. Do you recall
anything what that would be about.
A. I don't recall specifically, but there was some property that Madison either
owned or was trying to develop that was partially in a township that was
wet, or something like that. That's all I remember right now.1912
1908
H. Clinton 4/22/95 Depo. at 30.
1909
R. Clark 12/5/95 GJ at 20-22. Some of these documents had been removed in 1992
by Hubbell and Foster. See Hubbell 5/7/96 GJ at 15, 18-19; Rose storage facility checkout log
(Mar. 24, 1992) (Doc. No. 105-00054216).
Recap of fees from Madison Guaranty Savings & Loan Final Recap at 2 (for period
1910
1983 through Sept. 1987) (Doc. No. 105-00083353 through 354). H. Clinton 4/22/95 Depo. at
41. When discovered, the billing records listed that in fact the entire $2,731.25 was for the IDC
matter. Rose Law Firm Billing Records (Jan. 21, 1986) (Doc. No. DEK015017).
1911
H. Clinton 4/22/95 Depo. at 41.
1912
Id. at 42-43.
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Mrs. Clinton was asked whether she thought the fees had been allocated to her because
she had brought in the business, or because she had done the work. She replied: "Well, I did
work. I just can't remember 10 years from the work exactly what the work was."1913
The billing records showed that Mrs. Clinton billed Madison Guaranty for an April 7,
1986 telephone conversation with Don Denton.1914 That was the day that Madison Guaranty and
Ward executed the second set of "cross notes" that deceived the federal examiners about Ward's
compensation.1915 Mrs. Clinton's time was billed to the IDC matter.1916 In her 1996 RTC
1913
Id. at 43. In Mrs. Clinton's FDIC interview on November 10, 1994, she was
questioned about one of the few IDC bills investigators then had. Mrs. Clinton said she did not
remember the IDC matter, but presumed her name was listed on the bill as billing partner. H.
Clinton 11/10/94 FDIC Int. at 3. The investigators asked Mrs. Clinton to give her answers under
oath, which she declined. Id. at 1. The FDIC also asked Mrs. Clinton about a January 23, 1986
memo from Rick Donovan to her about the wet/dry township issue, and she said the matter was
handled by Rick Donovan. H. Clinton 11/10/94 FDIC Int. at 3-4.
1914
Rose Law Firm Billing Records (May 13, 1986) (Doc. No. DEK015030).
1915
Denton 8/20/96 GJ at 64-65; Ward $300,000 "loan" to Madison Financial (Apr. 7,
1986) (Doc. No. 56-00126454); Ward $70,943.47 "loan" to Madison Financial (Apr. 7, 1986)
(Doc. No. 396-00000525); Clark 7/26/97 Int. at 3-4; FDIC-OIG Supplemental Report on Rose
Law Firm Conflicts of Interest, WA-94-0016 at ii-iii (Sept. 20, 1996). In summary, on March 31,
1986, Ward was paid $400,00 by Madison Guaranty as compensation for Ward's role as straw
man in the IDC purchase. To conceal the true nature of the transaction from the examiners who
were then auditing Madison Guaranty, two cross notes were prepared: one note purported to
evidence a loan from Ward to Madison Financial for $400,000; the other purported to evidence a
loan of $400,000 from Madison Guaranty to Ward. On April 7, 1986, the cross loans were
replaced with new notes. The $400,000 loan note from Ward to Madison Financial was replaced
with separate notes for $300,000 and $70,943.47. The $300,000 note corresponded to the
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interview, when asked what she knew of the cross notes, Mrs. Clinton testified: "I don't recall
knowing anything about these loans."1917 Don Denton said he received a telephone message on
April 7, 1986, from Sandra Moody, Hillary Clinton's secretary, asking him to call Mrs.
Clinton.1918 Denton returned the call and spoke with Mrs. Clinton about Ward's loan to Madison
Financial. On April 7, 1986, Mrs. Clinton billed the IDC matter for a telephone conference with
Denton.1919 Denton later said he vaguely remembered that Mrs. Clinton was preparing the note
from Ward to Madison Financial and that she was calling for Hubbell.1920 Denton said he told her
the note had already been prepared and executed.1921 Denton said Mrs. Clinton asked him to send
her a copy of the note, or both notes, for her review.1922 Denton said they may also have
discussed Ward's cross loans -- the $300,000.00 and $70,000.00 loans to Madison Financial --
that replaced the $400,000.00 loan.1923 Denton said he told Mrs. Clinton "there could be a
problem with the notes as they constituted in effect a parent entity fulfilling the obligation of a
amount of Ward's supposed "commissions" -- his compensation for being straw man on the
transaction -- and the $70,943.47 corresponded to the amount that remained outstanding from
Ward's initial purchase of IDC.
1916
Rose Law Firm Billing Records (Mar. 28, 1986) (Doc. No. DEK015022).
1917
H. Clinton 2/14/96 FDIC Int. at 81.
Telephone message slip to Don Denton from Sandra Moody (Apr. 7, 1986) (Doc. No.
1918
DD00000241).
1919
Rose Law Firm Billing Records (entry for Apr. 7, 1986) (Doc. No. DEK015030)
(reflects 0.2 hours billed by Mrs. Clinton for "Telephone conference with Don Denton").
1920
Denton 6/20/96 Int. at 5-6.
1921
Denton 8/20/96 GJ at 64.
1922
Id.
1923
Id. at 65-66.
475
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subsidiary." He said she "summarily dismissed" his concern in a way he understood meant that
she wanted him to manage savings and loan matters, and leave legal matters to her.1924
Q. Tell the ladies and gentlemen of the grand jury what happened when you
called Sandra in Hillary Clinton's office back.
A. I returned the call and was immediately connected with Hillary Clinton.
We exchanged a couple of hellos, how are you, The conversation was very
short. I was told that she was working on a transaction involving Seth
Ward and Madison Financial, and that she was . . . [seeking] information
so she could document the obligation that Madison owed Seth. In other
words, the $400,000 obligation. She understood that Seth had been loaned
the 400 by Madison Guaranty Savings & Loan. And she was working on a
transaction that would document Madison Financial's obligation to pay
Seth his commissions, Seth Ward his commissions.
A. I cautioned her that the Madison Financial obligation was not a direct set-
off or direct tie to Madison Guaranty's loan. I pointed out that Madison
Guaranty had loaned Seth the money, but Seth was owed money by
Madison Financial Corporation. She rather summarily dismissed my
concerns and indicated that she'd take care of the lawyering.
A. I informed her that the $400,000 note from Madison Financial -- excuse
me -- from Madison Financial to Seth had already been prepared. And she
asked that we supply a copy of that note, which I did. I had an employee
of Madison deliver that note.
Q. To whom?
1924
Id. at 64.
476
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Q. And then also the note that you had prepared, was it the first note on April
-- pardon me -- on March 31st, or was it a note drafted on that day, April
7th?
A. I don't recall which it would have been. It was -- as I recall, it was the
$400,000 note. I'll note now that the replacement notes were also dated
April 7th, so I don't recall specifically which ones were delivered.
....
So I think on April 7th, two notes were replaced, the 300 plus the 70, to
take care of the remaining $300,000 balance on the original note plus the
$70,000 note. And it more clearly identified them. Rather than a total
note for 400, it broke it down into two notes, with those specific amounts,
the 300 and the 70,000 note.
Q. Did you and Mrs. Clinton discuss that in your telephone call on April 7th?
A. That was the reason of her inquiry. I may or may not have informed her
that the 300 plus the 70 had already been done. I just don't recall now.
....
Q. Who did you believe was Mr. Ward's attorney at that time?
A. Webb Hubbell.
Q. Who did you think that she represented at the time you received the phone
call from her on April 7th?
A. Seth Ward.1925
Denton did not remember this conversation until after the billing records had been found.
1925
Id. at 63-67.
477
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Prior to that time, Denton had said he remembered no conversations with Mrs. Clinton.1926 Mrs.
Clinton's counsel, in his letter transmitting her affidavit to the Senate, criticized Denton's "sudden
recollection of a twelve-minute phone call with Mrs. Clinton over ten years ago" rendering, he
Mrs. Clinton addressed the Denton conversation through her attorney in a June 17, 1996
letter to the Senate Whitewater Special Committee after her attorney produced the billing
records. That letter said she thought the April 7 phone conversation related to another Madison
Guaranty matter -- the Babcock matter.1928 The letter said the April 7 telephone conference was
about Babcock because notes underneath the telephone message slip produced by Denton to the
Senate were about Babcock.1929 Mrs. Clinton billed the Babcock file for 1.5 hours on April 9,
1926
Id. at 66.
Letter from David Kendall, the Clintons' personal attorney, to the Senate Whitewater
1927
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A. No, I can't. From looking at the billing records, it merely states telephone
conference with Don Denton. I believe that it had to do with a matter
referred to as Babcock in the billing records.
Q. Would you agree that it's listed under the matter IDC?
....
Q. Now, Mrs. Clinton . . . Mr. Denton has stated that on this call, that there
was a phone message from you to him on that day and that you and he
discussed certain loan documents flowing from Madison Financial to Seth
Ward, and then a loan going back from Seth Ward to Madison. Did you
do that?
Q. Your counsel has publicly stated -- I don't know if he put this in any kind
of written form, I think he did, I think I read that at some point -- perhaps
to the Senate, that he believes that Mr. Denton was not truthful about that;
in fact, that there was a message slip that Mr. Denton had but that it was
laid on top of some Babcock documents.
Q. And is it your position that the message slip that he had was actually a
copy and it was shown that it was on top of the Babcock documents, and
therefore reinforced a belief that maybe he wasn't telling it like it was?
A. Well, I don't want to draw any conclusions. I can only say that based on
the billing records, and based on the information I have seen, if you look at
the 4/7/86 entry, which is the 12-minute telephone conference, and yes it
was billed to IDC, but I don't think that was correct, because it was
followed two days later by an hour and a half conference with Mr. Denton
concerning the loan participations that Savers Savings and Loan had that
Madison was interested in resolving. And then all of the time on Babcock
concerns those loans and Mr. Denton is one of the people that I spoke with
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So, I believe, based on the evidence that I see and the fact that Mr. Denton
was involved in this Babcock matter, that that is what that first telephone
conference also pertained to.
A. That's a good question, Mr. Ewing, and as I've looked at these billing
records carefully, over the last days, there are a lot of questions I have
about that. There are a number of errors, and I attribute it to secretarial,
clerical, accounting errors. But I think that's where the telephone
conference with Mr. Denton rightly belongs.1931
One other document arguably shows Mrs. Clinton's knowledge of Ward's cross-loan
agreement with Madison and his interest in Castle Grande - a page of notes written by Rick
Donovan when he was first assigned the wet/dry research project by Mrs. Clinton.1932 The notes,
however, are subject to more than one interpretation. The undated notes list two research
projects Mrs. Clinton assigned to him - an unrelated project on a writ of garnishment and:
2. Seth Ward
The notes go on to discuss the project and how Donovan would decide what property was wet or
1931
H. Clinton 4/25/98 Depo. at 125-27.
1932
Donovan 12/6/95 GJ at 6-7.
1933
Donovan's handwritten notes (undated) (Doc. No. 105-00003697).
480
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The phrase "property purchased" could modify the heading "Seth Ward" -- in which case
the notes would confirm that Mrs. Clinton knew Ward owned some of the property. Another
interpretation, though, is that "Seth Ward" refers generally to the source of Mrs. Clinton's
information and her contact at Madison, perhaps to let Donovan know who to contact if he
a. Background.
The FDIC concluded that the May 1, 1986 option agreement between Madison Financial
and Seth Ward was intended by Ward and other insiders to deceive the examiners about the true
nature of Ward's compensation, and that it accomplished its intended effect.1935 Investigators
were particularly interested in evidence related to the option when the billing records showed that
Mrs. Clinton billed Madison Guaranty for preparing the option.1936 On May 1, 1986, Mrs.
Clinton billed Madison Guaranty on the IDC matter two hours for:
Mrs. Clinton testified that it was not unusual for Ward to stop by Rose demanding legal
1934
Id.
1935
FDIC Supplemental Report at V.
1936
Id. at IV.
1937
Rose Law Firm Billing Records (May 13, 1986) (Doc. No. DEK015032).
481
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work immediately.1938 It appears that after April 29 (Tuesday), when one of the federal
examiners followed up on the option agreement that Denton had told the examiner was being
prepared,1939 Ward went to Rose Law Firm in person on May 1, 1986 (Thursday). This is
corroborated by Mrs. Clinton's two distinct billing references: one for a "conference with Seth
Ward," and the other for a "telephone conference with Seth Ward"1940 -- the more explicit
"telephone" reference in the second entry implying that the "conference" reflected in the first
Hubbell was out of town in an unrelated trial.1941 Ward may have asked Mrs. Clinton to
draft the option simply because Hubbell was gone. Billing records show that Mrs. Clinton may
have drafted the option after making phone calls to both Ward and his accountant, Mike
Schaufele.1942 The option was signed and notarized on May 5, 1986.1943 The option contained
1938
H. Clinton 2/14/96 FDIC Int. at 13.
1939
Denton 3/19/98 GJ at 21.
1940
Rose Law Firm Billing Records (May 13, 1986) (Doc. No. DEK015032).
1941
Tucker 3/18/98 GJ at 187.
1942
Ward 1/17/96 GJ at 31-32. Schaufele later testified that he did not remember his
conversation with Mrs. Clinton but thought that the only topic he would have discussed with her
was Ward's tax liability. See Schaufele 1/30/96 GJ at 27-29. Ward testified that he has no
recollection of any conversation with Mrs. Clinton. Ward 1/17/96 GJ at 82-83.
1943
Option to Purchase Real Estate Agreement Version #1 (May 1986) (Doc. Nos. 99-
00043196 through 43201); Option to Purchase Real Estate Agreement, Version #2 (May 1986)
(Doc. Nos. 99-00043202 through 43208).
See Option to Purchase Real Estate (May 5, 1986) (Doc. No. 99-0043197). In the
1944
bottom-right corner is the code "0190g," Mrs. Clinton's word processing code.
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Denton gave a copy of the option to examiner Darlene Ford on May 7, 1986.1945 Ford
reviewed the legal description of the property and noticed it was wrong.1946 The option did not
refer to Holman Acres, but to property already purchased by Davis Fitzhugh on February 28,
1986.1947 Ford pointed out the error to Denton, who had the first two pages re-typed to describe
This Office could not identify the source of the incorrect legal description. Rose files that
might have shown how the error occurred were destroyed at Mrs. Clinton's direction in 1988, one
Mrs. Clinton was first questioned about the option agreement on December 21, 1995,
when the RTC sent her supplemental interrogatories.1950 The RTC learned on December 21 that
1945
Copy of option with Ford's handwritten notes (May 1, 1986) (Doc. No. 99-00043196).
1946
Ford 7/29/96 Int. at 3.
1947
This same property description appears on an attachment to a release deed given to
Seth Ward by Madison Guaranty dated December 30, 1985. Martha Patton, Webb Hubbell's
secretary at the Rose Law Firm, said she typed the attachment. Patton 9/25/96 Int. at 2.
1948
Ford's notes on her copy of the option she received from Denton state: "Talked to Don
Denton. He said that this land description goes with the Fitzhugh mortgage property and that this
description is in error. He said it should be the property known as Tract 27 and 28 of Holman
Acres on which Ward [unintelligible]." Copy of Option with Ford's Handwritten Notes (May 1,
1986) (Doc. No. 99-00043196); see also Ford 7/29/96 Int.; Clark 7/26/96 Int. Denton had the
first two pages of the incorrect option re-typed. Denton 6/26/96 Int. at 7. Denton's corrected
version is referenced as Doc. No. 99-00043202.
1949
Memo from Mary Russell, secretary to Mrs. Clinton, to Mrs. Clinton (July 21, 1988)
with attached list of files destroyed (Doc. No. FDICHRC 0163).
1950
H. Clinton 1/20/96 RTC Interrog. Resp. at 2-3.
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the Rose word processor identification code on the document ("190g") was hers.1951 Mrs. Clinton
answered the December 21, 1995 interrogatories on January 20, 1996, using information
contained in the recently produced billing records. The interrogatories asked sixteen questions
about the option agreement, thirteen of which Mrs. Clinton responded to in one omnibus
response:
1951
Pillsbury Madison & Sutro LLP, A Supplemental Report on the Representation of
Madison Guaranty Savings & Loan by the Rose Law Firm: Prepared for Federal Deposit
Insurance Corporation 125, n.308 (Feb. 25, 1996).
484
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In her February 14, 1996 FDIC interview, Mrs. Clinton was asked about the option
agreement:
Q. Let's talk for a minute about the option that was drafted on May 1, 1986 . .
. . Now, the billing records and the word processing codes indicate that
you have something to do with the drafting of this option. But you're a
litigator, as you've told us. Had you had occasion before this to draft
options for real estate purposes?
A. No. That was not part of my practice, and I have no recollection of doing
this. I can only go by what the billing records describe. And I think it's
unlikely that I would have drafted this option from scratch, that I would
have had [a] conversation with Mr. Ward and Mr. Schaufele and a
conference with Mr. Ward all within a two-hour period.
Q. Mr. Hubbell suggested in testimony that the Rose Firm maintained form
files that were available to people when they were drafting various kinds
of legal documents and at least made the suggestion that this was
something he or others might have used for a purpose like this.
In your practice, would you on occasion, use these form files when you
had to draft documents with which you were unfamiliar?
Q. Mr. Donovan, in his testimony, said rather colorfully, for him, would have
regarded drafting an option as malpractice waiting to happen. And I
wonder, is what you're saying that this is not something you would have
been comfortable doing on your own? You would have involved
somebody else?
A. I have no recollection of what occurred, Mr. Ericson. It's also possible that
since only two hours were recorded, that Mr. Ward had something that had
already been prepared by somebody else and wanted my secretary to make
1952
H. Clinton 1/20/96 RTC Interrog. Resp. No. 33.
485
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some changes on it. That was not uncommon for Mr. Ward, and I would
have talked to him about it and maybe he needed some piece of
information from Mr. Schaufele. I'm totally speculating now, but Mr.
Ward often walked around our firm asking our people to help out on
certain legal matters that were pressing, so far as he was concerned, and
insofar as we were able we tried to accommodate him.
Q. Do you have any recollection of ever talking to Mr. Schaufele about the
IDC property or Mr. Ward's work with respect to it?
A. I have no recollection. All I can point to is the billing record that reflects a
telephone conference with Mr. Schaufele.1953
Q. Mrs. Clinton, we -- the bank examiners were in the bank during this time.
There is evidence that there were these cross loans where Mr. Ward was
advanced monies by Madison, but to cover the obligation, he then on
paper loans money back to Madison, but it was not funded. That later, on
May 1st, '86, there was an option agreement put in place of this document.
Now, we know now that you apparently drafted the option agreement that
took the place of this document here.
A. It, it was billed for. That is correct, along with several other activities in a
two-hour period on May the 1st.
Q. Did you actually bill the client and list on the records of your law firm,
draft option agreement?
A. Draft option agreement is what it says, that's right. But I do not believe I
drafted that option agreement from scratch. That would not be something
I would do.1954
1953
H. Clinton 2/14/96 FDIC Int. at 83-85.
1954
H. Clinton 4/25/98 Depo. at 129.
486
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The May 1 billing entry raised the issue of whom Mrs. Clinton represented in that
transaction. The option agreement was between Ward and Madison Guaranty, and Mrs. Clinton's
billing entry showed she consulted only with Ward and Ward's personal accountant, Schaufele.
Investigators questioned whether Mrs. Clinton had breached legal conflict rules by representing
both sides of the option transaction. Mrs. Clinton denied representing Ward in his individual
capacity. In her 1996 answers to the RTC interrogatories, Mrs. Clinton said:
To the best of my recollection, I don't believe that I have performed legal services
for Seth Ward individually, although I did confer with him on certain matters, as
described more fully herein, when he was working for Madison Financial
Corporation, a wholly owned subsidiary of Madison Guaranty Savings & Loan.1955
In her 1996 FDIC interview, Mrs. Clinton addressed the potential conflict of interest. She
said:
Q. The option is an agreement between Mr. Ward on the one hand and
Madison Financial on the other, so there are two parties to it. Yet, the
time records indicate you talked to Mr. Ward. They indicate you talked to
Mr. Schaufele, who is Mr. Ward's accountant. They don't indicate you
talking to anyone other than Mr. Ward associated with Madison.
In a matter such as this, where you're drafting something, an agreement --
strike that. Let me put it this way. Your client was Madison, not Ward;
right, and this is an agreement between Madison and Ward, yet so far as
the billing records indicate, you talked only to Ward and to Ward's
accountant. Do you think you would have talked to someone at Madison
to ascertain whether this is what they wanted to do?
1955
H. Clinton 1/20/96 RTC Interrog. Resp. at No. 32.
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Q. What I'm getting at is, what distinguishes this in my mind from that
representation, here you have at least the possibility -- feel free to disagree
with me -- of a conflict and yet this is a transaction between Ward and
Madison. It's not Ward simply acting as agent of Madison, but you didn't
speak to anyone at Madison?
A. I may have. I don't recollect that, and the time records don't reflect that,
but I can't tell you, sitting here today, I did not speak to anyone at
Madison.1956
Mrs. Clinton was also asked whether she in fact represented Ward as an individual, and
she responded: "I do not recall thinking anyone was the client other than Madison Guaranty."1957
Webb Hubbell, Ward's usual Rose attorney, testified he understood Mrs. Clinton was
Mr. Chertoff. Can you help us to understand why it was Mr. Ward would
have gone to Mrs. Clinton to help him draft an option rather
than to you?
Mr. Chertoff. Who was representing Ward with respect to the option?
Mr. Chertoff. So Mrs. Clinton was representing both Madison and Ward?
1956
H. Clinton 2/14/96 FDIC Int. at 85-87.
1957
Id. at 48-49.
488
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Substantial evidence supported the conclusion that Hillary Rodham Clinton did more than
an insubstantial amount of legal work on the IDC matter for Madison Guaranty. Significant
evidence also supported the conclusion that Mrs. Clinton's testimony about that work was
incomplete and factually inaccurate. Nonetheless, insufficient evidence exists to prove beyond a
reasonable doubt that Mrs. Clinton's inaccurate statements and testimony were knowingly false,
Lack of Memory -- This Office examined Mrs. Clinton's initial claim that she did not
remember working on the IDC matter. This Office concluded that certain evidence contradicted
The billing records showed that Mrs. Clinton did more work on the IDC matter than on
any other Madison Guaranty matter. There is also evidence that Mrs. Clinton reviewed the
billing records in 1992 showing this work. Her fingerprints were on a copy of the billing records
produced in 1996,1959 and she later agreed that if she touched them it was in 1992 rather than
1994 or 1995.1960
When Mrs. Clinton said in 1995 that she could not remember what IDC was because the
work had been done 10 years previously, it had only been three years since she reviewed the
Senate Whitewater Comm. Hearing, supra note 147, at 7 (Feb. 7, 1996) (testimony of
1958
W. Hubbell).
1959
Federal Bureau of Investigation, Laboratory Report at 3 (Mar. 21, 1996).
489
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billing records recording that work. In 1994, when she told the FDIC investigators that she
thought her name was on the IDC bill only as the billing partner, it had been two years since she
had reviewed the billing records showing her work. Nevertheless, this circumstantial evidence
was, in the Independent Counsel's judgment, insufficient to obtain and sustain a conviction.
The billing records provided significant documentary evidence about Mrs. Clinton's
connection to Seth Ward. The records showed that at several times when Seth Ward was
engaged in irregular activities, Mrs. Clinton was billing for legal services performed for Ward
and Madison Guaranty. For example, on April 7, 1986, when Don Denton and Seth Ward were
executing the cross notes to conceal Ward's compensation from the regulators examining
Madison Guaranty, Mrs. Clinton billed Madison Guaranty on the same IDC matter for a
telephone conference with Denton. Mrs. Clinton was also personally involved in preparing the
May 1, 1986 option agreement used by Ward and Denton to deceive the federal examiners. On
February 28, 1986, a day that numerous fraudulent transactions were conducted on the eve of the
federal examination,1961 Mrs. Clinton billed Madison Guaranty for three-quarters of an hour for
"Seth Ward."1962
Mrs. Clinton had three motives to minimize her role in the IDC/Castle Grande
transactions: First, there was the potential for political embarrassment because the press was
closely scrutinizing the work she did for a corrupt thrift, some of which involved representing the
1960
H. Clinton 4/25/98 Depo. at 126.
1961
Denton 8/20/96 GJ at 48-50.
1962
Rose Law Firm Billing Records (Mar. 28, 1996) (Doc. No. DEK015022).
490
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thrift before state agencies regulated under her husband's authority as Governor. Second, there
was the potential for legal action by the FDIC and RTC against Rose for negligently facilitating
transactions that caused substantial losses to the institution. Third, there was the possibility of
criminal liability resulting from frauds perpetrated by insiders and others associated with
Madison Guaranty.
As set forth in Chapter 2 of this Part, many events had happened following Mrs. Clinton's
termination of Madison as a client -- any of which, in this Office's judgment, could have
refreshed her recollection. By 1990, for example, Mrs. Clinton must have known that John
Latham had pleaded guilty to criminal fraud in a Castle Grande transaction, and Jim McDougal
and Jim and David Henley had been indicted and acquitted on Castle Grande transactions.
Most significantly, in 1992, Mrs. Clinton's work for Madison Guaranty became a
campaign issue. Mrs. Clinton, Webb Hubbell, and Vincent Foster focused significant attention
on the matter at that time. Of particular significance is that Hubbell reviewed the billing records
during the campaign and discussed with Mrs. Clinton her numerous conferences with Seth
Ward.1963 Mrs. Clinton's fingerprints were found on the billing records produced from the White
House in 1996. Mrs. Clinton explained her fingerprints on the records by testifying that she may
have looked at the records during the 1992 campaign, but not later when they had been
subpoenaed.1964
Balanced against this circumstantial evidence, however, is Mrs. Clinton's denial of any
1963
Hubbell 12/19/95 GJ at 177-78.
1964
H. Clinton 1/26/96 GJ at 28.
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recollection. As Mrs. Clinton frequently said, the length of time since her work for Madison
Guaranty was substantial, almost 8 years. That passage of time could support a reasonable
inference that Mrs. Clinton could not remember what work she had done. There is no direct
The circumstantial evidence about Mrs. Clinton's lack of memory was inconclusive and,
therefore, insufficient to refute Mrs. Clinton's claimed lack of memory. Considering the totality
of the evidence, it is the judgment of the Independent Counsel that Mrs. Clinton's statements and
testimony that she did not remember working on the IDC/Castle Grande transaction could not be
April 7, 1986 Phone Call With Denton -- This Office examined whether Mrs. Clinton
played any role in the creation of the Ward "cross notes" or concealed that role from federal
investigators.
It is indisputable that, on April 7, 1986, Mrs. Clinton had a telephone conversation with
Don Denton of Madison Guaranty. Documentary evidence, in the form of a telephone message
slip and Mrs. Clinton's billing records, provided contemporaneous corroboration that the
Guaranty and Ward executed two "cross notes" on Ward's "commissions" from the IDC/Castle
Grande transaction. It is indisputable that Mrs. Clinton billed her telephone conference with
Denton to the IDC matter in the Rose billing system. Significant evidence corroborated Denton's
claim that he and Mrs. Clinton discussed the Ward cross notes during the April 7 conversation.
Mrs. Clinton's contrary explanation -- that their conversation was about Babcock and not
492
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the IDC matter -- is supported by less corroborative evidence. There is also a substantial basis to
challenge Denton's recollection of the conversation. Denton offered a detailed recollection, but
Denton was not an unbiased witness and his detailed recollection was not disclosed when he was
first questioned on the subject. The delay in recounting this conversation leaves his credibility
subject to challenge. And, of course, the only other participant in the conversation, Mrs. Clinton,
provided insufficient evidence to prove that Mrs. Clinton falsely denied that she had done work
May 1, 1986 Option -- This Office examined Mrs. Clinton's role in the drafting of the
May 1, 1986 option agreement. It is indisputable that Mrs. Clinton played a role in drafting the
option agreement -- she billed for doing so, and the option agreement bears her word processing
code.
However, the evidence was equally clear in supporting Mrs. Clinton's statement that she
did not draft the option agreement from scratch. As a litigator, Mrs. Clinton had little or no
experience in real estate matters, and the option prepared by Mrs. Clinton erroneously described
the property being optioned. Thus, Hubbell's suggestion that Mrs. Clinton may have used Rose's
Given that the evidence supports the conclusion that Mrs. Clinton worked on the option
matter for two hours as an apparent accommodation to Ward and/or Hubbell, no basis exists to
contradict Mrs. Clinton's claim that, when she prepared the option, she did not know the use to
493
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which it would be put. In particular, there is no direct evidence that Mrs. Clinton knew the
option would be used to deceive federal regulators. Though there is some circumstantial
evidence to negate Mrs. Clinton's subsequent claim that she did not remember the option
agreement, that evidence (as with other evidence of lack of recollection) is insufficient to sustain
a prosecution.
Representing Seth Ward -- The RTC and FDIC examined whether Mrs. Clinton's work
on the May 1, 1986 option agreement constituted a conflict of interest. This Office examined
whether Mrs. Clinton may have tried to conceal such a conflict from those agencies or other
federal investigators. On its face, the May 1, 1986 option agreement was a transaction between
Ward and Madison Financial -- the subsidiary of Mrs. Clinton's client, Madison Guaranty.
Though Schaufele testified he had no memory of speaking with Mrs. Clinton about the option, he
noted that the only subject he thought that he could have discussed would have been the tax
implications of the option for his client, Ward.1965 Such a conversation would support the
conclusion that Mrs. Clinton was working for Ward in his individual capacity when she drafted
the option, and Hubbell stated that he understood that this was so and that he understood that
Mrs. Clinton, however, denied that she represented Ward in his individual capacity. This
denial is corroborated by the documenting record -- her work on the option was billed to
Madison Guaranty, not Seth Ward, and Madison Guaranty paid the bill.
In sum, given insufficient evidence, this Office determined that no prosecution was
494
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appropriate for any of the statements made by Mrs. Clinton about her work on the IDC/Castle
Grande transaction.
The foregoing Chapters have summarized the evidence about the interaction between
Rose, Madison Guaranty Savings & Loan, Hillary Rodham Clinton, Jim McDougal, Webb
Hubbell, and Seth Ward. The evidence, as already noted, establishes indisputably that Jim
McDougal and other Madison Guaranty insiders engaged in criminally fraudulent conduct
through the operation of the institution. The evidence also establishes that Mrs. Clinton's
representation of Madison involved legal work that, ultimately, was used by McDougal and
In the end, however, the Independent Counsel concluded that there was no substantial
evidence to support the conclusion that Mrs. Clinton was a knowing participant in the criminal
conduct of McDougal or others. The Independent Counsel also concluded that there was
insufficient evidence to prove that any of Mrs. Clinton's subsequent statements about her
representation (including her statements to the effect that she did not remember the details of that
representation) were knowingly false. Though in some instances her recollection proved to be
factually inaccurate, the Independent Counsel ultimately determined that a trier of fact would not
conclude, beyond a reasonable doubt, that Mrs. Clinton's recollection was knowingly false. For
this reason, prosecution of Mrs. Clinton regarding these allegations was declined, and the matter
is now closed.
1965
Schaufele 1/30/96 GJ at 29.
495
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EXHIBIT 3 (Part 1)
to
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r",.,.,."
From HRC Team
s.,6j<><l,
Subjec;t: Swnmary EvidencelI
Summary of Evidence =::1-I
Hillary Rodham Clinton and Webb Hubbell
[L===========::JIJ.UHary
'------------_.....
[ IHillary Clinton and Webster Lee Hu~bcll.
.....
cQntaj~<;
Hut:bdL Section II contai ns aL
'.
Section n
$ectirlD me investi
II contains a chronological background and contextual summary of the g~li on so
invesrjgatjon
that the
th:lt th e fa cts relating to possible obstruction can be placed in t.he
facts the mntext oft.i-tc
context of the ongoing
investigation by
by ore.
Ole.
...l:_::________________-1;.'Uld
h-~_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _- J
be read in
should be in conjunction
conjunction with our ~~
introduction/outline memorandum of April 10th which, for convenience, is also included.
mtroductionloutline inchlG2,d,1'
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. .
The memo also reflects our best assessmenl
assessment of some o:the
of the contrary evidence and
9.f'.d theories
Iheor:es
.olacc, .
place, as well .as evidentiary
evidentiarY considerations.
considerations,
We aiso
also note at the outset that other options exist whieh
which might do jl.l:stjce
justice to thc ~:vidence
the evidence
1. J::videm:e
Evidence
~---"-" 1
__ L...---~
______________________
~====== ~ _JJ _ _ _ _
. : :" , '
__
.....
l
, .1
i
FOLi\(t))G
FOIA(b)6
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FOIA(b)7 ~- (C)
FOII\(b)7
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,
Page 164 of 421
FOIA(b)6
IA(b)6
FOIA(b)7
FOIAib)7
FO (e)
IA(b)7 - (el
FOI/"\(b)7 (C)
1"".
,------,~
' -_ _ _ _ _ _ _ _ _ _ _ _ _~_ _ _ _ _ _ _.J
L -____________________________________~
J IThe case would be the story of how
isa
that happened. Here is of the evidence developed by the investigation:
.a summary afme
1)
/) Castle
J) Cas/Ie Grande -- [The facts relating to the
Ole Castle Grande transaction are
arc detailed in
.transactions? .".Yes.
Yes.
Yes.
Castl~
Cast I.e Grande refers 10
to a 1,050
1I,OSO acre development so
-acre
,OSO acre south ~inle Rock, Arkansas which
uth of Little
fraudulc,nt
accomplished in a fraudulent
fraudulc.nt way that violated fede
fe4e ral
vio lated federal law governi
rallaw governing
ng savings and loans a.<;
as well
themselves
theIflselves resulted in mUltiple
theifiseives multiple investigations, indictments, and convictions.
a. . The initi.l
initial purchase of the pproperty
r operty by Seth Ward and MFC violated
viola ted federal
feder
der-nl
fe d er-Illlll
and Arkans,as
Arkans,as state law.
Atkans.
Seth
Se
SeLh arrangern~nt whereby W
tJl Ward and Jim McDougal negotiated an arrangement Ward ag~eed to ael
ard agreed act
a CI as
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servIce corporation
simply because of the service
Street was Simply limitations would ha,ve
corporatiOn hmltatlOns ha\'e been
exceeded if the service corporation had bought the entire property. 5'
The 6% investment limitation restricted the amounts MGSL could loan its affiliaL
affiliate MFC,
l1mitation,
limitation, McDougal and Ward agreed that Ward would take title to ali
all of the IDC property
pwperry
.' . ' . . I
145t~ Stre~t
north of 145th Street as a nominee purchaser for MFC. 7 Ward andMcDougallagreed
and McDougai,agreed that !L~t
MGSL would 103n
loan Ward the entire amotl.'it t~e purcha..<;e
amount of the purcha<;e price on a nonrecourse basis.,
bas is.
, I
(:l?6.
3, 1985 (396
I
-,
.-- 00001130),
00001130).
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to
not required to
"'IO m:ake any down payment. ."MFC agreed to reimburse him for any addition1
to make additioJaJ
additio aJ taxes
) al rcimb~e
he may have to pay by virtue ofms
of his holding the property.
property" MFC also agreed to handle allbfthe
ail
all l fthe bfthe
admjnistr~tive associat~d
administrative duties associated with the property such as collecting rcnts,
rents, and the like.9 lIn
thc like.
likc. ~ Q
~n
I
return
rerum for his role in the transactions, Ward was to receive approximately $300.000
$300,000 in
It
h is these terms - lUlder
terms"": under which Ward received significant
signi ficant compensation, but ass:uned
assumed no
risk or responsibility
-- that
responsibility thaI have led to Ward being
thai bcing characterized as a "straw man" or "Jrninee"
"J
IIJrninee
"Jrnminee"
inee" bCi~g
bei~g ll
,purchaser.
purchaser. c~arnctCri~lion is supported
purChaser. "' This characterization is th~t ~o anyjng
supponed by the fact that he did nothave
not
nOI "have an)Jng to
have to do anylng
'have
Memo from Jim McDougal to Seth Ward, September 3,
Si 1985,
1985 , (396-00001130);
3,1985,
~O IA
I A(b)3
(b)3 - Rule 6(e),
F.OIA(b)3
FOIA(b)3 6(e), Fecleral
F8cleral
Fe deral Rules Crimillai Procedure
Ru les of Criminal Pmcedure
Pl"Ocedure
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163 T--
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- such as responsibility
rc.s ponsibility for taxes
taXes and collecting rents. Moreover, ~ost
Moreover. unlike most owners, Ward's only
most owners. onl y
source of compensation was his "commission" h~ did not benefit directly from any
"coIllIl1lssion" -- he an)'
Grande.
c:~tries
e~tries
However, entries in the billing
partners
e~idence
bi;ling materials and other evidence suggest that
thaI fo~er ROS~ Jw
thai former Rose Jw Firm
panners Hillary Rodham Clinton and Webster L. Hubbell performed work that appears tl o have
tiD
facilitated the payment of substantial commissions to Ward, who wbo acted as a.. buy~r for
a... a straw buybr
Financi~1 in the IDe
Fillallci~1
Madison Financial IDC transaction
traoS2ction.., Ward is Hubbell's father-in-law.
fatherinlaw. The Tbem~tbod
Tbe .meltbod
.me1tbod or
of
payment of
Jlllyment or the commissions evaded regulations designed to protect the tbe safety and I I
soundness of the(he institution, and violated the integrity
intt!grity of it'!
it.. books and
it, lind records. Furher,
FUfher,
Madison Guaranty
Guaranly used a documenl
document drafted by Clinton 10 deceive Federal Bank examiners as to
Cli~llon 10
Cli~lon to 10
"
II Some have argued that Ward earned his commissions, at least in part, ,I ,
pact. by playing a
ri tical role in putting together the IDC deal because of
'ccritical
ritical his relationship with Everett Tucker and
of,his
of.his
officials ofIDC's lenders, such as Bob Wilson of Union National Bank,
lenders. such. B~, who was a c10se
B~. Ifriend
close lfriend
of Ward's. Contemporaneo!lS
Contemporaneoj.lS docwnents, however, indicate that IDe
Contemporaneo~ documents, IDC was under severe financial
pressure from its lenders, and that this was "widely known knOYlll attorne~, Darrell
knO\>ll1 around town". IDC's attorne~.
interv iew that
Dover, left the impression during his interview offcr
entertained any serious offer
thai IDC would have enlertained
on the IDC property and that Ihe the final selling
sell ing price of $1.
$1.775M
ofSI.75M
SI. 5M would have been accepted from
any qualified Duyer.
anY qualified
'qualified Duyer, Dover 302, 7/ 18/96.
302,7/18/96.
7118/96.
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12
Ihe tnie nature of the payments to Ward.
the true Ward .
Ward.
b.
h. Not only was the initial traosllction
transaction
tion illegal, but the subsequent
tran,saction
tran,sllc payment
psymtDt of
suhsequent pS)'DltDt
Ward's commissions
commiJsions was
WIiS also illegal.
Ward was paid his commissions through a series of loans involving MFC and MGSL
ofloans MGSt.
MOSL.
MFC signed a loan note the same day stating that it owed Ward $300,000. Ward's obligation to
accounting records and the corporate records of MFC never properly reflected the loans and their
purposes. Moreover, when the bank examiners who were at the institution in March 1986
questioned the loans, Madison officials deceived the examiners about the true nature of the loan
loanss
thcirr !;onncction
and their
the'i
the'ir t:;onnection to the payment of Ward's commissions.
connection
I;onncction
Transactions related to the Castle Grande development have been the su.bjecl
subject
su.bject of several
first McDougal
McDougal criminal trial in 1990, triaJ of Jim and Susan
\ 990, and the recent trial
{rial SlL'iaIl McDougal and Jim
charges related to fraudulent loans made during the course of the Castle Grande project.
12
12
11 FDIC Office ofinspector
oflnspector General Supplemental Report on Rose law
Law Firm
Conflicts
Conflict, ofInterest
s oflntcrest
Conflict.S Septem~r
September 20,
orIntercst Septemb(:r
orlnlerest 1996 at iiiii
20,1996 ii-iii (emphasis added).
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.-- ..
1. Mebougal.case
First Mcbou"gal.case
McDougal.case
.According
According to the official FBI "'fil
According e, Special Agent Gary Aaron received infonnation
file, information from a
involving- Jim
involving McDougal. Senator William
J im McDougal, Fulbrigh~ and Jim Guy Tucker.
Fulbright.
Will iam Fulbright,
Fulbright., Tucker. l13) The
The information
The
-The
AttomeyJor
Anomey for Georg~ Proctor, of the opening afthe
fo r the Eastern District of Arkansas, George of the .case
case on
1j
23.., 1987Y
January 23 1987
1987.Y On March 19, 1987. The FBI received a criminal referral from MGSL
19. 1987,
l6
employee Sarah Hawkins 16 which attached a copy af
of the investigative report prepared by Borod
Barod
In October 1987, investigators further narrowed the focus of the investigation, deciding to
13
FBI Madison case file, 29A-2459. Serial 1.
file , 29A-2459, 1I..
.."
14 M..
l.d.. at Serial 7.
15
" M..
l.d.. at Serial 2.
16
" l.d.. at Serials 9 and 10.
ld..
17
" 105-0007)
105-0007 J 012 pr~uced
012.. The bates number on this document indicated it was produced
\ 05-0007\1012. prqduced
pursuant to a subpoena served upon the Rose Law Firm.
Finn. . .
"18 FBI
FBJ Madison case file
fil e,, 29A-245
29A-2459, Serial
9, Se rial 13.
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,.- .
Fitzhu&n.19 By August 18.
Fitzhugh.19
Fitzhugh:9 1988, the agents and AUSAs Stoll and Cherry decided to focus the
18, 1988.
investi gatioQ on, among other things: falsification of Madison records (allud
investigation.
investigation ing to the alteration
(alluding alterat ion
ofMGSL as
of MGSL board minutes with John Latham as the potential
pote nti al target); David Hale's loans with '
MGSL
MGS L which were allegedly obtained with false information; nip
infonnation; 1308 Main Street land flip
fal se information;
20
PauJ.20
Paul.
21
violation of 18 U.S.c. 1006 based fal sificati on of board of director minutes.
ba<;ed upon his falsification minutes.!1
minutes.!1 He was
McDougal was'
was 1?89, along with Jim and Bill Henley (Susan
wasindicted on or about November 20, 1989,
, ,"-
McDougal's brothers), based
ha,sed
ba,sed upon their conduct surrounding the sale of the Levi
Levi
Lev i Strauss building
Castl~ Grande 10
at Castle:
Castle to Davis Fitzhugh
10 Fitzhugh..
offaJse
of U.S.c.. 1014),
false statements (18 U.S.C 10 14). and conspiracy to commit bank fraud and false statements
1014).
(18 V.S.c.
V.S .c. 371). HenJeys was acquitted by a jury in June
371). McDougal and the Henleys June. 1990.
19
" FBI Madison case file. 29A-2459,
file, 29A -2459. Serial 52.
29A-2459.
20
ld.
l.d..
21
. .-- " ld.
l.d..
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2. 825 case
As aaresult
.result of the $825,000 loan to
( 0 Dean Paul Ltd.,
(0 Guaranty, David Hale
Ltd. , from Madison Guaranty.
was $150,000 to
\\0 Sew~r and Water which was a corporation which Jim Guy Tucker had an
0 Castle Sewt:r
Sewer
in . Castle Sewer and Water used those proceed to make the down payment on the
interest in.
the property in the purchase from Industrial Services Corporation. The balance
baJance of the purchase
J 8 of the 19 counts for conspiracy, misapplication, false statement, false entry, bank fraud,
on 18 fraud ,
Susan McDougal
McDougaJ was initially charged in 8 counts of the 21
2 1 count indictment.
indictm.ent. Four of
How~d. Susan
the counts were dismissed by Judge Howard. StL<;an McDougal
StL"an McDougaJ was convicted on the four
months.
~oun(S
~ounts
the counlS convi~ted on 2 of
counts were dismissed by Judge Howard. Tucker was convicted the remaining seven
afthe
A~gust 19, 1996 and received a sentence of 18 months home detention (including
sentenced on August
A,:gust
10
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Possible Defenses --
Ward was not a straw man -- instead it focused on whether or not it could be proven that
thaI anyone
else.)
else,)
The only testimony the report cites for the proposition that Ward was not a nominee
buyer is Ward's denial and some testimony from John Latham's Senate deposition. Latham
good deal and Ward and McDougal both wanted to make as much money as possible so they
rents,n
responsibility for taxes or collecting rents.
reots. n
23
2. "McDo':lgal
"MeDo':lgal
"McDougal wa!'J acquitted in tbe
"McDo!:,gal was the first case, therefore
tberdorc
tberdore Castle
CasCie Grande was not a
crime"
22
" Latham. 5/
John Latham, 15/96 Senate Deposition, at 36-37.
5/15/96 36-37,
23
Seth Ward, 1117/96
1117196 GJT, at Ipagel
(page}..
1
11)
II
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Order of
ofProQf
Proof
~ ..
22.. . Fred Gibson - re: loarn; exp~anatio~; violation of 6% investment
loans to Ward; deceptive explanation;
Wa~d his
W~d
. purpose of cross loans was to pay Wru:d hi'ss CQmmissions.
hi
hi' cQmmissions.
cQrnmissions.
