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MONICA LEWINSKY CAME INTO

KENNETH STARR7S LIFE JUST WHEN

Where IT SEEMED HIS INVESTIGATION WAS

COMING TO AN END-WITH FEW,

Starr IF ANY, INDICTMENTS IN SIGHT.

A special TAS report Stands BY BYRON YORK

n Wednesday, January q,Whitewater independent coun- The brevity of the questioning immediately set Starr-watch- sel Kenneth Starr went to the White House to question ers to speculating. Did it mean that Starr was just wrapping up First Lady Hillary Rodham Clinton. Accompanied by the loose ends of an investigation that was over-in which he lawyers for both sides, they met in the second-floor Treaty would take no action against the Clinton White House? Or was Room. The subject was the scandal commonly known as File- he using the session to make a final assessment-to look the first sate-the Clinton White House’s improper acquisition of hun- lady in the eye-before going forward with an indictment? dreds of FBI files on Republicans from previous administrations. Whatever the answers, such questions were soon forgotten According to several published accounb, the first lady told Starr amid news of the Monica Lewinsky affair (unbeknownstto Mrs. she didn’t know anything about the retrieval of the files. And Clinton, Starr had begun that probe on the Monday before she said she didn’t know who hired Craig Livingstone, the White their Wednesday meeting). Still, the White House session on House operative who ran the file project. It was a story she had Filegate raises questions about the Starr investigation. Starr- told many times in the past; not surprisingly, news of the meet- along with his predecessor, Robert Fiske- has spent four years ing was buried deep inside the next day’s papers. and about $40 million investigating the constellation of events But there was one intriguing fact about the session. Given the now known simply as Whitewater. His probe has resulted in war of words that has erupted lately between Mrs. Clinton and three trial convictions-including one ofa sitting governor-and Starr, the meeting was remarkably free of acrimony. In fact, it was twelve guilty pleas. But where did the investigation stand at the downright upbeat. “She was very friendly,” says a person who moment Monica Lewinsky sent Stan moving in a new direction? knows what went on in the room. Of course, that may have had Was Starr about to move aggressively on a broad range of new something to do with the length of the meeting; the whole thing charges against the Clintons and their associates? was over in about ten minutes. It appears the answer is no. Extensive interviews with several ...... , ...... , ...... , ., ...... ,...... sources close to the independent counsel’s office, along with con- BYRONYORK is an investigative writer with TAS. versations with nearly a dozen defense lawyers involved in the

