Castle Grande
Encyclopedia
Castle Grande was a real estate development in Arkansas
about 10 minutes south of Little Rock. It came into National news as a result of the Whitewater
investigations. The project was a 1050 acres (4.2 km²) lot where Jim McDougal
hoped to build a microbrewery
, shopping center, a trailer park and other future projects in 1985. The land was scrub pine forerst that had failed already as an industrial development. The sales price was $1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his Madison Guaranty
S&L
assets. So, he put in $600,000 of Madison money and then for the difference had Seth Ward put in the remaining $1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse, no personal obligation to repay. If federal regulators found out McDougal's S&L could be shut down, since it had already been operating under orders to correct its lending practices.
's father-in-law was hired by Jim McDougal
to assist in land acquisition for the Castle Grande project. Hillary Clinton, with the Rose Law Firm
, worked with Ward on certain legal details of the project she knew as IDC - Industrial Development Corporation. Webster Hubbell was Hillary Clinton's partner and friend at the Rose Law Firm. The bad loans for the project cost the public $4 million.
was the land appraiser for one of the Castle Grande loans, he later admitted to conspiring with Jim McDougal and others with Madison Guaranty
savings association. The conspiracy was to inflate the estimates used for the loans. Kenneth Starr
's investigators found that Palmer inflated estimates used to support loans made to Gov. Jim Guy Tucker
of Arkansas.
Mr. Palmer did many appraisals for loans for Madison Guaranty. The larger appraisals was for a $1.05 million loan to Gov. Jim Guy Tucker of Arkansas and an associate to buy a water and sewer system for the Castle Grande project. Later appraisals showed the system to be worth about 1/2 of that loan. Later when the loan went into default it was one of the largest losses to Madison, which collapsed in 1989 at a cost to taxpayers of $68 million.
Palmer pleaded guilty on December 6, 1994 to Federal charges of conspiracy, charges related to Whitewater
. He was sentenced on June 16, 1995 to 3 years probation with the first year home detention and was fined $5,000 fine. He was later pardoned by Bill Clinton
in a controversial
manner.
who declined to the seek prosecutions, Casey was appointed United States Attorney for the Eastern District of Arkansas by Bill Clinton and was also a student of his. Federal special prosecutors later got 14 persons convicted in Arkansas of more than 40 crimes, including a sitting Governor, Jim Guy Tucker who was forced to resign and Bill Clinton partner in Whitewater, Banker Jim McDougal.
ran the Small Business Investment Corporation, Capital Management Services, Inc., that was licensed to provide lending to minorities and the economically disadvantaged. The loans were matched and backed by the Small Business Administration
. SBA. David Hale testified that he and Jim McDougal, with future-Governor Jim Guy Tucker
, made the scheme that would use Hale's SBIC as a pass-through to generate additional loans from Madison. Dean Paul, a friend and business associate of Hale's, borrowed $825,000 from Madison to buy three properties from David Hale. But, Paul never used the money, it went to Hale, who used it to recapitalize his SBIC with matching funds from the SBA. Hale then loaned a $150,000 downpayment to Jim Guy Tucker and business partner, R.D. Randolph, who together bought out a portion of Ward's Castle Grande holdings for $1.2 million. Tucker and Randolph borrowed the additional $1.05 million from Madison.
McDougal then loaned his old friend and political mentor, Senator William Fulbright, $700,000 to buy out the bulk of Ward's remaining holdings. The net effect was to remove Ward's non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison. The transactions were designed to be confusing to keep the regulators from finding Ward's loan and Madison's full investment in Castle Grande. The federal thrift examiners arrived the first week of March, 1986. The Dean Paul loan done on February 28.
The loans did not miss the examiners. Jim Clark, the Federal Home Loan Bank Board Examiner-in-Charge at Madison, discovered that Seth Ward was behind the Castle Grande deal. The land was purchased illegally with Madison money. The Castle Grande loan like other loans were "pyramid scheme" intended to enrich institution insiders and bolster the net worth of the S&L. Clark said Madison was one of the 3 worst cases of insider dealing that he did ever seen in his 20 years as an examiner.
interview in May 1995. But later Rose Law Firm billing records were discovered in the book room family quarters of the White House. Ms. Clinton said she has no idea how they got there. When the billing records showed that she charged Madison for about 30 hours on work with Seth Ward over 4 months in 1985 and 1986. She and her lawyers said was work with a development as called IDC, thus the confusion. IDC was the company that sold the land to Madison. She said the only Castle Grande she knew was Castle Grande Estates the trailer park, for which she did no work.