5. SA Gary Aaron -first investigation into Castle Grande and summary testimony re:
- first inyestigation
2)
2} Other Facts Rela/ing /0 RLF Work/or
Relating to Work for MGSL -- [The facts relating to
MGSL-- toRLf's
toRLF's
to' RLF's
12
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--,. statements to investigators lies in her statements regarding the manner in which Rose Law Finn
Latham of MGSL and Rick Massey of Rose wanted to do business together, that her partners
MOSL
ofMGSL panners
. would not accept MGSL ~Iient because of an unpaid bill and that she interceded with
MOSL as a client
McDougal to get the bill paid, at the request of Massey. The other version is Jim McDougal's
13i11 Cli
"jogging incident" story -- that Bill nton carne
Clinton came by his. moming, sat in
his office while jogging one morning,
his new leather chair, staining it with sweat and asked McDougal to 'send
send some business to HRC
1. Bac~rouDd of
Back:rouod
BaclQ:round ofMadisog's Lees.
Lees! Representation
Madison's Le2al Represegtatiog
Represegtation
,,,,-, ,
two reasons. First, Mrs. Clinton claims that in 1985 Rose partners conditioned Rose's agreement
&;
institution, Madison Bank &
& Trust ("MB&T"). howe~er, that the
("MB&T"). Unequivocal evidence shows, however,
howe,:er,
Clinton claims. Second, Mrs. Clinton claims Madison's b.usiness was initially brought to Rose by
Madison'Ss business
Madison'
a matter
maner where Rose had little expertise.
linle expertise.
a.
K. Bugk ofKin~stog
Banko!
Bagk of KjnE:!ton
Kin2ston (Madisori Trust) .
(MadisoO Bank & TrusO
KjnE:!tog (Madison Trustl
13
lJ
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."--"
Rose's first representation ofa McDougal.controlled institution began in 1981 when it
of a McDougal-controlled
24
~ffice to a different city inArkansas.
bank's principal office in .Arkansas. 14
Arkansas,14 ~&T lost the case in the trial court
MB&T an~
coun and
an,appeat
approved an appeal;: Carol Arnold,
an.appeiu Rose~
Arnold, a young associate at Rose!
Rose, argued the case before the
26
Arkansas Suprem.e COurt,2S
AIkansas Supreme
Suprem,e Coun,H and ruled against BOK.
Court,!} which upheld the Chancery Court arid SOK.l/>
BOK,26
SDKY' Rose's
McDougal Rose's bill, writing that the "statement is, of course, subject to your approval. ,,21
McDougal
McDougal' ,,27
Jim.,,28
Jim."21
Rose's July 1982 bill remained outstanding for several years. McDougal says he refused
.-.
.~ .
2~
~~
24 The first aspect of the Rose
Rose's' s representation involved petitioning the Arkansas Bank
's
Departn).ent
Deparonent to move SOK's
Dcparunent BDK's
BOK's principal office to Huntsville, Arkansas. The First National
Nati'onal Sank'of
National Bank
Bankof 'of
of
Huntsville,
Huntsville. a competing bank affiliated with the the. fonner owners of BOK, learned ofSOK's
ofSOK,learned
ofSOK, of BOK' s
~d objected to the move based
proposal Ml:d
and
ilfl:d based' on non-compete
based non-compcte cclause
non..compete BOK's purchase agreement.
lause in SOK's
BDK's
In a letter to the president of First National Bank of Huntsville, Jim Guy Tucker, on behalf
ofHWltsvilJe,
HuntsvilJe, behalfof
beha1fofof
BDK,
SDK,
BOK, threatened litigation: liAs
SOK, minority stockholders in the Sank
"As representatives of the min9rity
miri9rity Bank of
Kingston, weare
we are
are considering litigation to declare
declarc'this
this non-competition
noncompctition
non-compctition provision void." Letter
Lctter to
HuntsvilJe, from Jim Guy Tucker, Feb. 13, 1981 (RlC120734
Hargis. Chainnan, Bank of Huntsville,
James Hargis,
to 735). On August 4, 1981, First National Bank of Huntsville HWltsvillc sued
sued BOK
SOK to enforce the purchase
agreement and enjoin BOK from moving moving to Huntsville
Huntsville.. RIC 120653 656.
656 . On August 2
I 20653 to 656. J,, 1981 .,
21I,
Vincent Foster and Rose answered on behalf of BOK. SDK,
BDK.
BDK. RIC 120648 to 651.
25
25~ Letter to Steven Smith
fu SiTlith Jul . 2,
Shlith from Vincent Foster, Jul.
Jui. 1982, at 1I (Carol Arnold
2,1982,
reports that [Justice] Steele Hays asked her a question at oral argument ... (GG-OOOOO 165 to
(GGOOOOO
. .. ") (GG00000I65
(GGOOOOOI65
166).
166).
"
27
Letter to James B.
B. McDougal from C.1. 3D, 1982.
C.J. Giroir, Jul. 30,
C.J.
CJ.
28
l!
21
l.d..
ld... After the appeal
l.d... appeal,, Rose did no additional legal work for MB&T.
additionallegaJ
14
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10
appeal.)~ Giroir, who 'was
30
anomey
attorney like Vince a junior attorney to argue the appeal.
Yince Foster but sent ajunior
.ajunior was the
billing partner on the BOK account, testified he believes he asked Mrs: C linton to intercede
Mrs. Clinton iOiercede to
ll
Smith, l31
Smith. J ''
Mrs.. Clinton spoke to McDougal in an attempt to get the bill paid.J2
In late 1983, Mrs,
Mrs paid..,ll
paid
to, 1983.
the original bill on October 10, 34
1983.3~
1983,14
1983.14 Again, the bank did not pay
pay..
outstarlding for more' than two years and almost a year after Giroir'S
After remaining outstanding Giroir'S
Gi roir's
Giroir's
October 1983 letter requesting payment, the matter of the outstanding bill was brought to the
- "
29 J. ~/2/97, at 77-78,
JJ.. McDougal GJ, (4/2/97, 77-78 , 105-106.
"
30 McDougal 302, 2/19/97
211 9/97 (DRAFT), at 7; 1. 412197,
412/97, at 114.
J. McDougal GJ, 4/2/97, '114. Board
Minutes from MB&T corroborate some discussion about a "new lawyer" who was assigned to the
appeal. MB&T Board Minutes,Min~tes,. Sep. 25, 1984, at 2 ("Board
Min~tes (ltBoard discussed the fact that new lawyer '
case.It);
sent to argue case. "); see also Letter McDougal" Joe Giroir) from
Lener to Gary Bunch (cc: James McDougal,
V incent Foster, Oct. 9,1984
Vincent 9, 1984 ("You [Bunch] mentioned somethi.
somelhi.ng about a 'girl' lawyer doing the
something
work on appeal. ").
31
" GJ, 7/
G iro ir 'GJ,
Giroir 18196, at 21-22,
18/96,
7/18/96, 21-22 .
n
II
32 B. McDougal from C.l.
Letter to James B. C.J. Giroir, Oct.
C,j. to, 1983 ("Pursuant to
Oct . 10,1983
10,
your discussion with Hillary Rodham Clinton, I am enclosing a copy of Our our
OUI firm statement, dated
1981
December 23, 1981.") .") (56-00064693).
198 1.") (56-00064693 ). McDougal was shown shov.'I1 a copy of Giroir's
Giroir' s letter and has no
of s~nB
recollection of s~ng to Mrs. Mrs. C linton about the
Clinton !.he outstanding bill. J. McDougal. 302, 2/19/97
J. McDougal 2119/97
10;1;1
10.
10;1
(DRAFT), at 10;1 1I .
.
, '
....
.33
n
13 Note~{of
Nott?s' of John Podesta from May 18, t1994,
Nott:=s' 994, indicate Mrs. Clinton has "some
indicate.that Mrs.
recollect~on" of talking to Giroir: "Ths
recollection" letter, She has some recollection of Giroir
"This is a 10 year letter.
letter.
talk.i~.
talk.i~,
talkin~to
talk.i ~ . to her about the unpaid
n~ Wlpaid bill and may have talked to McDougal about it." 2139-00000\58
2139-00000158 .
2139-00000158.
2139-00000\58.
34
.. ~
' ,r - 00064693).
00.0.64693).
00064693) .
00064693).
" ~ener to James B. McDougal
!.-etter
Letter McDougal from C.J.
C.J . Giroir,
C,J Giroi
Giroir, to, 1983 (56-
r, Oct. 10,
15
,
NW: Dg@l&(
Dg8l&( Oftij(J(:R'5'gf\>'~g\:egjral
"i\j(JdI'5'~f\>,:l!!eegjral
I';\j()rR'5'gf~.l{eeg~ra l Rules of
NW: 15416 Db@l&(~)a(Jd1~~f~i{ee51~ral (riminal
Criminal Pmcedure
Criminal
ofCrirnillal PlOcedure
PlOcedu re
173
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with BWlCh
Bunch to pay the bill, and Rose was going to sue MB&Tunless re~eived
re~ eived by
MB&T unless payment was received
totaJly baffled by the continued delay in the payment of this statement, but
We are totally
Wltil October 22 in which to Satisfy this
are willing to allow you an extension until
suit. J1
statement. Otherwise, I am directed by the Firm to file suit.)7
suit.)]
Bunch
BWlch does not know why the payment of the old bill came upin
BWlCh up in the fall
faJl of 1984 but
11
38
1984 ..31
in October 1984. Indeed, records from MB&T show that on October 22, 1984, MB&T paid the
)JS
))5jj discussed infra.,
As discwsed in.fi:iL, this is just
i.n.ful..,
i.n.ful.., just after McDougaJ BiB Clinton jogged by
McDougal says Bill
Madison and complained about the Clintons' financial
financ ial situation.
financiaJ situation.
"
36
Bunch Senate Hearing, 5116/96,
5/16/96, at 17.
9,1984,
9,
9,1984.
"
37
1984.
Oc~.
Lener to Gary Bunch (cc: James McDougal, Joe Giroir) from Vincent Foster, Qq.
Letter Oct.
JII
38
] 5/16196,
5/ 16/96, at 39-40
Bunch Senate Hearing, 5116196, 39--40 (emphasis added).
added). Bunch
.r- speculated that a reason why the matter of the old bill came up in September 1984 was because
came-up
16
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contains hand-written notations which refigure the allocation of fees to Rose attorney's
which_,refigure
wruch.refigure
which. attor:ney's based
Hillary Clinton met Jim McDougal the "unpaid" bill had been paid. [And, indeed, if the
argument is that the $893.63 remained to be paid, the evidence is equally clear that these unpaid
."--"
MB&T "may have had a linle little more money at that time than we'd had previously." ld... ld.. at 58
M.. 58..
Bunch's testimony that the MB&T old bill was considered in
.Bunch.'s in September 1984 and paid in
October 1984 is corroborated by several documents. First, minutes from MB&T's MB&Ts board meeting
from September show that Bunch "will negotiate senlement" with Rose concerning the MB&T
negotiatesettlement"
bi ll. Minutes of the Madison Bank &
lL
bill. & Trust Board Meeting, Sep. 25, 1984, at 2 ("Rose Law Firm
25,1984, Finn
-- We owe S5,000Jor
$5,000Jor
$5,Oo.o..or Huntsville move appeal, according to firm. firm . Board discussed the fact that
new lawyer sent to argue case. Mr. Vaughn moved, Mr. !Vir.
/lvlr. McDougal seconded that Mr. Bunch will
negotiate settlement with Rose Firm.Finn. Approved unanimously.").
un'a nimously."). Second, records from ,MB&T .MB&T
show that on October 23, 1984, a debit of $5,000
$5,0.00. was made from its general ledger for legal fees. fees.
records from Rose confirm a credit of $5,000
Third, records $5,000. on MB&T's account one day later on
October 24, 1984.
1984. Letter to Hickman Ewing from Alden Atkins, Apr. 17,1996 996 ("[Records from
17, 11996
Worthen
Wonhen Bank] show that Rose deposited a check for $5,000 55,000 on October 24, 1984. We are told
55,0.00
by the bruik's
batik's representatives that the identification number for that check shows that it was
barlk's
baflk's
written on an account at Madison Bank & Arkansas. "). Fourth, minutes from
& Trust in Kingston, Arkansas.").
MB&T's
MB&Ts November
Novcmber board meeting reflect that a reduction in earnings wasdue part
was due in 'part to "a
part 10
payment of legal fees from a 1983 lawsuit." Minutes of Madi~on
lawsuit. " Mmutes Madi$On Bank & & Trust Board Meeting,
Meeting.
Nov. . ,
27, 1984, at 1.I. The lawsuit actually ended in 1982, but Rose's last letter requesting payment was
sent in 1983
1983..
,-
~.
" Letter to Amy S1.
J9
39 SI. Eve from Ronald M.
A. Ericson from Alden L. Atkins,
Bruce A. Atkins, Oct. 31
31,, 1995,
1.995, at 6.
31,, 1996. See
M. Clark, May 31 Sec also Letter to
, . .
17
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b.
h. Milche!! Firm '
The Mitchell
Beginning in 1982 and throughout McDougal's ownership. Madison's primary counsel and "lead
McDouga1's ownership,
firm"
finn" was Mitchell, WiIli~, Selig, -Jackson
Mitchell. Williams, flIlll).' 1
Jackson & Tucker (the "Mitchell" fmn).41
fmn).4 ! McDougal
MCDougal hired
firm because of his relationship with Jim Guy Tucker, with whom McDougal
the Mitchell finn McDouga1 had
42
years.(2
been friends and business partners for years.
years,2 bad previously represented
In addition, Tucker had rep"resented
rep'resented
43
McDougal in numerous matters.'
matters,)
matters.')
matters. )
'll
40 McDougal purchased Woodruff County Savings and Loan on January 26, '
1982 with Susan McDougal, Steve Smith, C.E,
Smith. C.E.
C Ransom. and Julie Baldridge. 174-00012956.
.E. Ransom, 17400012956. Its
name waS changed to Madison Guaranty Savings & Loan within a a
a few months of purchase.
.." JI
41
FOIA( b ) 3 - ~ule
FOIA(b)3 6(e),
?ul e 6!e), Federal
FedHal Ru lle e.~ Criminal
ess oE Ptoc~"u
Crimi nal P r~
rocedu re
42
" J. McDougal 302,2/19/97
J.
1. 302, 2/1 9/97 (DRAFT), at 6
2/ 19/97 6..
..' U43, In a deposition from the Bank of0 f Kingston litigation, Tucker described his
profess'iional
onal relationship with McDougal: "Mr. McDougal and I.I have a continuing attorney-
profess'ional
profess" attorney.
attomey-
client relationship because of he brings to me and 1I act on, some of
various business ventures that lie
ofvanous
which reach fruition and some
sOf!1e of which do not. ...
sorne . .. I have served as persona]
personaJ attorney
personal anomey for fo r Mr.
.."-,-- McDougal since I entered private law practice on transactions ranging from timberland purchases
18
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legal advice. Mitchell provided a wide range of legal services to Madison, including extensive
regulatory work before the Arkansas Securities Department, Arkansas Bank Department,
Department,
Department , Federal .
primarily handled the Madison account. Other attorneys at Mitchell who did work for Madison
included Bel,lerly
Be-\lerly Bassett, who left the Mitchell firm in 1985 to become, with McDougal's
Be",erly
Beverly
written retainer agreement between Madison and the Mitchell firm, and the fees were charged at
billing rate.
the normal hourly bil.ling ratc.
and. the responsible attorney was listed as John Selig. 46 Almost two months later, on March 27,
and
~4-4
4-1
44 Information concerning the scope of the Mitchell firm's
finn's representation of Madison
is found in the voluminous billing records produced by Mitchell to the OIC under subpoena. ~
~enerally 155-0005700~
~eneraJly
~eDeraJly
KcneraJly 155-0005700=
"
4S
155-00001506.
.- 46
19
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1985, Mitchell opened another new file for Madison, file number 5615-10, entitled "Broker~
munber5615-10, "Broker-
regular outside counsel, would do the work. As described below, it was these same matters that
[55-0000[508,
155-00001508.
48
155-00001504 to 509
509,.
49
I _ _ _ _ _ _----11I
." ,,~I
~o'
As discussed infra,
infm, at the time of Rose's retention, Madison was under a
Supervisory Agreement with
Sup,crvisory wj.th the FHLBB restricting its loan practices and
requiring Madison to increase its net worth.
20
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--.
,..-- .
apparently at the request of the ASO,
the ASO.and
ASO and the FHLBE,
ASDand FHLBR. an.d increase its net worth
FHLBB, to raise capital and
by issuing a Dew stock. ~ I Madison needed approval from the ASD to issue a
new class of preferred stock."
stock.'1
stoCk.'1
new
neW class of stock.,
stock, and Arkansas. unclear as to whether a ~vings
Arkansas law was Wlc1ear sav.ings
sav.jngs and loan could
couid
eouid issue a
prefem:d class as Madison intended. Rose was hired to secure approval from the
non-voting, preferred
dealer matter, was an effort by Madison to establish ,:1a.a subsidiary investment broker-dealer
~SD.
and the limited partnershiplbroker-dealer matters required regulatory approval from the ASD.
ASO.
51
" Rose referenced the preferred stock matter on 11)e I".
accOWlt as matter" 11".
the Madison account ".
553
j1]
51 DEK014947.. The enOj'
DEK014947 bil ling records reflect the following entry for Mrs.
entry on the billing
hilling
Clinton: "4/23/85 -- Conference ~th ~rs. Clinton recalls meeting
Latham ." Mrs.
with J. McDougal and J. Latham."
mee
only with McDougal and says that it was at that meetting ~ ing that they discussed Massey's and
meeting
Latham's proposaJ
proposal that Madison... McDougal does not recall
thai Rose do work for Madison recaJl the meeting but
bUI
Cli nton was in the fall of 1984 when they set up the retainer.
says that his last meeting with Mrs. Clinton
302.2119/97
J. McDougal 302, 2119/97
2/19/97 (DRAFT).
(DRAFT), at 10. . .
~4
H 319~00034 730. This notation appears
319-00034730. appears: to .refer
refer to 9:00 a.m., as
a.m. , as it is from the
morning portion of
oflhe
the caJcndar.
calendar.
55
H
S5 DEK014947. Mrs. Clinton'S
Clinton'S
Clinton's billing entries for April
April 23, 1985, reflect that after
McDougaJ and Latham,
her meeting with McDougal Latham , she had a c.onference Massey, a young
conference with Rick Ma.,sey,
MaSsey,
associate
in the securities section, Gregory , a senior partner in the securities
section. and a conference with Watt Gregory,
section... Massey's entries for April
section Apri l 23, 1985, ~onference with Mrs.
1985 , show that he had a conference Mrs . Clinton, a
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..
." . - -
60
agreement between Madison and Rose. 6O
..agreement
agreement Rose billed Madison its usual hourly, rates
rales and used the
conference with John Latham, a conference with Les Baledge, another associate in the securities
stock. offering." l.d...
~ose. and conducted research on "preferred stock
~ose,
section at Rose, ld..
l..d...
,-,
~6
j6
56 DEK014947. Mrs. Clinton "review[ed]
DEKOJ4947. dr8..ft docwnents" and had "conferences"
"review[edJ draft
"review[cd}
"review[ed}
with Massey,
Massey. Latham, and
Wld Davis Fitzhugh, anomey at Madison. Massey and Sharon Grimes,
Fitzhugh. an attorney Grimes.
a paralegal at Rose, conducted legal research and "draft[ed] li1..
li1...
documents." l~
"draft[ed} docwnents."
docwnents." .
" 54-00266226 . .
54-00266226.
so
54-002312771. McDougal says that he had
54002312771.
Sl
58 neve~ paid a retainer to a law firm
had. never
before. 302, 2/
before. McDougal 302. 19/97 (DRAFT).
2119/97
2/19/97 8. Latham says that Rose was
(DRAfT), at 8. was the only law firm
finn
Madison ever had onretainer. 211 4195, at 2.
retainer. Latham 302, 2114/95,
on .retainer.
~9
59 Rp5e dated 5/
The second and third checks to Rose
Rpse 17/85 and
5/17/85 7122185
anq 7/22/85
7/22185 were in the
amounts of
of$2,018.00
$2,0 18.00 and $3,023
S2,O .20, respectively. 54-00231446,54-00232199.
$3,023.20, 5400232 199. The difference
54-00231446, 54-00232
54-00231446.
represents fees incurred in excess of the $2,000
S2,000 retainer.
retainer.
60 As noted above,
above , McDougal
M'cDougai had a written retainer agreement with Rose for the
Bank..of Kingston matter.
Bank.
representation in the Bank, matter. There was no policy at Rose in 1984 or 1985
requiring written retainer agreements; such decisions were left to the individual attorney.
attorney . Letter
Lener
to:Bruce A. Ericson from Alden L. Atkins.
to Atkins, Oct. 31,
3 1, 1995,
1995. at 6 ("In 1985, Rose Law Firm did
not have a policy regarding retention letters. We are unaware of anyWly retention letter
lencr for Madison
(RIC120845);1 .'
Guaranty.") (RlCI20845);1 I
61 ..)nti~~
)nti~~
.Jnte retai~er payments to Rose as
~al Madison documents reference the monthly retainer
"pcepaidJegaJ
"prepai.d)egaI
"prepai.cJ1egai
"prepai.d)egai
.... fees."
fees
fee ."
s." See. q
e.g
e,2"
e.g".. 54-00266225, 54-00264666 to 667, 54-00264669,54-00260954,
54-00264669, 54-00260954,
, .......
....
........
.....
............
.......
.....
......
...............
. 22
......
FOIA(b)3
FOI 3 - Rule 6{
A(b )3
FOIA(b
FOIA(b) e),
e), Fecleral
6{e),
6(e), Rul es of Crim
Feeleral Rules inal Procedure
Criminal Proce dure
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attomey.64
anomey.64
attorney.64
unusuW.
unusual ,,65 Webb Hubbell,
unusual..."65 Hubbell. chief operating officer at Rose from 1985 through 1988, testified that .
. retainers were indeed unusual, and he could not remember any client at Rose other than Madison
54-00260973,54-00260956,54-00282220.
54-00260973, 54-00260956, 54-00282220
54-00282220..
54-00260973,54-00260956,54-00282220.
62
62 54-00260979 to 980. 980. Each cover letter
letter transmitting Rose's bills acknowledges
fee,~,
"receipt" of the previous month's "retainer" fee,
fee. "-2...
'-i... 54-00266228 ("April Retainer Received .,.
'-..i.., ...
April Fees ...
.:. Balance ...It).
BaJance Due ... tt).
").
"). .
63
63 Thirteen of Madison's nineteen checks to Rose listed the payee as "Rose Law
Soc,
Firm, Attn: Hillary Clinton." Soc.
So<. c 1:~.,.. 54-00231446,54-00232199,54-00232674,
See. ,e.2., I 99, 54-00232674, '54-00233116,
54-00231446, 54-00232 199, 54-00233116,
54-00233 456, 54-0054-00234001
54-00233456, 54-0054-00234001,, 54 -00234265 , 54-00212147, 54-00212393, 54-00214419, 54-
54-00234265,
54-00233456,54-0054-00234001,54-00234265,54-00212147,54-00212393,54-00214419,54-
00215014,
00215014 ...54-00216137.
554-00216137.
400216137. Rose deposited all Madison's checks into a trust account against which
m
the actual fees were billed. ~ RICRJC 120846.
64
64 Alden. L.
Letter to Bruce A. Ericson from Alden
Alden. L. Atkins, Oct. 31, 1995, at 6 ("In 1985,
Rose Law Finn did not have any policy regarding retainers or client advances. The decision
whether a retainer or client advance would be n:quested
about whether.a requested was left to the discretion of each
n::quested
lawyer depending on the circumstances particularmatter.").
circwnstances of the particular matter."). .
65
" GJ. 3/30/94, at 58-59
Clark GJ, 58-59..
,_ . .66
OJ, 12119/95,
Hubbell GJ, 12/19/95, at 187-188.
23
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ask a client, a
I can't call their name to you right now, but it was not unusual to ask
client or a client that perhaps there had been some billing
new ciient billiI1g problems with
billiI'lg will]. in
61
past, to make a deposit against fees and expenses. 67
. the past,to .
According to Joe Giroir, former chief operating officer at Rose, the billing attorney
anomey is usually --
_.
-.
hut not always --
but who brought the client to
t}:te person ,who
_. the fmn.6I
finn.6I The billing attorney is
to the fIrm.68
responsible for assigning and supervising the legal work in addition to reviewing and sending
account. 1O
70
The purpose af"The
of liThe announce new clients and determine whether
"The Daily Briefs" is to aimounce
"
67
ole Deposition, 4122/95,
H. Clinton, OIC 4/22/95, at 14.
14.
61
68 Girioir GJ, 7/18/96,
7118/96, at 12. Rose had a policy that first
fust and second year associates
fU"St
could not serve as a billing attorney. Giroir GJ, 7/
7/18/96, 1/ 11 /96.
18/96, at 13; Massey Senate Hearing, 1/11/96,
1/11 /96,
at
a t 76
76..
.."
69
ld..
1<1.
ld. at 13.
70
10 105-00008011. A second "The Daily Briefs"
Briefs M dated the next day announces
annOWlces the
second Madison matter
maner -- the broker/dealer Mrs. Clinton again as the attorney.
brokerldealer -- and Mrs. attorney . 105-
00008012.
?
71 I I n.In 1989. Vinet::
,In February 1989, Vinct:: Foster sent a ten-page proposal to the FDIC soliciting
Vince Foster
work. 105-00003859 to 868
legal work. 868... Page eight of the letter addresses potential conflicts of
interest as follows
follows:: "[Rose] does not represent any savings and loan association in state or
maners. From time to time we have provided specialized services to some
matters.
federal regulatory matters.
savings' and loan associations in such areas as employment discrimination, work-out of
savings
participation loans and bankruptcy. We do not represent any of these clients on an ongoing basis
... " 1105-00003866.
05-00003866. Notably .
omitted from Foster's description are the services Rose provided for Madison between 1985 and
,- c'ilpi~ization, real-estate developments, etc.
ciilpi~ization,
1987: regulatory work before state agencies, c,)-pitalization,
1987: clilPitaiization,
24
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- ..
3. EyidCQce Supportine
Eyidegce
Eyidence
EYidence S-
S'UDPOrti0i'
ugportior McDoueal's
S'UDPOrtj0i' McDQueal's Version
McDoural's VersioQ
Versiog
VrrsjQQ
Obviously the disproof of Mrs. Clinton's "unpaid" bill story does not, necessarily require
ofMes. require
prosecution. And, most obviously of all, with Jim McDougal's death the admissible evidence of
McDougal .-
without McDougaJ o~ly a portion
-- only poniDn of which is admissible, but the full scope of which is useful
ponien
veracity.
in assessing McDougal's veracity.
present during McDougal's meeting with Clinton. The other witnesses may have knowledge of
,.-
.' ~ ''
the jogging incident because of contemporaneous statements made by McDougal about the
I. Bm Clip
Bill ton .
Cljnton
Cljntoo
CljntoD
Remarkably,
Remarkably. Bill Clinton does not
nOI deny the jogging incident. Clinton testified he has
n
72
B.
B. C linton OIC
Clinton Deposition, 4n2/95,
Ole Deposition. 4n 2/95, at 66.
4/22/95, 66 .
"
73
B. Clinton 825 Trial Testimony, 4/28/96,
4128/96, at 69-71.
69-7l.
25
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.-- ..
"tried to remember" and is not accusing McDougal of Iyins,'4 but he does not remember anything
lying,1
lyinS,74
oflying/
ii. Dm
am HeDley
BjIJ Hepley
Henley
74
" 4122/95. at 83:
4122/95,
B. Clinton OIC Deposition, 4/22/95,
A No.
Q
Q . -- about (the joggins incident]?
[the jogging
jogginG
"
"7S l.d..
lI1. at 67. Clinton also testified he does not recall whether he knew in 1985 that
lQ..
Mrs. Clinton was doing legal work for Madison. lQ.. ld..
~ 65-66 ("I don't recall that I did know [in
1985 that Hillary was doing some work for Madison].
Madison). Normally Hillary didn't discuss her legal
me.
mc. ")
work with me.")")..
. 76
" ld..
l<I. at 69.
l<!. 69.
n l.d..
hl at 72. Clinton says he does not remember McDOugal ever complaining that the
\Vhitewater: "I certainly
Clintons were not putting their fair share into Whitewater:
\Vhitewater: reme~ber any time
ccrtainly don't remember
when he complained about that. I can remember the occasions
in be said .we
i.n which he we had to PUI
_we money. in, and when we did
put more money.
money
money-
put more money in, and we did that."
that.
that." B. Clinton Ole
M ole
OIC Depositi on, 4/22/95, at 83-84.
Deposition,
26
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not present at such meeting but does remember seeing Clinton leave McDougal's office and
McDougal complaiiting
compiaiiting
complairung about Clinton's leaving a sweat stain on the chair.
HenJey jwy that one morning between 6:30 a.m. and 8:30 a.m
Hen1ey testified before the grand jury
Henley a.m..
19
McDougal.79
he went to Madison to meet with McDougal.
McDougal .19 Henley said the door to McDougal's office was
closed, so HenJey shon period of time -- no more than 15 minutes. Henley thinks
Heriley waited a short
Henley
Heruey
80
office.1O
office.
office.to When the meeting ended, Henley
Hen1ey said Clinton, who was in jogging clothes and
sweating; exited McDougal's office. Henley and Clinton exchanged pleasantries, and Clinton left
sweating,
chairs."ll Henley
sweat through my chairs."I'
chairs."11 Hen1ey said he and McDougal then entered McDougal's office and
80
10
I(l Strayhorn had been present outside McDougal's office as Henley
If Snayhorn
Suayhorn Hen1ey remembers,
remembers. it
would be inconsiStent
inconsistent with McDougal's timing of the jogging incident because Sue Strayhorn
Strayh()rn
began work at Madison in February 1985 - well after McDougal says the
jogging incident occurred. Strayhorn 302, 3/30/94, at 1. This testimony is also inconsistent with
testimony from Rae Ann Moles. Moles testified she overheard Clinton and McDougal set up the
retainer, but Moles left Madison before Strayhorn started work. S.tt. infra...
~ subsection "v." i.n.fn..
in.fr:a..
i.nfr:a..
81
" Henley ,oJ,
pl, 6/
PJ,
Henley,GJ, 18/96, at 27,50.
6/18/96, 27, 50.
27, 50.
27
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.-----. conducted their meeting. Henley testified that while he was in McDougal's office he noticed a
of~e
fresh sweat stain on one of the two chairs facing McDougal's desk.
desk.~
~ Henley was only able to
82
11
to sometime in 1984 or 1985. 1l
date the event 10 83
The only conversation Henley
Henley has had with
Henley
Blood Sport
Span was published. Henley said McDougal corrected a quote in the book attributed to
Spon
iii.
iii. McPoui:11
Susan McDou&al
McDo'
McDougal. 8s
Jim McDougal feels certain he discussed the jogging incident with Susan McDougal.'$
IS
"
82
Id.
ili
ld. al
a1
at 46-47.
- 83
I) Id.
l.d...
I.d... at 33. Henley testified at one point, however, that he believed the event may
"swnmertime." When asked why he thought it occurred
have occurred in the "summertime." summertime,
occurrt=d in the sununenime,
sununertime,
Henley's explanation was Clinton was sweating and it must have been hot. ld...
lsL. at 33-34.
lQ..
84
~s as follows:
The relevant portion from Blood Sport reads follows:
McDougal gently steered [Clinton] out of the office. Susan's brother Bill Henley
was standing nearby. With the governor safely out of earshot, McDougal turned
HenJey. "I
to Henley. "J don't mind the fat little
Iinle son of a bitch coming by and taking up my
time.
time. I just Wish chair. ~
wish he wouldn't ruin my chair." .
S1ewan,
Stewart, Blood Sport
Slewan, SPOrl (J 996), at
(1996), al 124.
124.
Would that have been something you would have told her about? .
A. I'm sure JI --
.-
yes. It would have been something I would
wou1d hcwe
have told her within
the business day, I would think.
!
28
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McDougal also said that she was at Madison the day of the jogging incident, saw Clinton jogging
Sawyer: There are things that you can help clear up a little bit from ..
-- for
some of us. The decision to have Mrs.
Mrs. Clinton help with some of
the legal affairs for Madison.
McDougal:
McDougal : I'll tell you what IJ know aboul
I'II "tell
tell
1'I1'tell about it,
iI, as I wasn't
ir, present at the
wasn'r presenror rhe time.
time.
rime.
But IJ do know that thai Bill came by the bank one day. day. He was jogging
- and sweating. Thefamaus
The famous story of
Thefamous afthe
the sweai
sweat in the chair.-I
chair
chair.-- JI
didn't rhal. But
that.
didn'r see thaI. Bul JI did see that
lhat he was running,
running, and he was
swearing. And he came by the
sweating. bank. And he did talk with Jim.
Ihe bank. Jim.
that, Jim came to
After that, {~ me and said,
ta "i've just given Hillary some
said, "j've
work from the
workfrom Ihe bank. Is that
Ihe Ihar alright
thaI
Ihat wirh you?" JI was at the bank
alrighr with
withyou?"
rhor
lhol day . ...
that . ..
McDougal: Whal
Whar he said
What was, "She needs the
saidwQS, Ihe work"
work." And I said,
work." said. "That'sfine
said, 'That 'sfine
'That'sfine
'Thal'sfine
with me. " Those were his exdct
wilh me." time, at
words. At that time,
exact words. alrhal day,
that day,
86
16 Maraniss and Weisskopf,
Weisskopf. Lawver wm Review
Lawyer Will
wm arkanSas Land Deal, Washington
Reyiew ArkanSas
M~. 12, 1992, at AI
Post, Mar. AI.. In an interview with the Ole,
OIC, Jim McDougal was read Susan's quote
from The Washjni!0n
Washjoi\oo
Washjni\on
Washiniton Post. McDougal agreed with Susan's statement but added that either Bill
o r he must have told Susan about the jogging
Henley or jogg ing incident. J. McDougal 302, 2/19/97
2/ 19/97
,-. 89.
(DRAFT), at 8-9.
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.-.
.-.-.. "She needs 'he
the work." Anti
And 1J said,
J:aid, "That's
'That's fine,
'Thar'sfine, Jim.""
fine. Jim.
Sawyer: ~kc:d.
Because, again, she has talked.
talked about the business coming in a
different way -- coming through a connection between someone
who was in her office and someone who knew your husband.
Sawyer:
Sawyer: But this you do know? /1
/I did take
11 I'ake place?
McDougal: Oh,
Oh. nB7
Oh, yes.11
II only know that Jim came to me and said, "They need the
Ihe money. I'm going to
give her the work. Is thaI
thol
that alright with you?" And
Anti J
I
1 said yes. Th.at's
yes. lbat's
That's all I know
88
about how that came to be. II
90
Moles remembers an event similar to the jogging incident described by
by. McDougal.
McDougal,90 Moles ,says
says
McDougaJ's
McDougal's office wearing jogging clothes.
clothes, Moles says she heard most of their conversation
17
" Prime Time
Tjme Live (ABC television, Se,p.
Se:p. 4,1996,
Sep. 4, 1996, out-takes, tape 2) (emphasis
added)
added)..
. Larry Kin~ Liye
LilI'O'
Lany
Latri Ljve (CNN television broadcast,
broadcast., Sep. 6, 1996) (emphasis added)
added),
added)..
.
89
Moles is writin
writing a book on her experiences Madison. I
ex riences at Madison.
90
I/O
Ij(I
/j(I McDougal does not rem'
,
rOIA(b)
FOI A( b ) 7
rOIAlb))
rOIAlb)
remember
J - Ie)
(C )
(G)
IO::!
30
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open ."!
because McDougal's office door was open..~1
91
open.'''
open Moles said McDougal complained to Clinton
C linton about
abo ut
share. 92 According to
an outstanding Whitewater loan and urged the Clintons to pay their fair share.91
Moles, Clinton told McDougal that Webb Hubbell was encouraging Rose attorneys to get more
on
savings and loan business, and then Clinton asked McDougal to put Mrs. Clinton on a S2,000
$2,000 per
91
retainer.'ll
month retainer. 'll
9J
'FIrm
Finn
McDougal told Clinton "he really didn't have anything for the Rose Law Finn
to do
t;lo [and] that the
the Mitchell law firm
furn was representing the institution and perfonning as he
expected.
expected."~,<)01
94
Moles testified McDougal asked Clinton how the account would be shown as
coming in, and Clinton said Hubbell would take care of it and that more than likely a young
she left before the meeting ended to go home. When Moles came
carne to work the next
n.e xt morning,
moming,
..- ..
McDougal said, "Well, we've put Hillary on the payroll. Susan will be in shortly. She doesn't
onthe
.the
93 GJ~ 10/19/95,
Moles GJ, 10/ 19/95, at 22 ("Mr. Clinton asked
10119/95, asked him to hire the Rose Law Firm.
-asked Firm.");
");
302, 8/4194
Moles 302,8/4/94 219195, at 7 ("CLINTON said that he and HILLARY CLINTON were in
8/4/94 & 2/9/95,
need of some money and because he was a government servant, he only made so much.
CLINTON then asked McDOUGAL to haveMGSL have MGSL put HILLARY
ROD HAM CLINTON of the ROSE LAW FIRM on a $2,000 per month retainer.
RODHAM "). Bill Clinton
retainer.").
. says he has "absolutely no recollection" of talking to Hubbell about Hillary and Rose being on
retainer and doing legal work for Madison. B. Clinton Ole Deposition, 4/22/95,
4/22/95 , at 72-73
72-73..
.
94
10/ 19/9
10/119/95,
9/95,
GJ, 10/19195,
Moles OJ, 5, at 22
22..
....- -.
"
95
ld...
!ll.
!JL at 24
!Jl. 24..
31
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-,
-.
.~ ..
g~t uncomfortable, go downstairs
you get ... 96 Moles Sald
downstairs."96 said that after learning that Madison retained
McDougal if Madison was going to split the legal work between the Mitchell
Rose, she asked McDougal.if Mite,hell
~d Rose.
finn and
arid ~' YQU are to send the Rose Law Firmnothing
~'YQU
Rose. McDougal responded, :'YQu
"YQu Finn nothing."97
nothing."97
..,97 Moles
98
resigned from Madison in January 1985. 91
v. . Hillafy
Hilla[y
Hillary Clinton's Income
Hillan' Clintop's Ipcome
Yw
~ Wa2es
Waees from Rose
Wa2cs
1983 82,741 99
$ 82,741"
1984 iOO
72,989'00
$ 72,989
101
1985
1985 $ 55,382'"
55,382 '"
4.
4, Statemegt:! RelatiQll to HiIIIO'
Statements Relatipe
Relatipf HiIIlO'
HmBO' Cliptop's vcnioQ
Clintop's Version
Cliotoo's
Clintoo's yenjoQ
vcnioD
"
96
liL at 26.
lli
l<L
97
" ill
lli
l<L at 27.
27,
98
91 2/9195. at 10. Moles' testimony is corroborated by her sister,
Moles 302, 8/4/94 & 2/9/95,at
2/9/95, sister.
Sarah Handley, a former financial examiner for the the. Arkansas Securities Department.
Department, Handley
testified that Moles told her while Moles was working at Madison 'tthat
Madisontluit ~Clinton had come by
hat "Clinton
(Madison]
[Madison] and that at the conclusion of that visit . , McDougal had retained Hillary, the Rose
visit,...
. ..
Law Firm." S, S. Handley GJ, 10/31 /95 , at 22,
GJ, 10/31/95, 22. .
99
" DEK001329 . .
''''
100
'00 DEK000753.
DEKOO0753.
101
'" DEK001371.
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cJerk :'II02
Law Firm as a law clerk~102
cJerk:
clerk: ()2 When he passed the bar examination in August 1~84, he became an
1984,
associate at Rose and was assigned to the securities section. Massey's "mentor"
"menlor" in the
tile securities
a
section was David Knight, a partner. al
partner. Massey became involved with Rose's work for Madison at
Mrs. Clinton's version of Madison's retainer of Rose puts Massey at the center of the
. l\.1rs.
. origination. To the general question of whether he brought the Madison business to Rose.
Rose,
says .that
Massey says that
that he "do[es] firm.',I
"do[es) not know how Madison Guaranty came to be a client of the finn."103
firm.',103
finn .',I Ol
However.
However, .in.
However, Massey testified that while he does not remember how the business came in,
in. he does
.in,
D'Amato at the Senate Whitewater hearings, Massey conceded he would have remembered
102
'" republican. Massey GJ, 1117195,
Massey is a republican. n 195,, at 88.
Ilnl95,
Il nl95 88. Massey testified before the
Committee that he has a "very good memory."
Senate Comminee memory." Massey Senate Hearing, 1/ 1/11196, 238.
11 /96,, at 238.
11/96 238 .
10)
101
103 Massey GJ, 1117/95, ("My position
llnl 95 , at 21 (liMy
Ilnl position." has been that I'm not
position.has -- and it is today
not
that I'm not aware o/how
ofhqw - what their motivation was/or
was for hiring us. II have -- II had aa
factor. But I don't -- you know, II don't
relationship with their president, which might have been a factor. don 't
know that IJ .-
-- you know, I don',
don't know.
know. You'd have to ask them why they came w... at 82)
U1.
carne to us," kl.
isL
(emphasis added). See also Massey
Massey FDIC Interview, 10/4/94, at 1.1.
'"
104
. Massey Senate Hearing, 1111/96,
1111
1/
III111/96, 78,
/9 6, at 78.
/96, 78 .
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-.
~--. '
Mr. Massey"
Massey., That's correct.
Massey
'Mr.
Mr. Massey. No, sir,l
sir, I do not.
...
Chairman D'Amato. Same day, contemporaneously.
Chairrnan D'Arnato. contemporaneously. If you had brought
the clic:pt
client
cliept in,
in. in. we went over
in., you would know that you brought the client in, ov~r that.
. First-year associate, eight months, you would have known that, it would have
been memorable, wouldn't it? Yes or no?
Yes. I05
Mr. Massey. Yes.IOS
lOS
says that he does not remember that the event did happen.
happen.
David Knight remembers attending the lurich with Latham and Massey, and Knight's
lOS
105 ld...
l.d... at 232-233, 240-241. Chairman
l..d... Chainnan D'Arnato's
D'Amato's point is ac1assic
O'Amato's a ,classic
classic deductive
syllogism: Massey says that, had the event happened, he would have remembered the .event,
event, and
he does not
remember the event; therefore, the event did not happen.
.-- .. ".'"
106
ilL at 29, 77
lil 77..
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-- ..
test:fied the purpose of the lunch was 10
Massey's.107 Knight testified
memory of it is consistent with Massey's,1M to
Mr. Latham to
solicit legal business from Latham: "We took Mr, to. lunch, and I can't remember
conversation but the gist of it was we told him a little bit about the types of
certairily the specific conversatio.n
aJ'ld I did. Representative clients for the finn. And then asked him for
work that Rick and
business." I08 Knight testified that Latham said McDougal made the decision as to which law finn
business."I08
to hire and that Madison was happy with the Mitchell law fum:
firm: "My recollection is that he said
that Mr. McDougal was really the one that made decisions about hiring lawyers, . , , He also said
lawyers ....
services provided by the law finn. ,,109 Knight further testified he left the lunch with the
firm, ,,100
closed and that Rose was not going to get any business from
was dosed
impression that the matter v.'aS
Madison,)
Madison. I 10
Latham says that he does not remember taking a class where Knight and Massey both
107
\L-_'''
AL--_ _ _ _ _ _ _ _-',
- - - - - - - - - - - - ,
Hl~
108 5/16/96, at 10. Knight testified that the lunch occurred
Knight Senate Hearing, 5116/96,
after the conclusion of the jaw
law school course which Massey helped him teach.
109 .
'"
110
ld. at 11, 13
k!. 13..
II!
III Latham Senate Deposition, 5115196,
5/15/96. at 10-11. Latham remembered being taught a
corporations (x)U1'Se school. Latham seemed to leave open the possibility
course by Knight while in law schooL
that he may have taken a course after law school that was taught by both Knight and Massey:
"Kot
"Not unless --~~ well, I may have, if it was a continuing cd
ifit ed course, or maybe they were teaching a
t;ourse bit. It would have been after law school, butl
course that 1I had an interest in and attended for a hit. but I
don't remember it it. " ls1
11 l.Q..
35
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...-- ..
remembers Massey at some point expressing an interest in obtaining SOJ!le
some of Madison's legal
work:
work : "I s~nse that he wanted us to hire them to do
"} do recall that Rick pitched the business in the sense
"]
Commin~e, Latham
Committee, L~tham testified Massey did approach him, but told him the decision to hire Rose
. was McDougal's:
McDougal's:
Rick Massey and I ran into each other when we were studying for the bar, and
were'studying
Rick went to work for the Rose Law FirmFinn after that, and had talked with. with me about
us using the Rose Law Firm. And I think I probably mentioned that to M' McDougal
c Dougal
at some point.
point. At some later point, Jim came back to me and said let's use the
~anted to put them on retainer ....
Rose Law Firm, and he wanted think. he wanted to
. ..... 1]I think
..
use them because he had friends over there, and one of those friends, of course,
~ose Law Firm
was Hillary. He had used the Rose Finn there before. What's open there, of
course, is what prompted Jim to make that decision. Was it a conversation with
Hillary or was it just beCause
because I had suggested that at some point I would
would like to
point]I.would
11l
work with the Rose Finn
Firm at some point. I don't
donit know.
knoW. III
\l3
til
use Rose:
112
'" Latham Senate Hearing, 5/ 16/96, at 35.
16/96,
5/16/96,
113
I II
1\3I) 5/ 15196, at 7-8.
. Latham Senate Deposition, 5115/96,
5/15/96, 7-8 . Latham says the pitch from Massey
O CCWTcd while they studied for the bar examination and
occurred and" thus suggests that his conversation with
and'
occ~d in the swruner
Massey occurred summer of 1984 --:- roughly consistent with the timing of oithe
the jogging
incident alleged by McDougal Lathamgradt,l8ted
McDougal.. Latham gradl,l3ted from law school in May 1984, so he would
graduated
,gradl,l3ted
studied for the bar the summer of 1984. 2031-00000027.
have snidied
.,,-,., ".
