CONTENTS

WHITEWATER

"The President has kept all the promises he intended to keep."

- Clinton aide George Stephanopolous

Since Starr was appointed special prosecutor, the OIC spent over $40 million. Starr spent over four years investigating Whitewater, Filegate, Travelgate, and Monica-gate at a cost of over $40 million, nearly fifty percent higher than Lawrence Walsh's probe into Iran-Contra.

WHITEWATER DEVELOPMENT CORPORATION. In 1976, Bill Clinton was elected attorney general of Arkansas. Former attorney general Jim Guy Tucker did not seek another term, since he ran for U.S. Congress. Later Tucker was elected governor of Arkansas, and in 1996 he was convicted of several Whitewater crimes.

The Whitewater land deal began two years after the 32-year old Clinton had served as attorney general, making an annual salary of $35,000. Meanwhile, Hillary worked as an attorney for the Rose Law Firm in Little Rock and was making $25,000 annually. Also in 1978 Clinton was elected governor of Arkansas.

With virtually no investments, the Clintons were approached by bankers and developers, Jim and Susan McDougal, who had helped Bill get elected governor. Their "get-rich-quick" plan was to build retirement and resort homes on the Whitewater River in the Ozark Mountains. The McDougals formed the Whitewater Development Corporation and named their planned community the Whitewater Estates. They purchased 230 acres of forest land and subdivided the area into 42 lots. By selling the lots, they hoped to net over $250,000 in profits.

But the McDougals had problems. First, they were the corporate partners of the Whitewater Estates, and they could not legally invest money in the new projects. They needed $203,000 for a down payment. So they called on their friends, Governor and Mrs. Clinton, who put up $500 in cash. Some say the Clintons invested nothing. The McDougals promised them a 50 percent share in both the equity and the profits -- again, for nothing but their role as co-partners.

Later, Clinton testified under oath that he personally never borrowed money or had anyone else borrow money for him at Madison which was operated by Whitewater partners James B. McDougal and his wife, Susan. Later, the Rose Law Firm did the financial records for Madison Guaranty. Savings and Loan. When an independent counsel began investigating possible illegalities in 1993, they alleged that Clinton had received a $27,600 loan from Madison Guaranty. And, in the trunk of an abandoned car, investigators found a Madison Guaranty cashier's check for $27,600 made out to Clinton and dated November 15, 1982. They also produced microfilm of an August 1983 check for $5,081.82 made out to Madison by Susan McDougal with a note at the bottom "Payoff Clinton." McDougal's check exactly covered the amount prosecutors said would have been due on the alleged loan at that point. And the government had evidence both checks were used to help the Whitewater venture.

However, Clinton's signature did not appear on the $27,600 check and prosecutors could not establish that he had received the money or knew about either check. Moreover, Jim McDougal originally said that Clinton was innocent. He became the president's accuser only after being convicted of fraud and having his sentence reduced in exchange for a promise of helping independent counsel Kenneth Starr.

The McDougals had a second problem. Who was to finance the land? As a wheeler-dealer banker in Arkansas, Jim McDougal convinced Citizen Bank and Trust Company to finance 90 percent of the land. Normally, banks cannot legally finance more than 50 percent of the land value. However, the McDougals and Clintons needed another $20,000 for the down payment, so they went to another Arkansas bank for a second loan. The final result was that the four partners received nearly all of the $203,000 for the down payment and virtually used none of their own money.

As construction began some of the lots sold quickly, but interest rates soared to 20 percent. Something needed to be done to stimulate sales. The answer was to build a $30,000 model home. Since Hillary was not a corporate officer, she volunteered to be the center of this ingenious scheme. In 1980, Jim McDougal's bank (Bank of Kingston) loaned her $30,000.

This alone presented a possible conflict of interest. Then the Whitewater Development Corporation transferred lot 13 to her at no cost. Now she could use her lot as collateral to obtain a legal loan. However, Whitewater Development -- not Hillary -- made payments on the $30,000 loan. In addition, there is no record which indicates that Hillary paid property taxes on lot 13. If she were the owner and was entitled to any profits, she legally would have had to pay taxes.

Two years later the home on lot 13 sold for $27,000. The Clintons pocketed $3,000. However, the new owner died shortly after he purchased the home, and Hillary bought back the house from bankruptcy court for $8,000. At the same time, Governor Clinton borrowed $20,000 (with no collateral) from McDougal's Bank of Kingston and paid off Hillary's initial $30,000 loan. Again this presented another possibility of a conflict of interest. Finally, the Clintons sold their home for $28,000. When the market soured, the Clintons claimed they lost money and eventually sold their shares back to Jim McDougal.

In 1985, McDougal hurriedly sold all his remaining Whitewater lots to Chris Wade. McDougal asked $191,500 for 23 lots the year before. But Wade paid no down payment to McDougal and agreed to assume $35,000 of $96,000 that was still owed by the Clintons and McDougals on the original 1978 loan.

THE ROSE LAW FIRM AND MADISON GUARANTY SAVINGS AND LOAN. A year after the Whitewater Development Corporation was formed and just months after Clinton was elected governor of Arkansas in 1979, Jim McDougal formed another bank: Madison Guaranty Savings and Loan. He began with assets under $500,000. By 1985, the bank was worth $120 million, but because of making risky loans to many to FOBs (friends of Bill), Madison Guaranty was headed towards bankruptcy. For example, Governor Jim Guy Tucker received over one million in loans, most of which he never repaid.

During Clinton's tenure as governor (reelected in 1982, 1984, 1986, 1988, and 1990), Jim McDougal looked to state officials to keep Madison Guaranty solvent. In January 1985, Governor Clinton replaced the head of the Securities Department with a friend of McDougal. This was an example of patronage.

