$65,862 owed by Larry Kuca, a Little Rock real estate broker who lied to obtain a $143,000 loan from Hale's company in 1986, has been paid in full.Posted on 05/05/2002 7:59:01 AM PDT by Jean S
Eight years after his guilty plea sparked the legal and political drama known as Whitewater, former Pulaski County Municipal Judge David Hale has paid only a little more than 1 percent of his court-ordered restitution.
Out of $2,040,000 he was ordered to repay the taxpayer-funded U.S. Small Business Administration in 1996, Hale still owes $2,037,875, according to U.S. District Court records in Little Rock.
The likelihood of the government collecting more than the $2,125 that Hale has paid to date is slim because, according to his lawyer, he has health problems, isn't working and isn't likely to work again.
But at least Hale, now of Louisiana, is alive and some day may be able to further reduce his debt to the taxpayers.
In contrast, the largest amount of outstanding debt in the Whitewater saga -- $4,274,301 -- is owed by a dead man.
That amount owed by the late Jim McDougal represents more than half of the total $8,005,163 that federal judges ordered eight Whitewater defendants to pay in restitution.
Records show that collection of the other half hasn't been easy, either. Only 6.2 percent of the total has been paid, in fact, leaving more than $7.5 million still owed.
Some of the outstanding debt continues to trickle in, according to the U.S. District Clerk's office in Little Rock and the Small Business Administration in Washington, D.C., but the likelihood of collecting all the restitution in the case that launched a $70 million investigation of President Clinton and his eventual impeachment in 1999 isn't good.
McDougal died in prison in 1998 after serving nearly a year of a three-year sentence. Officials with the Small Business Administration say he left behind an estate that allowed the government to recover some money but not much. Now the matter is considered closed.
"Jim McDougal paid with his life. I would think that would be enough," his ex-wife, Susan McDougal of Camden, said last week upon hearing of the debt he left behind.
She blames the government for the heart attack that killed her ex-husband in prison.
"They killed him by not giving him his medicine while he was in solitary confinement," she said. "So I really think they owe him."
Traci Billingsley, a spokesman for the U.S. Bureau of Prisons in Washington, D.C., responded that while she wasn't familiar with the particulars of Jim McDougal's death, "all inmates at all or our facilities are given appropriate quality medical care."
Jim McDougal, who owned Madison Guaranty Savings and Loan, was convicted in 1996 of conspiring to pump money into Hale's lending company, Capital Management Services Inc., so it could make government-backed loans to help political friends.
Former Arkansas Gov. Jim Guy Tucker obtained one of those "loans," which actually was used as a down payment on a sewer and water system he co-owned in southern Pulaski County.
Court records show Tucker has paid his $150,000 restitution, as well as his $25,000 fine. In addition, former Whitewater prosecutor Hickman Ewing Jr. said Tucker deeded back to the government the 34 acres the loan covered.
The former governor, who now works in Hong Kong, at one time owed $1 million in restitution in still another matter grouped under the Whitewater umbrella. But the original restitution order was thrown out and ordered recalculated by the 8th U.S. Circuit Court of Appeals in St. Louis, and it has yet to be resolved.
Tucker admitted in 1998 that he put a cable television company through a sham bankruptcy to avoid paying taxes on millions of dollars in profit when he sold the company. He reiterated recently in an e-mail that he believes he doesn't owe anything because the government did not prove it suffered any tax loss.
Susan McDougal herself still has not paid $300,000 in restitution incurred from prosecution in Little Rock.
Her attorney, Mark Geragos of Los Angeles, said he doesn't think she owes any money because Clinton pardoned her last year before he left the White House.
"The pardon vacates the conviction, so there's no sentence," he said.
McDougal said Geragos handles such matters for her and she agrees with "whatever he says."
But attorney Cecilia Seay of Fayetteville, a receiver's agent for the Small Business Administration, said Susan McDougal's criminal pardon didn't erase her civil debt.
"We had a criminal and a civil judgment for the same debt," Seay said. So even if the pardon eliminated her criminal judgment, "we have a civil judgment against her that far exceeds that."
Seay said interest that accrues on the civil judgment would have increased the debt significantly by now.
Thomas Morris, director of the office of liquidation for the Small Business Administration in Washington, D.C., also said recently that "we still have judgments against Susan McDougal."
Morris said the restitution stems from a taxpayer-financed government loan McDougal got in the 1980s from Hale's company, Capital Management Services. The loan was designated for "operating capital" for her advertising agency but instead mostly went to her and her then-husband's real estate developments.
"She got the loan and still owes it -- and post-judgment interest," Morris said.
McDougal sees it differently.
"Since I didn't get any of the money, I think they probably owe me, too," she said.
She spent 18 months in jail on a contempt of court citation for refusing to testify about Clinton before a federal grand jury, and then served 3 1/2 months of a 2-year sentence for her four 1996 felony convictions for which she was later pardoned.
Morris said the government collects on unpaid debts in a variety of ways, including attaching levies to assets, trying to negotiate a settlement and selling the judgment to debt collectors who keep a percentage for their efforts.
"Obviously in this case, since it's still outstanding, we haven't been able to find sufficient assets," Morris said of Susan McDougal's debt.
"I have no idea what they're talking about," Geragos said of the Small Business Administration, calling the argument that his client still owes money on a civil obligation "an interesting concept."