'"
114
Int~TView, 7/12195,
Latham FDIC Interview, 7/12/95, at 1.
I.
,36
,..36
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..,..-.....
authority ..1L5
have that authority. ~ecision to hire Rose,
II' When specifically asked who made the decision
115 Rose. Latham
did.")16 Latham does not remember any discussions about there being
testified, "Jim McDougal did."116
McDougal wanted Rose to work on, although he does remember discussions with McDougal
broker/dealer. IIlIS1I
about acquiring a broker/dealer." Massey also says he does not remember a discussion wi~
any Rose partner about Madison's having an outstanding bill and partners objecting to
10 bringing
discussions, that there was some disgruntlement. And discussions like this could have gone on.
retainer ''.'doesn't
''doesn't hiS,I20 and he insists he has no memory of ever discussing Madison
doesn't square" with his,120
115
Ilj
II' 302,2114/95,
Latham 302, 2/14/95, at 1; 5115/96,
I; Latham Senate Deposition, 5tr5196, at 12-13; Latham
5tr5/96,
Senate Hearing, 5/16/96, at 14-15.
116
116 Latham Senate Hearing, 5/16/96,
5116/96, at 15. When asked if it is "safe to say you
ifit
personally did not hire the Rose Law FirmFinn to work for Madison," Latham responded, "Yes, in the
sense ...
. . . that I didn't make the decision to hire them and move that forward." Latham Senate
..
Deposition, 5/15196,
5/15/96, at 8-9. Pat Heritage-Hays, an assistant to Latham, says that when she
learned Madison was paying Rose $2,000 per month, she asked Latham about it, and he be
responded, "Oh, it's one of Jim's deals." 1/6/95 , at 1.
deals." Heritage-Hays 302, 1/6/95, I.
I.
117
'" Latham Senate Deposition, 5115/96,
5/15/96, at 20; Latham 302, 2114/95,
2114195 , at 2.
2/14/95,
118I
111
II 2/.14/95, at 1,3. Latham told FDIC investigators, however, that
Latham 302, 2/14/95,
Massey worked on the preferred stock and broker/dealer
brokerldealer issues because Latham specifically
asked him to. Intervj"ew, 7112/95
to . Latham FDIC Interview,
Intervi" 7/12/95 . at 1.
'''
'10 .
119 Massey Senate Hearing, 1111/96,
Hearing, 1/11196, /96, at 23-24; Massey GJ,
1/111/96,
1/1 OJ, 11/7/95,
1117195, at 33,86 ("I
("1
wasn't usually consulted or involved in billing maners matters as a first year associate .... 1I didn't know
there had been a11 reduction in the bill. ot).
bill."). .
'"
120 IInl95,
Massey GJ, 11/7/95,
Iln/95, at 84 (In an exchange about Mrs.
Mrs. Clinton's allegation that
Massey went to some securities
secUrities
secwities partners at Rose about bringing Madison in as a client, Massey
course, with your version," to which Massey
was told, "Mrs. Clinton's version doesn't square, of course,
37
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-.
.,.--.... ..
billing matters with any Rose partners:
partners:
[Dlo
[D)o 1I remember going to the partners and saying,
[D]o i'We want to represent the
saying,"We the~
~~
--
Madison, H and other partners saying, "You're not going to do that until
Madison," Wltil they catch
up on'
on their bill, and maybe there ought to be a retainer." I have read that Giroir
said that. I don't recall Giroir ever having said that to me. )JI don't remember me
being in any of that discussion, and it frank.ly
frankly would not have been a matter in
which I normally
normaJly would be involved because I was a first year associate, and we
didn't have much input on on hilling
billing arrangements of that kind. It's possible,
, however. I] just don't remember ii.lll l ll
it. 121 .'
Massey further testified jUl)' that he remembers no such discussion with any
testifted to the grand jury
jut)'
Q. Mr. Massey, do you remember anything about your going to the securities
partners and saying. "I want to work on a case for Madison,"and
Wld saying, Madison
Madison/,.... and
'and they said, "We're
not going to approve that until Madison has paid 'us
us what they owe us
US US'on
us' on some
other case"?
A.
A. I don't -- no, sir. II'don't
don't remember that.
I-don't
-.
-- Q.
Q. ~th Mrs. Clinton?
Either with any securities partners or with 'Clinton?
c.
C. ,Other Eyidence
.Other Eyidepce
I.
J. Webb MubbeU
MubbeU
HubbeU
Hubbell'
121
12 1 17/95, at 84-85. According to an article in The Los An~eles
1117/95,
11
Iln195,
Massey GJ, 1117195, An~e1es Times,
Giroir told Rose partners that he did not want Madison as a client again. Risen, White House HQuse
Woes; Documents Hint at More Help by Mrs. Mrs, Clinton for S&L Owner, Los Angeles Times, May
t 994,
31, 1994, AS ("McDougal had refused to pay Rose's bills, prompting the firm's
994. at A5 finn's managing
partner, Joseph Giroir, to declare that he did not want McDougal as a Rose c.lient
client again in the
future. according to partners.").
future, partners.".). Giroir testified to the grand jury that he has no memory of Rose
partners."}
finn about the
discussions in the firm
representing Madison in 1985 and 1986 and no memory of any discussionS
representation.
representation. Giroir GJ, 7/ 18/96,
GJ. 7/18/96, at 23-27
23-27. .
m
122
122 Massey GJ, 1117/95 , at 32. Massey told the grand jury, however,
OJ, 1117/95, however. that although he
"possible" he may have gone to Knight and told him he thought
does not remember doing so, it is "possible"
he was going to get MadisOn
Madison as a client. ld... at 84-85.
client . ld..
38
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Madison'S business. ~at Massey said he had been talking to John Latham
123 Hubbell testified that
Madison's bwiness.12.l
bwiness.12J
. and Massey
MaSsey felt that Rose had an opportunity to get some ofMadison's work..12
ofMadison'swork
of Madison's work 124'( Hubbell says he
Mrs. Clinton was one of those who helped him accomplish that
wanted them as a client and that Mrs.
123
123 Deposition. 10/26/95, at 134-136;
Hubbell Senate Deposition, 134136; ' Hubbell 302, 2/1/95,, at 5.
302,2/1195,
302,2/1/95
Hubbell .left
left Rose from September 1984 through January 1, 1985, while he completed an
term on the Arkansas Supreme Court.
unexpired tenn
124
'" 10126/95, at 134136.
Hubbell Senate Deposition, 10/26/95, 134-136.
125
'"
126 I.d...
M..
ld.. at 122. Hubbell says he has no personal knowledge as to who brqught.
as'to brought.
brought the
517/96, at 7475
. client in. Hubbell OJ, 517196, (It I don't know for sure who brought it in .... 1
74-75 ("I I don't have
righl.").
right.") . In the grand
personal knowledge, right."). grandjwy,
jury, Hubbell was read a quote from a news article as ~
follows: "Webster L. Hubbell, a partner and spokesman at Rose, said that nothing in the law
firm's records indicates that Hillary Clinton brought in the Madison Guaranty Ouaranty business
business.. 'That's a .
me: he said." When asked 'whether
new one on me,' whether the quote was accurate, Hu. bbell responded,
Hubbell responded. "I
don't know if 1I said that, but there is nothing in the records -- _. this is where lawyers are being
Ewing. There is nothing in the records of the firm that show that
lawyers, Mr. Ewing. illat Hillary brought in
the business." ld.
I.d...
M.. at 108.
According to notes of Susan Thomases from a conversation with Hubbell on February 24, .'
1992, Hubbell told Thomases that Massey will say he brought the business:
Massey had relationship wiwI Latham & HCHe had relationship wiwI MacD. Rick will say he had
re/[ationship] wi
rel[ationship} wi Latham
~/ham & & had a lot 10
to do wi
wi getling client in. She did all the billing.
getting the clienl billing .
rees, He
. According to time recs, HC
He had numerous confIerences]
contI erences] with Latham, Massey, and McDougal
conflerences]
on both transactions. docs:" She had one TC in 4-85
transactions. She reviewed some docs. aatt the beginning
485 ..at begirming of the
begirullng
deal wI
w/ Bev. [Bassett).
[Bassett]. Neither deal went through. Broker/dealer
Brokerldealer was opposed by staff approved
by Bev under certain condition which they never met. Preferred stock? But Bur for Massey, itjt would
there. But He
not been there. HC was billing partner and attended conferences.
:.-
39
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.-"
,.- ..
Rose: "HUBBELL notes that MADISON was HI
business to Rose: HILLARY's client, as she is the one
LLARY's client.
.ii.
ii. Watt GrecoD'
GreeOD'
GreeoO'
Watt Gregory,12I
Gregory,128 a senior member of the securities section at Rose, remembers that there
that "Mrs. Clinton was instrumental in introducing the client to the members of the finn
firm ...
. .. "nl
"131
" nl
"111
I
790-00000020 (emphasis added). See also Thomases Gl, 2129/96, at 45.
GJ, 2/29/96, 45 .
]2'
127 .
'" Hubbell 302, 211195
211 195,, at 7.
2/1/95,
1281
121
12 Watt Gregory left Rose in 1989, and later fonned
Wan firm of Giroir &
formed the law finn
fanner Rose anomey
Gregory with former
fonner attorney Joe Giroir. Gregory 302, 5/24/95,
5(24/95, I.
I.
5124/95, at 1.
129
129 Gregory GJ 1/3/96. at 7. Gregory testified that while he remembers some
GJ,. 1/3/96,
GJ.
discussion, he cannot remember "names, places, or dates" of such discussions. liL ld..
l.d. In an
interview .with
,with the OIC in 1985,
1985. Gregory remembered that one party 10 to the discussions was
5124/95 , at 2.
5124/95,
David Knight. Gregory 302, 5/24/95,
130
"" Gregory GJ, 1/3/96,
113196, at 25-26.
131I
II
III ld..
l.d..
l..d.
l.d... at 6-7 (emphasis added). the: term
added). What Gregory meant by the lenn "introducing" is
unclear. His interview with the OIC in 1985J 985 reads as follows: "RLF's opportunity
opponunity to represent
Madison Guaranty Savings & Loan (MGSL) came through Hillary Clinton in the mid 1980's." ]980s."
]980s."
5124/95, at 2.
Gregory 302, 5/24/95, 2. .' .
40
6(e),, Federal
FOIA(b)3 - Rule 6(e)
6(e).
6(e), Rul es of Crimina
Federa l Rules Criminall Procedure
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EXHIBIT 3 (Part 2)
to
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-.
...., ' - '
~
,-__...JI"
! __
-_ _.....t32
Gregory remembers two specific concerns about representing Madison prior to its
. .
r~presentation .. III
fi undertaking the representation.
representation 1ll
133. The first
llJ ~as whether Rose should represent Madiso
ftrst concern. was Madisonn
at all
all:: Gregory felt that Rose,
Rose. which had riot
not represented any savings and loans.
loans, did not have the
representing Madison was small and the risks were great because be
he understood that savings and
perceive Madison to have a particularly atti"a.ctive risk/reward ratio for our firm as a new
particuJarly attractive
anra.ctive
stoCk."13~
nIH Gregory has no memory of any discussion at
would say you can have two classes of stock."m
stock. "m
of~e
the origination of the retainer about Madison having
baving an outstanding bill. l36
outSllinding ~ill.
~ilI. \)6 When asked about
U6
132
,/1
/ilL--
L-I_ _
_ __
_--'
--I
I)l
III
I133
ll .,' liL.
U1..
ls1.. at 13, 15-16
1516 ("But I do kno
knoww that there was an open discussion
discwsion about the
~e potential client, as well as the substantive issue, could a state-<:hartered,
client, or 11le
lhe
the state-(:hartered,
state-<:hartered. stock-
stock
~vings & loan association have two classes of stock
savings
owned S:<ivings ... . But to my way of thinking, the
stock. ....
discussi' o ns about, 'Should
discussi"ons
discus.$i"ons 'ShouJd we be doing this,' took place before we undeItook
undertook the particular
projeri.
projC9t. ").
projefi")
,:.
I~
,~
w.. at 810.
1<1.
I<i 8-10..
810
....-
'"
13S
'" liL. at 13-14.
1<1.
I<i \314.
1314.
".i
116
136 .
'" liL.
1<1.
ld. at 18.
....:----.....
.;,-
'"
137
'" ld.
1<1. at 29.
29 .
41
1m~6?![
FOIA(b)J - ORw ie 6(el, ~~~~r~~RUles
6 DocId: 7~~~I~SH
NW : 154
1541 Federal Rules of
of Crimonal
Criminal Proceclure
Procedure
NW 7 0015'g5 Page 79 ,
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-.
3)1987-1992:
J) 1987-1992: RLF ConflictsIWard
3)1987-1992: ConflictslWard v. Madsibn/U.S.
MadsionlU.S. v. McDougal- [The RLF
Madsion/U.S. 's
RLF's
Barod
Borod & Hu~~ins
HUi~ins Ikpoo
Report
i
~cDougal and Madison
Fffi..BB ordered James McDougal
On July 11, 1986, the FHLBB Ma~ison President John
JaM
Guaianty.
Guaranty.. Shortly thereafter.
Latham removed from Madison Guaianty
Guaranty thereafter, Madison'
Madison'ss board hired the
McDougaJ 's use of Madison GuarantY to benefit himself and other insiders.
McDougal's Barod &
insiders. The Borod
"apparent cnminaJ
criminal
crim"inaJ
criminal violations."
criminaJ referral to the United States Attorneys' office in Little Rock and
Madison sent a criminal and
investigated the matter, inve~tigation led to the indictment of McDougal, Latham, and
maner, and that invdtigation
:
maners :related to Castle Grande.
others in November 1989 for matters GrandeY'm
\38
42
NW:
NW: 15416
154 16 DocId:
Docld:
Docld: 70001585
700015
7000 1585
70001 85 Page 80
585
,
II,
201
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Be~an Work
Rose Began WQrk For
FQr The FSLIC
ESLIC 10 J 985.
In December 1985.
ofG~ty
QfG~ty
Board ("FHLBB") and its agent, the FSLIC, in the takeover of Guaranty Savings & Loan
LQan in
Harrison. Arkansas.
Harrison, Arkansas. Vincent Foster served as billing partner and lead counsel for the FSLIC.
FSUC.
representation of FSLIC.
FSLlC. 139
FSUC. 139
1)9
FirstSouth and C,
FirstSoutb Josepb Giroir
C. Joseph
During the Fall of 1986, the FHLBB began to prepare for .the of
the imminent failure of
ofan
an
Arkansas savings and loan institution named FirstSouth, H.ubbeU described as "'the
FirstSouth. which Hubbell "the largest
The conflict involved Joe Giroir, a senior Rose attorney, and Giroir's work with
43
202
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On November 10,
10. 1994, Hillary Clinton told '[he FDIC~OIG when asked about FirstSouth
the FDIC-OIG
. of
afwhat
what those issues may have been. stat~ she had
been. She stated bad no involvement with the FSLIC and any
Financial. On June 1, 1987, the FHLBB issued a subpoena to Ward as part of its investigation of
4l
14lFriernis,
14'Friends,
Friends, at 132.
'141Friends,
142Friends, at 132.
,....,...
r" 144Hubbell Testimony,., 217/96.
'44Hubbell Senate Testimony
''''Hubbell 217/96,
2/7/96, at 158.
44
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70001585
85
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~-',
Madison GuaranfY.14~
Madison .1
.._
Guaranty.145 ,LI - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _"'-',,146
__________________ 46 Shortly
.;...I!'
thereafter, Ward decided to sue Madison Guaranty Savings & Loan and Madison Financial
Corporation.
Ward's yarious
rarious agreements with Madison Financial, his sham loans to and from Madison,
Madison .,
. '
the May 1, 1986 option agreement drafted by Hillary Clinton, and the history of his dealings with
were,' at issue in the case. The case was tried before a jury on August 30 and August 31,
Madison wen;
~:rder Skeeter Ward and POM to pay Seth Ward the monies Skeeter and POM owed
courtq'rder
court
. .
I~SSee Exs.
"'See Exs, 4 and 33 of the FDIC-OIG Supp. Rep., 9120/96;'-----------.
9/20/96;
. ~ .............. .
;;:1.------------------=----,
t
8/3/95~Ex.'12T
..... - .....
, 147RTC-OIG
'''RTC-OIG Rep., 813/95, Ex; 123 ........
, ........ ......
, , .. ' ..............
.. ..... .........
45
FOIA(b)3 - Rule 6(e), Federa!
Federal Rules of Criminal Procedure
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~.
then retrieved the escrowed money and gave it to Ward. The FDIC and RTC,.however,
RTC, however, removed
federal courts. Wright, Lindsey & Jennings withdrew from the case, but demanded that Ward
Wa.l
settlement, Ward returned the money he obtained as a result of the jury's verdict. 1148 HubbeU
'" Hubbell
advised Ward on the settlement (although Ward primarily used another Jawyer,
lawyer, Thomas Ray),
Ray).
invQlvement in the Ward case from the FDIC and the RTC.
Hubbell concealed his involvement
Hubbell said that he "did not tell Breslaw about this representation because it was
insignificant. "149
Rose began its work for the FDIC in approximately July 19S7. 1JO Vince Foster served as
1987.tjO
"~--------------~
I'~------------------~
.,' .... '''Hubbell FDlCOIG Interview, 3116/95,
149Hubbell FDIC-OIG 3116195. at 7.
\.~o264-00009841-90 .
'''2640000984190.
46
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interest. lSI
interest !51
,
By December of 1987, April Breslaw was the responsible FDIC anorney
attorney for the Coming
Bank matter. Breslaw worked with Mr. Hubbell and Rose associate ruck
Rick Donovan on the matter.
1988: Res.
November J988: Rose Afu;ml1\S QualitY As FSLlC
IQ Oualify
Attempts 10 FSLIC Fee COWlsel
Counsel
Susan McDougal.
McDougal, Frost partner James Alford, and Castle Grande,
Grande. It listed law firms and lawyers
iav,:yers
which FSLIC knew had performed legal work for Madison Guaranty. Those finns
firms included
Little Rock's Mitchell, Williams, Selig & Tucker and the Memphis firm
finn of Gerrish & McCreary
mention Rose.
'''Hubbell
IS1Hubbell RTC-OlG 4/2Q/95, at 11-12.
RIC-OIG Interview, 4/20/95, 1112.
,- '
47
FOi,..\{b~3 - Rule G{e),
FOIA(b)3 6(e), Federal
Fecleral Rules of Crim inal Proced
Cnminal ure
Procedure
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-. anorneys
anomeys conflicts check lists. Foster
attorneys which attached the conflicts'
conflicts'check Foster also sent Hindes a letter which
"advise[d] that this representation was deemed to be a conflict of such a nature to disqualify
[Rose]
[Rosel from being fee counSel
counsel on any.
any' receivership,"')6
receivership,"'J6
any new receivership. "1J6
"156
On Thursday,
Thursday , November 3, 1988, Foster circulated another memorandw:n
Thursday. memorandum to Rose
Jette
Lantelme a lette
-'m
' -_ _ _ _ _ _...J m Monday. February 21,1988,
IS8 On Monday, 21,, 1988, Hindes sent Foster a letter which stated
21
21.
'--------~
/
/0
-'
--
}-'
'D 0.
"'281-024945;
m281-024945;RTC-OIG
"'281-024945 8/3/95. Ex. 25.
Rep.,. 8/3/95,
; RTC-OIG Rep 25 .
____'11""---'
.~
~ .'11f"'----,
......'1
11..-___--'
" .....
'-----'
! ,,' ......
..... .
" .... 48
:,,'
NW: 1541~Blttfu!bo~~5f1Rgea8ules
N W: 1541mellt 1\i'bo1~5Fp!lg&"8ules of Criminal
Criminal Procedure
207
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-.
~'"
:C,[1e
2 }r, ,,-, _-:--_ _ _ _ _ _ _ _ _ _ _---1
}'lj9
jr--'15-9- - - - - - - - - - - - - -......\
I
Foster's letters did not disclose the Rose Law Finn's
Finn 's prior work for Madison Guaranty,
Guaranty.
and no one has ever found any document which would indicate that FSLlC,
FSLIC, the FDIC, or the
ever
everl~ed
l~ed of
RTC everkamed
ever learned oCRose's
Rose's prior work for Madison Guaranty before press reports
re-POrts of that work
repolts
during the 1992 campaign, and then during the investigations which began in the fall of 1993.
investigationswhich
Industries.
Industries.
In any case, a regulatory change occurred which soltcit the FDIC for that
Which required Rose to solicit
work.
to
and February of 1989, Vince Foster sent solicitation letters to the FHLBBIFSLIC and the FDIC.
FSLIC, and created the RTC to manage failed savings and loan institutions.
FSLlC, institutions.
~ubbell Be2an
Hubbell "Lawyering With A vengeance"
Be~an"Lawyering
Be~an
8ee'an"Lawyeriog veoeeaoce"
yengeance" 10
In Early 1989.
151
"1...____- - '
L _ _ _----'
...1
.// 160
../ ""281-00003361-3369; 264-00025765-81 ; 264-00025889-902;
281-00003361-3369; 264-00025765-81;
'''281-00003361-3369; 264-00025889902; 281-00001578-86; 281-
.029581-89
.029581-89 (emphasis added).
: -
:.--- '''Pub. L.
161Pub. L No.
No . 101 . . 73, 103 Stat. 364,
101-73,.
101-73,
101-73,' 364.
.'
49
.'
Im~)IlI' ~OIlO:l(j;~~I?
154 1m~)I:l:I' ~O@D1(i~,5=P~I~ules
NW : 154i=ID~)ld~
NW: 154 I 81Ules
~OIlill(ji~S'I?I~les of Criminal Procedure
208
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altogether."1
altogether."162
management altogether. 62
"162
. FOIA(b)
roIA( b ) 6
roIA(b)
rOV.(b)
LL-________________________
_________________.J so Mr. Hubbell ."resolved to build up [his]
practice, increase [his] billings[, and] began lawyering with a vengeance
vengeance."L6)
." L6) Along with Vince
vengeance."163
vengeance."16J
clouded. "16j
.clouded. "16j
"J6J
"J6j
Mr. Hubbell accepted the Madison Guaranty v. Frost case at a time when "in the only
- ....
.-.----
The Frosl 1997, has "become pan
Frost case, Hubbell wrote in 1997. part of the industry known as
Whitewater."161 He predicted.
Whitewater."167 predicted, ominously: evolving, I expect Madison
ominously: "The way all of this keeps evolving,I
evolving.
v.
v. Frost to eventually be linked with Lee Harvey Oswald and Deep Thoat.
TIuoat."'61
TIuoat.""168
16I
The Ori~ios
Ori~ins Qf
Qri~ins Of Madison }J.
)I.
)J. FroSi
y. Frost
,.,(,-.
162Friends,
162Friendr, at 145.
63ld. at 145.
16J/d.
I163ld. ]45.
I""Friend. at 147.
164Friend,
If>4Friend,
1 6~1d. at 147.
16j/d.
16SId.
165Id
166Friends,
I66Friends, at 145.
.-
--
-- 168Friends,
Friends, at 149.
161Friends,
I6'Friends,
161
50
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.- ..
. After the Borod & Huggins law firm issued its 1987 report, it concluded that Madison
and 1985 audits of Madison Guaranty. 169 Madison Guaranty alleged that Frost was negligent
Guaranty . 169
.on
.on
.on conservat.or
conservat,or of Madison GuarantY.
On February 28, 1989, the FDIC was named conservator
conservatpr 171l
GuarantY.170
Guaranry .I'c
GuarantY .170 April
.-
.0'--'.
On
00. 21.
On. March 21,1989, Mr. Hubbell circulated to other Rose attorneys a memorandum about
21, 1989, Mr.
169
'''1105-070547-52;
05-070547-52 ; 281.;01612;
"'105-070547-52; 281 '01612; Alford
281'01612; Alfmd OIC-302, 2/6/98, at 1-2; Alford RTC-OIG
OlC-302, 216/98,
917194, at 1-2.
9n194,
Statement, 9nl94, )2.
'lOCI 10500022985
17Oe!
''''Cf 105 (3/2/89
(312189 letter to Beverly Bassett
.. 00022985 (312/89
105-00022985 Bassert from a FHLBBIFSLIC
FHLBBIFSLlC representative).
representative)
172Interview 1111194.
I"?2Interview with Webster Hubbell by Jack Smith and John Downing, 1111/94
I12Interview 1111 /94..
. 173Hubbell
'73HubbeIJ House Banking Comm., 8110/95,
Comm ., 8/ 10/95, at 47; House Banking Comm. Index,
10/9.5, Index. 8/10/95,
8/ 10/95, at
.--k 242 .
242.
51
210
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had been the billing attorney in 1985 and 1986 ... [and] that for a period ohime,
of time, we [Rose] had
done some work for Madison, Mr. Hubbell admitted in testimony before the House Banking
"174 Mr.
Madison."J74
Mr. HubbelL
Hubbell. No, I did not.
,
il
Mr. Chertoff.
Mr. ~onnection with this same
Did you indicate that in Connection
property.
property, this Industrial Development Corporation property
acquisition. Ros~ Law Finn had given regulatory
thlit the Rose
acquisition, that
G~ty concerning certain regulations
advice to Madison Guaranty
uti1i~ies and sewer utilities?
that governed water utilities
r I'
.
Mr. Hubbell.
Hubbell . No, I'm sure I did not
not. I;
~-,------------------~--------~.
"'Hubbell 8110/95, at 59.
l7SHubbell House Banking Comm., 8/10/95, 59.
52
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-.
.- .
' ' - ''
Mr. Chertoff.
Me. Chertoff. So what is it exactly you told Ms.
Ms. Breslaw
BresJaw about the nature
of your previous representation of Madison?
Mr. HubbelL
Hubbell. As far as telling M~. Breslaw, the
Breslaw,lIJ believe the words were
. something to the effect that we didn't have any conflicts, we
could take it on. There had been three matters that I had
specifically addressed - and this may have been less than a
30-second conversation
_. the primary one being whether
.-
the fmn wou1d take on the litigation against Frost since we
finn would
had other clients who were still being audited by Frost &
Company.
Mr. Chertoff.
Mr. Chertoff. So in this 30-second
3D-second conversation,
conversation. you
ou said that the firm
had taken on three
tluee matters for Madison --
Mr.
Mr. Hubbell. No, no, I didn't say that, Mike.
Mike .
Mr. HubbelL
Mr. Hubbell. Mike, I'm trying to remember. What I'm J'm trying to say, in a
very short context, was that in my mind, there were three
issues. One was my father..;in-Iaw,
father-in-law, one was prior work for
Madison and the primary one being the Frost issue itself. I
knew that there had been a more complete disclosure
concerning our representation of Madison to the FDIC. II
that. 116
. probably improperly .assumed that she knew about that.176 176
Mr.
Mr. Chertoff. Well, what did you tell Ms. Breslaw?
Well.
Mr. Hubbell.
Mr. HubbelL 1I told her that we did not have any conflicts.
Mr. Chertoff. Did you tell her that there had been earlier representations
representatio ns '
representations'
of Madison by the Rose Law Finn?
Firm?
Mr. Hubbell.
HubbelL Yes.
"Yes.
Yes.
Mr.
Mr. Chertoff.
Me. Did you describe them?
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- .'
'~ "
M.-. Hubbell.
M.-.
Mr.
f\..1c. Hub bel l. IJ think I said we had done some minor lending work for
Madison.back in the early '80s.
'80s .
Mr. Chertoff.
Mr. Minor --
what does "minor
"m.ip.or lending work"
work " mean?
work"
wOll"
Mr:
M.-: Hubbell.
Mr: There would be some loans
Ipans that we would have been
counsel to Madison on.
on.
M.-. Chertotf.
M.-.
Mr. Chertoff. You mean collecting loans?
Mr.
M.-. Hubbell.
Hubbell .
HUbbell. No, no, I meant like closing loans.
M.-. Chertotf.
M.-.
Mr. Chertoff. And did you -- y~u for any details about that?
did she ask you
M.-. Hubbell
Mr. Hubbell....
Hubbell.. No.
M.-. Chertotf.
Mr. Chertoff. Now, did you refer her to some prior conversation that
Now I
-.
. ~ ,. M.-. Hubbell
M.-.
Mr. Hubbell.. No, II did not.
No.
M.-. Chertotf.
Mr. Chertoff. Did you yourself give consideration to whether these
transactions were conflicts?
confliCts?
M.-. Hubbell.
M.-.
Mr. II looked at it in
in the context of the Frost litigation and
afthe
whether there would be a conflict, and I did not see a
conflict as to the prior representation since we were, to
some extent, standing in the shoes of institu~ion :'
of the institution.
Mr. Chertoff. Well, , let's get into the nature of the prior
Well,let's
Well representations
priorrepresentations
and analyze that for a second. Were you familiar with the
fact that in 1986, the Federal
Fedeml Home Loan Bank Bani: Board, .
which was reviewing Madison Guaranty, had had. described the
acquisition of this Industrial Development Corporation
property as a fictitious -- involving a fictitious sale?
Mr.
M.-. Hubbell.
Mr. Was I aware in '86 at the time I was talking to April?
Mr.
M.-. Chertoff.
Chertotf. Yes, in '89.
'89 .
Mr.
M.-. Hubbell.
Mr. Hubbell . No, I was not aware of
No. of that in 1989.
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- .
Mr. Chertoff.
Mr. Were you aware of the fact that the firm
finn had represented
co~ection
Madison Guaranty. in connection
. with that acquisition?
Mr. Hubbell. Yes, I was. I don't know that I had remembered it in '89,
Yes;
Yes;
but I( do --- I was aware of it. 177
IT/ .
before it closed,"ns
closed
closed.. .."178
closed, 178 Funhennore,
118 "[w]hcn II retained .the
Furthennore, she says, "[w]hen the Rose Finn to work on
Mr. Hubbell later admitted that he "exercised very poor judgment in taking on the [Frost
110 Mr.
case]."O
case].180
case). Mr. Hubbell decided to accept the Frost case even though some Rose partners objected '
~at Rose and Frost had common clients and did not believe Rose should sue a
on the grounds that
Mr . .Hubbell
Mr. Hubbelliater wrote: "I was angry.
later wrote: angry because even though they wanted me to start
mine. So II wasn'
were for their benefit, not mine. wasn'tt in an accommodating mood. I]I took on Madison v.
v.
I~reslaw Senate
L79Breslaw
179Breslaw Senat.e Banking Conun., t 1130/95, at 25.
Comm., J.11/30/95,
IIOFriends, at 146.
1lOFriends,
1lIJFriends,
18OFriends, 146 .
..-
.- ' _e._g_
181See.
ee.
1.._'_"5_'_'_
/1-___
!lIS
IIIS
".JL-..._---:-,,-J
L.. I_ _ '--.,..-.
"F_ri_enJ(
e.g.,
. .
---",.,..-ll.// . ~: ~tI47:' LI___________________---1
e.g .. Frienl~~~
Friends,.. ~.at~ . J4].;
Friends,
1//
. -
t.4].;,'LI_______________________
147;L.1 _____________________ ~
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _......_ _ _ _ _ _..J
.J
., .. ....
....................
.... ..... .
-....
.......
.....
............ 55
~N~)l()OOU1i8l1eij~OOI
:'..........
214
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-.
.""'--""
Frost."182
Frost."L'2
Frost."1'2
FrOSI ."'12
attorney. that Mr. Hubbell, Seth Ward, and Seth Ward II were in-laws.
intervention attorney, in-laws.1I)
in-laws.III
183
in-laws.LIl
.on
On June 8, 1989, Mr. Jeddeloh
1989. Mr. leddeloh
Jeddcloh wrote a letter to Ms. Breslaw
Brcslaw
Brc:slaw which Mr.
wruch highlighted Mr.
11,',
II. L..1144 In his letter, Jeddeloh
Hubbell's in-law relationship with Seth Ward, and with Seth Ward 11.184
11.1 Jeddeioh
explairied and Seth Ward II had lawsuits pending against the Madison
explained that both Seth Ward and,
and.
Ward matter and appears to have been an interested (indirectly) participant in the Ward
proceedings." 86 .
J16
proceedings,"ll6
proceedings."1
proceedings."LI6
.' - -
Breslaw
Bres law askcd Donovan if Hubbell was Ward's
asked Dooovan father-in-law,
father-in-law , and Donovan confmned
Ward' s father-in-law, confll111ed that
confirmed
182Friends,
1I2Friends,
Ll2Friends., at 147.
II1Friends
"'Ex.
J8SEx. 99 to RTC-Rep., 8/3/95, vol. III.
"'Ex.
'''Ex. III.
J86Ex. 99 to RTC-Rep., 8/3/95, vol. III.
.- . JIlDonovan
rUDonovan Little Rock GJ:,
J88Donovan
"'Donovan G;J;, 1/6/98.
GJ.', 1/6/98,
GJ.-, 116/98, at 93-94.
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-. Hubbell. She,described
spoke with HubbelL follows:
follows::
She described her conversation with Hubbell as follows
Ms. Breslaw
Bres law "generally
"generaJly potentiaJ conflict]
" genera1ly recall[s] being irritated that it [the Seth Ward potential
that
thai Mr. Hubbell represented to her that Mr.
Finn was the fact that
case at the Rose Law Firm Mr. Ward was .
LLI~reslaw
I~re slaw Senate Banking Committee Deposition,
lI~reslaw Deposit~on. 6/6/95,
616l95, 23 ~24 .. See also,
616195 ., at 23-24
23-24. also. e.g.,
e.g.
e.g.,, Breslaw
Comm. Dep., 10/23/95,
Senate Banking Comm. 10123/95, at 246 (same).
(same) .
Jd.
Jd.
ld.
Id.
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RTC.1'92
9~ Mr.
19l
RTC.192
the RTC. Mr, Hubbell only denies, weakly,
Mr. weakly, that he ever told April Breslaw that he and Seth
Hubbell.
Mr. Hubbell. Not thai
that I know of.
Mr. Chertoff. And I want to read to you from line of the statement given
by Ms. Breslaw on page 200. "A few months after I had
Finn, IJ learned that Seth Ward was Webster
hired the Rose Firm,
Hubbell's father-in-law and that Ward:was
Ward was in litigation with
Madison. Under the ethical rules.
rules, an adverse interest by an
~puted to a lawyer. It is not a conflict of
in-law is not imputed
Nevertheless, I asked Mr. Hubbell about the Ward
interest. Neverthele~s.
Neverthele~s,
matter. Mr. Hubbell told me that he was not representing
matter.
Mr. Ward and that he would not do so in the future. He
Mr.
also told me that his relationship with his father-in-law was
one . I recall him saying that Mr. Ward was an
not a close one.
Democrat." II
ardent Republican and that he was an active Democrat."
want to ask you, did you tell Ms. Breslaw that your
relationship with your father-in-law was not
~ot a close one?
Hubbell.
Mr. Hubbell. 193
. I don't remember that, Mr. Chertoff. 193
191
'9l Breslaw Senate Banking Conun.
'9lBreslaw
191Breslaw Comm. Dep., 10123/95,, at 249. See also
Dep . 10/23/95,
10123/95 a/so id
id. ("I believe that if I
iff
ihat ifI
iliat
had understood inJWle
wtderstood in ~t Hubbell did represent Ward or Ward's interests,
June of 1989 that interests. that II would
have taken that up with supervisors. And 1
I don't know what they would have advised me to
do.").
-.
~.
'9JHubbeIl
1'9JHubt>e'11
'93Hubbell 217196, at
217196,
217/96,
9JHubt>e1l Senate Testimon ,217/96, a/so, e. . ,
at' 14-17. See a/so,e
at also,e
58
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115416~A\5\3 'Z~J~~.~I~~Rules
5 416~A\5\3 7!/ili1J
7!/ili1J ~~.~'%!iRules
~~.~I1.Ii
~~. ~I1.Ii R u les of Criminal Procedure
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- After Mr.
Mr. Hubbell spoke with Ms. Breslaw, he
Ms. Breslaw, he directed Rick
Rick Donovan
Donovan to draft aa letter
lener to
to
l9oI
lener, then gave the draft to Mr.
letter, HubbelL '94
Hubbell.
Mr. Hubbell.
Hubbell.''''
1901
1989, Ms.
On June 23, 1989, sent aa letter
Ms. Breslaw sent to the managing agent of the Madison
lener to
Paulson.'"
Paulson.
Paulson,l95
Conservatorship, David Paulson.19S Ms.._Breslaw explained that Hubbell did not represent Ward,
195 Ms. Ward ,
Ward,
Paulson:
Mr. Paulson:
Dear Mr.
J
.1 I
"'Donovan
194Donovan Linle G.J
GJ.. 112
Little Rock GJ. 1198
1/98 at
1121198 4. See also ee.
20-24.
0120-2
20-24. .R.I~.---------'"
M~.----------'
./~----------'
e.f!.1
. 59 .'
,.r
FO IA(b)3 - Rule
FOIA(b)3 6(e).
6(e),
Rul e 6(e Federa ll Rules Dr
). Federal 01
of Criminal
or P rocedure
C rim in al Procedure
Procedu re
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..
-.
--:- ..
Should you have any questions concerning this, please do not 'hesitate
hesitate to call me.
norhesilate
lsi
/s/ Webb Hubbell
Mr. Hubbell did not tell Ms. Breslaw anything about his relationship with Seth Ward
other than that he and Ward were in-laws -- a fact contained in Mr.
inlaws Mr. leddeloh's
Jeddeloh's June 8,.1989
letter,
letter.191
letter. 19K
In 1989, Hubbell read the 1986 FHLBB exam reports, and, in particular,
panicular, he read the May
l99
report which criticized Ward and the IDe/Castle
8, 1986 exam 'report IDC/Castle Grande transaction. 199
transaction .,l99 Then in
198Jeddeloh
'UJeddeloh later recalled that
'9IJeddeloh th'at "[d]uring
"[d]wing my tenure as the managing attorney for Madison,
Madison.. I did
not come into information
infonnation that would lead me to believe that Rose had represented Madison at
any time prior to its closing."
closing." Ex. 15 to FDlC-OIG
FDIC-OIO
FDlCOIG Rep.,
Rep. , 7/28/95
7128/95 (Jeddeloh FDIC-OIO
FDIC-OIG
FDlC-OIG
Statement, 3/
Statement. 15194).
15194). Jeddeloh also
3/15/94). also stated that if Rose "had represented Madison previously as its
counsel or on operational matters (as opposed to general
general counselor generaJ collection and foreclosure
work), it is likely that JI would not have utilized the finn,
firm, or would have tenninated
terminated the firm's
representation if subsequently discovered." Id. Jd
Id.
-.
...-. ubbell Senate Testimony, 2n1
I>'9Hubbell
199H
'99Hubbell 2n196,
96, at 217-18.
217/96,
217196, 21718.
60
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.-- . Ward 's dealings with Madison as involving fictitious sales, sham loans, and potential civil and
Ward's
22tIO
Breslaw.200
IDC/Castle Grande matter to Ms. -Breslaw. O
The evidence
-eevidence
vidence suggests the following:
1.
1. Webb Hubbell misled Breslaw about his relationship with Seth Ward in June
Jooe of
1989;
3.
3. When _the investigatioris to
investigations started, Hubbell admitted to the OIC on February 1, I, 1995
.."artfully
artfully crafted" and that Hubbell represented Ward
that the June 28 letter was 'artfully
and POM before, during, and after the Frost case;case~
4. On March 16.16, 1995, Hubbell changed his story and told FDIC-OIG investigators
that the June 28 letter was not "artfully" worded; and
In late 1989 or early 1990, Rose attorney Gary Speed reviewed Frost audit workpapers
which related to Frost's Madison Guaranty audits. As part of that review, Mr. Speed "came
Finn."lOI
across a standard audit response letter to Frost and Company from the Rose Law Finn."201 Mr.
61
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--
. ..
t.o assure [himself] that there were no conflicts of interest
out the nature of the work and to .."02
"202 Mr
interest."201
interesl."02 Mr..
D~partment. Mr.
about Rose's work for Madison Guaranty before the Arkansas Securities Department. Mr. Speed
primary contact with FDIC, and was knowledgeable about the ethical rules concerning
conflicts."2~ Mr.
conflicts."21l'
conflicts."204 Mr. Speed asked Mr.
Mr. Hubbell if Mr. Hubbell was aware of Rose'
Rose'ss prior work for
[Mr. Hubbell] said he had been aware of some collection work. wor~. I showed him the
r~trieved concerning the ASD
bills I had retrieved "'-:SD work. He said he would talk about it
with April Breslaw. . .. Within a day or so,
Breslaw.... so, Mr. Hubbell/old
Mr. Hubbell tlult he had .
told me that
spoken 10to Ms.Ms. Breslow
Breslaw about the ASD work and that she agreed it was not a
conflict.. .1J recall that conversation clearly.
conflict clearly. I do not believe that I ever spoke to
Ms. Breslaw personally about the matter,maner, and I do not believe I ever wrote
Y.'I'Ote
maner.
anything about the matter. 20
matter.20~'
The evidence reveals that Mr. Hubbell did not disclose Rose's
Rose' s prior Madison Guaranty
work to April Breslaw, even though he learned that Rose had submitted a Frost audit to the ASD
202Speed RTC-OIG
RTCOIG Statement, 6/3 0/95,, at 5.
Stateme.nt, 6/30/95
2O~Speed
2O~Speed'
2O~ RTC-OIG Statement, 6/3
SpeedRTC-OIG
205SpeedRTC-OIG 6/30/95,
0/95,, at 5 (emphasis added).
0/95
6/30/95
".
'"206Hubbell 0/95, at 49 ("I
8/ 10/95,
Hubbell House Banking Comm., 8110/95,
"'Hubbell 811 . [Frost] audit
("1 became aware that the audit..
had been sUbmi.tted
.had submi.tted to the Arkansas Securities Department at some point during the litigation
sUbmi.ned
-
.- againstthe
against the auditing firm.").
firm."). .
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- ..
she did) that he had not told her of the ASD work,1M
work. 207
It appears that Mr. Hubbell lied to Gary Speed when Hubbell stated that he disclosed the
208 Furthennore.
ASD work to April Breslaw. lo8 supra. Mr. Hubbell admitted in testimony
Furthermore, as noted supra,
before ._the
t he House Banking Committee that Rick Massey "disclosed that there had been prior
2'Hubbel1
207Hubbell Senate Testimony, 12/1195, 114-J7 (I don't have any specific memory that 1I
1211/95, at 114-17
did or that II didn't [dis<uss OIC..;]02, 21l195,
[discuss the ASD work with Ms. Breslaw]."); orC-302, 2/1/95, at 19
("HUBBELL did not have any recollection of discussing the representation ofMGS&L before
the Arkansas Securities Department with BRESLAW W but
but DONOVAN
DONOV AN may have discussed it
with her. HUBBELL did not ask DONOVAN to discuss the issue with BRESLA BRESLAW, W.
Furthermore, HUBBELL did not recall ever writing about the issue to BRESLA BRESLAW. W. PETER
KUMPE brought up the issue with HUBBELL. HUBBELL believed that KUMPE KUMPEmay bave
may have
brought the issue up by asking HUBBELL how bow he was going to get around the issue."); RTC-
OIG/OIC Hubbell Interview, 4120195,
OlGlOrC 1819 ("HUBBELL said that it is his opinion that the
4/20/95, at 18-19
matter should have been reported to BRESLAW, and as lead lead attorney the responsibility to do so
was his,
his. HUBBELL said that although he had no specific recollection
recoHection of discussing the matter
with BRESLAW,
BRESLA W, he believed that he did; although he said he would not disagree with
BRESLA W W if her recollection was that he had not told her,").
her. ").
63
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.. ..-... 2211
11
.-..
,-. ' .Rose & Huggins Report because Mr. Ward and Mr. Hubbell were in-laws.1 !!
Rose a copy of the Borod &
Beaty, arid
. Beary, and he approved of her decision to forward the Borod & Huggins Report to Hubbell.
Hubbell .
Hu~bell's
Beaty told Breslaw that he had a favorable impression of Hubbell due to Hubbell
Hubbell's
' s work on the
I believe that since I had previously determined that the Ward and Hubbell
conflict. an~
relationship was not a conflict, and had made the assumption that Hubbell was
issue,., I felt that there was no
trustworthy on this issue
issue. DO reason to prevent Rose from
obtairiing infonnation the fmn
obtaiiiing whatever information fInn felt was necessary to pursue the Frost
suit. I believe that Beaty mentioned that Hubbell had responded to a conflict
issue which arose in cormection
connection with the FirstSouth project in a very .
professional manner. ]I have the impression that Beaty had confidence that
..,.-- .,
,- ethically .212
Hubbell would behave ethically.lIZ
ethically.m
ethically.m
According to the Frost billing records, I, 1990, Mr. Hubbell met with 9ary
records. on February 1, Gary
"'Ex.
'''Ex. to
214Ex. 128 to RIC-DIG
RTC-OIG Report, Ill. See also Breslaw RIC-OIG
Repon, vol. III. RTC-0IG Interview, 4/94, at
RTC-OIG
12, 24; and Breslaw Senate Banking Committee
Conuninee Deposition, 6/6/95, at ot24-25 ("[B]ased on the
24-25 ("[BJased
("[BIased
information that we had at the time -- again, I am sorry to repeat myself --- that Hubbell didn 't
infoJ.lIlation
infoJ.lllation
wou)d not represent Ward, it seemed to
wOll;ld
represent Ward, and said he would to.us
us that there was no
..us
conflict and therefore our counsel should be allowed to see ~ all material that was relevant to
--~
...---. Madison to see if
MadisoD it would be of any use in the accounting case.
ifit
if'it case . So, despite the fact that Ms .