Additionally, it set up a potential conflict of interest, since Madison Guaranty put the Rose Law Firm on a $2,000-a-month retainer in May 1985. McDougal's legal advice came from the Rose Law Firm where Hillary worked. When Hillary took over Madison's financial records, it was learned for the first time that the bank had been defunct for four years.

Thus, a key issue in Whitewater is whether Hillary helped McDougal's financially-failing Madison Guaranty to remain open. She maintains that she performed "minimal" work for Madison, while others maintain that she was heavily involved in legal work with Madison. In 1989 Madison Guaranty filed for bankruptcy at a cost of $68 million to American taxpayers.

We are the President."

-Hillary Clinton

In 1994, when President Clinton was in the White House, special prosecutor Kenneth Starr subpoenaed Hillary's legal papers when she worked for the Rose Law Firm. Then the Clintons proclaimed that her legal papers were missing. Nearly two years passed, and her papers were discovered by an aide in a book room in the White House living quarters which are generally offlimits to the staff. Hillary's records showed that she may have conspired to make a sham land deal. The records also indicated that she did at least 60 hours of work over a period of 15 months for Madison Guaranty, and that she was paid $2,000 per month.

In January 1996, Hillary was subpoenaed to appear before a grand jury and to answer questions about the missing files. She testified that she did not know how the records came to be found and where they were found. The statute of limitations is two years, so no charges could be brought against Hillary. The administration vehemently denied any wrong-doing. Republicans claimed that Hillary's papers were deliberately concealed from Starr so as not to implicate her in any improprieties.

The most controversial issue raised by Hillary's "missing" records concerned a legal document which she drew up in regard to Castle Grande and Madison Guaranty. Ward obtained a $1.15 million loan from Madison Guaranty to purchase 1,050 acres of real estate which was zoned for commercial use. This loan was structured so that he could not be held responsible in the event that Castle Grande went into foreclosure. In addition McDougal invested $400,000 and eventually proposed buying out Ward's share of Castle Grande. Madison later agreed to pay Ward $400,000 for a 22-acre parcel of the Castle Grande property. In the end their were nearly $4 million in losses., primarily through large commissions which were paid to Arkansas businessmen. Eventually, Castle Grande went into foreclosure. Hubbell has denied he helped his father-in-law obtain Castle Grande.

In December 1995, Hillary testified to the Resolution Trust Corporation (RTC). Her answers never fully satisfied Starr's deputies. She said, "I don't believe that I knew anything about these real estate projects." The RTC investigated an option agreement which Ward may have entered with Madison. Under the agreement, Madison agreed to pay Ward $400,000 for a 22 acre tract of the Castle Grande property. The records indicated that Hillary worked on several matters relating to Castle Grande and that she had at least 14 meetings or telephone conversations with Ward. According to the Washington Post, a code on the agreement stated that it was drawn up by Hillary. She claimed that she had looked at the option documents which were sent to her by the RTC in January 1996 and stated that she had no recollection of them. In addition, Hillary was allegedly paid to provide the legal work for a sewer and a brewery for Castle Grande.

Independent counsel Starr believed that there had been contacts between the White House, the Treasury Department, and the RTC during the Madison Guaranty and Whitewater investigations. He thought that there had been an effort to pressure the RTC on behalf of the Clintons. Investigators established that there had been some 40 conversations and meetings related to Whitewater among the RTC and officials at Treasury and the White House. At one point, a senior Treasury official alerted the White House to the fact that the president's name had come up in the RTC investigation of Whitewater. Moreover, an administration official admitted that their initial explanations of the contacts were not complete or accurate. That sparked angry exchanges with Congress, which was also investigating, and two senior Treasury officials resigned for misleading Congress. Ultimately, the OIC was unable to prove that any illegalities or improprieties had occurred.

Starr thought that Hillary may have been involved in illegal financing. He subpoenaed Hillary's Rose Law Firm financial records regarding the Castle Grande project. For almost two years after the billing records were subpoenaed, the White House said that it could not find them. Then 22 months later -- in January 1996 -- the Clintons' lawyers suddenly produced the documents, saying that one of the first lady's aides had just found them in a storage box in the private living quarters of the White House where only a limited number of people had access to that area. Hillary claimed that she did not know how the billing records came to be found.

Starr won a major victory in June 1997 when the Supreme Court ruled unanimously that Hillary's conversations with her personal lawyers were not protected by attorney-client privilege. Independent counsel Starr sifted through her papers to determine if she had perjured herself and obstructed justice.

Carolyn Huber, the aide who said she found them, told a simple, if not entirely satisfying, story. A former office manager in the Rose firm, Huber worked on the first lady's staff. One day in August 1996, she said, she noticed a stack of papers on a table in the first family's private quarters. Assuming it had been put out for her to file, Huber said, she carted the documents off in a storage box. Months later, while tidying up her office, Huber said she noticed the box, opened it, and recognized the long-sought billing records. Investigators were livid but found no proof to the contrary.

In the spring of 1998, Starr subpoenaed Hillary to appear before a grand jury to answer questions about her role with the Rose Law Firm and about the missing files on Castle Grande. On April 25, 1998 she testified for over four hours before a Washington D.C. Hillary said that she had very little knowledge of Whitewater finances, saying: "I've never seen these documents before, and I have no information about them." She said that she had not played a substantial role in the work done for Madison. Skeptical investigators subpoenaed the Rose billing records to determine the extent of her involvement. After considerable delay, the records were produced. They showed that Hillary had charged Madison Guaranty for 60 hours of time over 15 months, not considered a large amount, given the scope of the S&L's legal problems.

After Clinton was elected president, he named Foster chief counsel in the White House. As part of his responsibilities, Foster handled the Clintons' Whitewater affairs as well as their personal income tax returns. Basically, Foster was the guardian of the Clintons' family secrets. He represented them in the sale of their shares in the Whitewater Development Corporation. As the Clintons' lead attorney, he was at the forefront of all their alleged improprieties.

