February 15, 1996 in Nation/World

Two Testify First Lady Didn’t Know Deal Was Fraudulent

Los Angeles Times

Two Arkansans involved in a questionable land transaction linked to the Whitewater inquiry Wednesday defended first lady Hillary Rodham Clinton against suggestions that she knew the 1985 deal was fraudulent.

Alston Jennings, a lawyer more involved than Hillary Clinton in the so-called Castle Grande transaction, told the Senate Whitewater Committee he did not know until recently that the deal was riddled with problems. He said that the first lady was “not at all” connected with questionable parts of the transaction.

Hillary Clinton’s role is at issue because she drafted a legal document in the sale and had more than a dozen talks with one of the principals in the transaction - Little Rock, Ark., businessman Seth Ward. Federal bank regulators have termed the deal, arranged by Madison Guaranty Savings & Loan, “a sham real estate transaction.”

Bank examiners told the committee last month that Castle Grande was the name of a cluster of “sham” purchases by Ward and other Madison Guaranty “insiders.” These inside buyers were secretly financed by Madison in deals structured to evade an Arkansas law limiting direct purchases by thrifts, the examiners testified.

In a sworn statement released by the committee Wednesday, a second Arkansan - Ward - said he did not know at the time that the transactions were fraudulent and does not recall ever speaking with Hillary Clinton. Newly discovered billing records show that Hillary Clinton billed Madison Guaranty for more than a dozen phone calls and conferences with Ward.

“I do not recall discussing it with her,” Ward said in the statement. He acknowledged that “in retrospect, I’d say that I assume the deals weren’t on the up-and-up.”

Ward surrendered more than $300,000 in commissions he had received for his part in the Castle Grande deal after being sued by the federal government, which had assumed Madison’s assets after its collapse cost taxpayers $60 million. Jennings, a former lawyer for Ward, said that Ward was in ill health and wanted to avoid a protracted legal battle with the government.

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