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21]'''S
responses.21221
interrogatory responses.
199 1. 217
Borod & Huggins Report on February 8, 1991 and February 12, 1991. 2
1991.217 ]7
ofthe Borod & Huggins Report. Hubbell initially denied that he ever saw the Borod & Huggins
of
,
/
Report. Then, he claimed that his Frost co-counsel kept the report from him. Then, Hubbell said
~pril 4, 1990, Gary Speed, Rick Donovan, and Jim Birch interviewed
~pri1
On April intetViewed Patricia
.""- ',.
Heritage,
Heritage. who then was a newly hired
"hired Rose attorney,
anomey. about her previous work at Madison
anomey,
attorney.
penniaed
Strayhorn expressed some concern, we permitted
permined the Rose firm to see Gerrish's report.
permiaed report . ").
216264-00014589; 105-00083364;
"'264-00014589; 105,00083622; 105-00083633; 264-
264-00009459; 105-00083622;
00020682.
217
105-00083548;; 105-00083537; 105-00083558; 264-00020802-03; 105-00083531;
"'105-00083548
"'105-00083548; 105-0008353 1; 105-
00083538; 105-00083550; 105-00083559;264-00020802.
105-00083559; 264-00020802.
264,00020802.
1lSHubbeli
llSHubbell
l18Hubbell 8122/96, at 115-16; FDIC Interview with Webster
218Hubbell Grand Jury Testimony, 8122196,
Hubbell by Jack Smith and John Downing, 1/11194;
HubbelI 1/11/94;
1111194;
1/ 0IC-302, 2/1/95.
11194; OIC-302,
OIC,302, 2/1/95, at
a. 21;
2 1; Hubbell Senate
.- Testimony; 217196, at 232-34.
2/7/96, 232-34.
65
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-
..-..
Guaranty.1l9
Guaranty.lI9
Guaranty.219 The biHing
Guaranry,lI9 billing records reveal ~t Mr. Speed met with Mr. Hubbell on April 4. 1990.
revea1 $it
that
The billing records do not reveal any call to Ms. Breslaw, but Gary Speed says that he
he-and Mr.
and Mr.
220
Hubbell called Ms. Breslaw about the Pat
Par Heritage matter.
maner.:UO
maner.220
matter"220
'Ms.
Ms. Breslaw denies that anyone iilformedher
informed-her
iruonned"
iitfonned"her about Pat Heritage' p~evious Madison
Heritage'ss previous
Guaranty employment. Ms. Breslaw stated that she "learned in roughly January 1994 that she
had once worked at ' Madison and that Gerrish had accused
acc.used her of editing minutes of
"221 Mr.
Madison board meetings. "221 Mr. Hubbell "said they did not
Dot
DOl discuss this matter
maner with Breslaw
although they probably should have talked with her about it."222
it."m
it.'>222
The panies
parties in the Frost case reached a tentative agreement to settle the Frost case
sometime in February 1991, and April Breslaw issued a detailed authority to settle memorandum
on February 26, 1991. 223 That memorandum recommended that the RTC settle the Frost
1991.22J
1991.213 Frosl case for
..--.
$1 .025
$1. million.224
million.224
025 million.224
$1.025
219
'''105-00083613;
105-00083613; 264-00009497; 264-00020695.
264-00020695 RTC-OlG
264-00020695.. See also Speed RTC-OIG
RTC-OIO Statement,
6/30/95, at 7-10.
221lSpeed
221lSpeed 6/30/95, at. 7-10.
6/3.0/95,, a1.7-10.
220 Speed RTC-OIG Statement, 6/30/95 at7-10.
"'Hubbell FDIC-OIG
222Hubbell 1I I -12. See also,
FDIC-OIO Interview, 3/16/95, at 11-12. also, e.g., RTC-OIGIOIC
alio, RTC-OIG/OlC
RTC-OIG/OIC
RTC-OIO/OIC
4120/95, at 19-21 (which discusses the Patricia Heritage matter).
Interview. 4120195,
Hubbell Interview, maner)."
matter).
66
..
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-.
."'--' ..
The next day.
day, February 27. 1991 , as the parties in the Frost case continued to negotiate
27, 1991,
225
the tenns Heritage,"m
of the settlement agreement, attorneys for the defendants deposed Ms. Heritage.
terms afthe Heritage,'m
Rick Donovan attended the Pat Heritage deposition and billed the RTC on FebruaJ)'
February
FebruarY 27,
27 , 1991
1991
1991. for
8.50 hours for "prepare for and attend deposition of officers/directors; correspondence with
witnesses."l26
witnesses."126 At the deposition, Ms.
witnesses."226 Ms. Heritage testified that Seth Ward was "someo!1e
"someorte I wasn't
"someone
past~due
pastdue letters to" apparently because Mr. Ward was "one of
supposed to send past-due the preferred
oflhe
afthe
friends of Jim McDougal or John Latham. 22? Ms. Heritage testified that she had not.
Latham,n7
Latham.227 not done any
work on the Frost case while she was an attorney at Rose. n Ms. Heritage
Rose.221 Heritage"also
also testified about
the Borod & Huggins Report and about minutes she prepared at John Latham's direction which
.-
depositi no
the:: Heritage deposition.2lO
Ms. Breslaw claims that no one from Rose told her about the on.2lO
deposition.
225
J05-0008344 J; 105-00083566;
m 105-00083441;
"'105-00083441; 1105-00083566; J05-00083609.
05-00083566; 105-00083609.
05-00083609.
226
"'105-00083441;
"' 105-0008344 1; 105-00083566;
105-00083441; 566; 105-00083609.
05-00083566;
105-00083
227
85-00045517.
"'85-000455 17.
"'85-00045517.
228
"'8585-00045519.
-00045519 .
"'85-00045519.
229
85-00045498-506.
85-00045498_506.
85
22'85-00045498_506. "1 think .Don
-00045498_506. Heritage also said of Don Denton that "I Don had a good
background
backgroWld and knew ~hat
?/hat he was doing, yes." 85-00045518.
I must have read the section that contains the allegations Heritage.
allegationS about Pat Heritage,
however. because at that time she was not employed at the Rose Law Finn,
however, Finn.
she did not, to my Icnowledge.
knowledge, ever workworle on the Frost accounting case, and I
did not ever speak with her until after the Frost case had t>tenbeen settled for
several years. cOTUlcction when I spoke with her in probably
years . I did not make the connection
1993, that is four years later, allegatiorts had been made against her in a
later , that allegations
6677
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as ~ deposition
informed Ms. Breslaw of Pat Heritage's testimony as.l!
No one at Rose infonned
233
Indicunent And 1m
1989 Indictment 1990 Trial
Irial DfJames B. McDQu~al
OfJames B, McDou~al
In November of 1989, a Little Rock Grand Jury indicted James B. McDougal, lohn
John
234
Latham, and others for alleged crimes related to the IDC/Castle Grande transactions.
transactions.2$t John
Latham pleeded
pleaded guilty.
gUilty. A jury acquitted McDQugal
McDougal after a trial which occurred in May and June
of 1990. Rick Donovan and Gary Speed billed the RIC triaP3S
RTC for attending McDougal's trial. m
"'Hubbell
232Hubbell FDIC-OIG 3116/95, at 11-12.
FDIC-DIG Interview, 3116195,
1_____________----'
ml~~~
233 ...
Z34-?C,I=
1________________-'
234&e ...
235
"';105-00083618; 264-00020696; 264-011IB-149111;
. . . 105-00083618; 264-01I1B-149/11; 264-02175; 105-00083510; 264
264-
00020701.
.QOO20701.
68
227
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-.
I No one ever deposed McDougal in the Frost case, but McDougal did meet with the
because ''they wanted to paint McDougal as the criminal" and "we had nothing to gain and
story: "McDougal was not seen as helpful to the case because McDougal did not like the .
government, McDougal had lost his savings and loan and his ability to deal, and [Rose] was
Co~ittee -'
Hubbell told the House Banking COl1ll!'littee _.. wrongly -- that "it was back in the mid-
w_
J
~ I
;~~~~';"~K~um=pe~L~i=ttl~e:R~OC~k~G:::-:.J'-'
237Kumpe Little Rock G.J., ~21:31:9:8,-a~t
2/3/98, at ~4-5
4':5.~...;;11,-~_=_=_=_=_=_=_=_=_=_=_=-=_=_=_=_=_=_=_=_=_=_=_=_=_=_~
....
. f
I
;:1===~I
I L . . . . - -_ _ _ _ _ _ _ _ _.....J
"'Speed OIC-30~.,.1/30/98.
mSpeed OIC-302,.1l30/98.
69
228
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"~ight have some type of criminal exposure under these broad bank fraud violations that the
"might
, J . .
U.S. Attorney's Office seems so happy to use these days, "W tlult he (Heuer) was
tluit
"W Heuer wrote that
days."w
daYS."241
" in a pretty tight situation on this McDougal case" and that "Seth Ward, who II understand to
"in 10 be
case . "l~2
"2~2 Heuer requested an
witness in this case,"2.2
your father-in-law, appears to be a pretty critical wimess case."242 ~
Clinton.and
Clinton and ,W
Webb
ebb Hubbell met with Heuer over lunch individually
individual,ly and occasions.2~6
and' on separate occasions. 2 6
246
-.
"241''212-011968
212-011968.
212-011968 .
242
212-011968..
'''212-011968.
'''212-011968
143
243
l4l212-011968
212-011968.
212-011968.. Hubbell
Hubbell's's co-coWlSci
CO-COWlSC) on the FroSI
co-counsel Donovan. first learned of
Frost case, Rick Donovan,
Heuer's May
May.7,
7, 1990 letter to Hubbell about Seth Ward's possible criminal exposure on January
.7,
6, 1998 when Donovan testified before the Little Rock Grand Jury. Donovan Little Rock OJ., G.J.,
1/6198
1/6198,
1/6/98 , at 99-100 ("This is the first I've ever heard of anything like thal.").
1/6/98, that").
that.").
1401Heuer
2401Heuer G.1.,
244Heuer Little Rock G.J.
G.1.
G.J.,, 10/8/97,
10/8197, at 20-21.
20-21 also Heuer Little
2021 . See a/so ROck GJ
Linle ROCk 4/ 1/97. at
G.J.,., 4/1/97,
96 ("The
('The letter went out. Hubbell never got gOl back to me. IfIffI called,
Ifl called. he didn't call me back.
back. So
trial ."). But see id. at 97 ("After it [McDougal's
we just went on to trial."). trial) was over,
trial1
[McDougaJ ' s 1990 criminal trial]
II talked to him. But prior
priOTtOto that, he may have --. he may have called me back after II wrote the
-- where I could see potential criminal exposure and me explaining it to him
letter to ask what I
and him communicating that he did not want me to talk to his father-in-law.
father-in-law. That very well may
fatherin:law.
father-in:law.
have happened. IJ don't remember.").
remember.").
245
'''105 -00083618 ; 264-00020696; 264-01I1B-149111
'''105-00083618;
-00083618;
105-00083618; 264-01I1B-149/
264-01 11;; 264-02175; 105-00083510; RIC
Il B-149111
264-01/1B-149/11;
000442; 264-00020701,
264-00020701.
264-00020701 . .
229
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'"-_
L..___ __
____
____
_________
____
____ Mrs, Clinton was
_ _......'47 Mrs. =:141
!:' "knowledgeable" about McDougal's well publicized trial.HI
m
"'L ____
241L._ -,-----.....II
_ _..,-_ _ _ _ _ _ _---IIHeuer
Heuer Little Rock Grand
LIttle Rock Grand Jury,
Jury, 4/1/97, at 102.
411197, at 102.
i4
1
...
\
.. " .
71
230
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of Frost's defenses to the RTC's chum was that Madison's officers and
R!C's accounting malpractice claim
directors were corrupt, and that any losses to Madison Guaranty were the fault of the "crooks
!: Julie Baldridge
BaJdridl:e Speed
.. . During the Frost case, Gary Speed learned.
learned that his
"his Jul~e
Jul ~e Baldridge Speed,
his then wife, Julie
happened :
happened:
2. Gary Speed told Webb Hubbell about the Julie Baldridge Speed potential conflict;
3. Webb Hubbell concealed the Julie Baldridge Speed potential conflict from April
Breslaw;
2S2105-00083428;
"'
"'105-00083428; 000364 ; 105-00083435-36; RIC
105-00083428; RIC 000360; 105-00083432; RIC 000364;
000367-68
000367-68;; 105-00083411;
105-00083411 ; RIC 000343 .'..
253Donovan
2S3Donovan Little Rock GJ.,
m Donovan Linle 116/98, at 881-83.
G.J., 1/6/98, 183.
~.~I.~------------~
2.~1L
... 2541..._ _ __
-_ _____
_ __
_ __
__ ---1
----'
....... 72
:...,
FOIA(b)3 0
OIAW)3 0-- R
Rule 6teL
ouje 6lel Federal Rules
Rul es of Criminal
6leL Feder"bRul
Feder"b Procedure
Crimina l Proced ure
NW: 15416
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700015 85 Page 110
II
231
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. "-- 't
4. Hubbell falsely stated to Gary Speed that Hubbell
Hubbell"told Breslaw about the Julie .
Baldridge Speed potential conflict;
and
1984 and 1985 audits of Madison Guaranty. He left Frost in 1988 and went to work for Pace
", /~S?]...'- - - - - - - - - - - - - - .
...' ..... .
.' 2~?[1~===========]
/~~.?[I~===========]
/2~?[1
i .:;:>
.', , .'" 73
. ...
,
, ~ .'
..
: .;.
FOIA(b)3 6~)),
FOIA(b )3 - Rule 6(e ),, Federal Rules
6(e), Ru les of Criminal Procedure
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The evidence indicates that no Rose attorney disclosed the Alford matter to April Breslaw
m
or anyone else at the FDIC or the RTC. m
During July
JuJy or August of 1990, Rose decided to depose Beverly Bassett Schaffer.H9
Schaffer.2S9 Mr.
Schaffer.lS9
Hubbell called Ms. Bassett Schaffer, and she told him that she believed that Rose should not be
I
.1
.-. -~"
L .-00:" ttl
. - _.....
l
Ms. Bassett Schaffer was "angry with Webb Hubbell," so she called Frost's lawyer,
Ms.
the :Rose
the.Rose
. Fi~
Fi~had
.R ose Law Finn had represented Madison before the [Arkansas
. Securities)
Securities] department
~~ughoutI985 ~c,l
~oughout 1985..
~oughoutI985
thioughoutI985,. and n~erous doc~ents
anc,l that there were documents and files to that effect, numerous documents
an4.
2S1See e.g.lr----------------------------,
e.e.g
g.lr----------------------------,
ee,, eg.1
H1See,
2S8S
+::,---:-__
.. -.Jt.t,I; and Speed RTC-OIO
RTC-OIG Statement, 6/30/95
RTC-DIG 6/ 30/95 at 11 ("1 do not recall disclosing
II ("I
IiIf!i Rose's representation of Precision to the government.
g~vemment .Because Mr. Alford was not our
OUI client and
..
...
... there was no conflict, I do not believe we.
we. had a duty to disclose it.").
ifij
mOn August 7, 1990, Mr. Hubbell billed
15900
2"On
H90n billed the RTC for a "telephone conference with B.
Bassett." ] 05-00083422. Ms. Bassett testified that her conversations with Mr. Hubbell occurred
Bassett. n 105-00083422.
if roughly July or August of 1990." Bassett Schaffer Little Rock GJ
in ""roughly 1118/95.
] 118/95, at 135.
OJ.,., 1118/95,
GJ.,
~~
~' 1..._______________
'~ IL
26
_____________----' ___I
74
EQIAlb)3
EOIAl
EQIALbb)3 RUI~ .6ie)pFedera,IRules
)3 - Rl,I)e J31~)pFederql .Rules of Crimina
J31e)pFedera,IFules
jlJe)pFedera,IFules Criminall Procedure
Proceclure
NW: 15416lJbcl
15416 Ubc a: 700U15~)
Uoc d: 70UUI5 ~ ) age 112
70Uu15g)
70Uu1 Sg) 11 2
233
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Department. Commissioner Bassett Schaffer then suggested that Kumpe serve her with a
subpoena..
subpoena, and she would produce'all
produce all public records to Mr. Kurnpe.
Mr,
Mr. Kumpe subsequently issued a subpoena and obtained the records. 2631
records.2~;l1
,
/,,..
r'264
.~----------------~
~------------------------~
Kumpe took the documents. copied them.
documents, copled them, and left,
left. Next.
Next, Ms,
Ms. Bassett Schaffer received a
settled.26s
call from a Rose paralegal who informed her that the case settled.:2M
161Bassett
262Bassett Schaffer Little Rock GJ
GJ.,. 11/8/95,
) 1/8/95, at 133.
J33.
2~)Bassett
263Bassett Schaffer Little Rock GJ.,
GJ" 1118/95,
1118195, at 134.
'1~ ________________ ~ ~
2~. ~__________________________ ~ __
?6s Bassett Schaffer Little Rock 0.1.,
/"Ba.;;sert GJ., 1118195,
11/8/95, at 135.
135 .
267
'"
./
'.'~
75
234
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. ~,
Frost's Auorneys'Leamed Of
Auorneysteamed Qf Rose's ASD
OCRose's ASP Work
POM
rOM Work By Rose Purine
Durin&
Durioi The Frost Case
Purina
On May 4, 1990.
1990, Webb Hubbell and the Rose Law Finn
Firm filed aa patent infringement and
anti-trusl1awsui~
anti-trust lawsui~ on behalfofPOM
lawsuit competitor.
competitor. ~~.~. IL.
competitor.16~.
behalf ofPOM against Duncan Industries, aa POM competitor.26. I,-___ __
_....
..1
....
.-.-
::lI
----268f
e.g.. RT.
269See. e.g.,
269See, C~bIG
~bIG Records Examination,
RTC:':OIG 6121194,
Examination., 6121 /94, which indicates that RTC-OIG
6/21/94,
agents Philip L. Sprague and Patrick S. Durkin
Purkin examined court records
records
J:eCords for the United States
: .. District Court ofofthe Eastern District of Arkansas, Wc:
oithe
o(tfie tem Division in the case of POM. Inc.
tern
stcrn
Western Inc. v.v.
Duncan Indu~,;
Indu.
Indu,,s,;
Indu,,; No.
No. LR-C-W-293
:;"No.
No. (.0.. Ark.); and 01;-00000174-98.
LR-C-90-293 (E.O
(E.O.
(E.D. DE-00000174-98,
DIE-OOOOOI74-98, which are documents
01;-00000174-98, docwnents from
POM~e;
the POM caSe; Seth Ward II Little Rock GJ.,
POM"",e;
coSe; 1/21/98,
OJ., 1121198,
/98, at 13-45; LR OJE
1/21198,
1/21 GJE 1669; LR G1
G1 OJE 1674.
GJE 1674 .
iii .'
"CJ
D ,: 27"'
0 ' 1
11 -'-
L---
-------
-
----
---.
- ----
- -----
----
L,.
---
---
-''
' _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _- - - I
-
.U
. .if
.--::-:
... :' ,, '
. .
, "
~., ..::<::::
':
:',"
"
.....
,, '
76
,.:.;>"
:,,'"
6(e) , Federal Rules of Crimina
FO IA(b)3 - Rule 6(e),
FOIA(b)3 Criminall Procedure
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"[Ube i~ withholdin~
"[T]be RIC is specific lQan
withhQldin2 s~ific pertainin~ to loanS
loan files pertainjn~ loans made to Seth Ward."
On January 31
31., 1991 Froslcase
1991., the defendants in the Frost case filed aMotion
a Motion To Compel
loan liles perutining to loans made to Seth Ward" and argued that "[tlhe
files pertaining "[t]he withholding of those
273
name. I
'~------------------------------------~
Other RIC
RTC WQrk
Work Pertbrmed
Perfonned By Rose
After the Frost case settled, Rose obtained more savings and loan work from the RTC
RTC.
...-....
By 1991, the RTC had fonnalized its conflict of interest procedures. The RTC sent Rose
the
conflicts lists which contained the names of individuals and entities that the RTC knew were in
RTC~OIG discovered, however, that the conflicts lists it sent Rose contained the names of Rose
RTC-OIG discovered.
clients. The Rose Law Finn conflicts memorandum contains a more detailed discussion of the
1~1
2'-1
. ~----------------~
~------------------------------~
'
z;J
~ \
- _ _ _- - - - - - - - . . 1'
./:-"fL-
"1~----------~
.... 77
236
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-. RTC
R work Rose performed.
TC :work perfonned.
4X 1992 Campaign -- [The facts relating to the Clinton campaign are detailed in
4)
Hillary Clinton, Webb Hubbell and Vince Foster: What Did They Know?" January 1998.]
"Hillary
"HilIiuy 1998.)
1998.J
Most importantly, from our perspective, the February-March, 1992 time frame reflects a
. ..' . )))
period of intense scrutiny of Whitewater and Madison Guaranty issues by Clinton campaign
they provided official tribunals when Whitewater and Madison Guaranty questions became the
A summary
swnrnary of the evidence to be presented, relating to the campaign, includes the
fOllowing:
following:
fOllowing :
Lorena Lyncb--
Loretta Lynch-- Lynch was responsible for developing infonnation
information on Whitewater and on
78
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111 6
I 16
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.-.
who had advised Lynch that there had been at least 1 contact between BSS
BBS and HRC on
Arkansas
Arkansas Securities Department and reviewed the microfiche records reflecting the exchange of
On February 21st,
21 st, Lynch spoke with Susan
SUSIlll Thomases who had spoken to HRC on the
Thomases recognized that the RLF billing records would provide additional detail on HRC's
help in pressing WLH to do a more thorough review of the RLF records. Lynch GJ,
OJ, 2/1/96, at
19-20.
1920, See al~
SeeaJd
fir \
On February 24th, Lynch met with WLH to discuss RLF's representation of MGSL for
ofMGSL
memorand ....
another, handwritten rolling memorandum,f'r =======11
l1IIl 1_______.....1In that discussion WLH disclosed
representa~_io-n of McDougal in 1981. He alSQ
to Lynch the earlier RLF representation also advised Lynch that HRC
Lynch GJ,
OJ, 21l/96, 24,Ac~Ording
2/1/96, at 24""A'
ccording to WLH, the RLF bill roughly 200 hours total and that "20
percent of
ofHRe w~ 'atlocated to McDougaL"
HRC wasiilloc.ted McDougal." Lynch GJ.
GJ, 211196,
2/1/96, at 24-25.
2425, From this Lynch
1
276
I WCOOIr.
80
\
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238
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the topic.
Between
Bet:ween ~e Whitewater issue ~d
Bet:Ween the start of her assignment to the
':he ~ynch '
and February 22nd, I;ynch
of her investigation,l
atiOO,;;.,.LILLI..._____
gation,
investigation:
investi __
_ __
____
_..... I____--Itt
...~7S
7,' As of February 18th, Lynch had identified 4 separate
tenns ofthe-se.
terms ofthe -se.ft1ement entered into with the Frost accounting finn on behalf of
ofthe-se.ttlement
ofthe-se,itlement afthe RTC.
the RTC.
. .
In her'rolling
heJ;/rolling memorandumlL
memorand1lI'nI..._
____
__ ---'1
_......1Lynch identified the parenthetical comments
on these 4 i~s,ues
on i' ,ues as WLH i~,ues
co~entary
' s co~entary on
WLH's on Gerth questi.on~.l
n~.lrI---------,1
_______. . . .I
's questions-',r...- - - - - - - - . , 1 On
Gerth's
Feb~
Feb~
FebruaJ)' ,i/t
February :i8,
/18,8, WlderS~d.ing of the state of
WldefS~ding
s, 1992 her Wlders~ding
undefs'~ding ~H"~~oWledge
ofWLH'~
~H"~'
ofWLH ..~~owledge was:
knowledge was:
239
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....-....
realized that the Clinton campaign could not publicly maintain that HRe
HRC had done no work for
MOSL
MGSL or McDougal, as it would have liked to do. WLH expressly told Lynch he had reviewed
Mareh 5th,Lynch spoke with WLH again regarding the RLF's representation of
On March
51-52. 278
GJ, 2/1/96, at 51_52.'"
which Lynch is confident could not .11~ve 2/1/96, at 52. The reference
GJ, 211196.
have been "never." Lynch OJ,
211/96, at 53.]
2/1/96,
On March 5th ~d
and 6th, Lynch and Thomases met with Gerth for several hours in New
G,{ 2/,l196.
York City. Lynch OJ, 2/1/96, at 41. Based on that conversation, Thomases reported to the
I,.Ynch.
Ly'nch, it should be noted.
277
211 noted, was not given access to the RLF files on MGSL; nor to her
./1
r _ _
knowledg~was
knowledge ",as any other cam:~ .~
gn employee ..,
campaign \
.,.---.,
, . - - ;'
278
://LI: I. ._______________
_______________
41 l
fO_'_f_:b_'-_'_-_'_';;______________J
FO_I_A_(b_7_._-_(_Cl_ _ _ _ _ _ _ _ _ _ _ _ _ _..J
I
81
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- campaign that she had bought some time -- enough to put the issue offpast
time- off past Super Tuesday on
some~hat
Becawe it turned out she had not succeeded in buying the time, she fell somewhat
March 10th. Because
w~
8th, there was
. .a~ scramble
. the
respond .to the anticipated allegations. Most
at the Clinton campaign to respond
respond,to
afthe
of the scramble involved review of Whitewater-related documents ~ad finally been
\VLH had
docwnents that WLH
persuaded to release to the campaign. Lynch was less concerned with the issue ofHRe
ofHRe's
ofHRC 's
ofHRC's
representation ofMGSL and her activity before the Arkansas Securities Department because she
already knew that BBS would be in a position to provide an exculpatory statement. Lynch GJ,
GJ,
2/ 1196, at 37.
2/1/96,
However, ofhigh~level
However. the picture Lynch paints is one of high-level activity. She had numerous
numerous
nwnerous
BSS and Sam Heuer to try and coordinate a response. Lynch OJ,
BBS 1/96,, at 44. Lynch drafted
GJ, 2/1/96,
2/ 1/96
GJ
GJ,, 2/1/96,
BBS statement. Lynch GJ,
the BSS Gl. 2/1/96. at 37.
2/1/96,
211196. 37.
She also drafted the campaign response on WW which was released to the public on
March 8th, after having cleared the statement with George Stephanopolous, Bruce Reed, HRC
notwi' ~tanding Lynch's understanding from WLH that neither of those individuals had a
notWithstanding
~.~ollection
~ollection 'to
~ecollection ~t the direction of Susan
mad~ at
to that effect. According to Lynch that assertion was made.
/ . Thomases, who Lynch questioned on the matter instru.cted Lynch that the statement
maner and who instructed
82
FOIA(b)3
FO IA(b)3 - Rule 6(e), Federal Rules of Criminal Procedu
Rul e 6(e). Proceclure
re
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70001585
1585
85 Page 120
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On March 16, 1992 HRC made the public claim that she had done no work before state
agencies and received no compensation based upon work RLF did before state asQencies.1
encies.
On March 22 the campaign received aa list of questions from the Washington Post that it
83
FO!A(b)3 Rule 6(e),
FOIA(b)3 - Ru!e 6(e), Federal
Federa! Rules of Criminal Procedure
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~ ,.
Susan Thomases __
_-- Susan Thomases, an anomey
attorney in New York City, played a role
ro le in the
early development of the Clinton campaign response to the inquiries from JeffGerth~
ofthe
nfthe Jeff Gerth 1
Ii\L-_________~
'"
L-____________________________________________~\279
\
As of February 20th, Thomases role was to respond to additional inquiries being made by
/IL-_________________
,IL-_
iIL-_ _ _ _ _-,--___________
-,--________-,.-_ _---l
/ _1_ _ _ _ _ _~----..:....----------I
;;
::
, '1
~!~'//\
..
-----,--_-1\
-, /:,'- -. -.,. ."1
. '--___________
/ / \'-----.,...
. _ ------l\ _- - , -_ _
., 84
~----.,;.-------..--J
\
FOIA(b)3 - Ru
Rule
le 6(e), Federal Rules of Criminal Procedure
NW: 15416 DocId:
NW: Docld:
Doc1d: 70001 585 Page 122
70001585
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ThOInases
Thomases G1, Thomas~s' annotated her notes of the conversation
OJ, 2/29/96, at 34. Subsequently Thomasi!S'
r~hitio~hip witll
had a retationship with McDougal and that "Rick "'ill
will say" he had
Imd a relationship with Latham
" "
//1,'/.
I
I
280
FO I A(b ) 7 - (ei
..
, ,
85
244
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reviemng some docwnents and conducting one phone call with BSS
WLH, HRC's role involved reviewing BBS
GJ, 2129/96,
OJ, 47 . Thomases, however, is not certain he had the records in his possession at that
2/29/96, at 47.
acCOWlting
accounting of the relative nwnber
nwnberofhours matters~
HRe spent on MGSL matters
of hours Massey and HRC -- a
matters
Ge~..~I_
On March 5, 1992 Thomases had another phone conversation with Jeff Gerth"I..I
Gertl)'LI _ _.J
___ ..I
o
D
.
conversati~n
In that conversation Gerth posed additional questions for the Clinton c.c~p~gn
~~gn to answer.
answer . .
..
c..~~~~gn
'gn
./ Senate Banking Com
[Senate 12118/95, at 92.
.. , 12/18/95,
Com", ~~ had spoken with
fIRe
HRC
When Gerth inquired whether ,lIRC
.- '
.- . " ,
!
!
i
; McDougal.
about. MGSL
MOSL hiring RLF,
"
RLF ..Thomase"
.Thomases,
,Thomases.
Thomases, on behalf of the campaign,
cainpaign,
cafupaign,
car;,paign,
.
told him that HRC
"
Massey.
Massey . Thomases GJ,
GJ. 2/29/96, Ge~.ar~
...aar~o
49. Ge~,.aIso
2129196, at 49. Gerth lso asked Thomases to confum
confmn
confurn McDougal's
~otate1th
~otate~.th
. .. i.
annotate4.this
annotate4"this s quest~on'\~rith
ques.
quest.
ques!. !.ion'With ans~C!r"Intr~duce
ans~~r.'
onWith her ans~~r ''Ititroduce J McDougal to Rick Massey with John
~ltitrOduce
. ....~Ititroduce
.... ..... ..........
.... .. ..
.,-- : LaYt~'.
LaVt~"'.'' .~.ur
LaYt~
La~am".but'she ,~.ut"'she ..d~~~notrec~l
do~,~s., nonec~:
do~.
~?~: not"rec~:ll whether this answer was, in
not"rec~l io fact, provided to her by HRC.
HRC .
.................
......
.........
- ......
.....-::::: ....... .......---
.' .. ............... - ...
--_.-- - .... .
...... 86
...:>' .....
.....
------.,
..........
-:.:>
'
,,,"
;,,"
;:<:- -
245
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EXHIBIT 3 (Part 3)
to
246
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person besides HRC whom she is likely to have asked for this infonnation.
information. Senate Banking
,. 12/18/95, at 9~.
Com .. ,,12/18/95, 9t1.
Thomases nores
notes do, however, reflect that on March 6th she spoke v,lth H~ctl---'
with HRC. I" ___....
....
D
:D Those notes reflect HRC's opinion that "This [i.e, the Whitewater inve~tment]
.
inve~trri~nt] is the only
Those notes reflect HRC's opinion that "This [i.e. the Whitewater
"
is the only
;': stupid dumb thing we ever did" and that they would not do it again if they.-cOuld"
they" "fuuld. Thomases OJ,
GJ,
, 2129/96,
2/29/96, at 6263.
62-63.
,
7th/
On March 7thJ
LI___________
.. L..._ _ _ _ _ _ _- - - - -J, 'La,,", that I Lat~r
that day Thomases
Thomases spoke with WJC
spoke directly v.ith who said
WJC who said
.
he lost money and would not make the investment ifhe had to do it over again, at least
m,ake theinvestrnent teast in part to
.-
avoid the appearance of a conflict ofjnterest
ofaconflict of interest. Thomases OJ. 2/29/%. at 53.
GJ, 2/29/96,
On March 10th.
IOth":"Thomases indiv.i~tWD
Thomases notes reflect a conversation with an unknown indi~dwilD
a.:;~owledgment.....th~t
."a~knowledgment H-RC~h~d "a'a conversation with BBS and instead contend that HRe
tl1!:1.tHRCh~d HRC never
... "
87
,..... -
"- - --------------
247
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caned
called BBS, but made oniy call to her office. Thomases GJ, 2129/96,
only one ministerial can 2/29/96, at 67-68,
67-68.
.....-..
.,:
/~----------------------------------------------------~
88
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Com., 1/11/96 at 191. His understanding was that Foster was collecting the files on behalf of the
.1'--"
finn,
firm, not the Clihton
Clinton campaign. Sen"
Sen. Banking Com 1/1 1196, at 202. 282
. _1111/96,
Com.,. 181 Indeed, it
appears that
during this week Vince Foster was actively involved in developing an tmderstanding of RLF's
understanding ofRLF's
representation ofMG~l.
ofMG~L.
89
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~as not prepared by Massey, but rather by either Vince Foster or Loretta
was Lorena Lynch. OJ,
Massey OJ
GJ,,
12/3/97, 56.283 At the time it was prepared Massey had reviewed his own files. ', Massey OJ,
1213/97, at 56.213 OJ ,
GJ,
12/3/97,0<.59.
12/3/97, at 59.
,1-______
''-_____
~-_____ ...1I1At the time he signed this statement Massey had not reviewed the billing
_ _ _ _--'..
1213/97
12/3/97,, at 60.
GJ, 1213/97,
his review. Massey OJ, 60 .
.- .
This summary conflicts with Hubbell 's recollection and also with infonnation
Hubbell's information Hubbell
personally gave to Mrs. Clinton in late March or early April, 1992. According to Hubbell, within
one month after the Gerth article was published, he had one conversation with Mrs.
Mrs. Clinton
12119/95,
12119/95 , at 178. Besides again establishing Mrs.
Hubbell GJ, 12/19/95, Mrs. Clinton's awareness of the
m It is very unlikely
283 unlik.ely that Lynch was involved in the preparation of ofM~y's
Massey's statement.
First, Lynch has no contemporaneous notes of her involvement in the preparation of this
document
docwnent and she was a ""religious"
religious" note-taker. Second,
Second, the docwnent
'Second, fOWld in Vince
document was found
ole by the Clinton campaign,
nO copy of it was ever produced to OIC
Foster's briefcase, and no
suggesting that the campaign did not have a copy of it. Third, had.
had.. the document been available
to the campaign it would likely have been released to the press during this time period -- and
ahd it
, was not. Indeed, this statement may be the memo that Hubbell says he and Foster prepared after
..~
-;-.
Massey . Hubbell GJ
they interviewed Massey. 12119/95
12119195,, at 91.
OJ,,'2119195,
GJ, 12119/95, 91 .
90
FOIA(b)3- Rule
FOIA(b)3 6(e) , Federal Rules of Criminal Procedure
Ru le 6(e). Proced ure
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85
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.,-,
informatioRcontained
contained in the billing records, it suggests that .whoever
information-contained
information whoever drafted Massey's statement.
statement,
statement
Also by March 26th, Foster had prepared a chronology on his computer, entitled
enutled ""Re:
<ORe:
Re:
Madison Representation."I
Representation." .......
. _____
Representation," .... I _____
....IThe docwnent
---'IThe
--'IThe document was found in Foster's briefcase in
document
10/2~/84
1012~/84
1012;3/84
IOI2;l/84 $5,000 paid on Bank of Kingston bill
04185
04/85 Latham, as Madison's CEO, hired the Rose Law Firm Finn to request an
interpretive ruling of the S&L statutes from the S&L Administrator
Administrator..
c~"l
. f;',/ the ca];) ~d appears to rebut the "unpaid bill"
c~r'l to Bassett and 284
2"
hill" assertion.U.t
assertion.
assertion,U.t
,
The other significance of Foster's
Foster' s chronology lies not in its substance but in the
,!/
"~mputer card" name associated with the document on the RLF computers.
"c;bmputer computers, This docwnent,
document,
,/
91
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/- , when discovered on RLF computers in December 1997, was entitled "Clinton campaign
1212/97,
1212/97, at 139; LR OJ
OJ , 12/2/97,
another document entitled, "Clinton campaign document I," Clark OJ, GJ
document "II."
" II
II." knowthat,
." Since we know that, at the latest, ""docwnent
know-that. "document
docwncnt II," the chronology,
document chronology , was prepared
of Mrs. Clinton
provided with a copy afMrs.
ofMes. 's draft statement that had handwritten
Clinton's handwrinen changes in what may
f-___
1-_ __
L -_ _ .J1 I compl,lter' co~tains ~;"
.11 The version on Foster's computer
_..... co~tains
compl,Iter' contains
compl,lter' ~'
Mr~;,: 'C'linton'ss statement, as amended
C.inton's
Clinton'
'--." .
.!j by the handwritten Changes
changes..
changes
Mrs.
As modified on Foster's computer, Mrs ~.Uriton recalls:
Mrs.. .S.Unton
C,Unton recalls:
..'' ...
"[Massey) ~as told
"[Massey] was could
coll:ld
tOld that the Finn couJd '~ot
co~ld 'not
'not
not do any work for McDougal or his businesses
until the bill 'owed
owed the Firm
owed-the thc::
th~....previous work was paid."
Finn for the,.previous
FO IA (b)77 -
fOIA(b)
FOIA(b) Ie)
(e)
!.
2~6 "'Mrs.
~~ "'" Mrs. Clinton has stated that her purpose in writing the statement "as best I can recall"
t.tP'put
was to 9 'put down her memory of of what happene~
happened at the time Madison was represented by Rose.
Rose,
H Clinton GI,
..... CHnton
H..Clinton GJ, 1126196,
OJ, 1/26/96, 54, She was unable, at that time, to identify when, during the
1126/96, at 54.
" .,.~: .campaign, document. H. Clinton GJ,
campaign, she drafted the docwnent. GJ; 1126/96. a154
OJ, 1126/96, at 54..
a154. .
92
' ....
FO IA(b)3 - Rule 6(e),
FOIA(b)3 6(e ), Federa
Federall Rules
Rul es of Criminal Proce dure
Crimin al Procedure
NW:
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-,
.- ...
.' - -
"[After discussing this with my partners] Massey and I called McDougal [to tell him a
"{After
$2,000 retainer was required)
required] but he was not in so we talked with Latham and another
employee.
employee, "217
"287
,II f------'
i
ofRLF's
were in direct contact regarding her recollection of ofMGSL;; and At the
RLF's representation ofMGSL
to Mr. Hubbell, of which only the first two pages have been produced to ole.
ofwltich Ole. S3S791~92.
~92.. .
535791-92
535791-92.
OIC. DEK 535791
211
287 I am not aware that either Latham or Massey has ever been asked about this assertion.
288 Blair has not been questioned about this document. Preswnably'she
m
211 Presumably she will acknowledge
Preswnablyshe
Presumably'
;.-
r- her own hand-writing
handwriting and provide the evidentiary predicate for its admissibility.
93
,
,
FOIA(b)3 - Rule 6(e),
6(e) , Federal Rules of Criminal
Cri minal Procedure
Procedu re
NW : 15416
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13
1311
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~'OIA(b)?
~'OIA(bl1
i'OJA(bl?
FOIA(b)7 - (C)
(e)
strongly suggests that HRC had knowledge of evidence contradicting her public statement (and
investigato~)
investigato~ ) of
subsequent statements to federal investigators) oflhe
the manner by which MGSL carne
cfthe
cflhe came to retain
RLF.
RLF.
will be raised by the defendants and will have to be overcome. It is not anticipated that the
. . .
... ... ... ...
...
. \
94
94
NW:'
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700015 Pag~
Pa g~ 132
85 Page
7000 1585
70001585
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---.. Fos/~r Documents - [The facts relating to the handling of the docwnents
Fost~r
5) Foster documents in Vince
Foster' s office are detailed in Colloton & Kavanaugh, "Foster Docuements Memorandum,"
Foster's
August 1996.]
bad "Personal"
Foster had "PersonaJ" Whitewaterrelated documents in his office in the West Wing of the White
"Persona]" Whitewater-related
WhitewateNeiated
House.
House.
evidence that would shed light on his state of mind. Some evidence exists that documents were
removed from Foster's office on the night of July 20th, before the office could be examined.
More Significantly,
significantly, on July 21
21st,
st, concerned that the Park Police might examine sensitive
the examination to be conducted by two career prosecutors from the Department of Justice, rather
'the
series of calls occurred between HRC, her chief of staff Maggie Williams, her close friend Susan
Thomases and Nussbaum. Following these calls (and we submit, inferentially, as a result of I
'those
' those calls) Nussbaum changed his position and refused to allow the Department of Justice
attorneys to review the Foster office documents. Instead, he conducted the review in their
presence and separated the docwnents into categories, including certain official documents and
95
9S
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.. --- ..
olher-"personaJ"
other
olher'''personaJ''
"personal" documents. 290
documents,290
290
the East Wing of the White House where they were stored in a closet in HRC's
HRC 's office,
office. Room 323
suicide, While at Foster's house she overheard a conversation between WLH, Bill
night Foster's suicide.
concern about particular documents, but rather of a "general concern from my perception." ld..
ld. at
Officer Heruy
Henry
Hemy O ' Nejll- Officer O'Neill isa
O'Nejll-
Q'Neill-- is a uniformed
unifonned Secret Service officer. He was
Nussbawn denies that any agreement was reached and also denies that any discussion
290 Nussbaum
of personal docwnents occuned.
personaJ documents occuned,
occurred. He is supported in the fanner
oc:cuned. former assertion by an Associate White
House Counsel. He is supported in the later assertion by Williams, ;rIJomases
;n>omases
;I'homases and
lhomases arid
aod HRC who
an:: clear that no discussion of personal
have varying recollections of the phone calls but are
documents occurred.
docwnents
29 1 The others named by Mrs. Kennedy say they do not remember any
291 an)' anr
anX such conversation
.~ and have denied it in their grand jury testimony.
testimony . .
96
256
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-.
..--'
-- ....
folders or files of that sort, in the company of
of another woman.292
woman .192
,192
varied in his assertion that Maggie Williams was observed carrying documents ftomFoster's
from Foster's
Foster' s
office, ~
e.... O'Neill.
e..&.. GJ. 6/6/95, it has varied in ,many
O'Neill, GJ, .many
many other respects --
_. as would be expected for a
requ~ st from the Park Police to examine Foster's office, Nussbaum called Phil Heymann (then
request
6/ 13/95 at 6.
6/13/95 6. Margolis and Adams arrived at the White House around 4 PM to meet with
Sloan. 293
Nussbaum and two other Associate White House Counsel, Steve Neuwirth and CliffSloan.:i:9l
C1iffSloan.:i:91
Cliff Sloan.: i:91
292 Williams to an FBI polygraph and denied taking documents from Fo'ster's
292 Foster's
Foster' s office on
the night of the 20th. The FBI examiner concluded that she was "truthful"
''truthful'' in making
nlaking this denial
denial..
FBI Polygraph Report ofMarg~t
Repon of Margaret Williams, 9116/94,
9/ 16/94, at 3-4.
97
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'--'.
According to Margolis prior to the meeting Heymann had.
had reached a tentative agreement
with Nussbaum that Margolis and Adams would review each document. Margolis,
Margolis. Senate
concluded an agreement that they would review each document during a search of Foster's
Foster' s .
office. One reason Margolis recalls .that event clearly is because at the end of the meeting,
office.
Neuwirth exactly misstated the agreement, saying that Nussbaum would review the documents
and that Margolis corrected Neuwirth and Nussbaum assented to Margolis' correction. Margolis
OJ,
GJ, 6/14/95, II.
6/ 14/95, at 11.
Gl,
Adams corroborates Margolis recollection on the substance of the agreement. Adams GJ,
519195,
5/9/95, at 12. He says that it was intended
i.ntended that he and Margolis do a "swnmary"
"sununary" review of each
"summary"
day~
day
documents. This understanding is reflected in notes Adams wrote within 7 days~ of the meeting.
meeting .
-.
.
Adams also recalls in the same fashion the anecdote about Neuwirth's misstatement of the
Hearing. 7127/95,
agreement. Adams, Senate Hearing, 96. 294
7/27/95, at 96.294
Howev~r,,
Howev~r on the morning of July 22nd, when Margolis and Adams arrived at the White
6113/95,
Nussbaum would look foolish. Heymann GJ, 61/3 /95, at 14. Heymann's
61 /3/95, Heymann' s assistant Cynthia
294 Margolis'
29-4 Margolis ' recollection and that of A4ams
Adams is also supported by the contemporaneous .
preparod by
"teletype" report prepared by FBI Supervisory Special Agent John Dana. FBI teletype, 175B-
WF-187743-1 (July 23, 1993). One other FBI agent present says he pe was not aware of the nature
of any arrangement between the DOJ DOl attorneys and Nussbaum.
DO} 6i30/95 , at 54.
6i30/95,
Nussbawri. Salter Deposition, 6i30/95.
98
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.---..
july 1993 which recorded the conversation from HeymallO"'
Monaco, dictated notes in July HeymaJ1.O"'s
Heymann-
Heymann' ' sS end and
and "
7/6/95.
7/6/95, at 26-27
2627 (Bates# 70-149).
70149).
70-149)_
of~ussbawn
As a result of Nussbaum 's
ofNussbawn's' s decision, the search was conducted by Nussbawn
Nussbaum in the early
afternoon Nussbawn reviewed each document and separated out the material into 3 piles: files
afternoon.. Nussbaum fil es
the investigators wanted to see; personal papers of Fosters and miscellaneous documents.