Foster mysteriously died on July 20 1993. Eventually, Foster's death was ruled a suicide by Independent Counsel Fiske. Yet his successor Starr spent over two years probing Foster's death until he, too, concluded that it was a suicide. Foster may have been obsessed with Whitewater: the loans, Madison Guaranty, the Rose Law Firm, and other scandals. Also on the day of his death, Foster learned that the FBI had searched the office of Little Rock Judge David Hale, a Clinton appointee, who claimed that Clinton had pressured him into making illegal loans. Additionally, on the day of his death, Foster received a phone call from a journalist who claimed that he had more information on alleged wrongdoings in regard to Whitewater.

After Foster's death, White House counsel Bernard Nussbaum immediately took control of Foster's papers in his White House office. Nussbaum kept the FBI and DOJ at arm's distance. It was not a crime scene, so thus most of Foster's documents were protected by attorney-client privilege. There were numerous files which related to the Whitewater land deal from 15 years before. A handwritten note was found in Foster's office. It read: "I was not meant for the job or the spotlight of public life in Washington.

But there was speculation that Foster's personal papers were taken from his White House office in the middle of the night. Eventually, his papers, including those pertaining to Whitewater, were given to the Clintons' personal attorneys. Thirteen months later in August 1994, Hillary's personal secretary stated that Foster's papers had been given to her chief of staff, Margaret Williams, who placed them in a White House safe.

Soon reports surfaced that Foster's death may not have been a suicide. When his body was officially found in a Washington D.C. park, there were indications that he may have been murdered. Foster's wife stated that he owned a silver gun. However, Park Police claim they retrieved a black gun, and ballistics and forensics experts determined that Foster was shot by a turn-of-the-century Colt .38 caliber Army revolver. There were no fingerprints on the gun; the wound in his skull was much larger than a bullet from the black gun could have inflicted; the powder burns on Foster's hand showed a hand position which indicated that the gun could not have been aimed to his mouth at that angle; dirt on Foster's shoes was inconsistent with the dirt in the area where his body was found; no suicide note was discovered until six days later where it was discovered in his briefcase, which had previously been searched; there was no signature on his suicide note; and a forensic specialist testified that the handwriting may not have been his.

In the spring of 1998, The White House argued that Foster's personal papers should not be turned over to the office of the special prosecutor. James Hamilton, Foster's lawyer and a member of the Swidler & Berlin law firm, had met with his client just nine days before his death. Hamilton argued to an appeals court that this information was confidential. He stated that their conversation was a privileged conversation and that they would not have had the conversation otherwise. On the other hand, Starr wanted possession of the notes which dealt with which involved the failed Whitewater Estates debacle. After Starr lost in an appeals court by a 2-1 vote decision, he appealed to the highest court.

In June 1998, the Supreme Court heard arguments on whether attorney-client privilege continues after the death of a client. Special prosecutor Starr wanted possession of the tapes because it may have provided evidence about whether the White House had covered up involvement of Hillary in the 1993 firings at the White House travel office. In a 6-3 vote the Supreme Court ruled that the privilege of confidentiality between attorneys and clients does not end upon one's death. Chief Justice William Rehnquist, speaking for the majority, stated that the shield between an attorney and his or her client "is one of the oldest recognized privileges" in the law and has been "recognized for well over a century" and that "the privilege survives the death of the client."

The purpose of the White House Travel Office was to make travel arrangements for members of the White House Press Corps. It operated on an annual budget of $7 million. In May 1993, its manager, Billy Dale, and his six-member staff were fired and immediately replaced by FOBs from Little Rock. Earlier in 1994, Dale had been indicted on embezzlement charges but was acquitted at his trial. One of the staff's replacements, Catherine Cornelius, 25, was a cousin of Bill Clinton. Harry Thomason, a Clinton associate, allegedly sought the firings after the Travel Office rejected his plan to get business for a travel company which he partially owned. Thomas and his wife were Hollywood producers and close friends of the Clintons.

First, there was evidence that the White House may have used the FBI to justify the dismissal of Dale. Someone in the White House obtained Dale's FBI file after he was fired. Someone in the White House obtained Dale's FBI file after he was fired. On June 5, 1996, White House counsel Bernard Nussbaum reportedly typed a background request --but with no signature -- for Dale's personal file. Nussbaum denied seeking or reviewing Dale's FBI file. FBI officials stated that they released the records solely in response to receiving the White House form and "not in response to any personal request from any official of the White house to any executive in the FBI." As a result, there may have been charges of misuse of the FBI by a White House official.

Second, Hillary Clinton was under investigation for possibly ordering the firing of the travel office personnel. Republicans accused her of orchestrating the firings of the Travel Office staff. She claimed that she was aware of the mishandling of money in the office but had never ordered the firings. David Watkins, the White House chief of administration, actually fired the Travel Office staff. He claimed that Hillary never ordered him to fire them, but he did say that she pressured him to do so. At a later date, Watkins was fired from the administration for using a helicopter to fly to a golf outing at a cost of $13,000. If Hillary was responsible for the Travel Office firings, she could have been charged with obstruction of justice.

In September 1996, a Republican-led House Government Reform and Oversight Committee investigated the allegations that Hillary was responsible for the firings. They concluded that Hillary knew about the firings two days in advance and that she was behind the scheme with the knowledge of her husband.

Towards the end of Clinton's first term, it was disclosed that over 900 FBI background files were requested by someone or some people in the White House. These included records of high ranking officials from previous Republican administrations. Clinton called the incident "a completely honest bureaucratic snafu," but the White House placed Craig Livingston, in charge of security for the White House, on leave, and a week later he resigned his position. Starr investigated the matter to determine whether Hillary helped Livingston get this White House appointment and whether White House counsel Bernard Nussbaum covered up her alleged role.