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case, plus a look at recent court documents, After the trial, Jim McDougal decided all suggest that most of what we know as The mysterious appearance of to cooperate with Starr and changed his Whitewater was actually winding down at story, saying did indeed know the time of the Lewinsky revelations. Mrs. Clinton’s billing records in the about the loan. Then Starr’s prosecutors The investigation, which at times has brought the newly convicted Susan seemed like an amorphous, far-reaching White House residence is likely to McDougal in front of the Little Rock grand search for facts, has now become narrowly jury. She was given immunity and asked focused on just a few issues. Although those remain a mystery; no indictments whether she had ever discussed the loan issues are not yet resolved, they appear head- with Clinton and whether, to her knowl- ed toward conclusions that, while they will there. Nor in the removal of docu- edge, the president had testified truthfully not exonerate the Clintons, will at least let at the trial. McDougal refused to answer, them off the legal hook. There is, for exam- ments from ’s office. leading Judge Susan Webber Wright to cite ple, the fraudulent $ym,ooo government- her with civil contempt of court. Since backed loan that was obtained by the Clin- then, she has served nearly 18 months in jail tons’ former business partner Susan McDougal. Part of that and has loudly accused Starr of police-state tactics. illegal money went into the Whitewater corporation, and Starr Susan McDougal’s intransigence has put Starr in a bind: he has been trying to determine whether Bill Clinton lied in 1996 needs more witnesses if he is to make a case against the presi- when he denied any knowledge of it. There is a good chance that, dent. A possible breakthrough occurred in late February when for- unless new evidence appears or some crucial witness decides to mer Arkansas governor Jim Guy Tucker -already convicted in the cooperate, Starr will not be able to make a case. Another issue is first Whitewater trial-pleaded guilty to a second set of felony the money paid to former Clinton confidant , charges unrelated to Whitewater. Facing time in jail, Tucker allegedly as payoff for his refusal to cooperate with Starr. Again, might provide new information on Castle Grande. Or he might Starr needs more evidence-which might be shaken loose by be willing to talk about an October 1993 White House meeting with indicting Hubbell again-to prove that the payments were hush Clinton, a session that took place as government regulators were money. If Starr doesn’t get the help he requires, both investiga- bearing down on the Madison case (the two bitter rivals later said tions will likely end without any further action. they discussed Arkansas highways). But sources close to Starr’s Beyond that, much of the rest of the Whitewater investiga- office are simply not sure precisely how helpful Tucker will be. tion is nearly over. The mysterious appearance of Hillary Rod- “He potentially has a lot of information, and by virtue of his ham Clinton’s old billing records in the White background and stature, he’s more credible” than Jim McDou- House residence is likely to remain a mystery; no indictments gal or David Hale, says one knowledgeable source. But another there. The removal of documents from Vincent Foster’s office warns that the simple fact that Starr agreed to a plea deal with following his suicide will also probably conclude with no pros- Tucker does not in itself mean that Tucker has extremely valu- ecutions. In addition, Starr’s probe of the firings of the White able information. Perhaps, he says, Starr had nearly as much House Travel Office staff seems largely complete, and, bar- motivation as Tucker to make a deal. Pointing to “the prospect of ring the appearance of new information, it appears unlikely a lengthy trial of a former governor who was forced out of office he will take any action there. And the same is true with Filegate. and who is a convicted felon already,” this source says that per- “As a whole, it’s a reasonable conclusion that some parts of the haps “there was not enough there to make it worth the expendi- investigation have been effectively completed,”says another per- ture of resources to prosecute it.” son with knowledge of Starr’s operation. “If there were going to So Tucker remains a question mark. And as Starr assesses be charges brought in those areas, they probably would have Tucker’s value, he still has to decide what to do with Susan been brought by now.” McDougal. There is no indication that she will ever cooperate. She has made it clear that she is content to stay in jail rather than THE LOAN answer questions about Bill Clinton’s involvement in White- First, the issue of the illegal $ym,ooo loan to Susan McDougal, water. Serving out all her sentences won’t be a problem, the Clintons’ former business partner. It is possibly the central McDougal’s attorney recently told the Washington Post. “She crime ofWhitewater, at least the Arkansas phase of Whitewater. can do this time,” the lawyer said, “standing on her head.” Both McDougal and her husband Jim have been convicted on Starr’s team is hoping McDougal’s resistance will be soft- fraud charges relating to the loan-but the question remains ened by a recent appeals court decision upholding her fraud whether Starr will be able to charge anyone else. conviction. There is some basis for that hope. As she finishes Witness David Hale, who earlier pleaded guilty to fraud serving 18 months for contempt, she will be transferred to a fed- charges, has said that Clinton knew about-indeed, showed inter- eral prison to begin serving her Whitewater sentence. In that est in-the loan (which was never paid back). At the McDougal prison she will not be free to appear in the media-as she did trial, both Jim and Susan McDougal denied that Clinton played recently on CNN’s “Larry King Live”-and thus will be less any role in the loan arrangements. And Clinton himself testi- able to keep her case in the public eye. That might diminish fied-under oath and on video tape-that he had nothing to do her hopes for a bonanza in book and movie rights and nudge her with the fraudulent loan and did not know anything about it. in the direction of cooperating with Starr.