7~1/95,
7/~1/95,
71'
711:1/95,
1: 1/95 , at 92 ("Bernie,
("Bemie, are you hiding
ruding something?"). Cliff Sloan took notes rus penultimate
nales and his
2122.1993
July 21-22, 1993::
21-22.1993:
- July2lst-
July 21st-
9 :11 PM
9:11 Thomases exits White House
11:00
II:OOPMPM
I I :OOPM IJ minute call charged to Thomases'.
Thomases''. calling card from
Thomases Thom~es' guest house to
fro~ Thomases'
Rodham residence
July 22nd-
22nd--
22nd --
7:43 AM Nussbawn
Nussbaum arrives at White House compound
99
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m
29S
l9S
77:57
:57 AM ThomaScs guest house in De
3 minute call from Rodham residence to ThomaSes
Thomases DC ..
8:01 AM
.8:01 Page for N~sbaum:
N!JSSbaum: 202_659_8787"196
N1JSSbaum: "pis call Susan Thomases at 202-659-8787"296
residence
11:11
11: 11 AM 3 minute call from Thomases extension at Willkie Farr Chicf of Staff office
FaIT to Chief
11 :16
: 16 AM
11:16 1 minute call from Thomascs FacT
Thomases extension at Willkie F arr to Chief of Staff office'
Farr office
:50 AM
11:50AM
11 :50AM 4 minute call from Thomases extension at' Lady' s office191
at"Willkie Farr to First Lady's
at 298
29' Thomases says she may not have received this call
295
29' Call and it is mere coincidence that she
immediately after called the White Ho~.
Ho~ . Thomases Senate Hearing. 12118/95, at 84-87.
Hearing, 12/18/95,
Thomases has testified that she did speak with Nussbaum that morning before the
296
196
296
search but
hut that Nussbaum
s hawn raised the topic of the search procedures,
Nus:sbaum
Nus. procedures. not her. Thomases Interview,
9/9/94, at 54-59.
54-59. Nussbaum
Nussbawn disagrees and says that Thomases expressed a generalized privacy
concern to him that was not tied either to specific docwnents HRe or
documents or to concerns held by HRC
President Clinton. Nussbaum Deposition, 7112/95,
7/
7112195,
12195, at 139-46.
m
191 morning Nussbaum had
297. Sometime during the moming had. further discussions with Mclarty,
McLarty,
Quinn, Lindsey, Neuwirth and Burton regarding the search of Foster's office.
Quinn. officc. Williams may also
apparently, including others in the deliberative process on
have participated. Nussbaum was, apparently.
how the search should be conducted.
~ I
.lr
/[
WItnesses say they were calling to console one another - which may lead
. Witnesses
I, GeneraIly,
GeneraIly.
Generally, the
lead. one to ask:
ask : How come
the widow is not in the circle of grief? No know phone calls to Lisa Foster are evidenced during
.-.---- this.time period.
period. .
100
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3:08 PM 10 minute call from Thomases cell phone to First Lady office.
Bernie [Nussbaum] that the First Lady had been concerned about unfettered access to Vince
m While he
299
. ,,
Foster office
.
being granted." Neuwirth
(
GJ, 2128/95.
GI, 2128/95, 97.199
2128/95 . a197.
97.2'19
at 97. be .cannot
.
exacdy
cannot recall exactly
what Nussbaum said to create that impression he has acknowledged that the impression reflects
- HiJber
Carolyn Huber -- Huber was contacted by Maggie Williams between 4 and 6 PM on the
the:
22nd. Williams said that HRC had asked her to call Huber and arrange for storage of a box in a
)00 In his Senate testimony, Neuwirth did not specify how he got this impression
300
)00 jmpression and
warned
waffled on whether it occurred before or after the July 22nd search. Neuwirth Senate Deposition,
7/10/95, at 11 L
atlli.
111.
301
30)Williams own testimony confirms that she made a call to HRC who said she should
put the personal files in the closed on the third floor to use to store them.
them . Williams Interview,
10/24/94, at 22-25.
22-25 .
101
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.- . 7:30 PM that evening and escorted them to the closet in Room 323, which she unlocked with a
was asked to help carry a box up to the third floor with Maggie Williams on "July 22 ..
onJuly .. He
understood
Wlderstood that the box contained docwnents
documents that belonged to the Clintons. Castleton 302,
6/9/94 at 2. He also understood, from someone that HRC and possibly President Clinton
would review the documents and make a determination as to what would be done with them.
them.
who originally told me about moving the boxes ... or she just further clarified once we picked
them up ... the President or the First Lady had to review the contents of the boxes to
.. . that the
..
. "--
determine what was in them." Castleton Senate Deposition, 6127/95.
6127/95, at 139-41; Castleton Senate
labeled "Vincent.Foster"
"Vincent Foster" in the closet 'of
"Vincent,Foster" f Room 323 on August 25, 1993 and again,
ofRoom again. probably,
probably , on
302
a,ccessible in the closet. G. Williams 302, 2/23/96.
whose plumbing is accessible .301
2/23/96.]02
2/23/96
circumstantial. The pattern of phone calls is clear -- but the content of the phone calls is
wholly circumstantial.
102
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the documents
docwnents in Foster's office comes from the testimony of Gail Kennedy.
ofGai! Kennedy .
of
In September 1993 several referrals went from he RTC to the Department of Justice
referrals identified in several instanc:es wiUtess because of her legal work for
instane;es Hillary Clinton as a witness
Madison. They also identified the Bill Clinton political campaign committee as a potential
criminal subject.
1.
I. The October 14 Meeting
Meetiog At The
MeetiDg Tbe White
Wbite House.
In early October, the New York Times began investigating the handling of these referrals.
referrals.
As a result, on October 14, 1993, a meeting took place at 3:30 p.m. in Nussbaum's West Wing
(Treasury officials) apparently so that DeVore could inform the White House of the press
inquiries he had been receiving regarding the referrals and how he intended to respond to those
inquiries.
mquiries.
00000079. DeVore ran the meeting. DeVore explained that he had convened the meeting .
00000079,
'".---.
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FOrAlb)7
FOIA Ibl7
l b)7 -
....:E'OIA(b)7
./FOIA Ie)
(C 1
Ie )
specuJation tha~r----'r~ho
There then was some speculation tha~""_ _ _---oII'who used to 'work
work at the RTC, had some
In a memorandum to file dated October 20, 1993, Lindsey described the October
14 meeting. 008DCOOO00083.
008-DC-00000083. The memorandum is generally consistent
consistt:nt with his testimony
.----..
and notes from the meeting. The memo does include the additional information
infonnation that, according to
Gerth, Clinton was not a target of the referrals, although Tucker mig~t be.JOJ
J03
303
One point of
and G.earan'J
G.~ara:n' J
an,d Gearin.,
and
.......
.........
.. . .. ...........
....... .. ..........
.....
....
......
.....
....
. ...
'
303.
303 . The memorandum also al so contains a parenthetical notatioii's'~~ting
nOt{ltiori' stating that "[a]
parentheti cal notatio'n'stating "{a] check of our
campaign records turned up three cashiers [sic] checksJo($3,OOO
[sic} cchecks
[sic) ..fod;),OOO each from
checks..for$'j,OOo
hecks..for$'j,OOo J .W. Fulbright,
(rom l.W.
J.W. Fulbright. Ken
Peacock, and Dean Landrum, and a personal checkf'" check-for
check for $3,000 from Jim McDougal, signed by
checkJ<>f
McDougal." According to Lindsey,he
Susan McDouga1."
McDouga1.N he 'checked with the person who runs Clinton's Little
Lindsey, .hetl1ecked
LindseY1 hethecked
Rock office and who has access to th. th~eI; .gubernatorial
~. .gu~rnatorial
. gubematorial campaign records (an individual
individual we have
identified as Susan Whiteacre) .... Sh{~as
..... .She was able to find the depos depositit slip with copies of the checks
)04
104
POIA(b)3
FO I A(b)3 - Rule 6(e) ,I
PO
FOIA(b)3 Federal Rul
Ruleess ooff Cr
Rules iminal
Crj.mi n a l Pr
j.mi nal
j.minal ocedu re
Procedu
Procedure
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F'OIA(b)
f'OIAtb)33 ... Rule
f'OIA(b) Ru le 6te)
6 (e ),,
6(e) ~~ede::al
~edecal
Fed Rules
e ra l Rul o f Cri
es of Crimmiina
n a l Procedure
minal Proce dure
.-.-"
.- ...
".
-- ". ."''. ,LL.II______________________
__
_ __
____
____
____
____
____
____
____
____
____
__~_~1
~_~I
__~~I
_...JI a copy of this memorandum
.. 11_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
,I
\, 11-OC-00000606,
'\, was found in Kennedy's files, 0011-DC-00000606,
11-OC
11-DC -00000606, and Gearan's files,
files., 004-DC-00000014
004-DC-000000I4.. The
004-DC-OOOOOOI4.
..
I
The meeting is significant on two
twO fronts. Fi rst it is the single most detailed
fronts. First
instance iIi
in which RTC offtcials
officials appear to have given _the White House a substantive heads-up
the meeting, Hanson, Steiner, and DeVore, all testified that to their knowledge Altman was not
aware of
o f the meeting
meeting..
., -,.
2. Februa r:y 1:
Februar:y
Februar:,.
February Altm an Considers His Possible
I: Altman ross ible Reeussl
rossible Rccusal Mad iso n Matters.
Recusal From Madison Malters.
Mlltters.
their ad
advice.
vice. The evidence indicates
indi cates that
thai at least Hanson and Kulka informally advised Altman
that he was not legally required to recuse on the basis of his friendship with the
the Clintons but that,
as a political matter;
inatter; he should
shou ld recuse
rec use because he already said he intended to follow
foHow Kulka's
politicall
politically.y. 304
politically.'"
pol itically.lIM
}04
304. Dennis Fo reman, the Deputy General Counsel of the Treasury and Designated Agency
Denni s Foreman,
that prior to February 2, Hanson
Ethics Official , testified thai Hanso n asked him for his quick reaction to the
que~ t ion whether Altman should recuse himself,
que~tion
question himself. and Foreman responded that he thought Altman
should so:: Hanson said that she agreed with Foreman. According to Foreman, Hanson
so
shoul d 'do so.
105
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3. Hansoo
HaDsoo Prepares Talking
Hanson The February 2 Meeting.
TalkiDg Points For The
Al~an's
A l ~an' s use.
Hanson assembled a one-page sheet of talking points for Altman's use. 001-DC-00000231.
l-DC-OOOG023l.. The
'001-De-OOOD0231
00 l-DC-0000023l.
'00
talking points explained the request of the Republican Senators to seek agreements, the
seck tolling agreements.
28. The talking points also detailed the three choices available
statute would expire on February 28:
agreements must be consented to by the relevant parties, and that a protective lawsuit must nol
not be
attorney could be sanctioned. The talking points noted that the RTC
frivolous oorr the attorney
anomeycould
investigation was being supervised by Kulka and Ryan, and, significantly, they state that, HitIt is
.."It
The twelfth and final talking point states that Altman will hi~self from the
hi.~self
wi ll recuse himself
Clin~on."
C.E.O. of the RTC, because of my relationship with the President and Mrs. Clinton."
Clinto n."
rerurned
returned to him some short time later and said that she had been talking with Altman, told him
her view on recusal, and that Altman was leaning towards recusal.
recusal . .
106
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was, she would change the last point. According to Hanson, Altman
Alunan said thai
that the talking point
Alunan
A lunan claims that he first saw the talking points on the way over to the White
Altman
into annoW'lcing
announcing his recusal becaUse
because she had been advising him to recuse.
recuse.
rccusc.
4. Tbe
Tbe. February
The Fe.bruary 2 White House Meeting.
-
-- ..
The testimony about the February 2 meeting is relatively consistent and for the
part. does
most part recol lections of each participant.
docs not merit a recitation of the individualized recollections
offi~e in the
p.m. in McLarty's office
The meeting took place at approximately 5:00 p.m.
\yest Wing.
West Altman. Hanson,
Wing. Altman, Hanson . Ickes, Williams, Nussbaum, and Eggleston attended.
anended.
anended . Although he
was scheduled to attend the meeting, McLarty was not able to be present because of a conflicting
Room .
engagement in the Roosevelt Room.
305 . L-_______
305. '-_
L.._ _ _ _r_O_r_
'A(_
_{!:;":~_
FOLb.(b)
fO
'o _'_
_'_ >_"'I'_'3'_-_-_' __,"_
'"_1
_--_'Kul~
'"_'( _'-___"_
;_
'_ (~_
'-_
'- ' _,,'. _'
_'1
f;(-:-!
'_ _'_
F-:-~'_
_'_
_''__~cldJl",";::c,
~___,_3". 1__
'_"_ '_""l_
'I _F'.u1
"_ _'_
..:''_.:
_':.'_.:..'..:
'_i,,_
'_
,:.."_""",:..
i_"-_
,,_',''l-:...-
i~"_ -.:.'rr:..
>:' ::.: of. ' ~c i [nifl.:tl F r oc,=dl.lL' E'
1_' '_ ' _" .: __ ',oc
_oc
..:
'OC _-",,_
~ _
-,'_
....:. '' ""_
__ __"(,-~~
".:. :',__
..-,"_
---, ~
_....J
_____
107
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talk.ing point, to the effect that the RTC would under all circumstances comp1ete
talking complete its analysis by
February 28.
ofickes
The testimony of
ofIckes
Ickes was somewhat different. 1ckes
Ickes stated that Altman said that
.-.
, -,
it was not clear whet.her
whether or not funy completed prior to !,he
nol the RTC's investigation would be fully t,/le
the
saying that
that the RTC would thereby be forced either to pass on otherwise meritorious claims or to
factual .investigation
investigation and analysis of
factuaLinvestigation
not be able to complete a thorough and final factual of claims prior to
deadline.
the dead line. the RTC would be able by the February 28 dead
deadline, line to make an assessment of
deadline
~er
~her study the RTC later decided to amend those complaints or
frivolous claims, even if after further
108
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the
lhe R TC could decide not to file any claims. Second, the RTC
RTC RTC could seek tolling agrcemen~
agreemen~
lolling agreements
. whether to file
fiIe
,ffile statute of limitations. As flil
ile protective lawsuits to toll the starute ful'
nilyly explained 'by
fully by Ickes,
his recollection is not terribly inconsistent either with the talking points, the recollections of the .
other participants, or the information Altman had received in his briefing from Kulka (that while
(that.while
.while
The notes Ickes took at the February 2 meeting are generally consistent with his
c)
c) tolling agreement
c)'
Airman when the original statute had expired, how it had been extended, and
remembers asking Altman
307. Altman remembers some sense of surprise from the White House when he stated that
one of the options was for the R TC to file a protective claim in court to toll the statute of
RTC
---.
.. ..
limitations..
limitations
109
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similarbriefing
if private counsel fqr the parties would be contacted and receive a similar briefing on the RTC's
procedures and the statute of limitations issues. Altman apparently responded that he assumed
Forher
so, but was not sure. for WiHiams does not remember asking this question but says it is
her part, Williams
The tenth talking point states that Kulka and Ryan were supervising the RTC's
investigation of Madison. The evidence indicates that either at this point or during AlL'11an's
Altman's later
recusal discussion Nussbaum stated that he and his firm had gone up against Kulka h the Kaye,
in'the
did not hold her or her judgment in high esteem. Nussbaum also -asked
asked what Ryan's background
was and
a..'1d was informed that Ryan had, 1ike
like Kulka.
Kulka, come from the Office of Thrift Supervision.
According to Altman and Hanson, Altman then announced his recusal, either
that he had decided to recuse himself (Hanson's recollection is that he read the beginning
stating mat
of the twelfth talking point, which is worded in this manner) or that he intended to recuse himself
308J
110
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-, himself, and Williams stated that Altman simply said hypothetically that if he were to recuse
by Nussbaum, in particular, that made him feel defensive (even flustered) about his
announcement.
arutouncement.
-- Hanson testified that Nussbaum asked whether Altman's recusal would mean that
this point that Nussbaum expressed his views about Kulka and asked for background information
Ryan . Hanson remembers Altman stating at this point that he had complete confidence in
on Ryan.
recommendation even ifhe did not recuse, and thus did not feel that his participation added
much.
much. Altman testified that Nussbaum
Nussbawn became particularly
particwarly agitated and the discussion rather
According to Nussbaum
Nussbawn he told Altman
Alunanthat
that ifthercwas
there was any legal or ethical
if there
reason to do so, he
be should recuse immediately. (Eggleston believes Nussbaum also suggested
111
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a legal or ethical obligation to recuse, int~nded to follow the staff recommendation, the
recuse , even if he intended
According to Altman,
Alunan, he felt like he was "under pressure" from Nussbaum at this
point. Altman testified that he believed the White House pani cipants were taking his decision to
Ilouse participants
panicipants
recuse ~rsonal Jl y.
personally,y, as if
ifhis rccusal
recusal was an insult
his rccusa! 10 the White House or the cowardly act ofa
iruult to of a rat
jjumping
umping off a sinking ship.
r,ecalls
calJs that she gave Altman what she calls "advice" on recusal.
Williams alone recalls
r. recusa!.
-..
.---..
. ,
I F9IA(b)3
FOI.:>.(b)3
ForA (b) 3 - Ru ( ~ )..
Rullee 6 (e),
Rille (-!) ,'Foederd
Fe ederd
oederd C~iln in all Procedure
dera l Rules of Cam
Crim
Crimina rrvc .. duree
Procedur
L ___
_ _J hand i~ the government
and that she was tired of people of integrity in
""'- _ _. J govemme~t saying they could not
governrne~t
goverrunent nOI
.partieipate
participate in anything.
anythingJ I
recusa!,
recusal., Ickes believes he told Altman that in his opinion both reasons indicated he should
for recusa!
112
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- ..'
.'- not recuse. But,.
But . according to Ickes.
recusc. But, Ickes, he emphasized it was Altman's decision.
responding that that was all the White House could ask for.
FOIA(b)3
fO I A(b I 3Cl - Rule
FOIA(b Rille G(e),
P.'l l-e 6(e),
P.'ll-e 6(e
6(-e). fed~ri;ll Rules
) . federilll
Federal Ru l-es of
Rul-es Criminal
vf Cdmi n_'l Procedure
Cdm i n"l
Cdmin<ol Pr.oc ednre
e(inre
ed nre
5. Altman Discusses The February 2 Meeting With Steiner: The Issue Of Steiner's
Diary.
indic~tes thai
The evidence indicates that Altman
Alunan met with Steiner when he returned
returncd from the
may have given Steiner a blow-by-blow description of the meeting. Altman told Steiner that he
had no idea why the White House officials would be bothered by his recusal since he had told
them that Kulka was going to be making the decision e~ent. Altman testified that he told
deci sion in any event.
Steiner, "What
"Whal do they care?" cannot recall precisely what he said to Steiner
care?" Altman claims he cannol
113
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309
- ",
-- speaking on the recusal issue. 309
lOll
According to Steiner, Altman told him that the White House had not
nOl fully
understood the statute of limitations issue and the fact that the deadline was fast
fast approaching.
Altman also reported thai the White House was unhappy about Altman's decision to recuse
reponed that
~pparently stated that Altman's recusal would set a dangerous precedent of recusing in the face of
apparently
political pressure.
prcssure... Nussbaum also
pressure a1so had made the point that the RTC had a reputation for being a
very partisan instirution and that if Altman recused, the investigation might be
panisan institution be carried out in a
partisan fashion. Altman told Steiner that he planned to sleep on his decision whether to recuse.
recuse.
Steiner testified that his impression was that Altman felt pressured by the White House not 10
to
recuse..
recuse
. -.
-..
In a February 12 diary entry, covering the period January 24 through
tluough February 12,
12,.
Steiner recorded his impressions at the time, including what he had learned from Altman of the
February 2 meeting:
meeting:
1/24-2112/94: extremes : In DC
12194: Two extremes:
11242112/94:
11242/ DC spent long hours wIwi R.:'- going over
w/ RA over
how he should handle the RTC's investigation of Whitewater. The statute of
limitations on Madison Guaranty
Guaranry cases was supposed to expire 2128
2/28.. Should RA
2128.
recuse himself or should he Slay
stay involved. The hurdle was so high (fraud) that it
seemed tmlikely
wtlikely
unlikely the RTC would bring suit or seek
seck a tolling agreement from
BCIHRC, but the chance existed. RA originally decided to 10 recuse himself but
under intense pressure
pressure./rom
from the White House,
House. he said he would make the Ihefinal
Ihe final
determination based on a recommendation from Ellen Kulka, the Gc. GC. The GOP
D'Amalo began a countdown to the 28th which was particularly ironic
through D'Amato
309. Nye similarly testified that soon after the February 2 meeting Altman
Allman told him that the .
White House was disinclined towards his recusal. NyeNyc remembers Altman
Alunan saying that the White
case , the staff would do a more thorough job
House made the point that by remaining on the case,
114
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-.
'-".,. since he had voted against extending the statute during the R
period. As it turns out,
Te reauthorization
RTC
Qut, RA's problem will probably pass when the Congress
decides to extend the statute once again. Pressure on R.A RA will cenainly
certainly mount
when Congress holds hearings on the RTC given that Ricki
next week .when Ricki Tiegert
sic] the FDIC nominee declared that she would 'recuse
[sicl
[(sic] recuse herself from all Madison
Madi son
related issues due to her friendship wiwI the Cl
Clintons.
intons. The WSJ also go into the act
wI a scathi
wi
wI ng attack on RA
scathing R.A. and Gene Ludwig.
010-0C-000000I4
010-OC-000000 14 (emphasis added).
010-DC-00000014 added):
added). In a February 27 entry
eorry covering the period February 13
2/13-2/27/94:
2/ 13-2/27/94: Every now and again you watch a disaster wUold unfold and seem
powerless to stop it. For weeks we have been battling over how RA should
handle the RIC
RTC investigation of Madison Guaranty S&L. Initially, we all felt that
he should recuse himself to prevent even the appearance of a conflict. At a Jateful
fateful
WH mtg wiwi N ussbaum, Ickes and WUliams,
Nussbaum, Williams, however, the WH stafftold'RA
W;J/iams.
W;J/iams, that
stafftold"RA thai
slajJrold'RA
slajJrold"RA it
that;1il
unacceptable . RA had gone to brief them on the impending statute of
was unacceptable.
limitations deadline and also to tell them of his recusal decision.
decision . They reacted
very negatively to the rfcural
recusal and RA backed down the nexinext day and agreed to a
defacto recusal where the RTC would handle this case like
deJacto like' any other and RA
like"
.would have no involvement.
OIODC
OIODC-OOOOOOI4
OOOOOOI4
01 O-DC-OOOOOO 14 (emphases added).
added).
fO!A(b)3
fOlA()3 Rul~ 6(e).
P.ui~
FOIA(b)3 - Rule F~d~[al Rules
F~d~ral
G(e), Federal
F.o:d-!cral Rul<?s oi Cdlninal
Ru l~s of Cdln ina l Procedure
Criminal Proc .. dure
Proc"du(",
Proc"dure
.-'
11 5
115
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-.
- , that the
the fact
fact that
that the terminology
termino logy in both entries is different reflects
terminology reflecLS his practice
reflects practice of recording
recording his
,
feelings
feel ings at the
the precise moment
moment he is writing
writing each entry.
entry .
Steiner attempted
anempted to explain
explain that
that Altman
thai Allman did not use
we those words with him during their February
2 meeting,
meeting. nor did Steiner
iocr"necessarily believe
Ste}ner
Ste}ncr
Ste, believe on February 2 that Altman was under "intense
pressure."
pressure .". Rather,
Rather. Steiner claims
claim s that
.,
thai this ,description
I
desc ription reflects his impression ten days later,
later, when
"pressure" 'from
"-from
from the White House not to
10 recuse.
recuse . According to Steiner,
Steiner. Altman
Alunan "did no't
nOI come
Ste inc~ used the same excuse to distance himself from his February 27 entry that
Steine~
Steiner
the White
'White House had told Altman that his decision
laid Allman decis ion to recuse was "unacceptable." According to
Steiner, that word described only what Steiner's impression was from what Altman had told him
was accurate. By "the White House staff' Steiner says he meant Nussbaum,
Nussbaum, as he was only
Nussbawn, onl y
Altman's recusal
recusal,, according to Steiner. By "backed down," Steiner meant to say that Alunan
Altman
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_
- .....
"'--', Atunan testified that he docs
Altman
Alunan does not remember telling
tell ing Steiner he had come under
"intense pressure" from the White House. He was not Under intense
imense pressure from the White
Altman testified that after sleeping on the issue, he decided that he would not
hc'would
at least forthe
recuse himself, at' for the time being. His rationale was that recusal was not required, he
would follow
fo llow Kulka's recommendation in any event, and he did not want the White House to take
J
../
White House
HOU5e officials) happy.
happy . ',
happy.'
fOIA(b):33
FOI.~.{b) - Rule
Ru l e 66(12)
l e) , fFecle.cal
I Rules .,f
ede.ral Rul;!s of Crim i. nal Procedure
Criminal Pc.,c",d \l r~
h~ would be aware of the timing and the legal issues on the starute
so that he
h!= statute of limitations.
oflimitations.
limitations.
117
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~O I A(b)3
FO A (b
A( b ) 3 - Rule
Ru lle ( ~) , Federal
(~)
e 6(e)
6 (e) Federa l Ru le
l ess of Criminal
Rules Crimi
Cr iminnal Proce dure
a l Procedure
Pr
Proc
ocedure
edure
-.
.
.
_____
,IL.....-_
... ...... ___ ~ Altman asked Hanson to"
--~ to check with Kulka on that
to thaI point
point..
ThaI moming,
That morning, Hanson called Kulka, and Kulka said that private
privale counsel (including Kendall)
Kendall)
course, bUI
would be contacted in due coUrse, al that point. Alunan
but that it was premature to do so at Allman had no
Altman
thaI at some point she told Altman that she assumed he would get
Hanson testified that
thai
ofltis
his copy of the talking points. She did so because she did nOI
rid ofrus
of not want a version of the talking
llI
mind as a result of the White House meeting. 31l
J 11
Altman claims not to remember this
conversation.
conversation.
7. February
Feb AODouDces
ruary 3: Altman Announces
ADDouDces Rccusal Decision To Tbe White House.
AODOUDCCS His Recusal Ho use.
The evidence indicates that sometime after a conversation with Bentsen, Altman
Alunan
.-. ~ite House officials
called over to the White House to arrange to meet with some of the same White
he had met with the day before. The testimony about how this meeting was set up,
up, what time of
day it took place, and what occurred at the meeting is widely varied.
In short, the evidence shows that Altman set up a meeting (on short notice)
nOlice)
noti ce) in
time being. He arranged the meeting by calling either Williams or Ickes, and Williams, Ickes,
310.
310 /
310./
I\
311. v.ith Altman where she said
311 . Hanson testified that she had another similar conversation ""-ith
with
~m that she assumed he had gotten
':Urn
to him gonen rid of his talking points.
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3, although
around the lunch hour on February 3. althougb there is ,some
some testimony that the meeting was
simply a precursor to a regularly scheduled health care meeting in Williams' office around 6:00
3 12
p.m. that evening. m
Altman testified that he called Ickes on the afternoon of February 3 and said that
ofFebrua..ry
he wanted to stop by and see hi~ cannot recall, but he thinks it is possible
him for a minute. Altman ca."1rlot
that both would be attending in Williams' office in the West Wing. Altman does not remember
in and sat down on the couch, AJtman had already told Ickes about his recusaL Altman is not
couch. but Altman
sure whether Eggleston was present for this discussion and does not believe Williams was even
312. When the meeting took place, and hence whether it was simply a precursor to another
Vvbite House on an unrelated topic, was a significant question
regularly scheduled meeting at the White
for our investigation because the meeting seems a more significant
contact if it was a separately-scheduled event rather than a casual add-on to another meeting.
]]9
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. To the contrary, Williams testified that Altman called her at about noon a day or
two after the February 2 meeting. Alunan told her that he had decided not to recuse himself, and
meeting . Altman
he said he wanted to tell people at the White House of his decision prior to going to a meeting he
he..
West Wing in five minutes. According to Williams, Ickes showed up, but Stephanopoulos
Nussbaum . Altman then came into her office and said that he had
Eggleston or Nussbaum. had decided
had'decided
haddecided
decided not to
FOIA(b)3
fOl Tl.(b)3 - R\lle
fOJA(b)3
fOJA,(b)3 R1l1e
Rule 6(e)
6(e),., f-=dHlIl
6(oe) Federal
f",dH~l Rules of Cr.iminlll
Criminal
Cr.imi n lll Procedure
P!;(">cedu(o:
P~OCoedUI;"
P~ocedul;"
./
Ickes_
Ickes.initially
Ickes-initially giand jury that Altman called him on the p~one
initially testified in the grand phone or
told him in the White House within a day or two of the February 2 meeting that he would not
recuse
recu~e himself. When he later testified in the grand jury, Ickes testified that he remembers
recuse
'recuse
meeting with Altman and Williams in the doorway to her office. Altman
Allman said that he was not
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._
.____ . ., refers to the meeting regarding Altman's recusal decision.
and Ickes for some unknown reason. Eggleston is not sure whether he "1mew
knew Alunan
-knew Altman would be
coming over, but at some point Altman stuck his head in the office.
office. Altman said that he
he'
he- had
313
decided not to recuse for the time being and left.J!l
left.JIl
left.
Stephanopoulos recalls being in a health care meeting in Williams' office that was
about to start, and Altman walked in and announced that he had decided not to recuse
recuse..
. -.
FOIA(b) Rul e 6(e)
FOIA(bl33 -+~ Rule FoCd~rl<l i'-uhs
Fed~rl<l
6(e).., Federal
6(0!')
6("') Ruhs ot
Ru le s o( nal ?rocedur~
of Cri(ninal
Criminal
Crimi ?roced u r~
Procedure
....
...-,.,-.
Hansgn
Hanson testified that when she arrived, Eggleston, Ickes, and Williams were
313 . Nussbaum initially testified that he remembers running into Ickes or Altman in the
313.
-Wing within a few days ~er
hallway in the West-Wing
WestWing
West Wing after February 2 and being informed that Altman
was leaning against recusing himself. In his second grand jury appearance, Nussbaum was more'
more
confident he had this conversation with Altman on February 3 and believed he may have also had
the same discussion with Ickes.
314. Hanson's schedule card confinns that she had a 12:00 p.m. lunch date scheduled at the
Ebbin Grill on February 3.
Old Ebbitt l. 329-DC-OOOOOI
329-DC-OOOOOl16.
l29-DC-OOOOOI 16.
315. Both Hanson's secretary and Gross corroborate Hanson's version of these events, further
supporting the view that the February 3 meeting took place around the lunch hour
hOllI..
luneh hour.
hoUl.
---.
.
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-- ~tanding in Williams' office, and they told her that Altman had just left. Hanson testified that
standing
s.tanding thaI
thai
Hanson remembers giving Ickes three names, Ben Nye (Alunan's assistant),, Michael
(Altman's special assistant)
Hanso"n testified that Ickes said that that was good because if that fact got out,
not now recall. Hanson OU1, it
would not look good in light of Altman's decision not to recuse. Hanson responded by saying
say ing
that she would have recused had she been in Altman's position, and Ickes again stated thai it
staled that
bener ifher advice did not get out. Hanson replied that she would say what .she
would be better ,she
she
she
.- .
FOIA(b)3
" (b) 3 - Rule
fOI,\(b)
fOII,i(b)
fO Ru l i 6( e ) , Fede~al
G(e).
G(e), ""cit-ral Ru le s o ff' Cu
F... deral Rules Cuminal
Cr i min
CJ:lmina
minal P rocedu~e
a l Proceduu:
Procedut{:
Pr ocedun:
~
L...___
L.. JhEggleston
/IE ggleston remembers telling Hanson that Altman
_ _...IIEgglestoh Allman had just left and that Altman had told
them he would not recuse. Ickes then asked Hanson how many other people knew that she
recommended Altman
A ltman recuse himself.
himself. Hanson responded with a list of names sufficiently long
Ickes testified that he saw Hanson on the second floor of the West Wing within a
day or two of the February 2 meeting, but claims not to recall any discussion about Altman's
122
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FOIA(b)3
bl 3 - Rule 66(e),
parA (bl3
POIA(
F'OIA (bl (e ) , Federal
Federa l Rules Crimi nal Procedure
Ru l es of Criminal Pr ocedure
....
...............
"
'.
"<
"
......
. "
'ecu;;;I:I,----------------------...:....-,
'ecu;;;I:I,----------------------...:....--,
recus:;LI'-_
recusaH __
......_ _ __
___
____
__ _
____
_____
____
____
__~_
____
___
---'
..J
A critical issue [or i~vestigatjon was whether anyone present at the February 2
i~vesligation
i~vestigation
for the i!1vestigation
Clintons or their counsel) either the fact of the meeting or the substance of the information that
o[the
had been conveyed during the February 2 meeting regarding the RTC's handling
bandling of the statute of
testified ' that he told Clinton the gist of what the February 2 meeting had
Ickes testified
been about, but Ickes claims not to be able to recall when or where he did so or exactly what was
said other than that he recounted what had transpired in the meeting, including both the statute of
recusaI discussions. Ickes believes he probably told Clinton about the February 3
limitations and recusal
conversation would have taken place, however, after the February 12 enactment of the extension
converSation
316
of the statute oflimitations.JL6
oflimitations.
of
oflimitations,JL6
limitations.JL6 Ickes does not recall but believes it is possible he told Clinton that
the R TC would not have time to decide whether it had claims that it intended to pursue with full
RTC
agreement.
316. One possibility we explored was whether Ickes' conversations with the Clintons may
have taken place after the controversy had erupted regarding the February 2 meeting.
meeting. While
Ickes was not positive, he thought, however, that the discussions took place
piace before February 12
1"2
and before Altman disclosed the February 2 meeting in his February 24 testimony.
123
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..~
~. Ickes remembers having essentially an identical but separate conversation with .
Mrs. Clinton.
Clinton . He similarly does not remember the circumstances of that discussion, except that,
Sabrin, had a conversation with Jane Sherburne and Sheila Cheston, both of the White House
Counsel's Office. Sherburne and Cheston took notes during this discussion, in which Sabrin
notes
note~
note ~ read:
read :
HI Recalls informing both WJC and HRC (meets with them several
se .... eral
timeslwk) goin~ to recuse
times/wk) separately that Altman not going recuse..
442-DC-00006538,
442-DC-00006538 , at 6538-6539. Cheston's notes similarly state (to the best they can be
442-DC-00006542.
442-DC-OOOO6S42.
442-DC-OOOO6S42 . _These notes are at least generally consistent with Ickes' testimony thaI
-These that he
believes he likely told both Clintons about the February 3 meeting with Altman
Alunan (at which
Altman
A himself).
ltman announced he would not recuse himself).
Mrs. Clinton testified that she did not learn of the February 2 meeting until around
284
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/--.
,_ options the RTC had in light of the statute of limitations -- filing suit, not filing suit, or seeking
seeking.
tolling agreements.
agreements. Nor does she remember Ickes discussing with her prior 10
to February 24,
disclosed in the newspapers. He testified that he learned basically what had appeared in the
press, that Altman had briefed the White House on procedural issues relating to the RTC's
fust
[lIst recusaJ was only when he did recuse on February
first he learned that Altman was considering recusal
reeusaJ
A. I have had one substantive contact with White House staff, and I want
wapt to
tell you about it.
it.
Q. ifII may,
if
Let me, ifl just given that "yes," I would like to know what the
may,just
.'
,J
"
317. Fiske did not question Clinton about his conversations with Ickes,
317. Ickes. and we never had the
opportunity to question Clinton on this issue.
125
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-,
,-
.. ..--,..
substance of the communication was, when it occurred,
occurred. who initiated it,
and what you were asked to do.
A,
A. First of all, I initiated it.
purpOse of that meeting was to describe the procedural reasons for the
The purpose
-- the procedural reasons for the then-impending -- then-impending --
February 28th deadline as far as the then-statute oflimitations was
concerned .
concerned.
said. I assume
I said, asswne so.
so .
I said,
said. fine,
fine. that was it.
I have not had any contact with the President of the United States or the
First Lady on any matter like this.
this .
this.
.'----
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Hanson testified that she noticed right away that Altman had not mentioned the
"That was the whole conversation," and she believed the opportunity had passed for correcting
testimony...
his testimony
Hanson also testified that she was not concerned about Altman's failure to
that he had mentioned it; she claims it was not until she later reviewed the transcript that .she
she
place at the February 22meeting. ~odesta from the hearing to tell him that Altman
meeting. He telephoned ':odesta
e~cerpts from Altman's February 24 testimony are taken from the final printed
318. The excerpts
bearing transcript. The Semiannual Report oJthe
hearing ofthe Resolution Trust Corporation Thrift Depositor
Protection OverSight
Oversight Board -- --1994:
1994: Hearing before
beJore the Committee on Banking, Housing,
Banking, HOUSing,
Housing. and
Urban Affairs, 103d (1994). lbat
l03d Cong., 2d Sess. {1994}. That transcript reflects several minor typographical
typographica1
typograph.ica1
corrections that were made to the preliminary hearing transcript. None of the changes appears to
be material to the investigation.
319. Gross stated that she does not recall this incident.
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___ Eggleston was at the hearing. He also does not remember the issue of Alunan's
Altman's failing to
Eggleston as the
the hearing ended, in which Eggleston reported that the recusal issue had not come
32o
up during the hearing.
hearing.!20
no
Altman testified iliat he used the word "substantive" to mean "relating to the
substance of the case," "the facts of the case," "the merits of the case,"
case;" "the status of the case,"
case, about the procedures applying to the case." He explained that he did not consider a
discussion regarding his possible recusal a "substantive" discussion; he never associated himself
with the substance of the case since in any event he was de facto recused and thus did not view
testified that when he used the word substantive he was not thinking of other meetings that
recusal and that he now wishes h~ had read it out loud. He admits
recusaJ ad.mit~ that his answer as
3;S given is
when looking at the transcript of his testimony. AJtman stated that he knows people
testimony, Altman pcoplemust
.must
must think
128
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- FOIA(b)
.OIA
."
mOIiI. (b) 33 -- Rule
I A !bj3
(b)3 Rule 6(e),
) , Federal
6(t),
6fe
Ei!e), f ede: al Rules
fe<le:al
fede:-al Rilles of
!!.I.Ies
Ih.:les o (f Criminal
of Crimi nal Procedure
P rocedur~
P~octdu~e
Procedure
Altman
A1Unan testified that when he said, "That was the
AiUnan the whole
lhe whole conversation,"
conversation," he meant
was referring
refemng to what
.what he thought was the purpose
pw-pose of the meeting,
meeting. which was to discuss the statute
iintent,
ntent, would II have sat around the night before with all these people,
..intent,
had had an intent, people, with the line
'recusal'
'recusa]' in there? --
I mean,
.- if ]!d
mean, 10 or 12 people - ifl'd
J!d intended to conceal it? ...
. . and would I have
. ..
gone over
OVef to the White House and talked -- me, "'"and
with our general counsel, taking with me, and
and four
Altman explained his statement that he was asked only one question during the
February 2 meeting as relating to the procedural discussion part of the case, the "substantive"
portion of the meeting. "One question about the substance, that's what I meant." According to
Altman, that is why he did not disclose the questions he admits being asked during the recusal
discussion .
discussion.
Madison..
regarding Madison
. A short
shon while later, Senator D'Amato again raised
shan rai sed the issue of contacts:
contacts:
.-
129
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..-... Q.
Q. Mr. Chairman, I have to say to Mr. Altman that I would like to go back to
a question that Senator Gramm brought up as it relates to any meetings
with White House Staff or counsel. .
Mr,
Mr. Alunan, I think you said that you and an
Mr. Altman, an-official
official from Treasury sought
out Mr. N
Nussbaum?
Nussbawn?
ussbawn? Is that co
correct?
rrect?
A. Yes, I did.
Q.
Q. Cou1~ you tell us why? In other words, I have difficulty understanding
CouJd
Could
why it is you felt compelled to seek out the White House counsel.
Q. Solely to?
If you recall,
recall. as I said, at that time there was a February 28,
28,1994
1994 date
which was the subjsubject major attention in the Congress and in the press.
ect of majo,r
,,-. .. It is not unconunon
It
It"is
It" uncommon of meetings of that type to take place. And I describe
it as a "heads-up" and a very stiff conversation.
conversation.
Q.
Q. Were any representatives of the President or Mrs. Clinton, or any legal
counsel, which I think would
woUJd be appropriate, speaking to the counsel for
wowd
R TC, or people handling this particular
the RTC, parucular matter?
maner? I mean, was there any
legal
legaJ representation going on? Was thisthi s you just called them? Did they
have any representatives, or any counsel who may have been meeting with
staff people, or talking to staff people?
Mr. Nussbaum had his assistant with him. And Mr. Ickes and Margaret
Mr.
Williams were both at the --
the--
.-
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EXHIBIT 3 (Part 4)
to
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.
--. Q.
Q. J~kes is in it, huh?
I~kes
Oh? Ickes
Q. Was there any other meeting that may have been requested?
A
A. No.
Q. There was no other meeting that you were aware of that the White House
counsel requested?
..",.-- ..
A.
A No.
,
Q. Or anyone else from the Whi'te
Whhe House?
A. No.
Q. Mr. Ickes?
A,
A. knowledge, Senator.
Not to my knOwledge,
,---'
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request for the February 3 meeting with Ickes because as he understood the question, D'Amato
was asking whether (he White House had requested any other meetings. Again Altman claims
the While
that while he may have misinterpreted the question, he did not intentionally conceal the February
Senator Bond then asked Altman questions regarding the criminal referrals:
Q. Next. when did you become aware of the RTC recommendations that
Next,
further criminal prosecution be taken against Madison?
A. Last fall. Ir[was advi.sed that the question of a referral to the Justice
was advised
Department. was under
Department Wlder consideration at the RTC.
R TC. And as other members
of the RTC staffwill anest, I said that normal
staff will attest, nonnal procedures with no
deviations whatsoever should be pursued, including chain of command
proc~d~es, in terms of reaching that conclusion.
procedures,
I might tell you that typically decisions like that are made at the Regional
Office level, and it was in this case. .
Q.
Q. ha~ asked the National
Were you aware that the Regional Office had Natiomil Office to
make a determination as to whether the Clintons' name should be in the
new expanded referral?
A.
A - No.
Q. You did not know they were asking for the National Office to make a
determination?
A. No. was
No. II was simply informed that this issue was on the
thc table, and my
reaction was - and I had only one conversation about it --- that normal
nonnal
nannal
procedure should followed.
followed . That is the way we are going to handle this
shouJd be followed.
thing from beginning to end ...
Q.
Q. How was the White House notified of the referral?
. A.
A. RT~, to the best of my knowledge.
They were not notified by the RTC,
RTS:, knowledge .
r..r--
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Q.
Q. Nobody in your agency,
agency, to your knowledge, advised the White House staff
that this was going to
10 be a major --
this could be a major source of
of
concern?
A.
A. Not 10
to my knowledge.
substance, whether his answer was correct, and Hanson responded that she thought it was.
was
was..
Hanson then spoke with Kulka, who was seated next to her,
her and asked her if she was aware
I
.,whether
whether the RTC had notified the White House of the referrals,
whether referrals. and she said, "No." She
remembers that when Bond asked his question she had a vague recollection of having spoken
Nussbawn. but she recalled no other details of the conversation at that time other than that
with Nussbaum,
.-
., ,,,,,-,
o usly related to the criminal referrals in some way.l2l
the conversation obvif>usly
obvi.ously
obvi. way.321I Hanson testified that
way.H
Altman turned to her or afterwards. m When she did recall this information,
afterwards.322 infonnation, she did not believe
she
she" understood the questions as asking simply
Altman had to correct his testimony because she
having thought at the time that Treasury had not prepared a Q&A about the fall contacts for
321.
321 . Hanson testified that she did not recall at the time the October 14 meeting.
meeting.
322. According to Hanson, she did not mention her conversation with Nussbaum
Nussbawn to Altman
after the hearing.
hearing.
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.---
- Altman. m
Altman.J2l
Altman.l23
said to Hanson, "They didn't, did they?" and Hanson responded, "No."
Because of the camera angles, they were not able to provide a de~tive
defi?itive analysis of exactly what
defi.nitive
Altman said to Hanson. They did conclude that the videotape is consistent with the versions
of, "We didn't do that, did we?" and Hanson responded in the negative by shaking her head side
Q. Please.?
Please.?
Q. Well, I assume
asswne we are not arguing there that you had .-
-- you are not
suggesting you had more than one are you?
A.
A. No. 1I am just saying that if yoil,
you, you know, you run into someone in the
hall, if you see that thing in the paper this morning, 1I am not including
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that.
Q.
Q. You said you were there 10 heads~up .
to give a heads-up,
heads-up.
A.
A.
A, I think IJ would have to know the details of the matter, Senator.
~enator.
Q.
Q, I guess what 1I am wondering is are we getting the right perspective of why
you did this?
Did you go there because you wanted them to know that, clearly, they
might be asked to sign a tolling agreement?
A. ~d
~d a matter like the one you referred
The difference between this and to
refe'rred to is I
refe'rred
had receiv~ng --
ha,d been receiving
ha.d ~- J
I had begun to receive a lot of inquiries, including
in writing, from Congress as to what procedures the RTC was
inquiries in
follow ,
going to follow.
I wanted to give them the Same sense of those procedures that I was giving
Congress. I said to them nothing different than 1I have said to
Members of Congress,
Mem~rs of Congress,
Members
Memt?ers Congress. \
Q,
Q. I understand that, but 1JI guess what I am getting at is there must have been
a reason for telling them that.
Congress was just saying "th~ statute is going to run, what are you going
to do."
do. So, you went over there to tell them we are
do," It arc going to apply the
same thing we do in any other case?
Same
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A. That is right.
Q.