Ms. Clinton told Barbara Walters
on ABC in a Jan. 12, 1996: "Castle Grande was a trailer park on a piece of property that was about a thousand acres big. I never did work for Castle Grande." "And so when I was asked about it last year [by the RTC], I didn't recognize it, I didn't remember it. The billing records show I did not do work for Castle Grande. I did work for something called IDC, which was not related to Castle Grande."
Walters asked." Was that Seth Ward?" Hillary Clinton replied "And Seth Ward was involved in that on behalf . . . " Barbara Walters: "Separate deal?" Hillary Clinton reply: "Separate deal completely. .
RTC lawyers interviewed Ms. Clinton in the White House, on Feb. 14, 1996, asked:
RTC:" Can you explain to me what you mean by IDC and Castle Grande are, in your mind, a separate deal completely?"
Ms. Clinton's reply: "Well, my understanding is that the work for Madison concerned property that was referred to then at the time and continually by the Rose Firm as IDC or Industrial Development Corporation property. I know that work as IDC. That's how it was billed. And I did not know that there was something called Castle Grande, to the best of my recollection, until it came to my attention through these investigations, the entire thousand acres that we referred to as IDC was being called Castle Grande . . ." "I was informed sometime within the last year or two that there was a trailer park on the IDC property called Castle Grande Estates. To the best of my recollection, that was the first I had ever heard of Castle Grande Estates."
She also claimed that she could not remember her work on the project nor 15 conversations with Hubbell’s father-in-law, Seth Ward.
details a series of grand jury questions about Hillary Clinton and Castle Grande that Mrs. McDougal refused to answer.
During the grand jury McDougal stated her full name "for the record," then refused to answer any additional questions. Her testimony included the response "Get another independent counsel and I'll answer every question.". U.S. District Court Judge Susan Webber Wright
sentenced her to prison confinement for civil contempt of court
related to McDougal's unwillingness to answer "three questions." http://www.cnn.com/ALLPOLITICS/stories/1999/04/12/mcdougal.trials/ One of those questions concerned whether President Bill Clinton lied in his testimony during her Whitewater trial, particularly when he denied any knowledge of an illegal $300,000 loan.
From September 9, 1996 until March 6, 1998, McDougal spent the maximum possible 18 months in prison
for civil contempt, including 8 months in solitary confinement
. Immediately afterward, on March 7, 1998, she began serving the two-year sentence for her conviction in 1996. Soon after, the Office of Independent Counsel indicted McDougal on criminal contempt-of-court charges, and charged her with obstruction of justice
.
After serving four months on the Whitewater fraud conviction, McDougal was released for medical reasons.
After her release, McDougal's embezzlement trial in California began. McDougal was acquitted of all twelve counts of embezzlement http://www.cnn.com/ALLPOLITICS/stories/1998/11/23/mcdougal/ later in 1998. A suit in 1999 against Nancy Mehta for malicious prosecution
was settled out of court.
McDougal's trial for criminal contempt-of-court and obstructon of justice charges began in March 1999. The jury hung 7-5 in favor of acquittal for contempt of court, and found her not guilty on the charge of obstruction of justice.
McDougal received a full Presidential pardon from outgoing President Bill Clinton in the final hours of his presidency in 2001. (See List of people pardoned by Bill Clinton)
Arkansas
Arkansas is a state located in the southern region of the United States. Its name is an Algonquian name of the Quapaw Indians. Arkansas shares borders with six states , and its eastern border is largely defined by the Mississippi River...
about 10 minutes south of Little Rock. It came into National news as a result of the Whitewater
Whitewater (controversy)
The Whitewater controversy was an American politics controversy that began with the real estate investments of Bill and Hillary Clinton and their associates, Jim and Susan McDougal in the Whitewater Development Corporation, a failed business venture in the 1970s and 1980s.A New York...
investigations. The project was a 1050 acres (4.2 km²) lot where Jim McDougal
Jim McDougal
James B. "Jim" McDougal , a native of White County, Arkansas, and his wife, Susan McDougal , 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...
hoped to build a microbrewery
Microbrewery
A microbrewery or craft brewer is a brewery which produces a limited amount of beer, and is associated by consumers with innovation and uniqueness....