Questions about Hillary Clinton also spilled over to investments in the commodities market where speculators invest money and hope that the value of a commodity --such as soybeans, sugar, or cattle -- increases. Hillary was involved with the chief attorney for Tyson Chicken, James Blair, who also was an experienced futures trader. She allegedly gave $1,000 to invest in cattle futures. In less than one year, her $1,000 investment had jumped to $99,537, despite the fact that such a profit is almost impossible to make in that short time span. In fact, 80 percent of all investors lose money in the commodities market.

In 1978, Clinton ordered 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade, although she had only $1,000 in her account at the time. The records of her trades, which the White House obtained from the Chicago Mercantile Exchange, showed how she turned her initial investment into $6,300 overnight. In about 10 months of trading, she made nearly $100,000, relying heavily on Blair's advice. The records also raised the possibility that some of her profits, as much as $40,000, came from larger trades ordered by someone else and then shifted to her account.

Robert Bone, who ran the Springdale, Arkansas, office of Ray E. Friedman and Company (Refco), allowed Clinton to initiate and maintain many trading positions when she did not have enough money in her account to cover them. Bone refused to comment, but Blair hypothesized that it was because Clinton was a good customer and paid him $800,000 in commissions over the years.

At first, Clinton claimed that she made all the trading decisions herself and tried to play down Blair's role. Then she changed her story and stated that he had made 30 of 32 trades in that one year time frame. The White House defended Hillary Clinton's preferential treatment, saying that other customers in the same office also were allowed to trade without having enough cash in their accounts.

The next year, Blair advised Clinton again. July 17, 1979 was her first trading day, and she lost $26,460 on 10 cattle contracts she had held for more than a month, by far her worst loss as a futures player. On Blair's recommendation, she immediately went back into the market. She acquired 50 new cattle contracts - worth $1.4 million -- and when the price moved in her favor, unloaded them for a quick gain of $10,550. This recouped part of her loss.

Blair and his wife, Diane, were so close to the Clintons that they were invited to his 1993 inauguration and stayed overnight at the White House. Later, President Clinton named Diane Blair to the board of the Corporation for Public Broadcasting.

An investigation of the cattle futures market found that in one 16-month period 32 traders made more than $110 million in profits from large trades -- those of 50 contracts or more. Clinton traded positions of 50 or more contracts only three times.

Bone was suspended for three years. Refco paid a $250,000 fine which was the largest penalty in the exchange's history. Internal memos from that investigation cover transactions from the same period in June in which Clinton was trading, but not the same trades. In one instance an investigation by Leo Melamed of the Chicago Mercantile Exchange revealed found that Bone and a fellow broker were ordering 1,000 cattle contracts at a time, far over the limit allowed at the time. She said that for six trades her initial trading position in the Refco records were not reflected in Chicago Mercantile Exchange documents. On one other trade neither her purchase nor her sale was included. On that trade she netted $12,150 on 15 cattle contracts she held for four days. Clinton reported a loss of $2,480 on another questionable day which netted her $2,553.

Although her account was under-margined for nearly all of July 1979, no margin calls were made, no additional cash was put up, and she eventually made a $60,000 profit.

June 29, 1979 -- $56,466 (Margin: Value account should have had to continue trading.)

July 12. 1979 -- $24,243

July 17, 1979 -- $22,537 (Account value: Total cash on hand plus or minus paper value of contracts.)

July 20, 1979 -- $61,537

July 23, 1979 -- She withdrew $60,000 and never traded again, closing the account in October.

In April 1995, while independent counsel Starr was conducting his investigation, the Senate Whitewater Committee was formed. It consisted of 10 Republicans and 8 Democrats, and was headed by New York Senator Alfonse D'Amato. D'Amato risked being investigated for receiving stock market trader inside information after he made a $37,000 profit on a one-day stock transaction. After 14 months of investigation, the committee published its findings in a 769 report.

The majority, consisting of Republicans, alleged that:

--Hillary Clinton "dispatched her trusted lieutenants to contain any potential embarrassment or political damage," such as hiding incriminating documents relating to her alleged White House Travel Office firings after the death of Vince Foster.

--Hillary Clinton was the only suspect in the 22 month disappearance of her Rose Law Firm billing records which pertained to Madison Guaranty. "Mrs. Clinton is more likely than any other known individual to have placed the billing records in the book room (where they were found nearly two years later), especially since only a limited number of people" had reason to handle the records.

The minority Democrats concluded that:

--The Republican report was "irresponsible" and "brimming with venom" for Clinton. It had "no credible evidence" and "unfounded conclusions."

--The Rose Law Firm billing records and any documents pertaining to Travelgate were never removed from the office of Foster on the night of his death. These records may have been "moved into or within the room inadvertently."

The Senate hearings were the lasted longer than any others in American history. The cost of the investigation surpassed that of Watergate and Iran-Contra. The hearings cost American taxpayers $1.8 million.

In May 1998, the Little Rock grand jury was dismissed. Its unfinished business was turned over to the Washington panel which was investigating possible illegalities in other Whitewater related matters. While the grand jury still was seated in Little Rock, Starr was successful in prosecuting the following people:

JIM McDOUGAL. In May 1996, McDougal was indicted, and months later he was convicted on 18 of 19 conspiracy and fraud charges. In April 1997, he was sentenced to two years, fined $10,000, and was forced to pay restitution to the federal government in the amount of $4.27 million for defrauding the Small Business Administration and the FDIC. In November 1997, a cashier's check for $27,600, which was written in 1982, was discovered in a tornado-damaged abandoned car near Little Rock. It was a loan from McDougal's Madison Guaranty S&L which was payable to Bill Clinton. The president has always denied that he ever received a loan from that institution. McDougal charged that Clinton was aware of the loan and that "Clinton and I had gotten worried about having his name on the loan." McDougal said, "It certainly proves that the chief executive perjured himself when he said he never obtained a loan from Madison Guaranty." Clinton's attorneys dismissed McDougal's statements, saying that McDougal is not credible since he has repeatedly changed his account of Whitewater events. He died while in solitary confinement at Fort Worth's Federal Medical Center prison in March 1998. He was placed in "The Hole" as punishment for failing to provide a urine sample for a drug test. An autopsy indicated that he died of a heart attack and that there was no foul play.

