Once-Secret Memos Question Clinton's Honesty; Federal Prosecutors Considered Indicting First Lady

Article excerpt


A decade before Sen. Hillary Rodham Clinton admitted fudging the truth during the presidential campaign, federal prosecutors quietly assembled hundreds of pages of evidence suggesting she concealed information and misled a federal grand jury about her work for a failing Arkansas savings and loan at the heart of the Whitewater probe, according to once-secret documents that detail the internal debates over whether she should have faced criminal charges.

Ordinarily, such files containing grand jury evidence and prosecutors' deliberations are never made public. But the estate of Sam Dash, a lifelong Democrat who served as the ethics adviser to Whitewater Independent Counsel Kenneth W. Starr, donated his documents from the infamous 1990s investigation to the Library of Congress after his 2004 death, unwittingly injecting into the public domain much of the testimony and evidence gathered against Mrs. Clinton from former law partners, White House aides and other witnesses.

The documents, reviewed by The Washington Times, identify numerous instances in which prosecutors questioned Mrs. Clinton's honesty, an issue that continues to dog her on the campaign trail after she was forced to acknowledge earlier this year exaggerating a story about coming under sniper fire as first lady during a visit to Bosnia in 1996.

For instance, the papers say prosecutors thought Mrs. Clinton first concealed her legal representation of Madison Guaranty Savings and Loan Association - and the money she made doing it - during the 1992 presidential campaign when she and her husband, then-Arkansas Gov. Bill Clinton, came under fire in a questionable Arkansas real estate project known as Whitewater.

Beginning in March 1992 and continuing over the next several years, Mrs. Clinton steadfastly denied that she ever "earned a penny" in representing her Rose Law Firm clients, including the failing thrift's owners, James and Susan McDougal - the Clintons' partners in the Whitewater Development Corp. project.

But the newly discovered records, more than 1,100 pages in 30 separate documents, tell a different story.

A June 1998 draft indictment of Mrs. Clinton's Rose firm partner Webster L. Hubbell, who followed the Clintons to Washington in 1993 as associate attorney general, said Mrs. Clinton did legal work for Madison "continuously" from April 1985 to July 1986. It also said she represented the thrift before the Arkansas Securities Department for approval to issue preferred stock, helped Madison obtain a questionable broker-dealer license to sell the stock and was actively involved in a failed Madison project known as Castle Grande.

The draft indictment clearly asserts that Mrs. Clinton, despite her denials, represented Madison and its projects "in a series of real estate and financial transactions." A separate 183-page report included in the Dash documents said Mr. Hubbell and Mrs. Clinton "concealed from federal investigators the true nature of their work" with Madison and its various entities.

Clinton campaign spokesman Jay Carson disputed the allegations.

"This is a baseless accusation which was looked into over a decade ago in an investigation that took $71.5 million and eight years to determine there was no case," he said.

But exit polls from Tuesday's North Carolina and Indiana primaries found that about half of the voters in each state said they didn't find Mrs. Clinton "honest and trustworthy."

Mrs. Clinton misspoke in March when she claimed she had come under sniper fire during a trip to Bosnia in 1996. She said she and her daughter, Chelsea, ran for cover under hostile fire shortly after her plane landed

in Tuzla. She later admitted to making a "mistake."

The Library of Congress documents have not been released publicly. A library official said they are still being "processed."

In April 1998, Whitewater prosecutors, divided over Mrs. …