, shopping center, a trailer park and other future projects in 1985. The land was scrub pine forerst that had failed already as an industrial development. The sales price was $1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his Madison Guaranty
Madison Guaranty
Madison Guaranty was a Little Rock, Arkansas financial trust company.Starting in 1982 and operated by Jim McDougal-Susan McDougal Madison Guaranty Savings and Loan failed in the late 1980s. On April 14, 1997, Jim McDougal was convicted of 18 felony counts of fraud conspiracy charges...
S&L
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...
assets. So, he put in $600,000 of Madison money and then for the difference had Seth Ward put in the remaining $1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse, no personal obligation to repay. If federal regulators found out McDougal's S&L could be shut down, since it had already been operating under orders to correct its lending practices.
Seth Ward
Seth Ward an Arkansas businessman and Webster HubbellWebster Hubbell
Webster Lee "Web" Hubbell , is a former Arkansas lawyer and politician. He was a lawyer in Pulaski County before serving as Mayor of Little Rock from 1979 until he resigned in 1981. He was appointed by Bill Clinton as chief justice of Arkansas State Supreme Court in 1983...
's father-in-law was hired by Jim McDougal
Jim McDougal
James B. "Jim" McDougal , a native of White County, Arkansas, and his wife, Susan McDougal , 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...
to assist in land acquisition for the Castle Grande project. Hillary Clinton, with the Rose Law Firm
Rose Law Firm
Rose Law Firm is headquartered in Little Rock, Arkansas. It is the oldest law firm in the United States west of the Mississippi River and the third oldest in the United States....
, worked with Ward on certain legal details of the project she knew as IDC - Industrial Development Corporation. Webster Hubbell was Hillary Clinton's partner and friend at the Rose Law Firm. The bad loans for the project cost the public $4 million.
Robert W. Palmer
Robert W. PalmerRobert W. Palmer
Robert W. Palmer is a former Madison Guaranty land appraiser and pleaded guilty to federal conspiracy charges related to Whitewater. He was later pardoned by Bill Clinton in a controversial manner....
was the land appraiser for one of the Castle Grande loans, he later admitted to conspiring with Jim McDougal and others with Madison Guaranty
Madison Guaranty
Madison Guaranty was a Little Rock, Arkansas financial trust company.Starting in 1982 and operated by Jim McDougal-Susan McDougal Madison Guaranty Savings and Loan failed in the late 1980s. On April 14, 1997, Jim McDougal was convicted of 18 felony counts of fraud conspiracy charges...
savings association. The conspiracy was to inflate the estimates used for the loans. Kenneth Starr
Kenneth Starr
Kenneth Winston "Ken" Starr is an American lawyer and educational administrator who has also been a federal judge. He is best known for his investigation of figures during the Clinton administration....
's investigators found that Palmer inflated estimates used to support loans made to Gov. Jim Guy Tucker
Jim Guy Tucker
James "Jim" Guy Tucker, Jr. is an Arkansas political figure. He served as the 43rd Governor of Arkansas, the 11th Lieutenant Governor of Arkansas, Arkansas Attorney General, and U.S. Representative...
of Arkansas.
Mr. Palmer did many appraisals for loans for Madison Guaranty. The larger appraisals was for a $1.05 million loan to Gov. Jim Guy Tucker of Arkansas and an associate to buy a water and sewer system for the Castle Grande project. Later appraisals showed the system to be worth about 1/2 of that loan. Later when the loan went into default it was one of the largest losses to Madison, which collapsed in 1989 at a cost to taxpayers of $68 million.
Palmer pleaded guilty on December 6, 1994 to Federal charges of conspiracy, charges related to Whitewater
Whitewater (controversy)
The Whitewater controversy was an American politics controversy that began with the real estate investments of Bill and Hillary Clinton and their associates, Jim and Susan McDougal in the Whitewater Development Corporation, a failed business venture in the 1970s and 1980s.A New York...
. He was sentenced on June 16, 1995 to 3 years probation with the first year home detention and was fined $5,000 fine. He was later pardoned by Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
in a controversial
Bill Clinton pardons controversy
President Bill Clinton was criticized for some of his pardons and acts of executive clemency. While most presidents grant pardons on several days throughout their terms, Clinton chose to make most of them on January 20, 2001. Collectively, the controversy surrounding these actions has sometimes...
manner.