Five hours before his death, McDougal complained of feeling ill, but he was never seen by a doctor, according to a federal government report. He also had no access to his heart medication after he was placed in a solitary confinement cell. Previously, he complained of being unable to provide urine for drug tests because of the medications he took for a variety of ailments. During the move, prison guards did not find McDougal's heart medication because they did not want to search McDougal's regular cell and disturb his sleeping cellmate, according to the report.

After his death, McDougal's book, Arkansas Mischief: The Birth of a Scandal, was published. He inferred that Clinton did receive cash payoffs when he was governor of Arkansas. However, McDougal did not offer any evidence to corroborate his story beyond his own word.

See Chapter 6 for the account of the legal process of Susan McDougal.

WEBSTER HUBBELL.Hubbell was the number three attorney in the Justice Department under Clinton in the 1990s. A decade before, he and Hillary Clinton worked for the Rose Law Firm where they performed legal work for Castle Grande land company. In a December 1994 deal, Hubbell pled guilty to mail fraud arising out of his Rose Law Firm work and promised to cooperate with the Whitewater investigation. He was sentenced to 21 months in prison and served 18, three of those in a Washington, D.C., halfway house.

The OIC grew suspicious that Hubbell had not revealed all he knew about the Clintons and, in April 1998, issued a subpoena for him to appear before the Little Rock grand jury. Hubbell refused, citing his privilege against self-incrimination. Starr countered with a grant of immunity, and Hubbell was compelled to hand over 13,120 pages of documents. The OIC was looking for proof that Hubbell had received hush money but instead he found evidence of possible tax crimes. Consequently, Starr indicted not only Hubbell but also his wife. The charge against her was later dismissed. Prosecutors were looking for evidence that suggested Hubbell had received "hush money" from the president's friends for keeping silent about possible involvement of the Clintons in illegal activities in the Whitewater scandal. Hubbell could not account for $750,000 which he received in "consulting fees" from former clients and law partners between 1994 and 1997 after he left his position in the White House. He used over 20 credit cards and ran up a bill of $750,000 in money which Starr's office saw as a pay-off, so he presumably would not leak out information about any Clinton illegalities.

Hubbell was indicted on ten felony counts of conspiracy and income tax evasion. The Hubbells were charged with underpaying their income taxes by $577,670. In 1994 alone, when Hubbell first won "consulting contracts," he and his wife reported $141,432 in taxes due, and they paid only $9,122. To the IRS. In addition Hubbell's tax accountant, Michael Schaufele, and his tax attorney, Charles Owen, were charged on the handling of income that Hubbell received in 1995 and 1996. Hubbell claimed that he was in debt and could not pay the taxes on time because he had been imprisoned for bilking his partners at the Rose Law Firm. He also challenged the tax indictment as unfair and unconstitutional.

In June 1998, Starr suffered a setback when District Judge James Robertson ruled that the OIC exceeded his authority when he sought tax-related charges against Hubbell. Robertson also stated that Starr built his case on evidence which Hubbell had furnished when he was protected by limited immunity.

Five months later, the OIC brought a third indictment against Hubbell. Starr charged him with concealing from federal regulators the role that he and Hillary Clinton played in the Castle Grande land transaction which helped bankrupt Madison Savings and Loan. He was charged with 15 counts of fraud which included making false statements, trying to impede two federal regulatory agencies, and perjuring himself before a Congressional committee.

In January 1999, a divided Washington D.C. Circuit Court of Appeals reversed the earlier opinion which had been issued by Judge Robertson who had thrown out the Starr indictment. In a 2 to 1 vote, the appeals court reinstated the tax case against Hubbell, but the court warned that Starr could not use Hubbell's own financial records as evidence against him. The panel said that Starr could use Hubbell's records only if he convinced Judge Robertson that prosecutors would not force Hubbell to incriminate himself by requiring him to turn over the documents. The three judges questioned whether Starr could meet the test, thus raising the possibility that Starr would not be able to present evidence at heart of his case.

In June 1999, the OIC once again indicted Hubbell. He pled guilty to a felony charge that he misled federal regulators about legal work which he performed with Hillary Clinton for the Rose Law Firm and that involved performing legal work for the Castle Grande tract. The indictment of Hubbell included about three dozen mentions of his "billing partner," a clear reference to Hillary Clinton. Though not accused by Starr of any wrongdoing, Hillary Clinton's name was mentioned 35 times in the independent counsel's 40-page indictment of Hubbell. Starr had listed her as a potential prosecution witness. Hillary Clinton had said publicly that her work on the project was minimal and that she did nothing wrong. By pleading guilty to the felony, Hubbell did not have to serve any prison time. The plea bargain also ended any possibility that Hillary Clinton would have to testify in court. This also precluded the chance that Starr would seek any further testimony from both the Clintons.