Q. Was it serious enough that you wanted them to know because there might
be something that they would be confronted with that was untoward as
you applied your rules like asking for
f<?r a tollmg
f,?r tolling agreement, or filing a
toHmg
lawsuit?
A. . Again, the essence of what we said was that the statute of limitations
w~ch then applied
which appli~d was scheduled to expire on February 28, 1994.
The RIC
RTC was going to make every effort to make a decision by that date
date..
Q. Well,
Well. the passage of the statute of limitations extension eliminates that
oflimitations
problem. as you have already indicated.
problem,
t
I'I guess, Mr.
Mr. Chairman.
Chairman, I am having a little difficulty with the explanaiion.
explanation..
explanaiion
One way of looking at it was that it was not a very meaningful or
oflooking
important meeting; that he was just doing this so that he would be able to
tell Congress he had told them he is going to treat them the same way as .
others.
others.
A. Senator, I did not know whether they knew of such procedures which, as I
say, I was then communicating to Members of Of Congress. It justt seemed to
Itjus.
me a little odd to explain to a Member of Congress that we are going to
follo~ X,
follow
follo;.v X. Y,
Y>Z procedures and not have them ever be made aware of what
Y.
those were.
were.
Q.
Q.
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-.--., that you would really be concerned that people involved in the
investigation,
investigation. whomever they are, whether it be people in Arkansas,
of the President,
whether it be confidants afthe PresidclJt. or whomever, that they would
Preside.lJt,
. not know that the statute of limitations was going to,
to. toll, and that that
presented a situation where you had to advise somebody_
somebody. I just do not
think'anybody
think anybody involved in this would not have known that.
Q. Right.
A. What 1I was saying was not that. What I was saying is I did not know if
they knew, and.
and, frimkIy, is. as a result of that meeting, that
frankly, my impression is,
they had not previously known what procedures the RTC RTC woul~
would be
following.
regarding the substance of the case, and that he did not associate himself and his recusal with any
his conversation with McLarty and his February 3 meeting with Ickes and decide that they were .,
qis
Raiher, he thought the Senators were asking about only contacts with the White
not substantive. Raiher.
Rather,
aboul the case. According to Altman his staff had already prepared a Q&A about the
House aboul/he
about
324. As discussed above, Altman consistently defends his testimony on the grounds that he
'. -
.. - that his staff chose the descriptive terms
did not prepare the contacts Q&A and that tenns "substantive" and
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.-- . claims "'he e~cluded his telephone conversation with McLarty because he viewed it as even
he excluded
he ev~n less
than "incidental."
denta1." In further defining
"incidenta1."
"inci.denta1."
"inci, defIning what an "incidental" contact would be -- a hallway
hal lway
haJJway
Alunan ._eexplained
conversation about what had appeared in the press that morning -- Altman
AJunan xplained that he
might have chosen a bad example, but that he was simply meaning to say he was,
was nOI talking
was. not
in~identa1
in~idental contacts.
about incidental contacts.
Steiner recorded in his diary entry dated February 27, 1994 (covering the period
-.
..,.- .
-,,--....
choice of words." Steiner said that when he wrote "ducked," he was referring to his own
conversation with Stephanopoulos on February 16. Steiner remembered having told Altman
was concerned only about Altman's use of the term "heads-up" and Altman's failure to mention
tenn "heads_up"
"incidentaL "
"incidental.N
325. Steiner testified that when he wrote this entry he still had no recollection of the October
]4 meeting.
14
14meeting. .
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FOIA(b)3 Ru le 6(e),
E"OIA (b) 3 -.:. . Rule 6 (el,
(e l,
) , Federal
Fed eral Rules of Criminal
o f Cri minal Procedure
Procedu re
-.:-.
/"":'., cQ:ncems about the accuracy or completeness ofat
after his testimony any concerns testimony .
of that testimony.
\\ Altman Recuses On February 25.
10.
\
\ ..,
" \. Ti~es published a front page article about
On February 25, The New York Times
\f\JUnan's
A-IUnan's testimony that was highly critical of the fact that the February 22meeting
\\Altman's meeting had taken
taken
.'.
~I~ce,
\\\ . . pl~ce,
pl~ce , implying that the White House had
pi~ce had' received an update on the underlying facts in the case.
had'received case
case..
Altman
~ltrh.an
~ lun.an testified that he was shaken by the story and its allegations ofimpropriety
impropriety and had
int~st. 'IL
inl,",,'t.
inl""st.
interest. ____________________
'\1.I...L_
_______________________ --------"
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.______
- - - - - - - ---'
"
When,he
Whet.,
When, he got to work, he did have several conversations with DeVore (who had since retired
retired and
. .
working in Texas) to get his advice on how to make the recusal announcement in a way that
was wOfking
.
~i,nimize
would rn:~imize
. De
mi,nimize further negative press stories. DeVore's Vor~'s
advice was to stay flexible on the issue
so as not to.
t6 "pour
t6. k~rosene on the fire
''' pour kerosene fire,"
," po'ssibiy da~s before making the
possibiy waiting a couple days
.
announcem~~t.
announcem~t.
-.Altman
---\Altman testified that he had a statement prepared announcing his recusal.
''\AJunan recusaJ. At
. ,. .
th~ mid- to late-afternoon, Altman spoke with Howell
some point in th~
. some. with
Howell. Raines, editorial page editor
February 22 meeting
February meetinir_
meelingl l_
--_-
_I...__________________
L
-_-_
-_-_
--_-
_ -_
-_-_
--_-
_ -_
-_-_
.I
.JI
..JI .Altman
Altman aattempted to
ttempted to
on the editorial. At some point in the conversation, Altman told Raines that he had decided to
release the recusal statement that had already been drafted announcing Altman's recusal.
recusa.l .
recusal
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010-DC-OOOOOOI".J~----~----'-----~--------'1
01 O-DC-OOOOOO 114.
O-De-OOOOoO ".J
fOIA(b)3
fOIA(h)3
rOIA(b)3 Rul~ 6(e).
R\.ll~
FOIA (b) 3 - Rule 'il~)... Fed
'il~)
I)(o?) F~eral
Fed
Fedeeral
e ral
r a l P.uhs
P.ules
,des of Cd
Rules Criminal P[oc~dut~
minal Procedu
Proce
Procedure
dutre
"!
'-_
~----'-------------------______~----------~/lt w~oruy
L-_ _ _ _ _-'--_ _ _ _ _ _ _ _ _ _ _ _ -,-_
L-____
It was
-'/ltwasonl
_ _ _ _ _ _ _...J/1' wasonI y
only
Y
during his telephone caJl Altman decided and announced that .he
cal l with Raines that Altrrian
call h e would in fact
FOIA(b) 3 - Rul!:'
fOIA(h)3
FOIA(b)3
FOIlb)3 Rule 6 (e). fedua]
RlIle "Ie).
RlIlc ';(e), Rule
Fedu/I] Rules
Federal Rul('s C~iminall Proco?du[o?
R\.llcss of Crimina
Criminal Ptoc~du
Procedure
Pr.:;,ced\.l re
/ Podesta believes he
Podesta believes
' - - - - - - - - - : - - - - - - - - - - - - - - -_ _.....J/Podesta he
that Steiner called him to say that Altman was seriously considering recusing himself from
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...---
- Madison but would not be consulting with the White House on the issue.
inform WhiteHouse
infonn the White House that he was
waS again considering recusal.
recusal . As Altman put it, if such efforts
took place, they were not very effective given the angry call he received soon
sooh after his
On February 28
28,. 1994, Eggleston sent Ickes a memorandum regarding
di~ussed issues raised by the FDIC and RTC reports addressing the question of
discussed possihle
ofpossihle
possible
Eggleston discussed the findings of both the FDIC and the RTC in their reports and noted that at
hearing, the Chairman of the FDIC and Altman had both agreed to have the
the February 24 hearing.
FDIC ;:md
;;md
I;Uld RTC Inspectors General review the conflicts issue.
and issue. Eggleston then reviewed the
had a conflict of interest. Next, he explained the status of the RTC's Madison civil investigation
light of Altman's recusal. The FDIC and RTC reports were attached to the memorandum.
A March I, 1994 memorandum addressed from Ickes to Mrs. Clinton with the
Mitrch 1,
..-- ("Rose"). Attached to that memo are copies of the FDIC report, dated 17
!4!
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It
Itis
is my understanding that sho:rtly
shortly after
,after
a fter RogerAltman
Roger Altman met with Bernie
Nussbawn, me and others concerning the RTC statute of limitations,
Nussbaum, limitations. he received
9fth~:
an opinion from an ethics officer 9fthf:
of the Treasury Departrnentthat
Deprutment that he, as the acting
Department
RTC, di~
head of RTC. di~'
di~
dig not have to recuse himself from matters involving
RosefMadison Guaranty. JI will confinn
RoselMadison confirm this situation.
DDb-De-DDODDDI3.
006-DC-OOOOOOI3.
006-DC-00000013.
that
that. Ickes called him and asked him to draft a memorandwn
Eggleston testified that memorandum
. a
giving wht;re things stood with respect to the conflicts issue,
a report on where there. was aa
i-ssue, whether there
issue.
confiict,.who
conflict, couJd happen if the FDIC found a
who was investigating what on the question, and what could
conflict. Eggleston wrote this memorandum to Ickes, and only later learned (in the course of the
.- public hearings) that Ickes had forwarded it to Mrs. Clinton.
Eggleston to
Egglt::ston
Egglt:ston
Egglt::stun prepare-the
to. pre;:part:.
to.pre;:part:-the
prepare. the February28
the;: February memorandum! but he is certain that he
28 memorandum, hc did. There had been
involved in that question, and Ickes believes the February 28 memorandum may be that
memorandum..
memorandwn
memorandum
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.- memorandwn with
have either had this memorandum him or tried to hand
withhim band it to
10 her, and she was not interested
,
in it. She does not believe she looked through this memorandum
memorandwn until she was fater.prepared
later.prepared for
the Ole.
questioning by theOIC.
theOIC.
asking her if she wanted to learn more about the Rose Law FirmlRTC
FirmlRIC issues, and her responding
summ~r of 1994 of a conversation they had with Ickes' private counsel, Amy
Cheston in the summer
Sabrin. These notes suggest that Sabrin conveyed to the White House Counsel additional
442-DC-00006540-6S41.
442-DC-00006540-654I
442-DC-00006540-6541.. Cheston's notes similarly read (again with modest expansions of
abbreviations):
2/27-3/11 Memos.
2127-3/1
2127-3/
Feb, 2126
Late Feb. 2/26 or 27 prob'ly, HI -- conv wI Pres -- had read WSJ article, .-
--
asks sever qs re procedure RIC; HRC. BC be held liable => HI asked
RTC; can Rose, HRC,
NE to write memo.
hrs.
wlin 12 hrs.
Did w/in
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,
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442-DC-0000654l
442-DC-0000654J
442-DC-00006S41 .
442-DC-00006543.
'surrounding
These notes provide a level of detail surrounding
surrounding the preparation and
~fthe
dissemination of ~ever provided in his sworn
the February 28 and March 1 memoranda that Ickes never
testimony. When confronted with these notes, Ickes testified that while he remembers having
the
spoken with the President and Mrs. Clinton about the statute of
oflimirations
limitations issue (as discussed
oflimitations
no~ recall having the conversation with Clinton that is recounted in these notes
above), he does not
regarding the potential liability of the President and Mrs. Clinton or the Rose Law Firm.
Finn. The
memorandwn, however. Ickes testified that the FDIC and RTC had issued reports
Eggleston's memorandum,
dealing with the possible conflict of interest with the Rose Law Finn and Madison and that there
read. Ickes acknowledged that Clinton may have read the same article or editorial and may
Ickes read.
have asked Ickes some questions about it, but Ickes claims not to recall. Ickes did testify
testi fy quite
recall if Eggleston wrote the memorandum in twelve hours, as described in these notes.
notes . He also
may well have. On the question whether he sent his own March 1I memorandum to Mrs.
Mrs. Clinton
the
(with the Eggleston memorandum
mem.orandum attached), Ickes again testified that he may well have done so,
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,
.-- but he does not recall. . Contrary to the White House COWlsel's c\~s he does
Counsel's notes, Ickes also claims
Mrs. the
Mr~. Clinton's asking questions about the .memorandum.
not recall Mrs. memorandum.
,memorandum.
Ickes' only explanation of the discrepancies between his testimony and the
Sherburne and Cheston notes is that he was not present for the Sabrin conversation and has no
information
infonnation she had collected from
from a variety of sources, and that she docs
does not know the source of
(~tatement of
Sabrin's information on these points. Ickes, Senate Hearing, Feb. 22, 1996, at 187 (statement
Sherburne).
After Sherburne's and Cheston's conversation with Sabrin, they interviewed Ickes
,'-.-'
..
personally. Ickes, Senate Hearing,
Hearing. Feb. 22, 1996, at 186 (statement by Sherburne). Pursuant to
22,1996,
from this interview were read to OIC attorneys. The portions relating to the February 28 and .
March 1I memoranda were not read because - prior to the disclosure of the notes of
of the Sabrin
OIC should consider pursuing the notes of Sherburne and Cheston from their interview with
wru,..t
w~J Ickes may have been confiding to his
Sherburne and Cheston notes accurately reflect wru,.,
.--.
145
.,
306
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326
.-_-_ .' swnmer of 1994.
private counsel and the White House Counsel's Office in the summer
.''
1994.326
. ..
.
... ... ... ...
7) Billing Records -- [The facts relating to the discovery of the billing records in the
the''
White House are detailed in Colloton & Azar, "Rose Law Firm
Finn billing records," September
1996.)
1996.]
and ably set forth in the Colloton!Azar memo of September 1996. Also well known is the
CollotoniAzar
that~
conclusion which Steve and Alex come to thatj
FOIA(b)1
FOIA(b)7 -
FOIA(bP Ie)
lc)
(C)
..-- ~----------~~
t
- - - - - - - - - - - - - - - -_ _ _ _~ _ _ _ __J
, they doubt that "the admissible evidence probably is
~eptember
September of 1996: .
1.
I.
L
FOIA(b)7
E"OIA(b)7
fOlA(b) 7 - (C)
Ie)
2.
ole
326. In addition, the OIC should consider questioning Sabrin, Sherburne, and Cheston about
their conversation. The OIC's position would be that Sabrin waived her private attorney-client
anomey-c1ient
communicating with Sherburne and Cheston and that, in any event.
privilege by 'commwricating event, any official or
private privileges were waived by the White House's disclosure of the notes of Sherburne
Sherb)JJTlc and
Sherb)JITlc
Sherb)JITle
Cheston. ..',.
146
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FOIA(b)7
FOIA(bI11 -
FOrA(bJ
FOIA(bJ - (C)
ICI
I"
3.
,!
.
.
FOIA(b)1
FOIA(b)
FOll\(b) -
FOIA(b)7'l") - (C)
ICI
I"
executiv~
exec utiv~ assistant says that the billing records
HiUary Clinton's personal executive
Carolyn Huber, Hillary
office in August 1995. According to Ms. Huber, she did not recognize what they were, boxed
,---
147
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.- January 1996. In January 4, 1996, her office was being rearranged and the table covering the box
fFOIJl.(b)
or.... (bp7.. -
oor".(bp.
fOr}l.(bp (C)
(e)
I
s~e is
She is the only individual in the White House who had a significant interest in them and she
one of onJy
only 3 people known to have had
bad them in her possession since their creation in February
1992 (the other two were Vince Foster, who was dead at the time of the records discovery, and
and public testimony by the FDIC, RTC and Hubbell before Congress on August 10,1995.
10, 1995.
1995 .
In addition there is some slight direct evidence that Hillary Clinton possessed the billing
'billing
'billing
testified that they observed Hillary Clinton carrying a~ cardboard box in the Residedce
Residence o~ about
Resideo'ce on or
almost everY
Finally, we have comprehensively interviewed almost every .~.~er
eve;:y .~ther
.C(.
almosteveryc;>.ther ~er indi
indi~idual
..~iduaJ
/idual who had
individual
.". . :'
,
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,.--
.--. seeQ. the billing records in the room. We might
billing records there and none recalls having seen
,
\
~ wimess
reasonably anticipate the possibility of bringing 00 tria1 for
witness in to the trial fOT brief questioning;
faT
FOIA(b)7
FOIA(b)) 7 -
fOUb Ie)
IC)
places, HRC and circles various entries in the billing records. It is clear that the handwritten
HI
under subpoena since June of 1994.328
I994.llI
994.1lI
1994. .
I F01Alb)7
FOIA(b)7
F01Alb)"7"7 -
F01Alb) Ie)
lei
328 We have been asked our view on how the billing records came into Mrs. Clinton's
m
J28
I
\
of theories as to how HRC came into
possession. The Azar/Colloton memo offers a couple oftbeories
possession of the billing records.,
records.
fOIA
f"OIA(b)
FOIA ((b)
b) 71 -
FOIAlb)7 (el
(e)
(C)
.
----
::.. .,.--.
:. ,,---
H9
149
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--. _________________________
' L-________________________ -C
LI~I________________________ ro~'~
ru '~
A~(b~)I'_
(b~ '__
_-~
~F_O_IA_(_b)_7_-
A~ _(C~
-_~ CI)________________________
((C_)
~ ________________________~1
________________________ ~1
~1 At
didn't consider it a forensic issue. Sherburne and Huber then took the billing t':l a color
hilling records to
copier in the White House and made 2 copies -- Sherburne kept one and Keridall
Kendall to the other
Rolfe and directed him not to let the records out ofrus
, . were highly
of his sight because they highly'
Rolfe affixed Bates' the copy and then compared the two sets of
Bates numbers to the original and the
not
nol complete (as the Post-It notes had not been copied) and he recopied the original. Most
remarkable,
remarkable. after completing the comparison, Rolfe made additional copies from the first copy
(principally
(principa11y for distribution to the Senate Whitewater Committee) but when the copies were
(principa1ly
I
. L . . . . . - - - -_ _
FOIA(b)
,DIA(b)?7 -
f01A(b)?
,(llA(b)? (C)
_- - - - - - - I
inthe records which show or indicates "Mrs. Clinton's role in suspicious transactions",
contained in'the
ISO
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~iiBd ,8,
6811 ~jjed
68 ~8~1000L
IOOOL :ppoa 991v~1
1v>l :MN
FOIA(b)7 -
fOIA(b)1
FOIA(b)1 - IC)
(CI
lei
lCl
O!ll(b)17 -- IC)
FO!ll(b)1
FOIA(bI7
.OV\(bJ (el
lei
lCl
FOIA(b)1
FOIA(b) - '"
- ,C>
FOIIl.(b) 71 - (C)
,--
151
15
lSI1
312
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'-"
FOIA
rO (b)"7 -
I A(b)?
FOIA(b)? (C)
FOIA(b)7
(b) 1 -
fOIA(b)?
fOIA (C)
152
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FOIA
'FO
Case #16-5366
( b ) 7 ~ (C)
IA (b)
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FOIA (b) 7 -
FOT? (D)
{J)
.-,
.- '
153
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..,-.. ..
FOIA(b) 7 -
For:'(b)?
For:'(b)7 (C)
..........
8) Supporlfor
Supp0rlfor
Supportfor
Support/or Webb HubbeU-
Hubbell-
I. BACKGROUND
1.
.---"-" On March 14, 1994, Webster L. Hubbell annolLl11ced
announced his resignation from his position as
annolL111ced
Associate Attorney General, the number three position in the Department of Justice. Hubbell's
resolve a billing dispute with his fonner th(~ Rose Law Firm
the:
former employer, the Finn in Little Rock, Arkansas.
Arkansas.
(b) 3 - P.1J1~
fOlA(bl3
fOIA (b)3
FOIA(b) P.ul~
P.\ll~
Rul e 6(e}, fed~[a
fed~[ a l Ru
fedoetal
6 (e), federal
6(e). RlJ ll oe.e;
Rules ~~' of
~." Criminal
ot Crimin P~ocedu[e
P~ocedu [e
a l Procedure
154
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~ -"
afRose
of Finn clients.
Rose Law Firm clients. As part of
ofltis pl~ agreement, Hubbell agreed to cooperate with the
his plea
Ole,
OIC, ,aand
OIC,and information.
nd to provide complete and truthful information.
r . Hubbell was sentenced by U.S. District Court Judge George Howard on June 29, 1995.
1995.
a
Hubbell received a sentence of incarceration of21
of 21 months. He was designated to serve this
DOJ, there were at least two meetings held at the White House to discuss Whitewater related
DOl,
matters.
maners. According to the grand jury testimony of then White House Chief of Staff Thomas
grandjwy
" Mack ~ McLarty, there was a meeting scheduled in the residence of the White House to discuss
"Mack"
with the President and First Lady an organizationa1 sttucture to deal with Whitewater related
organizational structure
. .
matters.
maners. Prior to that meeting, there was a "pre-meetirig",
Pnor 10 "pre-meeting", at approximately 8:00 a.m.,
a.m. , attended
155
316
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meeting in the residence. At approximately 8:30 or 9:00 a.m., the full meeting was held in the ,
ole
Ole on May 7, 1997),
produced to OIC ]997), there was a conversation of approximately 10 minutes with
ofapproximatciy
another matter that was topical and pressing in nature was raised at this meeting.
meetiJ:Jg. And
that's how I remember the Webb Hubbell resignation situation or possible resignation
332
being raised at this meeting. m
SWTOunding Hubbell's
assert executive privilege) -- but did say that they discussed the facts surrounding
,.-,
resignation.
resignation . McLarty made the general statement that:
given the fact that there had been apparently discussions with him [Hubbell] by Blair and
be would not be able to continue to
Kantor .. .it seemed to be a growing possibility that he
effectively serve as Associate Attorney General.
Anomey GeneraL That's how I remember the matter
coming up and generally what the tone of the discussion was. 333J3)
at least the feeling that I(f had, and I think it was shared certainly by others, that Mr.
cIosure was not reached on whether or not Mr. Hubbell
Hubbell would have to resign ... c1osure
informed McLarty that he would be willing to
would be asked to resign [but Hubbell had infonned
,,,
330
4/ 17/97 GlT,
McLarty, 4/17/97 GJT, at 114-117.
,,,
'"
331
ld
Id
ldaI12-37; 11'4-117.
at 12-37; 11"4-117.
m
Id
ld at
a132
32..
333
" ,
ld
ldal3!.
ldat3!.
at 31.
156
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was.
was, "Thank Yon ,,33S I
You Mack. I appreciate that very much. "l)~1
Following
FolloWing this meeting, McLarty spoke to Tnunan
Truman Arnold and Vernon Jordan about
Reaud, Bernard Rapoport, and C. W. Conn. Vernon Jordan recommended Hubbell to at least one
C.W.
staff director, telephoned Brad Keithley of the Jones. firm in Dallas, TX on Hubbell's
Jones, Day law finn
behalf. Burton called Keithley at McLarty's direction or on his own initiative following a
with MeLany
discussion lAith McLarty about Hubbell. A_short
short time later, Burton reported back to McLarty
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Jones. ~aw firms for that matter, as long as this billing dispute was
Jones, Day, or other traditional law
. .
Erskine Bowles, then the head of the Small Business Association, received a telephone
caU from Mickey Kantor around the time that Hubbell annoW'lced
call announced his resignation,
resignation. Kantor was a
good friend of Bowles. Kantor said that he was concerned about the plight of Hubbell's family
children. Although Kantor did not ask him to do anything and he was
and especially the Hubbell children,
!
not personally a close friend of Hubbell's, Bowles
Bowies decided to try to help Hubbell because he was
calling a few friends with contaCts in Washington. Hubbell indicated to Bowles that he was
D.C .
interested in remaining in Washington, D.C.
.~ ..
m
337
Id at 50-52.
50-52,
;).
338
......-...
158
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.
~.
~
fO!Alb))
fOIAI!))3
fO!Al);)3 Ru l ~e Gte),
Rul
P.u
FOIA(S)3 - Rul G(e), fe
G(e).
Gte). f~
r",d~ral
d~ral Rules of
Federal of Crlmlnal
Crimlnal ?roc",dllJ:e
Cnmlnal ?rocedll.J:e
Procedure
C!.!ENTS
III. HUBBELL'S CLIENTS
C!.IENTS
The following is a description of several of Hubbell's consulting clients which fall most
Hubhell..
which they hired Hubbell.
Hubhcll
Truman Arnold
1) Trumao
month contract
contract- at S3,ooo.00
,000.00 per month,
$3,000.00
$3 month. Arnold has testified before the grand jury that he
. ,-.."
received a call from Mack McLarty in late March or early April, 1994, requesting Arnold keep
FOIA(b)3
r OlA(b)3 - &ule
'OIA{b)3
fOIA{b)3 6(e
Rule G{~)
~( .. I ., Federal
~ l). r ed~ [a
Fede ~al Ru l es of
l Rules Criminal
o f cnminal
Cr
C~2minal Proced
lminal Proc ure
procedure
proc edure
,
(b) 3 - \' Rul
FOIA(b)
FOIA
FOIAtb) uh
ule
, 11.1
I
e 6(el
.. F~deral
F~derlll
f~derlll
6 (e ) ,. Feder RuL~s
RuLes
a l RuL .. s of cnmlnal
Rules
,
Cr i mi na l
,I
Proc~dure
?roc~dun:
Proc edure
159
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-
.. ..
FOIA
FOIA(})3
FOIAlb)3 R~l
Ru1@:~ 6(el,
l b)3 - Rule 6Ie),
6(el ~'oedetal
6 (e) , Federal
Fe-deta1
Fede Crimina l Procedure
tal Rules of Criminal Pro-::edure
L..-_
--------------~
I
L...-_ _ _ _ _ _ _ _...J/'Arnold further testified that when the six month contract expired in
October, 1994, rene.w the contract because he was "disappointed" with Hubbell's
1994 , he did not renew
perfonnance. Hubbell had not approached him with any i~vestment ideas or opportunities during
performance.
the six months he was on retainer. Arnold told the grand jwy that if
grandjwy
jury ifhe
he had known the true
,..
>40
I I
,..
FOrAlb)
.'OIA(bIJ
orA(b)33 - Rule 6(e),
FOrA(b)3 6 Ie) , Federal Rule s of Criminal
rederal Rules
. II
Cr iminal Procedure
>41
I
160
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.-. nature of Hubbell's situation and the fact that he would later plead guilty to the two felony
counts, he never would have hired Hubbell and would not have recommended him to his
hisfriend
hisfriends
friend s
his friends
F01I>.
fO (I:)3. - Rule 6(e),
l A(b)3
FOIA(b) ) , fedetal
6 (e),
6(e Federal Rules
Ru l es
P.u oof! Criminal
e5 t
! Procedure
Ctiminal Ptcedure
2) McAndrews and
Ind ForbcslRevlon
ForbeslRevlon
Webb Hubbell
Hubbellat 8:00 a.m.,
.at 8;00 a.m ., in the Melrose room at the Park Hyatt Hotel in Washington, D.C.
f01;:'(I:
FOIA(b) 3 - Rule "(e),
fOrA(b) 6(e)
<5 (e),, federal
Fedoe'!!tral
Fed
Federal Rul~
31 Rules
Ru s of Crim
les Crimi na l Procedure
i nal
Criminal PrQcedu[e
PrQcedl"'e
. i
'FOIA(b)
,
' rOI/db) ,')3 - Rule 6(e) Federal Rules of Criminal p
6 (e),, federal r'ocedure
pr'ocedure
, '
,.,
343
.,--- ,..,
. ,.~
"
161
322
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FOJA(b)3
rOJA(b)3
r01A(b)3
FOIA(b)3 - Rule
R.ule
Rl!le G(e) , Fed!'ral
Ru l e 6(e), Fed
Fedeera
e [al
rall Rules Ctim1nal Proced~
R.ules of Criminal Procedu[
Procedurr e.;,
Procedur.;,
,
I
Jordan says its "entirely conceivable" that McLarty called him about Hubbell and that
10rdan
McAndrews and Forbes is a holding company established to maintain and operate the
personal invesunent
investment holdings of Ronald Perelman. The General Counsel of McAndrews and
from Vernon Jordan that Webb Hubbell was availablle D.C. Schwartz
available for work in Washington, D.C.
he spOke
. testified that he two other employees of McAndrews and Forbes, Howard Gittes
spoke with two Gines and
to introduce Hubbell.
Hubbell .
This is consistent with Jordan's testimony in which he has stated that "I think at some
point after that we went to New York and I took him to a client of mine and introduced him."
i i
FO I A(lJ)
FOIA(
FO!A(I)) ,
I) 3 - ' ,!tul
Ru l e 6(e),
Rule 6( e ), Fe<l~ral
red
Fed Rule"
Fed".. ral Rules
Ru l es of Ctimina
Ruhs Crimina
Ctiminal Pr
, :)cedur~
criminall Pr:)c
Procedur"
.. dur
dur!'..
.. 345
~
162
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,...-'..
Jordan says he had no discussions with Hubbell about any post-employment restrictions
1I did not ask questions about the appropriateness of this or the appropriateness of that.
He was a friend in trouble,
trouble. I could be of some help to him, and I did it. Proudly.
Perelman had stopped by that initial meeting with Hubbell - Jordan then backed off and said that
President in an informal setting that I'm doing what I can for Webb Hubbell.
Hubbell, The President said,
'Thanks."
"Thanks." End of conversation." "It was sometime in the spring I'm sure, and my suspicion is
During his grand jury testimony Schwartz could not describe with any particularity the
~d a second $25,000,00
1994 and $25,000.00 in July,I994.
July, 1994.
(
'"
346
ld
III at 3538,
35-38.
,---. . 'H
347
k1 at 46.
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ForA
FOIA (b) 3 - Rule 6 (c), Fe de r al RU]J~s
(e ), Federal Ru l es of
o f C_:_minaJ
Cr imin al Procedure
Procedur e
'-1...1...______
_ _ _ _ _ _.... ~ series of
.....111Telephone messages indicate that Hubbell had a of conversations.
conversations,
based on attorney/client privilege. Hubbell never produced any written work product dwing
during this
consultation.
28~
final $12,775.00 payment represented a pro rata payment from the invoice date of October 28,
1994, untit
until December 2, 1994, when McAndrews and Forbes was notified by Hubbell that he
Ameriean
American Income Life is a life insurance company owned by Bernard Rapoport in Waco,
,--.. .
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FOIA (b) 3 - Ru:e
FCIAlb) Ru le 6 (e), Feder~l
Fede Rules
ral Ru C:c'ifl)i.na~ Procedur
le s of Criminal :);:oced1.'-c:e
e
.- : :
.. "'1
11-_ _ _ _---11
..._____ .....1Arnold indicated that he had hired him for $18,000.00 - $3,000.00.
$3,000.00 a month
'~ \
LL
______________________ I
-I!Rapoport
Rapoport was not
no'
Hubbell's criminal activity he would never had hired him. Upon expiration of the six month
Umlted (Lippo/Riady's)
4) Hong Kong China Limited (LippolRJady's)
On June 27,1994,
27, 1994, $100,000.00 was wired into
Inoo the acoount
account of Webster Hubbell from a
foreign corporation based in Hong Kong. We have been unable to interview anyone from that
1I am pleased to provide my consultant services to your company. As you know, know. I provide
services including extensive expertise in capital markets, U.S.
.aa broad range of consultant services. U.s.
placements~
placements, A.D.R. and investments. From our previous dealing,
dealing., you are also aware that
I have extensive legal experience in banking, insurance, corporate organizations and
securities.
loS
165
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-.
--~" $100,000.00 per year payable in quarterly
. quanerly installments beginning on July 1,
I,
I , 1994 ...
<
The retention of Mr. Hubbell by Hong Kong China Limited followed a series Of
of visits to
Mvisits
the White House by James Riady and John Huang during the week of June 20,
20. 1994.
19,1994
May 19, 1994 Hubbell writes a letter to Juhn Huang at Lippo Bank Bank. in Los
Angeles,-CA
Angeles, CA :-"It
: "It was good to see you last evening. I1I apologize
;_
:-"11
that I did not have any business Ylith me.
businesS cards with me. I am enclosing one
if I can be of service or you would just like
yOll will call if!
and hope you
to visit. Please give James my best and tell him II would
-to wouJd love to see
him when he comes to Washington in June."
2:27 p.m.
2:27p.m. telephone call dwged Hubbetrs calling card from the
charged to Hubbell's
White House
4:45 p.m.
p.m. James Riady an.d
and John Huang enter West Wing according
to WAVES records
.-.
.".--
-- -..
4:51
4 :51 p.m. Kantor~enters White House complex according to
Mickey Kantor,.cnters
Kantor,.enters
EPASS
EPASS records
6:50 p.m. James Riady, John Huang, James Lewin (Sprint), Bernard
Rapoport, and Wayne Reaud visit porus on South Lawn
according to WAVES records
7:00p.m.
7:00 p.m. . Hubbell calendar lists appointment "Marsha Scott"
scon"
June
JUDe 22,1994
22,. 1994
22,-1994
2:57
2 :57 p.m. lohn Huang visit Mark Middleton in West
James Riady and John
Wing
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-. 4:33 p.m.
p.m. Kantor exits While
White House complex according to EPASS
records
7:51 a.m.
a.m. Kantor exits White House complex according to EPASS
records (no record of entry)
10:27 a.m. John Huang visits Alexis Herman in the West Wing
according to WAVES records
12:00 p.m. Hubbell calendar lists appointment with "1. Riady -~ Hay
Adams" .
33:44p.m.
:44p.m. Kanoo-
Kana tr exits White House complex according to EPASS
records
12:56 p.m.
12:56p.m.
12:56p.m. James Riady visits Middleton in West Wing according to
W AVES records ,
WAVES
5:00p.m.
5:00 p.m. appointment with "J. Riady"
appoinunent
Hubbell calendar shows appoinUnent
27, 1994
June 27,1994
JUDe
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S100,OOO
$100,000 (the ennre
S100,000 entire year's amount) is wired from Hong
Kong China Ltd to Hubbell's NationsBank account in
. Washington, D .C. through Bank of New York
D.C.
As for any work Hub~ll did for Hong Kong China Limited, the documents provided
worle that Hubbell
Mr. Hubbell indicate that his only contact with Mr. Yeh was the
by Mr. June 27,1994,
theJune 27 , 1994, retention
27,
documents do show contact with other employees of Lippo entities, mainly related to Hubbell
docwnents
travelllIT1Ulgements.
trayel
travel arrangements.
arrangements, there are .no
no documents
docwnents that indicate any substantive
substantive work that Hubbell
referring to his book and the Jane Sherburne memo refering to monitoring
mOnitoring Hubbell cooperation.
~ebb then says that in addition, the Journal article also "hring[s]
~ehb
Webb "bring[s] oul
out Riady again... "
5) SunAmerica Corporation
S)
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.. . . -.,,'
SunArnerica
SunAmcrica Inc. is an insurance and investment
SunAmerica mvestml:nt company based in Los Angeles,
Catifomia, oWned
California, owned and controlled by Eli Broad. BroaD
Broall
Broad has known Hubbell since the mid-1980s
when he was introduced to Hubbell and the Rose Law finn Kantor. Hubbell did
Finn by Mickey Kantor.
maintained periodic personal and telephonic contact with Hubbell. Broad did not recall any
Hubbel.l
contact with Hubbell during the period when HubbeU Justice.
Hubbell was at the Department of Justice.
Broad becam~
bccam~
became aware that Hubbell was doing consulting
,consulting
consulting work on or about April 14, 1994,
shaking hands with all the guests. During the short time Broad spoke with Mrs.
hopPing" shalting
"table hopping"
doin.g. Mrs
Clinton, Broad inquired about how Hubbell was doing. .. Clinton infonned Broad that
Mrs,.Clinton
.-.
Hubbell was doing consulting work in the Washington area. Broad says he has no clear
Hubbell
Broad subsequently did telephone H"
ubbell at Hubbell's Washington office.
office. Over the next
few months, Broad and Hubbell discussed SunAmerica and its interest
interest in a National Savings
policy.
policy .
Such a policy would likely include certain incentives such as tax defennent,
Such. defennenl, to encourage
- .
,..-.. Savings policy that would be supported by the;
the administration and as an advocate to get
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him.
no
nc evidence that Hubbell
ne HUbbe.ll completed any .of
of these items.
plea, na
nc longer of
plea. Hubbell was no te SunAmerica
.of value to SunAmerica. Employees of the company,
company. including a
-,
-,
' ~'.
former Co~General
fonner General Counsel, Karen Hedlund, and Loren Fife, current Co-General
CoGeneral
Co General Counsel with
amaunt and
Susan Harris, have stated that they felt that Hubbell had been paid an appropriate amount
that SunArneri.
ca had received the fair value of
SunAmerica afrus
ofms
his services up until the time he plead guilty in
ofrus
December, 1994.
of Truman Arnold.
recommendation of MOoTes paid Hubbell $18,000.00 in a8 lwnp
Arnold. Moores sum which he
Jump swn
.- develop
devel op in Cannel,
Carmel, California. Moares wanted Hubbell to make contact with the FAA about
California . Moores
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getting approval for his project. Moores also indicated that he contemplated~aving
he later contemplated
contemplated.}:laving
contemplated.having
.!:laving Hubbell
known about Hubbell's criminal problem beforehand, he never would have hired Hubbell.
7) C.W. Conn
CODa (Conn
(CODD Appliance, Beaumont,
BeaumoDt, Texas)
Tens)
C. W.
W. Conn is the founder of Conn Appliance Corporation and is a multi-millionaire and
C.W.
Conn first
fi.cst met Hubbell and retained him during a July 28, 1994, meeting in Washington,
Washington. D.C.
D.C. at
appoinunent
appointment as an ambassador. Hubbell indicated that he could help him in that process.
process.
FOlp.( b ) 3 - Ru
!;O!k(b)
'-O!k(b)
fO!A(b) P,u l e 6(e),
P.u 6(e) Fede~ ...
6(e ) , Federa
Fede:: lI l Ru
Rull es
e s of
e!!'
es C r iiminal
o f Criminal
Cr Proc~dure
"roc~d<lr'!
mi na l Proc-,ldure
P Loc -edure
~ -J/Connh~
-J/Connh~
________________________________________________________-Jiconnhas
L-____________________________________________________
L-____________________________________________________
. no evidence that Hubbell did anything to help him get 'an Corm is not an
an ambassadorship. Conn
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EXHIBIT 3 (Part 5)
to
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ambassador today. Conn has stated that if he had known of the true nature of Hubbell's personal
ifhe
8) Wayne Reaud
Wayne Reaud is a plaintiffs class action anomey Beaumont, Texas . .Reaud retained
attorney in Beaumont,
grandjury.
grand jury. Reaud was interested in looking for joint investment
iinvestment opportunities for the group at
On various occasions.
occasions, Hubbell spoke from prison with his wife Suzanna. l~ge
Suzanna. While a large
volume of the tapes provides moderately useful evidence, it is appropriate to end the evidentiary
.--..
tel~ing
ling excerpts.
presentation with the two most tel.
telling
be sued by the Rose Law Finn civilly to recoup its damages from his bill
hil.l padding. Hubbell is
panne~s
partners.. His wife has been talking about Hubbell's plan with Marsha Scott, who is a employee
at the White House and a close personal confidant of the Clintons. She relays Scott's concern
.,
with Webb's plan:
SWHo
SWH:
FOIA(b) 7 -
COHdh)7
fOHdb) (C)
(e)
WLH:
SWH:
SWH:
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"--"
I===-C=...,.,.___======~-----:-=-=!I
1
--:=--=!,
~~~__~~~____~~__~~~________~~~/AndShe
FOIA(b)7
'OIA(b)1
toIA(b)1 --
OOIA(b)1
L-,..,.=-:::--:-;:-:;-;-=-.--.=-=--:=-,-=-=
L-,..,.=-:::--:-;:-:;-;-=-.--.=-=--:=-,-=-.--.
(C)
(el
te))
(e I\
WLH:
WLH: Well. honey, I keep telling you, sometimes you have to fight battles alone. You
Well,
know, you just can't worry about other people. I know what I'm doing,.OK?
doing, .OK?
Now, if you don't want me to I won't.
WLH:
WLH: And I sat there and spent Saturday with you saying]
saying I would not do that. I won't,
won't. if
thoSe allegations, it mi2ht
I raised those mia-ht
miibt
mi&bt open it UP
oPen it Hj1IAQ'.. And you
up to Hillruy.
HjII:uy,
Hj1IAQ' know that.
YQU knQw that, We
talked about
abQut that,
that. . ,
SWH:
SWH: then, I1 get all this back from Marsha,
Ycs, but then.
Yes, Marsha. who's racheting it up and making it
sound like, you know.
know, if Webb ~oes
ifWcbb 20es
iOes ahead fiI1I':
and sues the fiIlI':
fil'D':
finn back.
back . then any
anY
stJpport I have
SJJpport
support bave at the White HQuse
House is "one.
"Qne.
eone.
WLH: Well.
WelL
SWH: I mean, that's what I'm hearing. I'm hearing the squeeze play.
play .
WLH:
WLH: So.
SQ. I Deed
So, tQ [all
need to [011 oyer
roll oQyer
yer one time .3~1
ooe more time. 3~1
348
FOIA(bl?17 -
FOIA(b) (C)
(el
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70001 Page2.211
2 11
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'E'O
CIl A(!.
CIA(!.
A(b ) 7 -
FOIAlbl7 (C)
ICI
."..--...,
short. many of the people and entities that hired Hubbell following his resignation
In short, resignation,
Jordan was responsible for at least one client. The First Lady was the direct impetus for at least
349
' " &..1
LI_ _ _
_ _....:.;
,o
ro;:Ir;;.
,,;:
;.I;,':;;.
;A ,,_-
" _ - ;;. ...Jt
::'_ _ _~temphasis supplied).
..:."";;'
__F_OI_A_Ib_1_7_-_I_C)_ _ _
\74
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States Trade Representative Mickey Kantor also made efforts on behalf of Hubbell following his
resignation. All this took place at a time where there: w:idespread public knowledge of a
there was widespread
.... ...
criminal Hub~II's billing practices while at the Rose Law Firm.
crimina] investigation into Hubbell's Finn .
'
~,
The U.S. attorney in Little Rock had recused herself on November 3,1993,
3, 1993, and the prosecution
of 10 RTC
of David Hale, the investigation of Madison, and the investigation of the lOR TC crimina]
criminal
criI!Unal
referrals had been turned over to Don MacKay, a career Justice Department prosecutor.
Attorney General Reno appointed Bob Fiske as the Special Counsel on January 20, 1994.
On June
JWle 30, 1994, the President signed into law the reauthorized Independent Counsel Act. The
Special Division appointed Ken Starr as the Independent Counsel on August 5, 1994.
~y individuals or entities
. This Office was given jurisdiction to investigate whether any
Services, Inc.
.- Within the scope of the investigation, it was important to detennine what the relationship
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CI~tons and the McDougals, and the relationship of both President Clinton and Mrs.
was of the Clintons Mrs.
Mrs .
---"
Clinton with each of the three named entities within the jurisdictional grant.
jwies have been utilized by the Office of the Independent Counsel in the
Two grand juries
Pillsbwy, u.s..
PilIsbwy, Madison & Sutro. Also, the House of Representatives and the U.S.
outside counsel, Pillsbury, U.S
testimony or statement in violation of Federal criminal law, in connection with any investigation
matters.
matters .[within its jurisdiction] described above."
maners
of the matters above.II
in order to understand how there may have been obstruction of justice, false .testimony,
In testimony,
and false
fal se statements, which may have affected the Independent Counsel's investigation,
COWlSeJ's investigati on, and the
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.- .
.-----.j
of events involved in the different investigations. It is also imponant
important to understand the
~t.
jurisdictional &rant. grant.
A. MadiSon Guaranty
.Mrs.
,Mrs. ~d the Rose Firm.
Mrs. Clinton, and Firm, represented Madison Guaranty Savings & Loan
Loari
and criminal transactions took place, (a number of which were in the RIC
RTC criminal referrals);
crus
those which have been the subject of our investigations and our prosecution of v'y. Jim
US v.
Madison had regulatory net worth problems from the time McDougal acquired it in
monitored the condition of MGSL and were concerned about it. Savings and loans associations
were required under federal regulation to have a 3% net worth; that is, the assets of the institution
The institution was required to make regular reports, often monthly, to the Federal Home
Horne
""- '
reqiJireme~.~.tlt ....
reqiJirem:_
regulatory net worth requiremeIl~.Anet
reqiJiremet:l. A ..i\e tworth
....A"networth worth schedule for these years has been prepared.]
A"nei'worth
-.-., .
.. -.-.,_
JanUY;"-l98'f~~~'~'the
....."
...
Janll43J}';1982,~hen
2. when the McDougals purchas~d
. In Janll)'{-l9S'
Janll)'{l9S' purchased the Woodruff County S&L, it had
.....
.._..assetSo"r
asscts-oi"SS3,899,434
; -:~~9 ,434 and liabilities ofof$3,817,955 ~et worth ofof2.0go/o.
... "
~setso"r
/:;:-.assetsof$3,899,434
i .. _........... .
: ..........
:,~"",
,.,'
....
.. -...........
-"",
. ..
,817,955 for a net
$3,817,955
$3 2.09010. McDougal "grew the
FOIAlb l 7 -
FOJAlbl7
FOIA(b)7 le
Ie)i
lei
(C) 177
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.
-.
...-,.
institution" at a very faSt rate. By the end of December, 1984, it had assets 0[$48
of$48.5
0[$48.5
of .5 million and
$48.5
agreement by the Federal Home Loan Bank Board in July 1984. By April, 1985. MGSL
April. 1985, MOSL had
assets 0[S67.1
of$67.1
ofS67.1
of net,
$67.1 million and liabilities of $66.2 million, with a net
net.worth of 1.32%.
Bill Black, a former FHLBB official, who has testified as an expert witness before in high
profile cases, has consulted with this office. He has reviewed the various records of
ofMGSL.