Jim McDougal
Starting in 1982 McDougal operated Madison Guaranty Savings and Loan. On April 14, 1997, Jim McDougal was convicted of 18 felony counts of fraud conspiracy charges. The counts had to do with bad - fraud loans made by Madison, the S&L failed in the late 1980s. As his Savings and loan was Federal insured the bad loans ($68 million) were at the end paid by the taxpayers. Criminal referral on Madison Guaranty fraud loans were give first to Paula CaseyPaula Casey
Paula J. Casey served as United States Attorney for the Eastern District of Arkansas.She earned her B.A. degree in 1973 at East Central University in Oklahoma and her J.D. in 1977 at University of Arkansas School of Law at Fayetteville.Casey was professor at the William H...
who declined to the seek prosecutions, Casey was appointed United States Attorney for the Eastern District of Arkansas by Bill Clinton and was also a student of his. Federal special prosecutors later got 14 persons convicted in Arkansas of more than 40 crimes, including a sitting Governor, Jim Guy Tucker who was forced to resign and Bill Clinton partner in Whitewater, Banker Jim McDougal.
David Hale
Since 1979, David HaleDavid Hale (Whitewater)
David Hale is a former Arkansas municipal judge, a former Arkansas banker, and 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...
ran the Small Business Investment Corporation, Capital Management Services, Inc., that was licensed to provide lending to minorities and the economically disadvantaged. The loans were matched and backed by the Small Business Administration
Small Business Administration
The Small Business Administration is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses...
. SBA. David Hale testified that he and Jim McDougal, with future-Governor Jim Guy Tucker
Jim Guy Tucker
James "Jim" Guy Tucker, Jr. is an Arkansas political figure. He served as the 43rd Governor of Arkansas, the 11th Lieutenant Governor of Arkansas, Arkansas Attorney General, and U.S. Representative...
, made the scheme that would use Hale's SBIC as a pass-through to generate additional loans from Madison. Dean Paul, a friend and business associate of Hale's, borrowed $825,000 from Madison to buy three properties from David Hale. But, Paul never used the money, it went to Hale, who used it to recapitalize his SBIC with matching funds from the SBA. Hale then loaned a $150,000 downpayment to Jim Guy Tucker and business partner, R.D. Randolph, who together bought out a portion of Ward's Castle Grande holdings for $1.2 million. Tucker and Randolph borrowed the additional $1.05 million from Madison.
McDougal then loaned his old friend and political mentor, Senator William Fulbright, $700,000 to buy out the bulk of Ward's remaining holdings. The net effect was to remove Ward's non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison. The transactions were designed to be confusing to keep the regulators from finding Ward's loan and Madison's full investment in Castle Grande. The federal thrift examiners arrived the first week of March, 1986. The Dean Paul loan done on February 28.
The loans did not miss the examiners. Jim Clark, the Federal Home Loan Bank Board Examiner-in-Charge at Madison, discovered that Seth Ward was behind the Castle Grande deal. The land was purchased illegally with Madison money. The Castle Grande loan like other loans were "pyramid scheme" intended to enrich institution insiders and bolster the net worth of the S&L. Clark said Madison was one of the 3 worst cases of insider dealing that he did ever seen in his 20 years as an examiner.
Hillary Clinton
Ms. Clinton has said she did not work on the Castle Grande project, when questioned by two separate federal agencies and part of the Hillary Clinton and Whitewater probe "I don't believe I knew anything about any of these real estate parcels and projects. . . . " she said in an RTCResolution Trust Corporation
The Resolution Trust Corporation was a United States Government-owned asset management company run by Lewis William Seidman and charged with liquidating assets, primarily real estate-related assets such as mortgage loans, that had been assets of savings and loan associations declared insolvent by...
interview in May 1995. But later Rose Law Firm billing records were discovered in the book room family quarters of the White House. Ms. Clinton said she has no idea how they got there. When the billing records showed that she charged Madison for about 30 hours on work with Seth Ward over 4 months in 1985 and 1986. She and her lawyers said was work with a development as called IDC, thus the confusion. IDC was the company that sold the land to Madison. She said the only Castle Grande she knew was Castle Grande Estates the trailer park, for which she did no work.
Ms. Clinton told Barbara Walters
Barbara Walters
Barbara Jill Walters is an American broadcast journalist, author, and television personality. She has hosted morning television shows , the television newsmagazine , former co-anchor of the ABC Evening News, and current contributor to ABC News.Walters was first known as a popular TV morning news...
on ABC in a Jan. 12, 1996: "Castle Grande was a trailer park on a piece of property that was about a thousand acres big. I never did work for Castle Grande." "And so when I was asked about it last year [by the RTC], I didn't recognize it, I didn't remember it. The billing records show I did not do work for Castle Grande. I did work for something called IDC, which was not related to Castle Grande."