In the spring of 2000, the case reached the United States Supreme Court. Hubbell acknowledged his immunity did not protect the contents of his tax papers because they had been prepared voluntarily, but he argued that because the OIC did not know the papers even existed until Hubbell was compelled to produce them, Starr could not use them to build a case. The Supreme Court agreed. By an eight-to-one vote, it threw out the tax charges brought Hubbell, ruling that the prosecutor violated the confidant's right against self-incrimination. The court ruled that Starr could not conduct a "fishing expedition." The OIC could not indirectly use papers which Hubbell was forced to deliver. The court wrote that Hubbell's "act of production had a testimonial aspect, at least with respect to the existence and location of the documents sought by the government's subpoena." The grant of immunity would prevent use of the papers against Hubbell "unless the government proves that the evidence it used in obtaining the indictment and proposed to use at trial was derived from legitimate sources ‘wholly independent' " of Hubbell's compelled disclosure. Starr admitted he could not prove this. He knew about the papers -- and the alleged crime -- only because Hubbell had been compelled to produce them. Thus, Hubbell's bouts with the courts finally ended.

GOVERNOR JIM GUY TUCKER. In June 1995, Tucker was indicted on three felony charges for making false claims in obtaining $300,000 in loans from Capital Management Services back in 1987. In 1996, he was convicted on two of seven charges of fraud and conspiracy while he was governor of Arkansas. Tucker was fined $25,000 and ordered to pay $150,000 in restitution.

MUNICIPAL COURT JUDGE DAVID HALE. A Clinton appointee, Hale pleaded guilty to two felony counts of fraud and was sentenced to 28 months. He also claimed that he was pressured by Clinton to give a $300,000 loan to Susan McDougal who never repaid him. Arkansas state trooper L.D. Brown corroborated accounts by Hale that Clinton had pressured Hale into making an illegal loan to Susan McDougal, an assertion which Clinton has denied under oath.

Much later, in 1996, Clinton testified under oath in the McDougals' fraud trial. The president denied that he knew about the $300,000 which they received from Hale. Clinton said that he and his wide only were involved in a business transaction and that were not part of the day-to-day operation of the project. Consequently, Clinton maintained that he knew about the McDougals' scheming.

After Clinton was elected president, billionaire Richard Mellon Scaife contributed $1.7 million to the "Arkansas Project" which was set up to discredit the Clintons. An ardent Clinton-hater, Scaife poured in tens of thousands of dollars in an effort to bring down the Clintons. The money was channeled through two of Scaife's tax exempt foundations which runs The American Spectator. Parker Dozhier claimed that he was paid $35,000 to dig up dirt pertaining to Whitewater on the Clintons.

STARR STRIKES OUT. In the end Starr was unable to reveal evidence of crimes or impeachable offenses by Clinton -- other than his affair with Monica Lewinsky. Starr believed that in 1986 Clinton pressured Hale to make a fraudulent $300,000 loan to Susan McDougal. When Clinton testified in the 1996 trial of the McDougals, he denied the allegations, and Starr thought of charging the president with perjury. However, the special prosecutor was forced to abandon that plan, since he had no credible witnesses. Jim McDougal died in 1998; Hale became a convicted felon; and Susan McDougal refused to testify about the loan. Meanwhile, new evidence surfaced which also hurt Starr's cause. In the fall of 1998, an independent investigator uncovered evidence that $8,800 of Hale's legal fees were paid by right wing philanthropist Richard Mellon Scaife. David Bowden, Hale's attorney, confirmed that his client received the money as a "loan."

Starr also hoped to reveal evidence that Hillary Clinton were responsible for the Travel Office firings in 1993. However, there was insufficient evidence to bring forth indictments, and nothing in the probe implicated the president.

At the start, Republicans believed that the most serious scandal was Filegate. The GOP charged that the improper acquisition of over 900 FBI files on members of their party was part of a dirt tricks operation by the White House, However, Starr again was stalled. He found no evidence that the files were obtained for political reasons to embarrass Republicans. He was forced to conclude that the collection of the files was what the White House consistently insisted: a bureaucratic blunder.

In November 1998, Starr reported to the House Judiciary Committee that his office did not have enough cause to hand down indictments involving Whitewater. The independent counsel said that he kept hoping for a breakthrough in negotiations with two other potential witnesses who might corroborate McDougal's account: former Arkansas governor Jim Guy Tucker and McDougal's former wife, Susan. Starr knew that his office would have a problem with a single witness. He appeared to boast when he told the committee that he won 14 criminal convictions, including cases brought against Hubbell and Tucker.

Starr continued his investigation of Whitewater. He was convinced that White House officials, as well as some of the Clintons' friends in Arkansas, were obstructing his probe. Starr felt sure that at least six people what happened with Whitewater. But both Jim McDougal and Vince Foster were dead. Bill and Hillary Clinton, he was convinced, were covering up any illegalities which may have occurred. That left two others -- Susan McDougal and Webster Hubbell -- who both served jail time. But Starr was going no where. So he turned to Lewinsky.

Chronology:

1978: Attorney General Bill Clinton and Clinton joined with Jim and Susan McDougal to borrow $203,000 to buy 220 acres of land in Arkansas' Ozark Mountains. They soon form the Whitewater Development Corporation intending to build vacation homes. Clinton is elected governor.

1980: Clinton lost his reelection bid and entered private legal practice. Jim McDougal, who served briefly as Governor Clinton's economic development director, resigned government to buy a small bank in Kingston, Arkansas. He loaned $30,000 to Hillary to build a model house on a Whitewater lot.

1982: McDougal bought a small savings and loan and named it Madison Guaranty. After two years as a private citizen, Clinton was once again elected governor.

1984: Federal regulators began to question the financial stability and lending practices of Madison Guaranty, criticizing Madison's speculative land deals, insider-lending and hefty commissions paid to the McDougals and others. Clinton is reelected governor.

1985: Jim McDougal held a fund-raising event at Madison Guaranty to help pay off a $50,000 Clinton campaign debt. Investigators later determined some of the money was improperly withdrawn from depositor funds. McDougal hired the Rose Law Firm, where Hillary was a partner, to do legal work for the ailing savings and loan. Hillary and another Rose lawyer sought state regulatory approval for recapitalization plan for Madison.

