Whitewater Scandal

James B. (Jim) McDougal (August 25, 1940 – March 8, 1998), a native of White County, Arkansas, and his wife, Susan McDougal (the former Susan Carol Hendley), were financial partners with Bill Clinton and Hillary Rodham Clinton in the real estate venture that led to the Whitewater political scandal of the 1990s. Starting in 1982, McDougal operated Madison Guaranty Savings and Loan.

On April 14, 1997, McDougal was convicted of eighteen felony counts of fraud and conspiracy charges. The counts had to do with bad loans made by Madison in the late 1980s. As his savings and loan was federally-insured, the $68 million was paid by taxpayers. During the McDougal case, special prosecutor Kenneth Starr requested a reduced sentence for McDougal because of McDougal's assistance in the investigation.

He joined with his wife, from whom he was later divorced, and the Clintons to borrow $203,000 to buy land in the Ozark Mountains for vacation homes. When the development failed, he attempted to cover the losses with S&L funds. McDougal was prosecuted for fraud in 1984 and hired the Mrs. Clinton's Rose Law Firm to defend him. Questions remain in regard to Mrs. Clinton's Rose Law Firm billing records on Madison Guaranty and how much work she actually did. McDougal also held a fundraiser that paid off Clinton's then campaign debt of $50,000. Madison cashier's checks accounted for $12,000 of the funds raised.

Jim McDougal, a staunch Democrat, was a former aide to the late U.S. Senator James William Fulbright. He later was a political science professor at Ouachita Baptist University in Arkadelphia in Clark County. Another Arkansas politician, Bob Cowley Riley, lieutenant governor from 1971-1975, also taught political science at OBU.

Jim McDougal died of a heart attack in federal prison in Fort Worth, Texas. The circumstances of his death remain questionable: he was apparently denied access to his heart medication, and he was placed in solitary confinement without the medication.

In 1982, Jim McDougal made a failed bid for the United States House of Representatives against the Republican incumbent John Paul Hammerschmidt in Arkansas's northwesterly Third Congressional District. Hammerschmidt, who had a reputation for excellent constituent services, polled 133,909 votes (66 percent) to McDougal's 69,089 (34 percent). Coincidentally, Clinton himself had been defeated by Hammerschmidt in this same district in 1974.

David Hale is a former Arkansas municipal judge, a former Arkansas banker, a self proclaimed Bill Clinton political supporter, though he never made substantial contributions to any of his campaigns. He alleged the charges that resulted in the Whitewater scandal trials. He worked with Jim McDougal on $3 million in loans from a lending company he ran. He plead guilty and went to jail for conspiring to defraud the Small Business Administration in looting the funds from a dummy business he established. He was sentenced to two years and four months in prison for fraud unrelated to the Whitewater deal. As part of his guilty plea in looting money from an insurance company, he provided the allegations for the Whitewater scandal, and testimony for its investigators. He testified in the trial of Jim and Susan McDougal in 1989 when the Madison Guaranty Savings and Loan originally failed, and never mentioned Clinton in a detailed account of the $300,000 loan at that time. It was not until Hale came under Indictment on other charges that he alleged any crime by Clinton. There is substantial evidence that Hale brought these charges for profit, and to reduce his own sentence.

Hale testified in U.S. District Court that Gov. Bill Clinton pressured him to make a fraudulent $300,000 loan and that he not be named in the loan. On June 23, 1994 Eugene Fitzhugh pleaded guilty to trying to bribe David Hale.