MGSL. In
woith" afthe
worth"
his opinion, it was absolutely essential that McDougal, "goose up the net worth" of the institution
& Tucker.
Tucker. Jim Guy Tucker was a longtime
long-time political friend of Jim McDougal's, and John Selig
banking matters.
The Mitchell, Williams Firm, B"everly Bassett was employed as an associate in the
Finn, where Beverly
1985.
J985, the Finn
opened and handled a number of "matters" for MGSL. In February, 1985,
early 1980's, opel)ed Firm
opened.
opened, "matter 00.9,"
opened. no.9," entitled, "sale of stock."
stock. II '''Maner
stoCk." "Matter no. 10," at the Firm
'''Matter Finn was entitled,
"broker/dealer. "
"broker/dealer."
MGS~'s plan in the spring of 1985 to issue preferred stock in the amount
It was MGSL's of$3
amoWlt of
ofS3
$3
million in order to raise capital and help it comply with the Federal requirements concerning net
worth. On April 3, 1985, Charles Handley, a career employee of the Arkansas Securities
.-
.- was any authority under Arkansas law for a savings and loan association to issue preferred stock,
was
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On the next day, April 4, 1985, Jim McDougal held a fund raiser at MGSL to heip retire
On April 23, 1985, the Rose Law Firm opened its first ever matter for MGSL.
MGSt. "MGSL '
no, 1"
Matter no. "stock offering." On
I" of the Rose Law Firm was styled, "stoc:k On
Ozi April 29.
Ori 29, 1985, Mrs.
/
3D, 1985, the Rose Law Firm sent a letter to the ASD on
On the next day, April 30, on the
-.
,...- ..
proposal.
proposal. 23., 1985,
proposal, On May 23,
23 Clintori sent a copy of Bassett's letter to Jim McDougal,
1985; Mrs. Clinton
adding that, "we look forward to working with you on your plans for growth."
growth."
President and Mrs. Clinton had a personal and business relationship with Jim
lim McDougal
beginning in 1979.
J 979. Jim McDougal served in Bill Clinton's firSt gubernatorial administration in
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~.
receiv~ 8a $2,000 a month "retainer," more accurately described as an
"~. "
months. The Finn receiveo
receivE:.d
gen. turn, had come from the "time sheet" entries for each
ecrated "billing memorandum," which in tum,
generated
w~ch MGSL
partnerships" and broker-dealer licenses, which MOSL wanted to be involved in as a way to raise
worked on this with other securities partners, but Mrs. Clinton remained the responsible anomey
attorney
to review all of
of the work and sent the bill to the client.
south of Little Rock, which generated nearly $3 million in profits, which would have "goosed
"Maner no.
"Matter no . 4," was labeled "general." The first entry on that maner
matter being on June 19,
Sarah Hawkins ofMGSL regarding MGSL's "business plan," and the proposed conference with
.-
>-..
supervisor. Mrs.
the FHLBB supervisor. "
\
Mrs: Clinton was the billing attorney
anomey on matter
maner no. 4 and also recorded
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, . - ...
time on that matter beginning on September 4.
4, 1985.
1985 . .'
B. Maner
The IDC/Castle Grande Matter
MaUer .
Clinton, but by Webb Hubbell. Mrs. Clinton, however, was the billing attorney
Clinton. anorney on this matter as
she had been on the others. Rose attorney, Tom lbrash, ennies to
TIrrash, has time sheets and billing entries
1,1I aD-acre
conferences with Seth Ward and others involved in the acquisition of the 1, ~O-acre IDC
OO-acre
. property, and the sewer and water utility of it's subsidiary, ISC, from the Industrial Development
subsidiary,lSC,
subsidiary,ISC,
ofLitile
Corporation of [Sectio~ 11.1
LinIe Rock. [Section
Little II. I and 11.2 of this memo,
11.1 memo. give more detail concerning the
indicate this.
this. However, shortly before the closing, it was determined that MF,'C could not acquire
thatMFC
.MF.'C
subsidiary.
subsidiary.
in his name. There is much evidence and testimony that Ward was a "nominee" or "straw man"
o
at
on this transaction. He was at "no risk" and had put up none of his own money.
money. The
The entire
e.ntire
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. ~ ...
Clinton's Rose Law Firm partner.
In summary,
swnmary, the IDC property, with its associated utility, was purchased by MFC and
sold to third parties (most of whom were insiders or affiliated persons) for in excess of
of$4
ofS4
S4
million.
million. These purchases involved, in most instances, "inflated Palm~r and
ninflated appraisals" by Robert Palmer
[rOIA(b)
[fOIA(b)
[FOIA( b ) 71 - (C)lI
(e)
(C) l
Friday,
Friday. February 28,
28. 1986.
OnFebruary
On February 28, 1986, a nwnber of transactions "closed." MFC, to which Ward had
On-February
ttansferred most of the property held in his name, sold a large tract to fonner
transferred u.s. Senator
former u.s.
MFC, upon transfer from Ward, sold the assets of the sewer and water utility to a recently
formed corporation, Castle Sewer & Water, which was controlled by Jim Guy Tucker.
fanned Tucker. The
ana was
utility had been purchased for $400,000 in the name of Seth Ward on October 4, 1985, and
$150,000 down payment coming from David Hale's company, Capital Management Services.
$500,000 profit for Hale, which he then injected into his small business investment company.
company.
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tria!.)
trial.)
The examiners came to the institution on or about March 3, 1986. Within a short time,
F~m, indicated
October 18, 1985, associate Davis Thomas of the Finn, indica~ed that he spent 3.5 hours
having multiple telephone conferences with state agencies. Thomas indicates that he wrote a .
to Mrs.
memo not 10 Mrs. Clinton, Hubbell..
Clinton., but to Webb Hubbell
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-.
- . Ward, to
Ward. Some of it appears to have been in connection with a proposed brewery to be located on
However.
However: some of the entries do not appear to be cormected
However, connected to either
cOMected either"of these projects,
either'of projects.
federal examination, which began in early March 1986, Seth Ward became
During the .federal
federal became'
MFC although he had not. These "cross loans" are discussed in more detail in Section II.!
II. 1I this
memo.
I, 1986.
other. On or about May 1,
to each other. 1986, an !'option
:'option agreement"
agreement" was prepared and put in place of
MFe.
the non-funded loan from Ward to MFC.
MFC. The ban,k
MFe. bank examiners would later testify that based on '
this option agreement, they stopped their pursuit of what appeared to them to be possible
fraudulent 'activity
-activity.
acti vity..
MOSL Board of Directors directing them to cease and desist from certain practices until there
MGSL
letter.
letter.
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be out.
busineSs day, Monday, July 14, 1986, Betsey Wright, the Governor's Chief of
On the next business
Staff.
Staff, and main political advisor,
advisor. sent the Governor a hand written note:
nOle: "Whitewater
"Vlhitewater stock
(McDougal's company). Do you still have? (pursuant to Jim's current problems). If so, I'm
J'm
On that same day, Mrs. Clinton and Seth Ward both attended a meeting of the Little Rock
)
Commission. Ward was a Conuniissioner,
Municipal Airport Commission. Commissioner, and Mrs.
Mrs. Clinton was the attorney
commissions to him. It appears that this document was backdated, and was prepared by Webb
secretary, Martha Patton. Patton has testified that she never prepared any documents
Hubbell's secretary.
handed directly to her by Seth Ward, but would have only done so only if Webb Hubbell gave it
to her.
accwnulated.
accumulated, and indicating that the RQse
Rose representation had not been "continuous or
significant."
significant. "
. Within a few days, McDougal himself was in the hospital with a str~ke.
str?ke. The MGSL
stroke. MGSI,.
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Board brought in an outside accounting finn and an outside law finn from Memphis
Memphi s to do an
run
run MGSL for the benefit of family and fri~nds .
fri~nd.s.
fri~nds. They listed a number
nwnber of suspect transactions,
ownber
crimes.
On March 19, 1987, the MGSL Board forwarded the Borod & Huggins report to the FBI
and US Attorney's office, and the criminal investigation involving Jim McDougal and Madison
began"in earnest.
began
carne out about his bad stewardship ofMGSL during the course of the investigation.
came investigation and his trial
i:nvestigation.and trial..
.,.-"
fiJed a lawsuit against MGSL claiming that he had not been paid the
the FHLBB, Seth Ward filed
represented by Tucker's finn at the trial in late August 1988, and the jury returned a verdict in
judgement completely.
completely.
.- . conflict. and requested the Rose Law Firm represent the interests of the Government and
a conflict,
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-. Madison against Frost. _The principal attorney at the Rose Law Firm :-'las Webb
Finn handling this was
D. CampaillD
CampajiD
CampajllD
1992 Campai.w
The Clintons' relationship with Whitewater and Madison, including Mrs. Clinton's
qinton's roil,
roll,
campaign. It came at a time shortly after there had been much media
during the Presidential campaign.
9raft
~
coverage about then Governor Clinton's alleged womanizing and his actions regarding the draft
important to the campaign that the best possible "spin" be put on their involvement with the
I I, 1992.
Prior to February 11,
II, Jim"McDougal, had talked to a reponer
1992, Jim
Jim' reporter
reIXmer about the Whitewater
reporter that the representation originally came about as a result of a conversation he had with
concerning Mrs. Clinton's having represented Madison before the Arkansas Securities
This article
anicle did not mention the role of Governor Clinton in getting the Madison business
,-
.-
, _. for Mrs,
Mrs. Clinton and Rose in part public; or other documents
pan because there were no public, dociunents
docUments reflecting
187
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.----.,
Bill Clinton's ~Iegedly Mrs. Clinton. The Clinton campaign
allegedly having asked McDougal to hire Mrs. campaign
There were some subsequent stories after the New York Times broke the story initially.
initially..
initially
banks",., and made her widely publicized "I suppose I could have stayed home and
represent banks"
baked cookies and had teas" comment. Clinton won several key primaries that week; and for the
..,".-."
' - '.
Actions were taken within the campaign and Rose Law Finn
Firm later in 1992.
1992, including
of cenain
certain Rose Law Finn Hu~beLl and Vincent Foster, Jr.
Hub.bell
Firm files, and involved Webster Hubbell Jr. Foster
Whitf:
joined the President's administration as Deputy Whiu:
Whitt:
White House Counsel. Hubbell was assigned to
E.
E. RIC Criminal Referrals
RIC
The RTC
RIC sent criminal investigators to Linle
Little Rock in April 1992, and on or about
I, 1992, ~e
September 1, RTC sent to the FBI and the U~S.
the RIC U$. Attorney crimina]
Anomey in Little Rock a criminal
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-- '.',
'-
' ~' .
languished until September 1993. The handling of this and later referrals was the subject of our
OUT
"DOl
liDO] Handling of Referrals" investigation.]
RTC, these9
these.9 referrals were sent to the U.S. ~tober 8.1993.
U,S. Attorney and FBI in Little Rock on October 8, 1993.
The other referrals related to McDougal, but not directly to the Castle GrandelIDC
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F.
F. Referral CR-0196
RIC ReferraJ
One ofthe
of the .RTC referrals (CR-0196) [dated August 18, 1993;
.RIC criminal referials 1993 ; and signed out of
III, a Madison director. The referra1 of the proceeds of these loans were diverted
referral stated that part clfthe
c.fthe
to the benefit of McDougal -:- some for a down payment on the 145th Street property [IDC/Castle
ofMcDougal
McDougal-
-.
'-"
Madison
on$12,000
on
on contributed money to help the
with MadisOn
Madis' fhe
MGSL or other transactions involving MGSL took place. tota1 amount raised for the
place. [The total
approximately $33,000.]
campaign as a result of this fundraiser was approximutely
approxinmtely $33.000.]
Referral CR-O
CRQ 196 made reference to the Whitewater Development Company account at
CR-0196
.on.
acted .on.
referial also stated that during the same April 1985 time frame in which the'fund
This referral the fund
the
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' - - ."
issue~
soliciting approval for the thrift to authorize and issue:
issue a class of preferred stock, which would
issue: wouJd
s~cific
specific legal assistance in addressing sensitive thrift issues (attaching
Clinton'S spe;cific
requested Ms. Clinton's (anaching
,<
exhibits), rather than utilizing John 'Selig Mitchell finn, who served as general counsel
Selig of the Mitch.ell counseJ to
MGS&L.
with the Mitchell firm and had done Tu~ker of that finn
Jim Guy Tucker
d.one a memo to lim fiim on Madison issues.
contained a chronology of events, including the 4-4-85 fundraiser,
This referral c<?ntained fundraiser, a 4-30-85
-.
55~~ 14-85Ietter
14-85 letter from Bassett to Mrs. Clinton, a 5-23-85
letter from Hillary Clinton to Bassett, a 5-14-85
letter from Mrs. Clinton to McDougal, and two August 85 Madison memos mentioning Mrs.
. further investigation into the alleged diversion of the Peacock down do"Wll payment to
Jim McDougal for use in the Castle'
Castle Grande transaction .
.8 ac~ount activity in the Bill Clinton
a review of the source of deposits and accoWlt
ac90Wlt
Political Committee Account records 21t
PoliticaJ at the Bank of Cherry
211 Cheny Valley
. further investigation into the possible. conflict
Q,onflict
" interest
ofintcrest
of Bimini'
re2ardin2
BewiDK Hillary
Biwini'
Clinton represeotio2 busjness Pam1er's
represeptin2 her business panner's
parlIler's a&ency
aeency
partner's thrift before another state a2epcy
aKency
appointee', designated by her
whose department supervisor was a political appointee',
appointcc'
husband. .
. 191
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..--."
.at persons at the
Investigations, both ours and those of Congress, have disclosed that
Treasury Department alerted persons at the White House about the RTC criminal referrals shortly
~fforts to
ultimately recused himself, in February 1994, after much scrutiny and Administration efforts
[The extensive investigation done by the Starr swnmarized in the "White House-
Star:r OIC is summarized
,
\
. G. Events leadio2'
leading
leadi02 to Appointment oflndependeot
ApPOintment of Independent Counsel
oflndependent CQunsel
. On July
JuJy 20, 1993, the FBI obtained a search Wafrant
Ju1y wainmt for the office of David Hale to seize
waiTant
.- - '.
.~
certain
cenain records of CMS. The search was executed on July 21,1993.
ofCMS. 21 , 1993. Foster committed suicide
21,
Business IilVestment
Investment Company.
Iiwestment Company, Capital Services. to Susan
Management Services,
Capita] Management: Sus'an McDougal at the behest
3,1993,
On or about November 3, of the publicity about the RTC criminal
1993, in the wake elf
clrthe
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.-
' ''-''' -' .
Attorney's Office an S825.000
Attomey's $825.000
$825,000 loan
Joan from Madison to Dean Paul, and related loans from David
Dav.id
was assigned responsibility for the pending Hale prosecution, and the investigation of Madison
gr~djury.
gr~djury
for the Little Rock grand jury.. Subpoena to the Rose:
jury. Rose~ Law Firm
Rose ;Finn
firm and Rick Massey (of the Finn)
rinn arid
..,,- ..
1~.
l~.
were served on January 12, 1994.
Independent Counsel. He was tasked with investigating whether any criminal viola~ion~ had
viola~ions
viola~io~
crimina] violations
an<~ Mrs.
occurred relating to the relationships of President and
an(! an~ Jim McDougal with the
Mrs. Clinton and
Te criminal
RTe
thus took over the prosecution of David Hale, the investigation of the specific RTC
and o~er
referrals, and other Madison-related allegations.
, ~,
~ . H. Inyesti~ation
Inyesti~atiQD
The Fiske InyeS1i2atjou
InyeSli23tjoD
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,..,.-.. ...
Shortly after the arrival ofBoh
of Bob Fiske in Little Rock there were reports in the media
media of the
shredding of documents at the Rose Law Finn. Thus, the first grand jury work by the Fiske
allegations. In
investigation was relative to the shredding allegations. 1994. an additional Grand Jury
In March 1994,
Fiskc1i s investigation)
(dedicated solely to Fiske's
Fiske investigati,
investigati.on) was empaneled to consider all matters within the
referrals. Just prior to his scheduled trial, Hale pled guilty in March 1994, repeating his
and refeITals.
implic~lting Jim
allegations concerning President Clinton, and implicating lim McDougal, Susan McDougal, then
Attomc~y
possible crimes committed by then Associate Attomc:y fanner Rose
Attorney General Webster Hubbell, a fonner
,"'-- .'.
Finn partner of Mrs. Clinton.
Law Firm qinton.
~ut
~ ut of' the investigation of the "core matters" including: the
Other matters "arose t.?ut
out
allegations against Jim Guy Tucker and his business partners; Chris Wade; and The Perry
. County Bank.
office in the wake of his death on July 20, 1993 . [See SectionII.5]
1993.
20,1993. Section II.S]
II.5}
Fiske issued grand jury subpoenas to President and Mrs. Clinton in May 1994 to produce in June '
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-,
-.
'--"
., Capital Management Services, and o.ther Firm was subpoenaed to
other named entities. The Rose Law Finn
o,ther
Madison, and her role in the representation. minimized her role in the MGSL representation,
representation. She min.imized
I.
I, The Starr InyestigatioD Be~iQS
InyestieatiQO Begins
Ipyesti2ation
., A team of2
of 2 agents, 6 financial analysts.
analysts, and an anomey
attomey
attorney was in place and investigating Hubbell.
They bec~e
becliI!le very familiar with the irmer
inner workings of the Rose Law Finn and with some of its
Hubbell for his criminal acts involving the Rose Law Finn, and its clients, then began looking
lOOking at
business had first come to Rose through Governor Clinton's asking Jim McDougal to hire Hillary
,
,..-.- Hubbell, who had agreed to cooperate, was questionc:d ~bout a number or issues, including the
questioned about
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Mrs. Clinton performed for Madison in 1985 and 1986. Clark produced some fi1es1
Mrs. files,1
fOIA(b) Rul~
FOIA(b) 3 - Rule EH~),
Rul e 6(e).
E;(e) f~de[al RulE,s
6(e),, federal
Federal Rul es of
RulE" ProceduI~
or Criminal Procedure
Pr ocedure
J.
J. The
Ihe FDIC/RTC~QIG
FDIC!RTC~QIG
FDICIRIC-OIG Inyestigations
Inyesth:atjoQS
and FDIC conducted audits of the Rose Law Finn relating to fees and expenses billed to those
Both the RTC and the FDIC also conducted investigations into possible conflicts of
1989 in Madison y,
y. Frost. The reports of the initia1
inilia1 investigalions by the FDIC Legal Division
initial investigations
Mrs. Clinto~
of criticism. The names of Webb Hubbell, Seth Ward, and Mrs. Clinton were prominently
mentioned in most of the media accounts. Webb Hubbell was interviewed by the FDIC Legal
196
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,"'-" "
Division on January 11, 1994.,
1994,
1994.. lying about the 8586
85-86 ~epresentation of MGSL.
85~86 RLF representation MOSL.
conducted more thorough investigations into the ~os;e Finn conflicts allegations beginning
Rose Law Firm
Webb Hubbell was interviewed by the FDIC & RTC OIG agents on March 16,
16. 1995 and
April 20,
20. 1995. Two days after Hubbell's RTC OIG interviews, Mrs.
Mrs. Clinton was interviewed in
did not have copies of the Rose Law Firm bills to Madison, the backup billing memoranda, or
grand jury,
conducted with an agreement that it would be read to the Little Rock grand jwy. and it was so
jury.
jwy,
On that same day the President was also deposed. He said that he could
coulq not remember
talking with Jim McDougal about Madison hiring Hillary Clinton and the Rose Firm.
Firm. [The
campaign in 1992 had replied "no" to the question about whether Bill Clinton had visited
A month later,
later. in May 1995, both President and Mrs. Clinton provided
provided:written
written answers
.-.- to represen~tion
answers to questions about Mrs. Clinton's representation
represenlfl'tion of Madison Guaranty.
Guaranty .
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FOIA(b)
I A(b) 3 - Rule
FOIA(b)3
FO Rul e 6 (e)
(e),, Federal
Fe de ral Rules
Ru
Rull es
e s of
o f Crim:inal
Criminnal
Crim:i Procedure
al Pro cedu r e
Procedu
, ~ ..
K. Little Rock Grand Jury
Linle JUQ' - Oct,
Oct.. Nov"
Oct. Nov .. Dec"
Nov" Dec .. 1995
., 1995, a number
Beginning in October, 1995. nwnber of present
pre:sent and former Rose Law Firm
Finn attorneys
,
and support personnel, as well as Arkansas Securitie$ personnel. including 'Beverly
Securities Department personnel,
Securitie:; Beverly
" Bassen were questioned before the Little Rock grand jury.
Bassett Schaffer, were'Questioned jury, Additionally key persons
l;bomases,
l)tomases,
Thomases.
t:homases.
,
In mid-November 1995 an agent assigned to \the ole located the Madison copies of
the OIC
'.
ce~in
ce~.in Rose Law Firm
Finn billing statements to Madison from the 1985-86 time frame.
frame, Prior to that
" '
time, ~e ole
time. tpe ole
OIC had questioned Rose attorneys (includmg
(including Mrs. Clinton) advising them that no
billing ~.ocuments
~ocuments Ro~e attomeys(Clark,
~ocuments were available except the 2-page fee recap. Several Rose anomeys(Clark,
attorneys(Clark.
copies of some Rose bills to Madison. The Vinson & Elkins attorney representing the Rose Firm
Finn
stated that it was obvious the OIC now had billing records and requested that the OIC furnish the
The
The'
The OIC declined to do so,
so.
December 18, 1995, Susan Thomases was questioned about what ~e 1992
18. 1995. 199i campaign learned
leamed
ole
ole also focused on the Firm's prior representation of the
In early December 1995 the Ole
McDOl~ga1-controlled
McDougaJ-controlied
McDougal-controlled Bank of Kingston (renamed Madison Bank & Trust) during the early .,
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,.
I .
-
'~ "
bill"
bill".
McDougal to pay the outstanding "old bill"
bill",. was relevant detennining the accuracy of what
rele vant in determining
On December 19, 1995, Webb Hubbell testified before the Little Rock grand jury,
jury.
RLF~MGSL records.
campaign to accumulate and review all the RLFMGSL records .
theClintons'
to David Kendall, the
10 Clintons' attorney, Supplemental Interrogatories concerning her work for
Ma~ison . This included questions about Seth Ward, the cross loans, and the "option
Madison. ~option agreement."
agreeme~t."
ofHRe.
ofHRC.
L. The RLF
RLF Bjllioe
Bjlline
Bjllio2 arC Produced
BilIin~ Records arc;
Mrs.
day. He stated words to the effect that the records backed up what Mrs.
the media on that same day.
Clinton
C linton had said all
aU along about her role in the Madison
Madis:on representation: .There is strong -'
These records reflected that much more work was billed to Madison by Mrs.
Mrs. Clinton than
was previously stated by her. d4~tai1 s of what she worked on and what she
d4~tail
d4~tails
her. For the first time the details
:0IMb)?
FOIMb)?
FOII'db)1
FOIF.lb ) 7 - Ie)
(C)
.- \
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These Rose billing records disclosed work billed by her to Madison on the IDe
IDe maner
IDC matter
which was later sold to Jim Guy Tucker and Castle Sewer & Water; and preparation of the May
examination of Madison.
Madison.
These particular records were covered by and should have been produced pursuant
pW'Suant to the
light of all the facts and circumstances, an investigation was conducted by this office as to the
. RLF billing records. There were interviews of almost all persons who were in the White House
Clinto08. bad
Mrs. Huber, a long time friend of the Clintons,
Clinlo08. had served in Arkansas as Governor's
Mansion administrator and also as office manager of the Rose Law Firm. She said that in
August 1995 she found the records in the book room on the 3rd floor of the White House
the'book
mite
write her book. Huber has testified that she removed these to her White House office not
realizing what they were until January 1996. [See the memo on the "Rose Law Firm billing
hilling
The book room where Huber says she found the billing records was a short
shon distance away
shan
from a closet, where documents found in Vince Foster's office on July 22, 1993, had been placed
,-
.- whether the "missing billing records"
records" had been in Foster's office at the time ofms
afms
of his death in July
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Foster, and others were fOWld on the set of billing records found
were: found fOWld in the White House and
[The "Foster Documents" memo covers the events of the night of Foster's death on July
20 including: the possible removal of records that night and the next morning, the "search" by
Mrs. Jury
Mrs, Clinton was questioned before the Washington grand Jury on January 26,1996
26, 1996 on
the'
the
the subject of how the Rose billing records came to be located in the White House. She testified
the'subject
.
there. She
~ld not know how the records got there.
that she did there,
,
acknowledged that the records were
kknowledged
her work for Madison On February 14, 1996, she answered the questions of
of the RTC's outside
The McDougals and Jim Guy Tucker were indicted in Little Rock on August 17, 1995.
Were charged primarily with events relating to both Madison and eMS loans occurring in
They were
.-
", ".-,- was the subject of some of the charges that were tried.
tried;
tried; The evidence aduced included: Madison
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President CHnton
Clinton testified as a defense witness at the trial. On cross examination he
stated that he
be could not remember whether he talked to Jim McDougal about Madison hiring
Mrs. Clinton
CIiJ:lton and the Rose Law Finn.
Firm.
outset McDougal stated that some of the testimony of the President at his trial was at variance
with the truth. In addition to shedding light on the President's role with Madison, Whitewater,
Whltewater,
Hubbell and his father in law Seth Ward, as it related to the ,Rose
Rose work for Madison.
Susan McDougal refused to cooperate, and defied a September 1996 Court Order to give
N.
N. Obstruction ofth, AdminisuatioD
Admioisuatioo
Adminisuatioo of Justice. False Swemepts
of the Due Administration Statements and
Testimony
Most oCthe
of the Arkansas substantive events occun:ed
of occurred over 10 years ago. For example.
occurr:ed example, Jim :
on his acts in late 1985, and in 1986. He began cooperating in August 1996, at a time when
years old.
Bob Fiske was appointed on January 20, 1994, at a time when there appeared to be time
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-.
-. to fully investigate possible criminal violations occuning
occurring in Arkansas, especially during the
1985-86 time period. But delays in finding the truth, be that from recalcitrant or perjurious
1986.
o..
O.
O Linle ROck Grand Jury
The Little EQU2aneled May]
J\1O' Empaneled ] 996
May 1996
Whitewater-dedicat~d grand jury in.Little Rock expired on march 23, 1996, during the
The first Whitewater-dedicated
Clintons on the Whitewater investment and matters related to the "825 trial." This
trial. It lbis
This included
vie~ng Pre~ident' s trial testimony given at the White House on April 28,
Pre~ident's
of the President's
viewing the videotape afthe
Beginning in late 1996 and early 1997 it heard extensive testimony regarding what was
investigation in Little Rock and later while he was allegedly fully ~ooperating
cooperating with the ole.
Ole.
Most of the persons involved in the payments to Hubbell (which were in excess 0[$400,000
ofS4oo,000
ofS400,OOO
occurred between May and December 1994) were questioned before the Little Rock grand jury.
.-.
.-'
,-'
,-~ . [See Section 11.8]
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deals, Ward~
evidence about the Madison land deals. ~1rs . Clinton.
Ward, and Mrs. Clinton .
Rock do~uments
documents which were responsive to previous grand jury subpoenas.
subpoenas. This call from
sUbpOenas.
These
e se docwnents
Th. Foster'!S daughter in a briefcase of
documents were discovered by Foster's Vince Foster's in
ofVmce
A Memorandum prepared for Rick Massey dated in late March 1992. It set forth work
done by Massey for the ASD, but did not discuss how the MGSL business
busmess got to the Rose
Finn.
Law Firm.
disCussion of the "1992 Campaign" and the obtaining of the work by the Rose Finn,
[See the discussion Finn.
II.4.]
Section 1l.4.]
11.4.]
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- ....
RTe. A number of
Rose Law Finn conflicts referrals from the FDIC and RTC. Rose attorneys'
afRase
afRose attorneys
attorneys"
,obstruction justice. Thus, as of April 1998, any such statement or actions OCcurring
obstruction of justice. occurring since
investigation.
FOIli,(b)
FOIA (b) 71, -
FOIA(b) (C)
.-
.--"
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- .,
-"
FO I A(b)7 - re)
FOIA(bI7 (el
.............
Conclusion _. We look forward to our discussion on Monday.
Conclusion-
-- Monday, April 27th.
206
NW:
NW: 15416
1541 6 DocId:
Docld: 70001585
Doc1d: 700015 85 Page 244
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Ex. A
369
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)
mDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civ. A. No. 15-CV-1740 (REW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
)
have become familiar with Plaintiff s Memorandum of Points and Authorities in Opposition to
Defendant's Motion for Summary Judgment and in Support of Plaintiffs Cross-Motion for
February 1,2016 Declaration, and to strengthen my explanation ofthe analytical process that the
National Archives and Records Administration ("NARA") engaged in when it reviewed the
requested documents in accordance with the Freedom ofInformation Act ("ForA"), 5 U.S.C.
552.
knowledge, upon information provided to me in my official capacity, and upon conclusions and
3. When my staff receives a valid, perfected third-party ForA request for access to a
box of records that a prior Independent Counsel ("IC") has marked as containing grand jury
-1-
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material, NARA examines each individual record in the box to determine whether each
document should be withheld pursuant to Exemption 3 (Fed. R. Crim. P. 6(e)). Thus, although
the IC markings on boxes serve as a guide, they are not dispositive, and my staff does conduct an
independent review in order to make its own determinations as to whether the material does
constitute grand jury information. For instance, in response to a 2005 FOIA request (not from
Plaintiff) for access to a memorandum dated April 22, 1998 from "HRC Team" to "All orc
Attorneys" ("Evidence Memorandum"), NARA examined that document and compared it to the
publicly released "Final Report of the Independent Counsel, In re Madison Guaranty Savings
and Loan Association" of January 5, 2001 ("Final Report"). When NARA examined the
Evidence Memorandum for possible release in response to that 2005 FOIA request, we
understood that it may contain non-grand jury material. Our examination, which included an
analysis ofthe factual and stylistic presentment in both documents, enabled us to draw important
distinctions between information in the Evidence Memorandum that had already been released to
the public in the Final Report, and that information in the Evidence Memorandum that was
considered grand jury information and should continue to be withheld. That approach was fully
consistent with NARA's long-standing practice oftaldng into consideration the overall context
of the material being requested, and in this example, resulted in a partial release of the Evidence
Memorandum with redactions for grand jury material (as well as other redactions).
March 9, 2015 FOlA request for "[alll versions of indictments against Hillary Rodham Clinton
... " Again, we took into account the Final Report, and the redacted Evidence Memorandum
(which we had also released to Plaintiff a year earlier in partial response to their June 2014 FOlA
request). The Evidence Memorandum presented the IC's "best assessment of some of the
-2-
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contrary evidence and theories likely to be presented by the defendants in the event an
indictment is returned and a trial takes place, as well as evidentiary considerations." Plaintiff's
Memo, Exhibit 3 (part I), p. 3. We also took into account the fact that when the IC issued the
Report contrast with the drafts of the indictment at issue in this litigation in both purpose and
form. Any indictment is a written accusation of a crime and is crafted for the specific purpose of
persuading a grand jury to formally charge one or more individuals. These draft indictments
reflect the net result of all of the evidence gathered throughout the grand jury investigatory
process; they represent a compilation and distillation of all of the evidence gathered and
presented before the grand jury up until the time the draft indictments were prepared. As a
result, they are inextricably intertwined with the grand jury process and are not subject to
segregation. NARA's practice is therefore to withhold, in its entirety, any draft indictment of a
living person if no indictment is ever formally issued by the grand jury against that person.
6. If we are able to ascertain that an indictment has been issued by a grand jury, our
practice is to release both the issued indictment as well as any of the underlying drafts, or at least
those portions of drafts that are relevant to any charges that are ultimately brought. Our practice
is also to release drafts, or portions thereof, if they contain information obtained separate and
apart from the grand jury process, such as a separate prosecutorial investigation. Neither of
those scenarios exists in this case for at least two reasons. First, as is evident in the Final Report,
the Whitewater grand jury was never presented with an indictment of Secretary Clinton. Second,
none of the drafts that we reviewed contained information that we determined had been obtained
separate from the grand jury process. As a result, we withheld all the drafts of the indictments.
-3-
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Accompanying fax cover pages, notes, and/or memoranda played no role in our decision to
withhold the draft indictments in full; we consider these accompanying documents to be non-
substantive, but withheld them since they were physically attached to - and an integral part of-
the drafts.
7. Because a draft indictment is inextricably tied to the Grand Jury process, the
development of the indictment, illuminated as each draft carefully refines the argument for
charging the accused individuals, provides a roadmap to that process. Unlike the Evidence
Memorandum, which NARA released in part, draft indictments that do not result in any further
prosecutorial action are not capable of a similar segregability analysis without revealing the
workings of the Grand Jury. Again, this has been NARA's practice reaching back many years,
starting. with indictments drafted by the Watergate Special Prosecution Force during Watergate.
noted in ~ 34 of my February 1,2016 Declaration, individuals who are never indicted, charged
and convicted of any criminal wrongdoing retain a significant personal privacy interest with
respect to draft indictments that were contemplated by the IC, discussed internally among IC
staff, but ultimately never issued. Protecting against the disclosure of allegations of illegality
that do not result in an indictment against a living person is among the most sensitive of privacy
interests that NARA protects. NARA holds approximately 76,898 cubic feet of U.S. Department
of Justice records, including those of the U.S. Attorneys' offices, and, approximately 17,537
cubic feet of Federal Bureau of Investigation records. NARA staff routinely examines these
records when access is requested to ensure that unsubstantiated and unproven allegations of
criminal wrongdoing regarding living persons are not disclosed to the public.
-4-
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Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true
and correct.
-5-
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Defendant, the National Archives and Records Administration (NARA), hereby submits
the following as its response to the numbered paragraphs of the statement under LCvR 7(h) filed
1-6. These paragraphs quote or paraphrase the Final Report of the Independent Counsel
In re Madison Guaranty Savings and Loan Association (Jan. 5, 2001) (Final Report). These
paragraphs are undisputed insofar as they quote or paraphrase the Final Report accurately.
See Decl. of Paul J. Orfanedes (Mar. 11, 2016) (Orfanedes Decl.), ECF No. 12-1, 2. This
9. Undisputed that the final reports are available on the website of the Government
Publishing Office. Plaintiff cites no authority other than the declaration of plaintiffs counsel for
the proposition that each of the final reports was approved for publication by the D.C. Circuit.
The declaration of plaintiffs counsel states that each report appears to have been approved for
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publication by the D.C. Circuit. Orfanedes Decl. 2. The above proposition is therefore
disputed.
10-25. These paragraphs describe or quote the Final Report. The paragraphs are
26-28. Undisputed.
memorandum dated April 22, 1998, from HRC Team to All OIC Attorneys captioned
Summary of Evidence [redacted] Hillary Rodham Clinton and Webb Hubbell (Evidence
Mem.), ECF Nos. 12-3 to 12-7. See Orfanedes Decl. 7. These paragraphs are therefore
disputed.
31. This paragraph describes the Evidence Memorandum. The paragraph is undisputed
32. The statement that the Evidence Memorandum is largely unredacted is plaintiffs
That statement is therefore disputed. It is undisputed that records purporting to be the records
33. Undisputed that plaintiff did not pursue an administrative appeal. NARA cannot
34-35. Undisputed.
36. Disputed. A Google search on April 12, 2016, using the term Starr Report yielded
75,200 results.
37. Disputed. A Google search on April 12, 2016, using the term Hillary Clinton draft
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38. This paragraph characterizes certain press reports. See ECF No. 12-1 11. The
Respectfully submitted,
BENJAMIN C. MIZER
Principal Deputy Assistant Attorney General
CHANNING D. PHILIPS
United States Attorney
ELIZABETH J. SHAPIRO
Deputy Director
s/ David M. Glass
DAVID M. GLASS, DC Bar 544549
Senior Trial Counsel
Department of Justice, Civil Division
20 Massachusetts Ave., N.W., Room 7200
Washington, D.C. 20530-0001
Tel: (202) 514-4469/Fax: (202) 616-8470
E-mail: [email protected]
Dated: April 18, 2016 Attorneys for Defendant
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EXHIBIT 1
to
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declaration to supplement my March 11, 2016 declaration and to provide further analysis of
Chapter 3, Volume II, Part B of the January 5, 2001 Final Report of the Independent Counsel in
In re Madison Guaranty Savings and Loan Association (the Report) and the 206-page
memorandum, dated April 22, 1998, to All OIC Attorneys, from the HRC Team and bearing
the subject line Summary of Evidence: Hillary Rodham Clinton and Webb Hubbell
(Evidence Memorandum). A true and correct copy of Chapter 3 of the Report is attached as
Exhibit 2 to Plaintiffs Response to Defendants Statement of Material Facts Not in Dispute and
true and correct copy of the Evidence Memorandum is attached as Exhibit 3 to that same
document.
the various sources of information relied on, cited, and quoted in the Report and the Evidence
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Memorandum, respectively. A true and correct copy of the chart I created for the Report is
attached to my March 11, 2016 declaration as Exhibit A. A true and correct copy of the chart I
created for the Evidence Memorandum is attached to my March 11, 2016 declaration as Exhibit
B.
two charts to determine whether the Evidence Memorandum included grand jury testimony not
included in the Report. Specifically, I identified those witnesses whose grand jury testimony was
included in both the Report and the Evidence Memorandum ten witnesses in total. (Two
witnesses, Webster Hubbell and Rick Massey, had appeared before the grand jury on at least two
occasions, and both the Report and the Evidence Memorandum included grand jury testimony
from these different appearances.) For each grand jury witnesss testimony identified on both
charts, I reviewed the pages of the Report and the pages of the Evidence Memorandum on which
the witnesss grand jury testimony were included and noted the page numbers of the witnesss
grand jury testimony. I then prepared a third chart, a true and correct copy of which is attached
hereto as Exhibit C, comparing the page numbers of the witnesss grand jury testimony included
in both the Report and Evidence Memorandum. The page numbers of each witnesss grand jury
testimony that are included in the Evidence Memorandum, but are not included in the Report are
bolded and italicized. For example, pages 12, 13, and 21-22 of Mr. Joe Giroirs July 18, 1996
grand jury testimony are included in the Evidence Memorandum, but are not included in the
Report; pages 115-16 of Webster Hubbells August 22, 1996 grand jury testimony are included
in the Evidence Memorandum, but are not included in the Report; pages 77-78, 105-06, and 114
of James McDougals April 2, 1997 grand jury testimony are included in the Evidence
-2-
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Memorandum, but are not included in the Report, etc. The results of my analysis are set forth
fully in Exhibit C.
I declare under penalty of perjury that the foregoing is true and correct. Executed on
.Paul iOlfatides
-3-
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EXHIBIT C
to
382
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Page numbers of grand jury testimony made public by disclosure of the Summary of
Evidence Memorandum and not previously made public by the Final Report, are bolded and
italicized.
Report: Page Nos. 24, 27, 30, 33-34, 46-47, and 50-51.
Report: Page Nos. 24, 35-36, 41-43, 49-50, 57-59, 60, 67, 79, 90, 93,
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Memo: Page Nos. 12, 16-17, 18, 19-20, 24-25, 37, 40, 41, 44, 45, 48-49,
Memo: Page Nos. 21, 32, 33, 82, 84-85, 86, and 88.
Report: Page Nos. 5, 21-23, 32, 33-34, 43, 45, 82, 84-85, and 95-96.
Report: Page Nos. 97, 98, 99, 100, 103-04, and 108-09.
10. Rae Ann Moles October 19, 1995 Grand Jury Testimony
Memo: Page Nos. 22-23, 34, 36, 44, 45, 47, 49, 53 56, 57-58, 60, 62-63,
and 67-68.
-2-
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Memo: No page numbers identified, but, based on the material cited (Wards
admissions of all the factual predicates that make him a staw[man buyer]), it appears to relate
-3-
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ORDER
In accordance with the Memorandum Opinion, issued on this same date, it is hereby
ORDERED that the defendant National Archives and Records Administrations Motion
ORDERED that the plaintiff Judicial Watch, Inc.s Cross-Motion for Summary
REGGIE B. WALTON
United States District Judge
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____________________________________
)
JUDICIAL WATCH, INC., )
)
Plaintiff, )
)
v. ) Civil Action No. 15-1740 (RBW)
)
NATIONAL ARCHIVES AND )
RECORDS ADMINISTRATION, )
)
Defendant. )
____________________________________)
MEMORANDUM OPINION
The plaintiff, Judicial Watch, Inc., filed this civil case, alleging that the defendant, the
Information Act (FOIA), 5 U.S.C. 552 (2012), by improperly withholding records subject to
disclosure under the FOIA. Complaint (Compl.) 10-12. Currently before the Court are the
Defendants Motion for Summary Judgment (Def.s Mot.), ECF No. 10, and the Plaintiffs
Cross-Motion for Summary Judgment (Pl.s Mot.), ECF No. 13. After carefully considering
all of the relevant submissions by the parties, the Court concludes for the following reasons that
it must grant the defendants motion for summary judgment and deny the plaintiffs cross-motion
1
In addition to the filings already identified, the Court considered the following submissions in rendering its
decision: (1) the defendants Memorandum in Support of Defendants Motion for Summary Judgment (Def.s
Mem.); (2) the Defendants Statement Under LCvR 7(h)(1) (Def.s Facts); (3) the Plaintiffs Opposition to
Defendants Motion for Summary Judgment and Cross-Motion for Summary Judgment (Pl.s Oppn); (4) the
Plaintiffs Response to Defendants Statement of Material Facts Not in Dispute and Statement of Undisputed
Material Facts in Support of Cross-motion for Summary Judgment (Pl.s Facts); (5) the Defendants Combined
Reply in Support of its Motion for Summary Judgment and Opposition to Plaintiffs Cross-Motion for Summary
Judgment (Def.s Resp.); and (6) the Plaintiffs Reply to Defendants Opposition to Plaintiffs Cross-Motion for
Summary Judgment (Pl.s Reply).
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I. BACKGROUND
In January 1994, Robert B. Fiske, Jr. was appointed as independent counsel by United
States Attorney General Janet Reno, to investigate allegations of criminal activity in connection
with a defunct Arkansas thrift institution, the Madison Guaranty Savings & Loan Association
(Madison Guaranty). Pl.s Facts 1. Among other matters, the independent counsel was
tasked with investigating Hillary Clintons involvement with Madison Guaranty, as well as an
Arkansas real estate venture named Whitewater Development Company, Inc., and an
Kenneth Starr replaced Mr. Fiske as independent counsel. Id. 6. Five reports detailing the
investigation were ultimately prepared by the independent counsel, id. 7, and are currently
publicly available on the United States Government Publishing Offices website, id. 9.
Included in the reports is information gathered from numerous sources, including but not limited
to, interviews, deposition testimony, grand jury testimony from twenty-one witnesses, and
Specifically, one of the reports describes Mrs. Clintons legal representation of Madison
Guaranty regarding numerous criminal and other fraudulent acts between April 1985 and July
1986. Id. 10-13. During the course of the independent counsels investigation, Mrs. Clinton
made numerous statements and gave sworn testimony regarding her representation of Madison
Guaranty, id. 20, and the independent counsel investigated whether Mrs. Clinton had
committed perjury, made false statements, or obstructed justice during those investigations, id.
21, ultimately concluding that there was insufficient evidence to prove beyond a reasonable
doubt that Mrs. Clinton had committed any federal criminal offense, id. 22. Upon termination
of the investigation by the independent counsel, federal law mandates that custody of the records
388
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compiled by the independent counsel be transferred to the Archives, see 28 U.S.C. 594(k)(1)
(2000), which now maintains custody of the records of the independent counsels who served
under Title VI of the Ethics in Government Act of 1978, Def.s Facts 1, ECF No. 10-4.
Included in the records are drafts of a proposed indictment of Hillary Rodham Clinton. Id. 4.
By letter dated March 9, 2015, the plaintiff submitted a request to the Archives under the
All versions of indictments against Hillary Rodham Clinton, including, but not
limited to, Versions 1, 2, and 3 in box 2250 of the Hickman Ewing[ 2] Attorney
Files, the HRC/_Draft Indictment in box 2256 of the Hickman Ewing Attorney
Files, as well as any [and] all versions written by Deputy Independent Counsel
Hickman Ewing, Jr. prior to September of 1996.
Id. 8. The Archives responded to [the] plaintiffs request by locating the two boxes of records
of Mr. Starr and his successors, both which contain drafts of proposed indictments of Mrs.
Clinton, but no other responsive documents. Def.s Mem. at 3. By letter dated March 19, 2015,
the Archives advised the plaintiff that it ha[d] examined the folders from Hickman Ewings
attorney files that [the plaintiff] requested and was withholding the folders entitled Draft
Indictment from box 2250 and Hillary Rodham Clinton/Webster L. Hubbell Draft Indictment
from box 2256 in full pursuant to Exemption (7)(C). Def.s Mot., Exhibit (Ex.) C at 1.
By letter dated May 14, 2015, the plaintiff appealed administratively the withholding of
the above referenced records, see Compl. 7, and on October 20, 2015, the plaintiff commenced
this action, requesting that the Court compel the Archives to comply with the FOIA and refrain
from unlawfully withholding documents responsive to its FOIA request, see id. 11. The
defendant now moves for summary judgment, asserting that it is entitled to judgment as a matter
of law because the drafts of the proposed indictments are protected from disclosure under several
2
Hickman Ewing was a lawyer who worked as Kenneth Starrs deputy in Little Rock, Arkansas. Def.s Facts 9.
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FOIA exemptions and Rule (6)(e) of the Federal Rules of Criminal Procedure (Rule 6(e)).
