Majority Report
Of The Special Committee
To Investigate Whitewater
Development Corporation
And Related Matters

PHASE 3 THE ARKANSAS PHASE

CONTENTS

CONCLUSIONS OF THE SPECIAL COMMITTEE

1. Mrs. Clinton's legal work on Castle Grande related to an effort to conceal the true nature of the activities at Madison Guaranty
2. Webster Hubbell was significantly more involved in Castle Grande than he admitted in his Senate testimony
3. In 1985, Mr. McDougal retained Hillary Clinton to represent Madison Guaranty; the work was not brought in by a young associate
4. Mrs. Clinton had a substantive contact with Beverly Bassett Schaffer about Madison Guaranty's proposal to issue preferred stock
5. Governor Clinton's official and personal dealings with James McDougal raised an apparent, if not an actual, improper conflict of interest
6. The Clintons took an active role in obtaining and extending Whitewater-related loans; they were not "passive" investors in Whitewater
7. Governor Clinton's office steered state bond work to Dan Lasater
8. The Clintons took a series of erroneous tax deductions related to Whitewater

SUMMARY OF THE EVIDENCE

PART I: WHITEWATER DEVELOPMENT CORPORATION

I. Whitewater: The Early Years

A. The Clintons' Previously Undisclosed Land Deal with James McDougal
B. Whitewater: A "No Cash" Deal
C. Lot 13: Irregularities in Madison Bank's loan to Mrs. Clinton

II. The Clintons' Continued Involvement in Whitewater: 1987 - 1992

A. The Clintons' Active Involvement in the Management of Whitewater After 1986
B. Governor Clinton's Approval of Special Legislation Benefitting his Whitewater Banker

III. The Clintons' Handling of Whitewater During the 1992 Presidential Campaign

A. The Focus on Whitewater During the 1992 Campaign
B. The Lyons Report
C. The Clintons Finally Get Out of Whitewater

IV. The Clintons' Questionable Tax Treatment of Whitewater: A History of Unreportable Income and Improper Deductions

A. 1978: The Clintons' Unreported Income of $5,405 from 15-Acre Installment Sale
B. 1979: The Clintons' Improper Interest Deduction of $2,400
C. 1980: The Clintons' Improper Interest Deduction of $9,000
D. 1980: The Clintons' Unreported Income of $10,000 from Whitewater payment of the $20,000 Union Bank Note
E. 1982: The Clintons' Unreported Income of $5,691 for Whitewater Payment of Citizens Bank of Jonesboro Note
F. 1984: The Clintons' Improper Deduction of $144 for Real Estate Taxes
G. 1984 and 1985: The Clintons' Improper Interest Deductions of $2,811 and $2,322
H. 1987: The Clintons' Improper Interest Deduction of $2,561
I. 1988: The Clintons' Improper Deduction of $1,275 for Real Estate Taxes
J. 1988: The Clintons' Unreported Income of $1,673 from the Sale of Lot 13

PART II: GOVERNOR CLINTON'S QUESTIONABLE RELATIONSHIP WITH JAMES MCDOUGAL

I. James McDougal's Madison Guaranty: A Corrupt Savings & Loan

A. Madison's Fraudulent Land Deals
B. Madison's Phony Books and Records
C. Federal Regulators Oust Mr. McDougal from Madison

II. Governor Clinton Provides Benefits to James McDougal and Madison S&L

A. Governor Clinton Steers Valuable State Leases to Madison
B. McDougal Holds a Questionable 1985 Fundraiser for Clinton
C. Governor Clinton Vetoes Legislation For McDougal Business Partners
D. Clinton's Promises to McDougal on Brewery Legislation
E. McDougal Asks Governor Clinton to Fire Tough State Regulators
F. McDougal Helps Select S&L Regulators
G. McDougal Hires Mrs. Clinton and Her Law Firm

1. The Questionable Retention of the Rose Law Firm
2. Mrs. Clinton Asks the Arkansas S&L Regulator to Approve a Novel Stock Issue

III. The Castle Grande Land Deal: A Series of Fraudulent Loans

A. Structuring of the Acquisition of the Castle Grande Property to Evade State Regulations
B. The Fraudulent Nature of the Castle Grande Purchase
C. The September 24, 1985 Letters
D. The May 1 Option Disguises the Questionable Payments to Seth Ward
E. Mrs. Clinton's Previously Unknown Legal Work for Questionable Castle Grande Transactions
F. Webster Hubbell's Mysterious Role in Structuring Questionable Castle Grande Transactions

PART III: GOVERNOR CLINTON'S QUESTIONABLE RELATIONSHIP WITH DAN LASATER

I. Governor Clinton's Close Personal Relationship With Dan Lasater

II. Governor Clinton Provides Favors to Dan Lasater

A. Dan Lasater's Special Access to Governor Clinton
B. The Governor's Office Steers Valuable State Bond Business to Dan Lasater

PART IV: DAVID HALE AND CAPITAL MANAGEMENT SERVICES, INC.

I. The Special Committee's Attempts To Obtain Hale Testimony

II. Mr. Hale's Testimony in the McDougal Trial: What was Governor Clinton's Role in the Making of the $300,000 Master Marketing Loan?

PART V: THE LENDING ACTIVITIES OF PERRY COUNTY BANK IN THE 1990 CLINTON GUBERNATORIAL CAMPAIGN


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