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Even if that doesn’t happen, there are still a few more incen- We also know that several other friends and political sup- tives Starr might use against her. McDougal could be charged porters of the president pitched in to arrange help for Hubbell. with criminal contempt, which could lead to her being impris- The Lippo group, source of hundreds of thousands of dollars in oned for three to five years-apart from her Whitewater fraud questionable campaign contributions to Bill Clinton, became sentence and any sentence that might result if she is convicted Hubbell’s biggest single client. Hubbell also got good deals with on unrelated theft charges in California. “That would really put the telephone company Sprint, Time Warner, and smaller com- the screws on her,” says a knowledgeable source. And it might panies run by Clinton campaign contributors. And Vernon Jor- have another effect to uphold the rule of law. Some who have dan put in a word for him at Revlon, leading to yet another deal. followed the investigation closely believe that the government This contact, incidentally, led Stan to question whether Jor- simply cannot tolerate McDougal’s behavior. To thumb one’s dan’s endorsement of Monica Lewinsky to the same company was nose at the law, which McDougal has done, ultimately under- part of an effort to buy her silence. mines the system. Another plum that came Hubbell’s way was a consultingdeal Of course, it remains an open question whether it is Starr’s job with the city of Los Angeles. The $49,500 no-compete contract to to continue pressing this point. “I can’t believe they want to was arranged for Hubbell by former Commerce Secretary and prosecute Susan for criminal contempt,” says another knowl- current Clinton scandal lawyer Mickey Kantor. Hubbell col- edgeable source. “With all their other issues, to divert resources lected half the money and did almost no work before city officials to prosecute her does not seem to be highly likely.” caught on; an audit done by the Los Angeles controller’s office concluded that Hubbell had bilked the city and suggested pros- WEBB ecution might be in order. In March 1994, the Clintons’ close friend Webster Hubbell was Finally, while Hubbell was in jail, he kept in close contact with forced to resign his post as the number-three man in the Justice the White House. Last year, the Los Angeles Times reported that Department because of allegations he stole nearly $500,000 Clinton confidante Marsha Scott visited Hubbell regularly while from his-and the first lady’s-old law firm. Nine months later, he was in prison, often bringing messages from the Clintons. in December, Hubbell pleaded guilty. He had tears in his eyes The paper also reported that Scott traveled to Little Rock to as he stood before a federal judge in Little Rock, admitting his meet with Hubbell at the time he was first called before the wrongdoing and promising to cooperate with Starr. Whitewater grand jury. But Hubbell didn’t keep his word; he never provided very So there is plenty of reason to suspect that the Hubbell pay- much useful information and finally announced that he would ments were something other than simple friendly generosity. not cooperate at all. It wasn’t until much later that the public But how can Starr find out more? After all, most of the people learned that Hubbell-at the same time he was stiff-arming from whom Hubbell took money were paying him as a political Starr-had received about $500,000 in financial assistance favor and thus didn’t care if he failed to actually perform any solicited by friends of the president. Most of that was in the work. It is unlikely they will help Starr. Given that, the Los Ange- form of contracts for work that Hubbell refused to describe, les consulting deal becomes quite important. City officials leading to suspicions that the money was paid to Hubbell to buy appeared angry at Hubbell; they shared their audit with Starr his silence in Whitewater. and testified before the Washington grand jury. But it remains to Both the president and the first lady denied it. “No one had be seen how much they would help in an actual prosecution. And any idea ...what the nature of the allegations were against Mr. the amount of money that Hubbell took from the city-$25,mo- Hubbell,” when they arranged for the payments, Bill Clinton told while certainly enough to charge Hubbell with a felony, might reporters last year. At about the same time, Hillary Rodham not result in the kind oflong prison sentence that would persuade Clinton denied any payoffs to Hubbell and said the suspicions Hubbell to cooperate. were “part of the continuing saga of Whitewater.You know, the Beyond that, there is the question of taxes. Hubbell received never ending fictional conspiracy that, honest to goodness, a lot of money in a short period of time in 1994. “Tax issues are reminds me of some people’s obsession with UFOs and the Hale- always lurking when you get a lot of money like that,” says a Bopp comet.” source who has closely followed the investigation. If Hubbell But several subsequent revelations have tended to support did not pay all his taxes, that would certainly be Starr’s strongest hush-money suspicions. In a “task list” compiled by the White weapon against him. At various times in the past year, there have House counsel’s office in December 1994, lawyer Jane Sher- been strong rumors that Hubbell would indeed face indictment bume wrote “Hubbell:Monitor cooperation” as one of the White on tax charges. His attorney, former House Iran-Contra counsel House’s priorities in dealing with the Whitewater investigation. John Nields, declined to comment. Several months earlier, during a March 1994 meeting at the But would Starr be able to charge any individuals higher up the White House, then-chief of staff Mack McLarty told the first chain? To do so, he would have to prove that they arranged for lady that he, McLarty, would arrange for some money for Hubbell. Hubbell’s business deals in exchange for his silence on Whitewater. And White House records show that Hubbell-while publicly Of course, they have all said they were just coming to the aid of keeping his distance from the president and first lady-visited a close friend. ‘You’ve got to pierce the pretext that they were them at the White House at least seven times in the months helping a friend,” says a source. But the source adds that “is diffi- after he resigned from the Justice Department. cult to do without direct evidence.” And it’s likely that the only

