By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
Rose traditionally represented the cream of Arkansas business, and Foster represented the cream of the cream, including three corporate giants that gave huge contributions to Bill Clinton's gubernatorial and presidential campaigns: Tyson Foods (see Clinton cabinet sidebar); Wal-Mart, and the Stephens family empire. It was a Stephens-owned bank in Arkansas, Worthen National, that extended a $3.9 million line of credit to the 1992 Clinton campaign, allowing Bill to survive after the Gennifer Flowers and draft-dodging scandals dried up other contributions.
Another Rose partner who worked on Stephens matters was William Kennedy III. Typical of the services Kennedy and the firm rendered to Stephens was a late-1980s filing with the Federal Reserve in which Kennedy--as New York Post business correspondent Paul Tharp recounted in 1993--"allegedly did not fully disclose the Stephens family holdings in banking. Had full disclosure been made, it could have blocked the family from making its subsequent moves to control at least three banking entities... The Federal Reserve last year determined that the Stephens holdings violated a Depression-era law barring people who control securities firms from owning more than 50 percent of any bank."
This violation, which included the Worthen bank, was under investigation by the Fed at the time Foster brought Kennedy to the White House to "take charge of ethics and security clearances for top administration officials after the Zoe Baird fiasco," as Business Week put it. But when Fed Chairman Alan Greenspan became chummy with the Clintons--sitting right next to Hillary at the president's first State of the Union address--the probe was quietly dropped.
In the cozy confines of Arkansas money, power, and politics, Vincent Foster was the state's Clark Clifford in more ways than one (except that Foster shunned publicity as assiduously as Clifford cultivated it). Although Foster's longtime representation of the Stephens banking interests was listed on his Clinton-transition disclosure form, which was subsequently examined by the Senate investigation into Foster's death, little public attention had been given to the connection between Stephens Inc. and the infamous BCCI, jocularly known as the Bank of Crooks and Criminals International.
As detailed in the Bank Resolution Reporter by Steve Pizzo, the journalist who broke the Keating Five S&L scandal, Stephens Inc. arranged the stock deal by which BCCI, through a front-man, bought its initial U.S. bank, Bert Lance's National Bank of Georgia. Furthermore, Stephens Inc. later "mid-wifed" the deal by which BCCI acquired the Washington, D.C.-based First American bank later headed by Clark Clifford. "Stephens Inc.," wrote Pizzo, "acted as agent for the BCCI group, which called itself Credit and Commerce American Holding." Only GOP Senator Lauch Faircloth, the reactionary fuddy-duddy from North Carolina, briefly attempted to raise the issue in the Senate Whitewater investigation, but he bungled the question, and the Foster-Stephens Inc.-BCCI connection remains uninvestigated and largely unknown to the public to this day.
In any case, such was the ethical climate that prevailed at Rose around the time Hillary became the partner representing Madison Guaranty, the S&L owned by Bill's old chum and former aide Jim McDougal, who was also the Clintons' partner in Whitewater.
McDougal and his wife have now been convicted by a Little Rock jury of having run Madison as a criminal enterprise. The S&L was essentially a piggy bank for politicians and McDougal cronies, and of all the series of interrelated check-kitings, land flips, and phony real estate appraisals the McDougals used to keep the bank afloat amid rising concern by federal examiners, none has proved more dangerous for Hillary Clinton than the scam known as Castle Grande.
Castle Grande was a real estate Ponzi scheme on which Madison insiders made nearly $2 million. Among those insiders was Seth Ward, the father-in-law of Webster Hubbell, who was part of the Foster-Clinton-Hubbell troika that ran Rose. (Hubbell was chased out of his Clinton administration job as assistant attorney general for having defrauded his Rose clients--including the U.S. government--and is now known as Inmate no. 20219-009 at Cumberland Federal Prison.)
The McDougals used Ward as a frontman to acquire Castle Grande, which was then carved into parcels and sold using inflated values. (McDougal's appraiser has since pleaded guilty to 24 counts of land fraud and is cooperating with the special prosecutor.) The recently discovered Rose billing records show that Hillary worked on a number of Castle Grande matters for Madison, including an option to buy back from Ward for $400,000 land that the Resolution Trust Corporation later valued at only $47,000. The original purchase documents on this land have mysteriously disappeared. The RTC has found that "At the time it assisted Madison Guaranty with the Castle Grande deal, Rose Law Firm was aware of regulatory concerns about the soundness of the institution."
The question is, what did Hillary know and when did she know it? In a sworn deposition to the RTC, Hillary has admitted that she ordered the shredding of four of her files on Madison, three of which dealt with Castle Grande and one with Madison's so-called Ward option. This admission is so damning that New York University Law Professor Stephen Gillers, the expert on legal ethics whose previous defenses of the Clintons on Whitewater and Madison have been cited by the president himself, now says it raises profound ethical and legal problems--a turnaround so noteworthy that CBS Evening News recently devoted a segment to Gillers's 180-degree switch.