Walters asked." Was that Seth Ward?" Hillary Clinton replied "And Seth Ward was involved in that on behalf . . . " Barbara Walters: "Separate deal?" Hillary Clinton reply: "Separate deal completely. .
RTC lawyers interviewed Ms. Clinton in the White House, on Feb. 14, 1996, asked:
RTC:" Can you explain to me what you mean by IDC and Castle Grande are, in your mind, a separate deal completely?"
Ms. Clinton's reply: "Well, my understanding is that the work for Madison concerned property that was referred to then at the time and continually by the Rose Firm as IDC or Industrial Development Corporation property. I know that work as IDC. That's how it was billed. And I did not know that there was something called Castle Grande, to the best of my recollection, until it came to my attention through these investigations, the entire thousand acres that we referred to as IDC was being called Castle Grande . . ." "I was informed sometime within the last year or two that there was a trailer park on the IDC property called Castle Grande Estates. To the best of my recollection, that was the first I had ever heard of Castle Grande Estates."
She also claimed that she could not remember her work on the project nor 15 conversations with Hubbell’s father-in-law, Seth Ward.
Susan McDougal
Federal regulators said “The indictment against Susan McDougalSusan McDougal
Susan McDougal is one of the few people who served prison time as a result of the Whitewater controversy although fifteen individuals were convicted of various federal charges...
details a series of grand jury questions about Hillary Clinton and Castle Grande that Mrs. McDougal refused to answer.
During the grand jury McDougal stated her full name "for the record," then refused to answer any additional questions. Her testimony included the response "Get another independent counsel and I'll answer every question.". U.S. District Court Judge Susan Webber Wright
Susan Webber Wright
Susan Webber Wright is a United States federal judge, presently serving as a district judge of the United States District Court for the Eastern District of Arkansas...
sentenced her to prison confinement for civil contempt of court
Contempt of court
Contempt of court is a court order which, in the context of a court trial or hearing, declares a person or organization to have disobeyed or been disrespectful of the court's authority...
related to McDougal's unwillingness to answer "three questions." http://www.cnn.com/ALLPOLITICS/stories/1999/04/12/mcdougal.trials/ One of those questions concerned whether President Bill Clinton lied in his testimony during her Whitewater trial, particularly when he denied any knowledge of an illegal $300,000 loan.
From September 9, 1996 until March 6, 1998, McDougal spent the maximum possible 18 months in prison
Prison
A prison is a place in which people are physically confined and, usually, deprived of a range of personal freedoms. Imprisonment or incarceration is a legal penalty that may be imposed by the state for the commission of a crime...
for civil contempt, including 8 months in solitary confinement
Solitary confinement
Solitary confinement is a special form of imprisonment in which a prisoner is isolated from any human contact, though often with the exception of members of prison staff. It is sometimes employed as a form of punishment beyond incarceration for a prisoner, and has been cited as an additional...
. Immediately afterward, on March 7, 1998, she began serving the two-year sentence for her conviction in 1996. Soon after, the Office of Independent Counsel indicted McDougal on criminal contempt-of-court charges, and charged her with obstruction of justice
Obstruction of justice
The crime of obstruction of justice, in United States jurisdictions, refers to the crime of interfering with the work of police, investigators, regulatory agencies, prosecutors, or other officials...
.
After serving four months on the Whitewater fraud conviction, McDougal was released for medical reasons.
After her release, McDougal's embezzlement trial in California began. McDougal was acquitted of all twelve counts of embezzlement http://www.cnn.com/ALLPOLITICS/stories/1998/11/23/mcdougal/ later in 1998. A suit in 1999 against Nancy Mehta for malicious prosecution
Malicious prosecution
Malicious prosecution is a common law intentional tort, while like the tort of abuse of process, its elements include intentionally instituting and pursuing a legal action that is brought without probable cause and dismissed in favor of the victim of the malicious prosecution...
was settled out of court.
McDougal's trial for criminal contempt-of-court and obstructon of justice charges began in March 1999. The jury hung 7-5 in favor of acquittal for contempt of court, and found her not guilty on the charge of obstruction of justice.
McDougal received a full Presidential pardon from outgoing President Bill Clinton in the final hours of his presidency in 2001. (See List of people pardoned by Bill Clinton)