Def.s Mem. at 1. In addition to opposing the defendants motion for summary judgment, the
plaintiff also cross moves for summary judgment, arguing that the defendant has not satisfied its
burden of proving that FOIA exemptions are applicable to the withheld responsive documents
and that Rule 6(e) does not apply to the Archives. Pl.s Oppn at 1, 9.
The Court must grant a motion for summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). When ruling on a motion for summary judgment, the Court must
view the evidence in the light most favorable to the non-moving party. Holcomb v. Powell, 433
F.3d 889, 895 (D.C. Cir. 2006) (citing Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150
(2000)). The Court must therefore draw all justifiable inferences in the non-moving partys
favor and accept the non-moving partys evidence as true. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255 (1986). The non-moving party, however, cannot rely on mere allegations or
denials. Burke v. Gould, 286 F.3d 513, 517 (D.C. Cir. 2002) (quoting Anderson, 477 U.S. at
248). Thus, [c]onclusory allegations unsupported by factual data will not create a triable issue
of fact. Pub. Citizen Health Research Grp. v. Food & Drug Admin., 185 F.3d 898, 908 (D.C.
Cir. 1999) (alteration in original) (quoting Exxon Corp. v. Fed. Trade Commn, 663 F.2d 120,
126-27 (D.C. Cir. 1980)). If the Court concludes that the nonmoving party has failed to make a
sufficient showing on an essential element of [its] case with respect to which [it] has the burden
of proof, then the moving party is entitled to summary judgment. Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). However, at bottom, in ruling on cross-motions for summary judgment,
the [C]ourt shall grant summary judgment only if one of the moving parties is entitled to
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judgment as a matter of law upon material facts that are not genuinely disputed. Shays v. Fed.
Election Commn, 424 F. Supp. 2d 100, 109 (D.D.C. 2006) (citation omitted).
FOIA cases are typically resolved on motions for summary judgment. Ortiz v. U.S.
Dept of Justice, 67 F. Supp. 3d 109, 116 (D.D.C. 2014); Defenders of Wildlife v. U.S. Border
Patrol, 623 F. Supp. 2d 83, 87 (D.D.C. 2009). [The] FOIA requires federal agencies to disclose,
upon request, broad classes of agency records unless the records are covered by the statute's
exemptions. Students Against Genocide v. Dept of State, 257 F.3d 828, 833 (D.C. Cir. 2001)
(citation omitted). In a FOIA action, the defendant agency has [the] burden of demonstrating
that the withheld documents [requested by the FOIA requester] are exempt from disclosure.
Boyd v. Dept of Justice, 475 F.3d 381, 385 (D.C. Cir. 2007) (citation omitted). The Court will
grant summary judgment to the government in a FOIA case only if the agency can prove that it
has fully discharged its obligations under the FOIA, after the underlying facts and the inferences
to be drawn from them are construed in the light most favorable to the FOIA requester. Friends
of Blackwater v. Dept of Interior, 391 F. Supp. 2d 115, 119 (D.D.C. 2005) (quoting Greenberg
compel the production of documents under the FOIA, an agency is entitled to summary
judgment if no material facts are in dispute and if it demonstrates that each document that falls
within the class requested either has been produced . . . or is wholly[, or partially,] exempt [from
disclosure]. Students Against Genocide, 257 F.3d at 833 (quoting Goland v. Cent. Intelligence
III. ANALYSIS
The issue before the Court in this case is whether the defendant properly withheld the
draft indictments pursuant to Exemptions 3, 6 and 7(C) of the FOIA and Rule 6(e). Congress
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amended the FOIA resulting in its current content in 1966, with the objective of promoting full
agency disclosure. See U.S. Dept of Justice v. Reporters Comm. for Freedom of Press, 489
U.S. 749, 754 (1989). When an agency receives a request for records that reasonably describe
such records, the agency must make those records available to the requester. See id. at 754-55.
While there are nine expressly delineated exemptions from compelled disclosure, the dominant
objective of the act is disclosure, not secrecy. See Dept of Air Force v. Rose, 425 U.S. 352,
360-61 (1976). The Supreme Court has explained this basic purpose as providing a way for
citizens to know what their government is up to. See Reporters Comm., 489 U.S. at 773.
Thus, courts should narrowly construe the statutory exemptions when determining if records
requested under the FOIA should be disclosed. See Rose, 425 U.S. at 361. 3
A. FOIA Exemptions
1. Exemption 3
Exemption 3 of the FOIA excludes from compelled disclosure matters that are
Exemption 3 only if it requires that the matters be withheld from the public in such a manner as
to leave no discretion on the issue, or establishes particular criteria for withholding or refers to
particular types of matters to be withheld. Id. The plaintiff does not dispute that Rule 6(e),
which prohibits disclosure of matter[s] occurring before the grand jury, Fed. R. Crim. P. 6(e),
is considered a statute for purposes of Exemption 3. Pl.s Oppn at 9; see also Fund for Const.
Govt v. Natl Archives & Records Serv., 656 F.2d 856, 867-68 (1981). Instead, the plaintiff
3
The plaintiff does not contest that the Archives satisfied the search requirements under the FOIA. Upon initially
receiving a FOIA request, an agency must conduct an adequate search for responsive documents and can satisfy the
threshold by demonstrat[ing] beyond material doubt that its search was reasonably calculated to uncover all
relevant documents. See Boyd v. Exec. Office for U.S. Attorneys, 87 F. Supp. 3d 58, 70 (D.D.C. 2015) (citing
cases). The FOIA request in this case specifically requested [a]ll versions of indictments against Hillary Rodham
Clinton, and the draft indictments that were discovered are the subjects of this case. Compl. 5. Thus, the Court
need not further discuss the adequacy of the search conducted by the Archives.
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asserts that Rule 6(e) does not in itself apply to the Archives, nor is it applicable to the drafts of
the proposed indictments because they do not fall within the purview of matters occurring before
the grand jury and because the information in the drafts is sufficiently public to warrant
disclosure. The Court will address each of the plaintiffs arguments in turn.
Rule 6(e) specifies seven categories of persons that are bound by the Rules secrecy
provision and expressly provides that [n]o obligation of secrecy may be imposed on any person
except in accordance with Rule 6(e)(2)(B). Fed. R. Crim. P. 6(e)(2)(A). The seven categories
of persons who must not disclose a matter occurring before the grand jury are: (i) a grand
juror, (ii) an interpreter, (iii) a court reporter, (iv) an operator of a recording device, (v) a person
who transcribes recorded testimony, (vi) an attorney for the government, or (vii) a person to
whom disclosure is made under Rule 6(e)(3)(A)(ii) or (iii). Fed. R. Crim. P. 6(e)(2)(B). The
plaintiff contends that because the Archives is not explicitly included in the delineated list, Rule
6(e) secrecy does not apply to the Archives. Pl.s Oppn. at 9. The Court, however, is
unpersuaded.
The District of Columbia Circuit has held that an independent counsel is an attorney for
the government, which is one of the seven categories, and thus, is covered by Rule 6(e) and its
bonds of secrecy. In re North, 16 F.3d 1234, 1244 (D.C. Cir. 1994). Upon termination of the
Office of Independent Counsel, the active independent counsel was obligated to transfer all
records which had been created during its tenure to the Archivist of the United States
(Archivist), 28 U.S.C. 594(k)(1), and was to clearly identify which of [those] records [were]
subject to rule 6(e), In re North, 16 F.3d at 1244 (quoting 28 U.S.C. 594(k)(1)). Furthermore,
the Archivist is responsible for the custody, use, and withdrawal of records transferred to him.
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44 U.S.C. 2108 (2012). A FOIA analysis of whether to disclose records that have been
transferred to the Archives is conducted as if the records remain in the possession of the agency
that created them. See Cause of Action v. Natl Archives & Records Admin., 753 F.3d 210, 216
(D.C. Cir. 2014) (holding that transfer of possession to the Archives did not affect the
documents status under the FOIA because the Court was confident that Congress did not intend
to expose . . . material to FOIA simply because the material ha[d] been deposited with the
Archives); see also Fund for Const. Govt, 656 F.2d at 870 (allowing the withholding of the
documents at issue even when custody of the documents had been transferred to the Archives).
By its own language, the statute governing the Archives provides that the statutory restrictions
applicable to an agency also transfer with the records being transferred to the Archives. See 44
U.S.C. 2108 (When records, the use of which is subject to statutory limitations and
restrictions, are so transferred, permissive and restrictive statutory provisions with respect to the
examination and use of records applicable to the head of the agency from which the records were
transferred or to employees of that agency are applicable to the Archivist and to the employees of
Because Rule 6(e) applies to the independent counsel, see In re North, 16 F.3d at 1244,
and the restrictive statutory provisions that apply to the independent counsel also apply to the
Archivist under the express language of 44 U.S.C. 2108, the Court finds that Rule 6(e) also
applies to the Archives. Prior to the transfer of the draft indictments to the Archives, Rule 6(e)
shielded the documents from potential disclosure because the rule extended to the independent
counsel as an attorney for the government. And, just as in Cause of Action v. National Archives
& Records Administration, 753 F.3d at 216, where the transfer of documents to the Archives did
not affect their FOIA status, the fact that the draft indictments were transferred to the Archives
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does not alter the Archives aptitude to protect the draft indictments from potential disclosure
under Rule 6(e). Therefore, the Court finds that Rule 6(e) applies to the Archives.
The defendant contends that the drafts of the proposed indictments are protected from
disclosure under Exemption 3 and Rule 6(e) because they would tend to reveal the secret
workings of the grand jury. Def.s Mem. at 8 (citing Boehm v. FBI, 948 F. Supp. 2d 9, 27
(D.D.C. 2013)). The plaintiff responds that the Archives has failed to meet its burden of
showing that the draft indictments constitute matter[s] occurring before the grand jury, Pl.s
Oppn at 18, because it relies upon a declarant who paints with far too broad of a brush, id. at
14, and presents opaque and shifting, if not contradictory, testimony, Pl.s Reply at 9.
Although Rule 6(e) prohibits disclosure of matter[s] occurring before [a] grand jury, it
should not be read in a manner that creates a veil of secrecy . . . over all matters occurring in the
world that happen to be investigated by a grand jury. Senate of P.R. ex rel. Judiciary Comm. v.
U.S. Dept of Justice, 823 F.2d 574, 582 (D.C. Cir. 1987) (quoting SEC v. Dresser Indus., Inc.,
628 F.2d 1368, 1382 (D.C. Cir. 1980) (en banc)). There is no per se rule against disclosure of
any and all information which has reached the grand jury chambers . . . . Senate of P.R., 823
F.2d at 582. Rather, the touchstone is whether disclosure would tend to reveal some secret
aspect of the grand jurys investigation, such as the identities of witnesses or jurors, the
questions of jurors and the like. Id. And, there must be a nexus between disclosure and
revelation of a protected aspect of the grand jurys investigation. Lopez v. Dept of Justice, 393
F.3d 1345, 1350 (D.C. Cir. 2005) (quoting Senate of P.R., 823 F.2d at 584).
Furthermore, information such as the names of grand jury witnesses and a draft of a
395
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grand jury indictment tend to reveal the secret workings of the grand jury. Boehm, 948 F.
Supp. 2d at 27 (finding withholding of draft indictment appropriate under Exemption 3). So too
does grand jury testimony. Boyd, 87 F. Supp. 3d at 83 ([G]rand jury testimony is precisely the
type of information that the provision is designed to protect.). When determining whether to
qualify withheld material as grand jury material, it is appropriate to rely on statements by the
governments declarant. See Davis v. U.S. Dept of Justice, 970 F. Supp. 2d 10, 17 (D.D.C.
2013) (Walton, J.) (allowing withholding of documents based on declarants statements that
Here, the drafts of the proposed indictment sought by the plaintiff would likely tend to
reveal the inner workings of the grand jury, just like the draft indictments in Boehm, 948 F.
Supp. 2d at 27. The Archives has presented two declarations from Martha Wagner Murphy, the
Chief of the Special Access and FOIA Branch, Research Services at the Archives, outlining the
contents of the draft indictments. See Def.s Mem., Ex. A (Declaration of Martha Wagner
Murphy (First Murphy Decl.)) at 1, 8-12; Def.s Response, Ex. A (Second Declaration of
Martha Wagner Murphy (Second Murphy Decl.)) at 3-5. In her first declaration, Ms. Murphy
First Murphy Decl. 25. Consequently, Ms. Murphy concluded that disclosure of the drafts of
the proposed indictment would violate the secrecy of the grand jury proceedings by disclosing
the inner workings of the federal grand jury that was tasked with considering these matters. Id.
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In her second declaration, which served as a supplement to strengthen [her] explanation of the
analytical process that the Archives engaged in when it reviewed the requested documents, 4
Any indictment is a written accusation of a crime and is crafted for the specific
purpose of persuading a grand jury to formally charge one or more individuals.
These draft indictments reflect the net result of all of the evidence gathered
throughout the grand jury investigatory process; they represent a compilation and
distillation of all of the evidence gathered and presented before the grand jury up
until the time the draft indictments were prepared. As a result, they are
inextricably intertwined with the grand jury process . . . . [And] none of the drafts
that we reviewed contained information that we determined had been obtained
separate from the grand jury process.
Id. 5-6. Thus, the drafts contain precisely the information that Rule 6(e) is intended to protect
information that would tend to reveal some secret aspect of the grand jurys investigation.
Senate of P.R., 823 F.2d at 582; see also Boehm, 948 F. Supp. 2d at 27; Boyd, 87 F. Supp. 3d at
83. More importantly, [b]ecause a draft indictment is inextricably tied to the Grand Jury
process, the development of the indictment, illuminated as each draft carefully refines the
argument for charging the accused individuals, provides a roadmap to that process. Second
Murphy Decl. 7. Accordingly, the Court finds that the drafts of the proposed indictment would
disclose the identity of individuals who actually testified before the grand jury and who the
independent counsel considered calling as witnesses, as well as the inner workings of the federal
grand jury process that would necessarily show the potential direction of the grand jury
proceedings, given that the independent counsel likely drafted the documents based on testimony
Moreover, the plaintiffs contention that the declarations are too vague, generalized, and
4
The plaintiff asserts that the Second Murphy Declaration contradicts the first by stating in broader terms that
[t]hese draft indictments reflect the net result of all the evidence gathered throughout the grand jury investigatory
process; they represent a compilation and distillation of all the evidence gathered and presented before the grand
jury. Pl.s Reply at 6. The Court, however, finds the Second Murphy Declaration to be consistent, as it merely
elaborates on the first.
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conclusory to satisfy the Archives burden is unavailing. The plaintiff cites Citizens for
Responsibility & Ethics in Washington v. U.S. Dept of Justice, 746 F.3d 1082, 1100 (D.C. Cir.
2014), as support for its position that the conclusory descriptions of grand jury material
contained in the draft indictments are not sufficient to warrant their withholding. There,
however, the defendants declaration asserted that the documents contain[ed] information that
could be used as evidence before a Federal Grand Jury or may be subpoenaed by a Federal
Grand Jury[,] Citizens for Responsibility, 746 F.3d at 1100 (emphasis in original), whereas
here, the defendant contends that information that would reveal some secret aspect of the grand
jury investigation, including the identities of witnesses, the substance of testimony, [and] the
strategy or direction of the investigation, Senate of P.R., 823 F.2d at 582, is affirmatively
contained in the documents. Also, the court in Citizens for Responsibility, found fault with the
defendants failure to specify how many documents were being withheld pursuant to Exemption
3. Id. But, in this case, the Archives has stated that it is withholding 238 documents responsive
to the plaintiffs FOIA request. Therefore, unlike the declarations in Citizens for Responsibility,
Ms. Murphys declarations do not merely state in a conclusory fashion that Rule 6(e) material
has been withheld, but instead specifies the precise nature of the contents of the draft
indictments, sufficiently demonstrating that the withheld material is of the type intended to be
The plaintiff further devotes a significant portion of its argument discussing In re Sealed
Case, 192 F.3d 995 (D.C. Cir. 1999), as support for its contention that the draft indictments are
not matters that occurred before the grand jury. See Pl.s Oppn at 11-13. Specifically, the
plaintiff argues that In re Sealed places the burden on the agency to show that the withheld
information will reveal non-public facts known to prosecutors only because of the grand jurys
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investigation, not because of [the] prosecutors own investigations or others investigations [and]
non-public matters that actually occurred or were likely to occur before the grand jury. Id. at
13.
Courts must distinguish between grand jury investigations and coincidental investigations
conducted by third parties, such as by independent companies, see Dresser Indus. Inc., 628 F.2d
at 1382-83 (holding Rule 6(e) inapplicable to documents that were created [by a Corporation]
for [an] independent corporate purpose even though government agency subpoenaed the
documents while grand jury investigation was being conducted), or prosecutorial investigations,
In re Sealed Case, 192 F.3d at 1002-03 (holding mere general statements by Office of
Independent Counsel prosecutors to the New York Times regarding their belief on the
direction of their own investigation did not constitute Rule 6(e) material). When, however, an
entity possesses information directly resulting from a grand jury investigation, the material is not
coincidental, and Rule 6(e) applies. See Fund for Constitutional Govt, 656 F.2d at 870 (holding
Rule 6(e) applicable because material was not coincidental to grand jury investigation, but rather
a direct result of it). The draft indictments are not merely statements of prosecutorial
deliberation like the statements made by junior attorneys to the New York Times in In re Sealed
Case, 192 F.3d at 1001, concerning the possible direction of the investigation in that matter, but
rather are documents containing information that [was not] obtained separate and apart from the
grand jury process. Second Murphy Decl. 6. Likewise, they are not materials prepared
coincidentally to the grand jury investigation, but instead were prepared as a direct result of the
ongoing grand jury investigation. See id. 5 (These draft indictments reflect the net result of
all of the evidence gathered throughout the grand jury investigatory process; they represent a
compilation and distillation of all of the evidence gathered and presented before the grand jury
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up until the time the draft indictments were prepared.). The relevant inquiry is not whether the
party seeking the information has an interest other than in its role in a grand jury investigation,
but whether revelation in the particular context would in fact reveal what was before the grand
jury. Fund for Const. Govt, 656 F.2d at 870 (citing Murphy v. FBI, 490 F. Supp. 1138, 1141
(D.D.C. 1980)). Thus, the Archives has established that disclosure of the drafts of the proposed
In sum, the plaintiffs argument simply seeks to heighten the Archives burden to a
degree of particularized specificity as to the meaning of each word used by the declarant to
describe the type of information contained within the withheld documents. However, as the
Court noted above, the Archives only bears the burden of showing some nexus between
disclosure and revelation of a protected aspect of the grand jurys investigation. Lopez, 393
F.3d at 1350 (citations omitted). Therefore, because Ms. Murphys declarations sufficiently
establish a nexus between disclosing the draft indictments and revealing the inner workings of
the grand jury process, the Court finds that the Archives has satisfied its burden of showing that
the draft indictments are protected from disclosure under Rule 6(e). 5
The plaintiff next argues that the information contained in the draft indictments is
sufficiently public to warrant disclosure because the secrecy to be protected by Rule 6(e) no
longer exists. Rule 6(e) does not create a type of secrecy which is waived once public
disclosure occurs. In re North, 16 F.3d at 1245 (quoting Barry v. United States, 740 F. Supp.
5
The plaintiff also asserts that, [t]o the extent [the Archives] claims that it was only following a long-established
practice of not disclosing draft indictments unless an indictment was formally issued, then [it] has failed to satisfy its
FOIA obligations. Pl.s Reply at 8 (citing Shapiro v. U.S. Dept of Justice, 153 F. Supp. 3d 253 (D.D.C. 2016)).
The Court, however, does not find that the Archives withheld the drafts pursuant to this practice, but merely used
this practice of withholding any draft indictment of a living person if no indictment is ever formally issued as a
starting point. Second Murphy Decl. 5. Rather, the Archives explicitly stated that it withheld the drafts in their
entirety after reviewing the drafts and determining that they were Rule 6(e) material that should not be disclosed. Id.
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888, 891 (D.D.C. 1990)). However, once information is sufficiently widely known, it has lost
its character as Rule 6(e) material[, as t]he purpose in Rule 6(e) is to preserve secrecy. Id. at
1244-45 (holding the purported Rule 6(e) material the final report of the Office of the
Independent Counsel no longer protected from release because the Independent Counsels
four interim reports to Congress included most, if not all, of the 6(e) material now disclosed in
the Final Report.). To show that withheld information must be disclosed based on prior
disclosure, a plaintiff must show that the specific information sought is already in the public
domain. Elec. Privacy Info. Ctr. v. Natl Sec. Agency, 678 F.3d 926, 933 (D.C. Cir. 2012) (A
plaintiff asserting a claim of prior disclosure bears the burden of pointing to specific information
in the public domain that appears to duplicate that being withheld.); Davis v. U.S. Dept of
Justice, 968 F.2d 1276, 1280 (D.C. Cir. 1992) (stating requester must point to specific
information identical to that being withheld); see also In re Sealed Case, 192 F.3d at 1004
(holding that usual Rule 6(e) secrecy protecting identity of witnesses did not apply to the
President because it was already widely known that he had testified in front of the grand jury).
Here, the plaintiffs attempt to demonstrate that the information contained in the draft
indictments is already in the public domain and widely available because of the independent
counsels final reports and a 206-page memorandum bearing the subject line Summary of
Evidence: Hillary Rodham Clinton and Webb Hubbell (Evidence Memorandum), which are
available to the public and contain grand jury information, see Pl.s Oppn at 18-19; Pl.s Reply
at 9, does not rise to the level of specificity required by the District of Columbia Circuit. The
plaintiff presented two declarations from Paul J. Orfanedes, counsel, officer, and director for
Judicial Watch, Inc., who prepared charts identifying the sources of information included in the
Independent Counsels January 5, 2001 Final Report (Final Report) and the Evidence
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Memorandum. See Pl.s Oppn, Ex. 1 (Declaration of Paul J. Orfanedes (First Orfanedes
Decl.)) at 1, 2-5; Ex. A (Chart for Final Report) to Ex. 1 at 4-5; Ex. B (Chart for Evidence
Memorandum) to Ex. 1 at 2-4; see also Pl.s Reply, Ex. 1 (Second Declaration of Paul J.
Orfanedes (Second Orfanedes Decl.)) at 2. Through these declarations and the charts, the
plaintiff purports to show that the Final Report and the Evidence Memorandum cite[],
reference[], and quote[] testimony from grand jury witnesses. First Orfanedes Decl. 7. Mr.
Orfanedes also conducted [G]oogle search[es] for Starr Report and Hillary Clinton draft
indictment, which rendered 13,200,000 and 547,000 search results respectively. Id. 10. And,
Mr. Orfanedes represents that the plaintiffs efforts to gain access to the draft indictments has
been the subject of news reports by various media outlets. Id. 11. While these efforts may
provide some support, the plaintiff has not pointed to specific items of information in the public
domain that sufficiently demonstrate that the information contained in the drafts of the proposed
indictment are publicly available to warrant disclosure. Instead, the plaintiff contends that
because paraphrased and quoted grand jury testimony was generally released to the public in the
Final Report and the Evidence Memorandum, see Pl.s Oppn, Ex. A (Chart for Final Report) to
Ex. 1 at 4-5 (identifying the pin cites of where grand jury testimony was either cited, referenced,
or quoted in the Final Report); Ex. B (Chart for Evidence Memorandum) to Ex. 1 at 2-4
(identifying the pin cites of where grand jury testimony was either cited, referenced, or quoted in
the Evidence Memorandum), the grand jury information in the draft indictments that reveal the
inner workings of the grand jury process must have also been released, and as such, there is no
secrecy left to protect. The Court is not convinced that such a presumption demonstrates the
level of specificity needed to show that the contents of drafts of the proposed indictments are
sufficiently within the public domain and have lost their exempt status.
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Nonetheless, the Archives, in response to a 2005 FOIA request for access to the Evidence
Memorandum, examined that document and compared it to the publicly released Final Report.
Second Murphy Decl. 3. Because the Archives understood that [the Evidence Memorandum]
Id.; see also First Orfanedes Decl., Ex. 3 (Evidence Memorandum). The Archives conducted the
same examination and analysis with respect to the draft indictments, comparing the drafts to the
Final Report and the Evidence Memorandum, and concluded that none of the drafts that we
reviewed contained information that we determined had been obtained separate from the grand
jury process. Second Murphy Decl. 6. More importantly, the draft indictments themselves
were not released with the Final Report, id. 4, unlike in In re Sealed Case, [w]here the general
public [was] already aware of the information contained in the prosecutors statement, which
provided the general basis for an indictment of the [President]s alleged perjury before a grand
jury, and of the Presidents status as a witness before the grand jury . . . [because] the President
himself went on national television the day of his testimony to reveal this fact . . . well before the
New York Times article at issue in [that] case was written, 192 F.3d at 1004, or in In re North,
where most, if not all, of the Rule 6(e) material was disclosed in the independent counsels final
report, 16 F.3d at 1245. Consequently, the Court is not persuaded that the plaintiff has satisfied
its burden of demonstrating that the information sought has lost its character as Rule 6(e)
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The Archives also withheld the drafts of the proposed indictments under Exemptions 6
and 7(c) because the drafts involve a significant privacy interest that is not outweighed by any
public interest that would justify disclosure. Def.s Mem. at 9. Because the Archives has
invoked both Exemptions 6 and 7(c), the Court will address only the question of whether the
drafts were properly withheld under Exemption 7(c). See Roth v. U.S. Dept of Justice, 642 F.3d
1161, 1173 (D.C. Cir. 2011) (holding that there is no need to consider Exemption 6 separately if
information was compiled for law enforcement purposes because Exemption 7(c) constitutes
broader protection, so any information falling under Exemption 6 is covered by Exemption 7(c));
accord Gilliam v. U.S. Dept of Justice, 128 F. Supp. 3d 134, 142 (D.D.C. 2015). Exemption
7(c) protects records or information compiled for law enforcement purposes, but only to the
extent that the production of such law enforcement records or information could reasonably be
Here, it is undisputed that the draft indictments were compiled in the course of the
independent counsels investigation of possible violations of federal law, and thus were compiled
for law enforcement purposes. Def.s Mem. at 9-10; Pl.s Oppn at 19. The remaining inquiry
for the Court is therefore whether the production of the records would constitute an unwarranted
invasion of personal privacy. 5 U.S.C. 552(b)(7)(c). To make that determination, the Court
must first decide whether there is a legitimate privacy interest protected by Exemption 7(c) and
then whether there is a countervailing public interest that outweighs it. See Citizens for
Responsibility, 746 F.3d at 1091 (stating [o]ur task, then, is to balance the [] privacy interest
against the public interest in disclosure[,] after establishing that the requested records were
compiled for law enforcement purposes) (some alteration in original) (citing Natl Archives &
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Records Admin. v. Favish, 541 U.S. 157, 171 (2004)); see also Boyd, 87 F. Supp. 3d at 72-73.
The parties do not dispute that any person other than Mrs. Clinton has any privacy
interest in the drafts of the proposed indictments. See Pl.s Oppn at 19. They do, however,
disagree on whether Mrs. Clinton has a viable personal privacy interest that precludes an
unwarranted invasion. See id. The Archives asserts that Mrs. Clinton has a significant personal
privacy interest in avoiding disclosure of the drafts of the proposed indictment, Def.s Mem. at
Def.s Response at 13. The plaintiff responds that the Archives fails to identify a single,
specific privacy interest [that] Mrs. Clinton still has in the draft indictments following the
publication[s] of the [Final] Report and the Evidence Memorandum, Pl.s Reply at 11-12, which
was authorized by the District of Columbia Circuit and the Archives respectively, see id., and
vitiate[d] Mrs. Clintons privacy interests [upon their] publishing, id. at 13.
When evaluating the privacy interest relevant to Exemption 7(c), [t]he privacy interest at
stake belongs to the individual, not the government agency. Petrucelli v. Dept of Justice, 51 F.
Supp. 3d 142, 164 (Walton, J.) (citing Reporters Comm., 489 U.S. at 763-65). [I]nformation in
an investigatory file tending to indicate that a named individual has been investigated for
suspected criminal activity is, at least as a threshold matter, an appropriate subject for exemption
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under 7(c). Fund for Const. Govt, 656 F.2d at 863 (citation omitted). More specifically,
individuals have a strong interest in not being associated unwarrantedly with alleged criminal
activity. Petrucelli, 51 F. Supp. 3d at 164 (quoting Stern v. Fed. Bureau of Investigation, 737
F.2d 84, 91-92 (D.C. Cir. 1984)); see also Dunkelberger v. Dept of Justice, 906 F.2d 779, 781
(D.C. Cir. 1990). This interest is even more substantial when criminal charges were never filed.
See Am. Civil Liberties Union v. U.S. Dept of Justice, 750 F.3d 927, 933 (D.C. Cir. 2014)
(Although the fact that such defendants were accused of criminal conduct may remain a matter
of public record, they are entitled to move on with their lives without having the public reminded
privacy interest under Exemption 7(c) in Citizens for Responsibility. 746 F.3d at 1091-93.
There, the Circuit discussed a FOIA request in conjunction with an investigation conducted by
the Federal Bureau of Investigation (FBI) of former House of Representatives Majority Leader
Tom DeLay, in addition to other suspects. Id. at 1087. Ultimately, the FBI decided not to file
charges against Mr. DeLay. In analyzing his privacy interests under the FOIA, the Circuit
determined that there are two cognizable interests for individuals in Mr. Delays position: (1)
avoiding the stigma of having his name associated with a criminal investigation, and (2) a
distinct privacy interest in the contents of the investigative files. Id. at 1091-93. Despite the
fact that it was widely known that Mr. DeLay had been the subject of an investigation, the
Circuit nonetheless concluded that he still retained a privacy interest in further disclosure of the
In this case, the Court agrees with the plaintiffs assertion that Mrs. Clinton no longer has
an interest in avoiding the stigma of having her name associated with the criminal
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investigation at issue, because it is widely known that this investigation was conducted. Pl.s
Oppn at 20. However, similar to the individuals in American Civil Liberties Union v. U.S.
Department of Justice, 750 F.3d at 933 (holding that the defendants had significant privacy
interest in being able to proceed forward with their lives by being able to control[] information
concerning criminal charges never filed against them), Mrs. Clinton has a significant privacy
interest in not re-visiting past criminal investigations, particularly when the investigation resulted
in an indictment never being filed against her. See Fund for Const. Govt, 656 F.2d at 864
(Typically, the decision not to prosecute insulates individuals who have been investigated but
not charged from th[e] rather significant intrusion into their lives.). Although Mrs. Clinton, as
a public official at th[at] time, may have a somewhat diminished privacy interest, [she] d[id]
not surrender all rights to personal privacy. Citizens for Responsibility, 746 F.3d at 1092
(quoting Quinon v. FBI, 86 F.3d 1222, 1230 (D.C. Cir. 1996)). And similar to the conclusion
reached in Citizens for Responsibility, Mrs. Clinton still maintains an interest in the contents of
the drafts of the proposed indictment, despite the fact that it is widely known that she was one of
Moreover, the fact that information about the independent counsels investigation and
potential indictment of Mrs. Clinton is readily available to the public does not extinguish Mrs.
Clintons privacy interest, as the plaintiff asserts. See Pl.s Oppn at 19 (discussing the release of
the Final Report and the Evidence Memorandum, along with numerous hits returned from
Google searches). Although an individuals interests in privacy fade when the information
involved already appears on the public record, ACLU, 655 F.3d at 9 (citing U.S. Dept of
Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 764 n.15 (1989)), the fact
that an event is not wholly private does not mean that an individual has no interest in limiting
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disclosure or dissemination of [the requested] information, People for the Ethical Treatment of
Animals v. Natl Insts. of Health, 745 F.3d 535, 542 (D.C. Cir. 2014) (quoting Reporters Comm.,
Here, the plaintiff has not shown that the information contained in the drafts of the
proposed indictment are widely available to the public, let alone to the extent that the privacy
interest Mrs. Clinton has in the drafts is extinguished. Indeed, if the [drafts of the proposed
indictments] were freely available, there would be no reason to invoke the FOIA to obtain
access to the information they contain. Reporters Comm., 489 U.S. at 764 (Plainly there is a
vast difference between the public records that might be found after a diligent search . . . and [the
requested information.]). And, contrary to the plaintiffs assumption that this Circuit vitiated
Mrs. Clintons privacy rights in the drafts when it authorized the publishing of the Final Report,
the plaintiff has not pointed to any evidence that the Circuit actually considered Mrs. Clintons
privacy rights in regards to the content of the drafts, particularly, in light of the fact that the
drafts were not included in the Final Report. Accordingly, the Court finds that Mrs. Clinton has
a substantial privacy interest in the contents of the drafts of the proposed indictment.
Having found that Mrs. Clinton has a substantial privacy interest that is protected by
Exemption 7(c), the Court turns to the question of whether public interest outweighs Mrs.
Clintons significant privacy interest, justifying disclosure of the draft indictments. The plaintiff
both of which directly bear on citizens right to be informed about what their government
is up to: (1) public interest in the actions of the independent counsel; and (2) public
interest in the actions of Mrs. Clinton as first lady of the United States, as well as in her
subsequent actions as a United States senator, United States secretary of state, and the
Democratic Partys presumptive nominee for president of the United States.
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The Supreme Court has stated that FOIA is focused on the citizens right to be
informed about what their government is up to. Computer Profls for Soc. Responsibility v.
U.S. Secret Serv., 72 F.3d 897, 904 (D.C. Cir. 1996) (quoting Reporters Comm., 489 U.S. at
773). Once the private nature of a document has been established, whether or not disclosure of
that document is warranted turn[s] on the nature of the requested document and its relationship
to the basic purpose of the Freedom of Information Act to open agency action to the light of
public scrutiny. See Reporters Comm., 489 U.S. at 772 (quoting Rose, 425 U.S. at 372). To
defeat the privacy interest, the requestor must (1) show that the public interest sought to be
advanced is a significant one, an interest more specific than having the information for its own
sake, and (2) show the information is likely to advance that interest. Boyd, 87 F. Supp. 3d at
73 (citation omitted). In determining what the[] government is up to, the relevant public
interest is not to find out what was the substance of an agency investigation, but rather the focus
Reporters Comm., 489 U.S. at 773. Information that reveals little or nothing about an agencys
own conduct does not further the statutory purpose; thus the public has no cognizable interest in
the release of such information. Beck v. Dept of Justice, 997 F.2d 1489, 1493 (D.C. Cir. 1993)
(quoting Reporters Comm., 489 U.S. at 773); see also Davis, 968 F.2d at 1282 (holding that
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disclosure would reveal little to nothing about agency conduct, let alone conduct of the agency
possessing the documents). Nonetheless, while the public interest cannot be based purely on
gathering information about an individual, there is a cognizable public interest in knowing how a
government agency goes about investigating high-ranking officials. See Citizens for
Responsibility, 746 F.3d at 1093-94 (recognizing the significance of public interest in knowing
The plaintiff, in this case, has not established that the information contained in the drafts
of the proposed indictment would yield information about what the government is up to.
Reporters Comm., 489 U.S. at 773. Initially, the plaintiff asserts that the public has an interest in
the activities of the independent counsel, and particularly, how he conducted the investigation of
Mrs. Clinton, as evidenced by the results disclosed by its Google searches. Pl.s Reply at 13-14.
However, this public interest in the activities of the independent counsel likely does not rise to
the level contemplated by the Circuit in Citizens for Responsibility. There, the court noted that
we have repeatedly recognized a public interest in the manner in which the [Department of
Justice] carries out substantive law enforcement policy. Citizens for Responsibility, 746 F.3d at
1093 (Disclosure of the records would likely reveal much about the diligence of the FBIs
investigation and the [Department of Justice]s exercise of its prosecutorial discretion: whether
the government had the evidence but nevertheless pulled its punches.) And admittedly, if the
investigation implicate[s] a public official as prominent as [Mrs. Clinton,] the public interest is
heightened. Id. at 1094 (It may show whether prominent and influential public officials are
subjected to the same investigative scrutiny and prosecutorial zeal as local aldermen and little-
known lobbyists.). But, how the FBI and other investigative government agencies conduct
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investigations concerning criminal misconduct, and in the case of Citizens for Responsibility a
concurrent criminal investigation, is different from the activities of a discrete and now defunct
government agency that has not been in existence for nearly two decades. More importantly, the
plaintiff does not allege misconduct on the part of either the Archives or the Office of the
Independent Counsel or present compelling evidence that either agency has engaged in improper
activity. See Favish, 541 U.S. at 174 ([T]he requester must produce evidence that would
warrant a belief by a reasonable person that the alleged Government impropriety might have
occurred.). Consequently, disclosure of the drafts of the proposed indictment would likely not
shed any light on the conduct of [the Office of the Independent Counsel], but would rather
disclose only information about Mrs. Clinton that is accumulated in various governmental
Furthermore, the plaintiff asserts that the public has an interest in the actions of Mrs.
Clinton while she previously served as the first lady of the United States, a United States senator,
and the United States Secretary of State, as well as her position as the presumptive Democratic
Partys nominee for President of the United States. 6 See Pl.s Oppn at 23. In making this
assertion, the plaintiff recognizes that, when weighing whether disclosure is in the public
interest, D.C. Circuit case law often differentiates between what a record will reveal about an
agencys performance of its statutory duties and what that same record will reveal about the
actions of a particular individual. Id. at 24 n.12 (citing Citizens for Responsibility, 746 F.3d at
1093). But, the plaintiff argues that Mrs. Clinton was not a private citizen when the investigation
6
Under the FOIA, an agencys disclosure obligations are triggered by its receipt of a request, Espinoza v. Dept of
Justice, 20 F. Supp. 3d 232, 238 (D.D.C. 2014) (citing 5 U.S.C. 552(a)(3)(A)), and continue until the agency
proves that it has fully discharged its [FOIA] obligations, Sciacca v. Fed. Bureau of Investigation, 23 F. Supp. 3d
17, 27 (D.D.C. 2014) (quoting Moore v. Aspin, 916 F. Supp. 32, 35 (D.D.C. 1996)). At the time the Archives
determined it had fully discharged its obligations under the FOIA with respect to the plaintiffs FOIA request, Mrs.
Clinton was the presumptive nominee for the Democratic Partys candidate for President of the United States.
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was conducted, and that she has held other high level federal positions after the investigation was
closed and now is seeking the highest office in the federal government and that Circuit case law,
holding that the only relevant public interest is in shedding light on how agencies perform their
statutory duties[,] do[es] not address this highly unique factual situation [and is therefore]
inapposite. Id. However, the Court is not convinced that it should (or even can) depart from
the precedents already established by the Circuit. While Mrs. Clinton was first lady of the
United States at the time of the investigation, she was neither part of a government agency nor a
government official when the events that were the subject of the independent counsels
investigation occurred, which led to the drafting of the proposed indictments. More importantly,
although the plaintiff seeks to cloak the public interest in this case with the veil of seeking to
know what the government is up to, or at least was up to during her tenure in multiple
federal offices [and] may be up to should Mrs. Clinton be elected president, Pl.s Reply at 15,
the Court finds that the proper characterization of this public interest is an attempt to obtain
information that bears on Mrs. Clintons honesty, credibility, and trustworthiness, Pl.s Oppn
at 23. Thus, disclosure of the drafts of the proposed indictment would not shed light on any
agencys performance of its statutory duties, but potentially shed light solely on the character of
Mrs. Clinton, independent to her position as a public official, which is not the objective of the
Accordingly, because the public interests offered by the plaintiff would not advance the
purpose of the FOIA, the Court finds that the proffered public interests do not sufficiently
outweigh Mrs. Clintons privacy interests in the drafts of the proposed indictment to justify an
unwarranted invasion of Mrs. Clintons privacy. Therefore, the drafts of the proposed indictment
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B. Segregability
Because the Court has determined that the drafts of the proposed indictment are protected
from disclosure by Exemptions 3, 6 and 7(c), its analysis must next address the issue of
segregability. The plaintiff asserts that the Archives, in withholding the drafts of the proposed
indictment in their entirety, has not conduct[ed] a proper segregability analysis of each draft and
justifie[d] its determinations with detailed, non-conclusory findings. Pl.s Reply at 18.
The FOIA requires that [a]ny reasonably segregable portion of a record shall be
provided to any person requesting such record after deletion of the portions which are exempt
under this subsection. 5 U.S.C. 552(b). [I]t has long been the rule in this Circuit that non-
exempt portions of a document must be disclosed unless they are inextricably intertwined with
exempt portions. Wilderness Socy v. U.S. Dept of Interior, 344 F. Supp. 2d 1, 18 (D.D.C.
2004) (Walton, J.) (quoting Mead Data Cent., Inc. v. U.S. Dept of Air Force, 566 F.2d 242, 260
(D.C. Cir. 1977)). The focus of the FOIA is information, not documents, and an agency cannot
justify withholding an entire document simply by showing that it contains some exempt
A district courts determination that agency records are exempt from disclosure under the
FOIA is subject to remand if the court does not also make specific findings on the question of
segregability. See Krikorian v. Dept of State, 984 F.2d 461, 467 (D.C. Cir. 1993) (remanding
back to district court because no specific findings of segregability were made). To make this
determination, the district court must be provided with a relatively detailed description of the
withheld material. Id. (citing Goldberg v. U.S. Dept of State, 818 F.2d 71, 78 (D.C. Cir. 1987).
Agencies must review the withheld documents and determine whether, absent the exempted
material, the resulting document would still be comprehensible, or whether the result would be
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an essentially meaningless set of words and phrases. See Mead, 566 F.2d at 261 (stating result
of meaningless set of words may be sufficient to claim that the information is not segregable). A
withheld is not reasonably segregable is sufficient to satisfy the requirement. See Juarez v. U.S.
Dept of Justice, 518 F.3d 54, 61 (D.C. Cir. 2008); Beltranena v. U.S. Dept of State, 821 F.
Here, the Court is satisfied that the Archives has conducted a proper segregability
analysis and may withhold the drafts of the proposed indictment in their entirety. Upon receipt
of a FOIA request for access to a box or records that a prior Independent Counsel has marked as
containing grand jury material, the Archives examines each individual record in the box to
determine whether each document should be withheld pursuant to Exemption 3 (Fed. R. Crim. P.
6(e)). Second Murphy Decl. 3. And while the independent counsels markings are used as a
reference point, the Archives conduct[s] an independent review in order to make its own
determinations as to whether the material does constitute grand jury information. Id. In its
review of the production request in this case, the Archives decided to withhold all of the
First Murphy Decl. 25. In addition to this detailed description of the contents of the drafts of
the proposed indictment, the Archives submitted a chart, indexing and further describing the
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materials. See id. 23; see also id., Ex. A (Description of Records of Independent Counsel
Kenneth Starr/Robert Ray/Julie Thomas). Based on this review, the Archives concluded that all
of the materials are inextricably intertwined with the grand jury process and are not subject to
segregation . . . [because] none of the drafts that [the Archives] reviewed contained information
that [the Archives] determined had been obtained separate from the grand jury process. Second
The Court finds particularly relevant here, the discussion of segregability in Goland, 607
F.2d at 350, which differentiated the segregability analysis under Exemption 3 from the other
FOIA exemptions. Exemption 3 differs from other FOIA exemptions in that its applicability
depends less on the detailed factual contents of specific documents; the sole issue for decision is
the existence of a relevant statute and the inclusion of withheld material within that statute's
coverage. Id. Thus, the scope of the exemption is not determined by the FOIA itself, but by the
protective statute that is being invoked under Exemption 3. See Beltranena, 821 F. Supp. 2d at
179 (noting that when conducting a segregability analysis for material withheld under Exemption
3, the court is mindful that while an agency must provide a detailed justification for the non-
segregability of any material withheld, an agency is also constrained by the need to avoid
noted above, the Court is satisfied that the Archives has properly applied Rule 6(e) to protect
grand jury material, and because the Archives has provided a detailed justification for
withholding the drafts of the proposed indictment pursuant to Rule 6(e), the records can be
The plaintiff also contends that a mountain of grand jury material has already been
7
The Archives also represents that the accompanying documents such as the fax cover pages, notes, and/or
memoranda were likewise withheld because they were physically attached to and an integral part of the
drafts. Second Murphy Decl. 6.
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made public, in light of the release of the independent counsels Final Report and the Evidence
Memorandum, and that the enormous volume of publicly available material must be taken into
account in a proper segregability analysis. Pl.s Reply at 18. The Court again notes that the
draft indictments were not released with either the Final Report or the Evidence Memorandum,
and more importantly, the plaintiff has failed to show that the specific information contained in
the draft indictments is already in the public domain. Although, the Archives, in response to a
FOIA request, provided a partial release of the Evidence Memorandum with redactions for
grand jury material (as well as other redactions), Second Murphy Decl. 3, this occurred
because the Archives examination, which included an analysis of the factual and stylistic
presentment of the Final Report and the Evidence Memorandum, revealed distinctions between
information in the Evidence Memorandum that had already been released to the public in the
Final Report, and that information in the Evidence Memorandum that was considered grand jury
information and should continue to be withheld., id. And, in its review of the drafts of the
proposed indictment, the Archives took into account the Final Report, and the redacted
Based on the declarations attesting to the review conducted by the Archives, coupled with
the chart which indexed and further described the draft indictments, the Court finds that the
IV. CONCLUSION
For the foregoing reasons, the Court concludes that it must grant the defendants motion
for summary judgment and deny the plaintiffs cross-motion for summary judgment.
8
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
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NOTICE OF APPEAL
Notice is hereby given that Judicial Watch, Inc., Plaintiff in the above-named case,
hereby appeals to the United States Court of Appeals for the District of Columbia Circuit from
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CERTIFICATE OF SERVICE
I hereby certify that on March 28, 2017, I filed via the CM/ECF system the
foregoing JOINT APPENDIX with the Clerk of the Court. Participants in the
case are registered CM/ECF users and service will be accomplished by the
I also certify that I caused seven copies to be delivered to the Clerk of Court