1986: McDougal borrowed $300,000 from a company owned by David Hale, a former Little Rock judge. Hale's company received federal funds from the Small Business Administration

to lend to disadvantaged business owners, but an investigation 10 years later alleged that he lent up to $3 million to political figures instead. Citing improper practices, federal regulators removed McDougal as Madison Guaranty's president, but he retained ownership.

1988: Witnesses from the Rose Law Firm said Hillary requested the destruction of Madison land contract files. Hillary wrote Jim McDougal to ask for power of attorney to sell off remaining Whitewater lots and clear up bank obligations.

1989: Madison Guaranty collapsed after a series of bad loans and a change in government accounting procedures. The federal government shut it down and spent $60 million bailing it out. Jim McDougal was indicted on federal fraud charges related to his management of a Madison real estate subsidiary.

1990: Jim McDougal was acquitted.

1992: The Clinton presidential campaign gathered information on Whitewater and Madison Guaranty. A report commissioned by the campaign claimed the Clintons lost $68,000 on Whitewater, an estimate later adjusted down to somewhat over $40,000. The Federal Resolution Trust Corporation, investigating causes of Madison's failure, sent a referral to the Justice Department that named the Clintons as "potential beneficiaries" of illegal activities at Madison.

January 1993: Clinton's first term as president began.

May 1993: White House fired seven employees in the travel office, possibly to make room for Clinton friends. An FBI investigation of the office ensued, allegedly opened under pressure from the White House to justify the firings.

June 1993: Deputy White House Counsel Vincent Foster filed three years of delinquent Whitewater corporate tax returns.

July 1993: Foster was found dead in a Washington area park. Police ruled the death a suicide. Federal investigators were not allowed access to Foster's office immediately after the discovery, but White House aides entered Foster's office shortly after his death, giving rise to speculation that files were removed from his office.

September 1993: The first of three meetings in which Treasury Department officials tipped off Clinton aides about the progress of the RTC investigation.

October 1993: RTC's criminal referral was rejected by Paula Casey, United States attorney in Little Rock and former law student of Bill Clinton.

December 1993: The White House agreed to turn over Whitewater documents to the Justice

Department, which had been preparing to subpoena them. These documents included files found in Foster's office.

January 1994: Attorney General Janet Reno named New York lawyer and former United States attorney Robert Fiske as special counsel to investigate the Clintons' involvement in Whitewater. Fiske announced he would also explore a potential link between Foster's suicide and his intimate knowledge of the developing Whitewater scandal.

February 1994: Republican attorney Jay Stephens was appointed to head the Resolution Trust Corporation's investigation of the failure of Madison Guaranty.

March 1994: Webster Hubbell abruptly resigned as associate attorney general after allegations were raised about his conduct at the Rose Law Firm. Two of Clinton's top political advisers called business friends and lined up more than $500,000 for Hubbell, including $100,000 from the Lippo Group. Hubbell was later convicted of fraud and serves 18 months in jail.

Summer 1994: The House and Senate Banking committees began hearings on Whitewater. Twenty-nine Clinton administration officials were subpoenaed or testify at congressional hearings. All were cleared of any wrongdoing.

August 5, 1994: A United States Court of Appeals panel refused to reappoint Fiske as special counsel, citing a possible conflict of interest because he was appointed by Clinton's attorney general, Janet Reno. Ken Starr, a former federal appeals court judge and United States solicitor who worked in the Reagan and Bush administrations, succeeded Fiske as the independent counsel to investigate Whitewater-Madison matters. He reissued subpoenas for documents, such as the Rose billing records of Hillary.

January 3, 1995: The Democratic majority on the Senate Banking Committee released a report finding no laws were broken in the Whitewater matter.

April 22, 1995: Starr interviewed the Clintons privately.

July 18, 1995: The Senate Special Whitewater Committee, chaired by Republican Alfonse D'Amato, began hearings on Whitewater and on Foster's suicide. D'Amato was also a chairman of Republican Bob Dole's presidential campaign. The hearings lasted 11 months.

August 10, 1995: The House Banking Committee, chaired by Republican Jim Leach of Iowa, finished its examination and found no illegalities.

August 17, 1995: A grand jury charged Jim and Susan McDougal and Arkansas Governor Jim Guy Tucker with bank fraud relating to questionable loans.

October 26, 1995: The Senate Whitewater committee issued 49 subpoenas to federal agencies and others involved in the affair.

December 12, 1995: White House associate counsel William H. Kennedy, who worked at

the Rose Law Firm, refused to release subpoenaed notes of a 1993 meeting between administration officials and the president's lawyers about Whitewater.

December 20, 1995: The Senate voted along party lines to enforce the subpoena. The next day, the White House dropped its claim to attorney-client privilege and released the notes. They proved vague and did not reveal any illegality, but contained the phrase "Vacuum Rose law files WWDC Docs - subpoena."

January 4, 1996: Hillary's billing records from the Rose Law Firm were found on a table in the White House residence book room after two years. Clinton aide Carolyn Huber said she found the bills in August 1995 but did not realize their significance until coming across them again. The documents included copies of bills for Hillary Clinton's legal work, showing she performed 60 hours of legal work for Madison in 1985 and 1986.

January 15, 1996: Republicans suggested billing documents may have been withheld from their investigation to disguise how much work Hillary had done for Madison Guaranty. The White House issued a denial.

January 22, 1996: Starr subpoenaed Hillary in a criminal probe to determine if records were intentionally withheld. This was the first time a wife of a sitting president had been subpoenaed.

January 26, 1996: Hillary testified before a grand jury about the discovery and content of the billing records.

March 4, 1996: Whitewater trial of Arkansas Governor Jim Guy Tucker and the McDougals began in Little Rock.

April 22, 1996: David Hale, the former owner of a government-funded lending company who had pleaded guilty to two felonies, testified at Whitewater trial that in early 1985 then governor Clinton pressured him to make a fraudulent $300,000 loan to Susan McDougal and asked that his name be kept out of the transaction.