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direct evidence that exists will be the testi- no further than Senate investigators before mony ofWebb Hubbell, should he decide to At various times in the last them. That doesn’t mean suspicions do offer it. Ifhe doesn’t, it is entirely possible that not remain, but suspicions-even when the Hubbell investigation, like the others, year there has been talk that supported by some circumstantial evi- will end without any high-level indictments. dence-are not a sufficient basis for crim- Hubbell would indeed face inal charges. THE BILLING RECORDS A related issue is the removal of AND FOSTER’S PAPERS indictment on tax charges. papers-perhaps including the billing It was a revelation that electrified the Senate records-from Foster’s office on the night Whitewater Committee. On January 5, 1996, But would Starr be able to charge of July 20,1993, and in the days thereafter. the White House announced that it had dis- During the Senate Whitewater hearings, a covered the “missing” billing records that anyone higher up the chain? Secret Service officer testified that he saw itemized Mrs. Clinton’s work for the corrupt Margaret Williams, who at the time was Savings & Loan. The the first lady’s chief of staff, leaving Fos- records had been subpoenaed more than two years earlier. ter’s office the first night with several file folders. Although Mrs. Clinton had steadfastly maintained that she did very lit- strongly challenged by committee Democrats, Henry O’Neill tle work for Madison. She also told federal regulators that she was unwavering in his account of seeing Williams with the didn’t remember doing any work for a real estate deal called Cas- files, which he said she took to her office. Williams denied it and tle Grande, a sham transaction that involved, in varying degrees, insisted she had gone to Foster’s office that night with the “irra- such figures as the McDougals, Tucker, Hubbell, and Hubbell’s tional hope that I would walk in and find Vince Foster there.” relatives. But the billing records told a different story, revealing that Senators also wanted to know about more than a dozen phone Mrs. Clinton billed Madison for more than a dozen phone calls calls to the White House made by ’s friend and meetings relating to Castle Grande. Susan Thomases in the hours and days after Foster’s death. Beyond that, the White House explanation of the way the Both Williams and later Thomases denied they were part of a records were “discovered” was difficult to believe. hde Carolyn plan to remove incriminating documents from the office. On Huber said she simply looked down one day and saw the records more than 150 occasions during her testimony before the Sen- lying on a table in the book room, a small chamber in the White ate, Thomases said that she did not recall some of the conver- House residence. “I didn’t know who left them there,” Huber sations and events in question. told the Senate committee. “Someone did.” Senate investigators It appears that this case too, like that of the billing records, immediately suspected that the records- which had been exam- remains essentially unresolved. A lawyer for Williams declined ined by Vincent Foster during the 1992 campaign-might have to comment, but Benito Romano, Thomases’ attorney, says it been among the documents removed from Foster’s office and has been a year since he had any contact with Starr’s office. “We taken to the White House residence in the aftermath ofhis death. were specifically told that she was not a target,” Romano says of The question quickly ended up in Starr’s hands. His investi- Thomases. Lawyers for other figures involved in the issue also gators “were all gung-ho on that one,” says a knowledgeable confirm they have not been contacted by Starr’s office in at source. Within three weeks of the discovery of the records, Starr least a year, all of which suggests that Starr does not plan to indict subpoenaed Mrs. Clinton to testify before the Washington grand anyone in this matter. jury. The subpoena was widely interpreted as a sign of Starr’s impatience with her cooperation-or lack of it-in the investi- FILEGATE gation; on previous occasions, he had allowed her to be ques- It is difficult to recall the excitement of many Republicans in June tioned at the White House. After her testimony, the first lady told 1996 when it became known that the White House had improp- reporters that “I, like everyone else, would like to know the answer erly requested-and received-the FBI files of hundreds of about how those documents showed up after all these years.” But members of previous Republican administrations. (The list she said she just didn’t know. included the names of James Baker, Marlin Fitzwater, Tony Starr, meanwhile, was grasping at straws in a search for physi- Blankley, and Kenneth Duberstein, among many others.) FBI cal evidence that might connect someone in the White House to Director Louis Freeh called the files project an “egregious vio- the records. He sent the original records to the FBI lab for finger- lation of privacy” and said he and the FBI had been “victim- print analysis. The experts found prints from Mrs. Clinton, Foster, ized” by the White House. House Republicans held eagerly- Huber, and Huber‘s assistant But they found nothing that told them awaited hearings to determine the roles of Clinton staffer Craig anything about the records’ chain of custody. Livingstone and detailee Anthony Marceca, the two men who Nor has Starr, apparently, in the years since then. Sources worked on the files operation. say it has been more than a year since Starr’s investigators Again, the controversy ended up in Starr’s office. Two weeks have questioned any of the principals in the case. “It just seems after the story broke in the newspapers, a panel of federal to be one of those mysteries,” says a knowledgeable source. judges-acting at the urging ofAttorney General Janet Reno- Given that there has apparently been little investigation of gave Starr the authority to look into the matter. Specifically, he the matter in the last year, it seems that Starr’s team has gotten was authorized to look into whether Marceca had lied to inves-