April 28, 1996: Clinton testified on videotape as a defense witness for just over four hours.

He denied Hale's charge. The tape was played to the Whitewater trial jury on May 9.

May 26, 1996: Tucker and the McDougals ere convicted of nearly all the fraud and conspiracy charges Starr lodged against them 10 months earlier.

May 28, 1996: The White House acknowledged that during four months in late 1993 it wrongly collected FBI background reports on hundreds, including prominent Republicans. Director of personnel security, Craig Livingston, later took responsibility.

June 17, 1996: The "second" Whitewater trial began. Arkansas bankers Herby Branscum and Robert Hill wee accused of illegally using bank funds to reimburse themselves for political contributions, including contributions to Clinton's gubernatorial and presidential campaigns.

June 18, 1996: The Senate Whitewater committee finished its investigation. Republicans and Democrats remained divided in their respective reports on whether the Clintons committed any ethical breaches.

July 7, 1996: Clinton testified on tape for the second Whitewater trial.

July 15, 1996: Tucker resigned as governor of Arkansas.

July 16-17, 1996: Deputy White House Counsel Bruce Lindsey, named an unindicted co-conspirator in the Branscum-Hill trial, testified about his role as the treasurer of Clinton's gubernatorial reelection effort in 1990. He said he never sought to conceal from regulators two large cash withdrawals he ordered.

July 18, 1996: Clinton's videotaped testimony from July 7 was aired at the trial. In it, Clinton denied naming the two defendants to unsalaried state posts in exchange for contributions to his 1990 gubernatorial campaign.

August 1, 1996: In a major setback for Starr's investigation, Branscum and Hill were cleared on four counts of bank fraud by a federal jury, which deadlocked on seven other charges.

August 19, 1996: Tucker received a suspended four-year sentence after his doctor testified that he would likely die of liver disease if imprisoned. Tucker was placed under home detention and fined $319,000.

August 20, 1996: Susan McDougal was sentenced to two years in prison for her role in obtaining an illegal loan for the Whitewater venture.

September 4, 1996: Susan McDougal, who had considered cooperating with prosecutors, said she did not trust them. She entered jail for contempt of court rather than testify in front of a grand jury.

September 23, 1996: An FDIC inspector general's report concluded Hillary drafted a real estate document that Madison Guaranty Savings and Loan used to "deceive" federal regulators in 1986.

September 30, 1996: The General Accounting Office reported that independent counsels investigating Clinton and his administration have spent more than $25 million. Starr alone spent more than $17 million.

November 24, 1996: Clinton's former campaign strategist for the 1992 election, James Carville announced plans to attack Starr as a partisan hatchet man with a right-wing agenda.

February 17, 1997: Starr unexpectedly announced he would leave his post as independent

counsel in August to become the dean of Pepperdine University Law School in California. After much criticism, Starr reversed his decision four days later and resolved to keep his post until after the investigation was completed.

April 10, 1997: Hillary denied on a radio talk show that hush money was arranged for former law partner Webster Hubbell. She said Whitewater reminded her "of some people's obsession with UFOs and the Hale-Bopp comet some days."

April 14, 1997: Jim McDougal was sentenced to three years in prison for his conviction on 18 fraud and conspiracy charges. Starr requested a reduced sentence for McDougal for assisting the prosecution.

April 22, 1997: The district court extended the Whitewater grand jury's term six more months, until November 7, after Starr says he has "extensive evidence" of possible obstruction of justice.

April 25, 1997: The Eighth Circuit Court of Appeals, overruling a lower court, said the White House had to turn over subpoenaed notes to Starr. The notes, for which the White House claimed attorney-client privilege, were taken by White House lawyers when investigators questioned Hillary.

May 2, 1997: The White House announced that it would appeal the decision on the subpoenaed notes to the Supreme Court.

June 23, 1997: The Supreme Court refused to hear the appeal, and the White House turns over the notes.

July 15, 1997: Starr's office concluded that Vincent Foster's death in 1993 was a suicide.

July 30, 1997: Susan McDougal was moved into a federal detention facility after seven months in two Los Angeles jails, much of which she spent locked in a windowless cell 23 hours a day. The move came week after the American Civil Liberties Union filed a lawsuit alleging that McDougal was being held, at Starr's request, in "barbaric" conditions in an attempt to coerce her to testify.

September 30, 1997: The General Accounting Office announced that Starr had spent over $25 million on his investigation as of March 1997.

January 16, 1998: Starr received permission to expand his investigation into whether Clinton and Vernon Jordan encouraged Lewinsky to lie under oath about her alleged affair with the president.

March 8, 1998: Jim McDougal died just months before he hoped to be released from prison.

April 1, 1998: The General Accounting Office announced that Starr had spent nearly $30 million on his investigation as of September 1997.

April 16, 1998: Starr said there is no end in sight to his investigation, and officially declined the Pepperdine job, which was being held open for him.

April 23, 1998: Susan McDougal, finally serving her two-year fraud sentence after completing her 18-month contempt of court sentence, refused again to testify before Starr's Little Rock grand jury.

April 25, 1998: Starr and deputies questioned Hillary about Whitewater for nearly five hours at the White House. The testimony was videotaped for the Little Rock grand jury.

April 30, 1998: A new set of tax evasion and fraud charges were brought against Webster Hubbell.

May 4, 1998: Susan McDougal was indicted on charges of criminal contempt and obstruction.

November 19, 1998: Starr testified before the House Judiciary Committee that he did not have the evidence to recommend impeachment charges in the areas of Whitewater, Filegate, and Travelgate.

November 23, 1998: Susan McDougal was acquitted on all charges in the case of Los Angeles Philharmonic director Zubin Mehta and his wife.