Ap 7 i 1 I 9 9 8 9 The American Spectator LICENSED TO UNZ.ORG ELECTRONIC REPRODUCTION PROHIBITED tigators. The mandate also allowed Starr “to investigate related a House committee on June 26,1996. Nussbaum said he had allegations or evidence of violation of any federal criminal never discussed Craig Livingstone with First Lady Hillary Rod- law ...by any person or entity.” ham Clinton, adding that ‘‘I do not know who brought Mr. Liv- Starr’s team looked for evidence to support the theory that Liv- ingstone into the White House.” But a month later, congres- ingstone and Marceca, acting on orders from higher-ups at the sional investigators found a report from an FBI agent who said White House, were searching for dirt on Republicans. But the Nussbaum had “advised that he has known the appointee Craig early investigation revealed no solid proof to support the theory. Livingstone...[ who] had come highly recommended to him by The idea that higher-ups ordered the file project has apparent- Hillary Clinton, who has known his mother.” ly not panned out. And even on the common-sense assumption It appears that the contradiction cannot be definitively that Livingstone and Marceca might have been searching for resolved. But sources say Starr’s staff has not been in contact with secrets on their own, it appears that there is no solid evidence on Nussbaum for more than a year, which suggests that the inves- which to bring an indictment. tigation is all but over. Randall Turk, an attorney for Craig Livingstone, says Starr’s office has sent signals that Livingstone is in the clear. “The last TRAVELGATE time we spoke it was quite obvious from what they were saying It is widely assumed that Starr has been investigating the 1993 fir- that they had no intention of pursuing anything against Craig,” ing of the White House Travel Office staff. But that’s not really Turk says. “They had concluded that he hadn’t done anything an accurate description of the probe. wrong.” But it is not clear whether the same applies to Marceca. The firings have been investigated several times before: by the Robert Muse, Marceca’s lawyer, did not return several calls for White House itself, by the General Accounting Office, by a comment. Asked if he believes Starr’s office has exonerated House committee, and by the Justice Department’s Office of Marceca, Turk answered, “That‘s not a fair way to characterize Professional Responsibility. The outlines of the story are well it.” But he added, “In my personal view, it’s not very likely they’ll known. The Clinton administration, anxious to steer White go after Tony Marceca. I don‘t think there’s any evidence to sug- House business to the president’s friends, made up allegations of gest that he did anything willfully, intentionally wrong.” financial wrongdoing against the Travel Office staff. They then There is one more name that has become entangled in the fired all seven staffers, installed a Clinton-friendly team, and Filegate investigation. On October 25,1996, the court gave Starr called in the FBI to give a veneer of legitimacy to the allega- authority to investigate whether former White House counsel tions of wrongdoing. The Justice Department even prosecuted Bernard Nussbaum committed perjury when he testified before (Continued onpage 76)

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LIKELYTO BE EVEN MORE GENE

I-

Ihe thing about Jesse Jackson is That Voice- that amaz- in mid-January,in front of - ing butterbean biscuits-and-gravy fried catfish uplift- some of the busiest and the-people twang. You know how it sounds: it sings. It wealthiest and Most Impor- swings. It rolls and rumbles, ebbs and flows, shucks and tant People in America, jives. He could read the phone book and make it soul- gathered on ful, turn a shopping list into a Duke Ellington rhap- top of th sody. Start him off with a few nonsense words-hep cha wo World 1 fist, say, or down with dope, up with hope-and in two minutes Trade he will have his audience smiling and clapping and waving Center, w, and rocking and nodding and humming and grunting and one hun- 1 exclaiming, just like in church, cheering Jackson on as he piles dred-some- up the syllables, rhymes them, elides and glides and rides them, thing stories building the fever until his listeners are awash in a torrent of above the combread rhythms and churchified feeling, so caught up in the surface of \ moment they don’t even notice that the Reverend has just gone ahead and broken the language barrier, that he has erased any distinction between meaning and pure noise, that he’s even gotten them ecstatically mouthing those same incred- ible, wondrous, absolutely meaningless sounds: Hep cha wo fist! Preach it, lesse, preach it! Making something out of absolutely nothing: it is a Jesse Jackson trademark. Who else but Jackson, on a chilly evening 1 MARCCARNEGIE is correspondent-at-large for TAS.

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