"No, that's not an interesting concept. That's Law 101," said Ewing, of Memphis, who prosecuted the Whitewater defendants under former independent counsel Kenneth Starr. "A pardon might extinguish the fine, but if you've got a civil judgment, you've got to deal with the civil courts on that."
In January, after McDougal was spotted driving a new Mercedes E-320 -- a $51,000 car -- she said the car belonged to Geragos and "he wanted me to drive it for a while."
She said she didn't own a house or car or have many other possessions. She also said she spends most of her time traveling and rarely makes money from her frequent speaking engagements.
Asked if she intentionally doesn't own property because she fears the government would take it, McDougal sighed and said, "Well, I haven't worked in quite a while. The only work I do is for women in jail, and I don't get paid for that."
Geragos also said he didn't know how his famous client would get the money to own property because she's 100 percent disabled by a back injury, which led to her early release from prison in June 1998, and "she hasn't signed a book deal or a movie deal."
To Ewing, restrictions on making a living -- and thereby living a normal life -- are the punishment for failing to pay a restitution order.
The U.S. attorney in Memphis from 1981-1991, Ewing said criminal defendants often can't pay restitution, especially steep amounts.
Although the federal government long ago did away with debtors' prison, which forced those who couldn't pay to be locked up, Ewing said a harsher punishment is living with the knowledge that the government can take everything the debtors own or make.
While some pay up and go on with their lives, others "try to play 'hide the ball' '' by keeping their money hidden from the government, he said.
"So in a way, it deters people. If you've got a $200,000 judgment against you, it affects the way you conduct your affairs."
Ewing said Jim McDougal was known to be broke when he was sentenced but a book he co-authored, Arkansas Mischief, was about to be published and "there were expectations" that he could make enough money to pay his debt.
But McDougal died about a month before the book was published, and it didn't sell well.
Ewing, who retired from the government in January 2001, said judges sometime extend probation for defendants who have failed to pay restitution.
But "in the case of Jim, Susan and David Hale, you're talking about basically insolvent defendants," he said. "There's no realistic expectation they could pay it in any reasonable period of probation."
Third behind Jim McDougal and Hale, as far as restitution amounts go, is William J. Marks Sr., a Boston businessman who conspired with Tucker in the sham bankruptcy.
Records in U.S. District Court in Little Rock show that of $1 million Marks was ordered in 1998 to pay in restitution, he so far has paid $156,688.31, leaving a balance of $843,311.69.
Citing judicial restrictions, court employees won't say whether Marks or other Whitewater defendants are making scheduled payments. They also cannot reveal when the last payment was made.
Like Hale, Marks couldn't be reached for comment. His former attorney in the case, Robert E. Davis of Dallas, said he believes Marks is doing business in France. Davis said he hasn't been in contact with Marks for years and isn't sure if Marks has a payment arrangement.
"We hope he hits it big so he can pay the government back," Ewing said of Marks and his French cable business.
Other restitution amounts owed in cases grouped under the Whitewater umbrella, and their status, are as follows according to recently obtained court records:
$65,862 owed by Larry Kuca, a Little Rock real estate broker who lied to obtain a $143,000 loan from Hale's company in 1986, has been paid in full.
$40,000 owed by John Haley of Little Rock, Tucker's former attorney who admitted he gave the IRS misleading information during an audit of Tucker, has been paid.
$135,000 owed by Webb Hubbell, former associate U.S. attorney general and previously a chief justice of the Arkansas Supreme Court and Little Rock mayor, has been paid in part. Hubbell still owes $57,000.
The money goes through the court to the Rose Law Firm in Little Rock, where Hubbell once worked and illegally billed at least $394,000 to the firm and its clients and then didn't pay taxes on the money.
Ron Clark, chief executive officer of the firm, said Rose later filed a lawsuit against Hubbell to collect the rest of the money that the restitution order didn't cover. But the court order must be satisfied first, he said, and the firm has yet see any money from its lawsuit.
Ewing said U.S. District Judge George Howard Jr. put Hubbell on a payment schedule that required an initial lump sum and a certain amount to be paid quarterly.
As for the restitution matter in the Whitewater affair that remains unresolved, that concerning Tucker's bankruptcy case, Ewing said it could be a while before resolution.
"It's in the bowels of the civil division of the IRS."
In addition to restitution ordered during the eight-year investigation that got its name from a Marion County land development, Whitewater defendants were assessed a total of $96,500 in fines.
Records show that 77 percent of the fines -- or $73,900 -- has been paid.
Because law requires restitution to be paid before fines, most of the fines paid came from defendants who didn't owe restitution.
Those who were fined and the status of those fines are as follows:
Charles Matthews, a lawyer who pleaded guilty in 1994 to two misdemeanor charges of improperly trying to influence a banker, has fully paid $7,500. Eugene Fitzhugh, a former Little Rock lawyer who pleaded guilty in 1994 to one misdemeanor charge in the same case as Matthews', has paid $1,400 toward his $3,000 fine. His attorney, Randy Satterfield of Little Rock, said Fitzhugh is making monthly payments out of Social Security checks. Robert Palmer, who owned a Little Rock real estate appraisal company and pleaded guilty in 1994 to conspiring to draw up false appraisals, has fully paid $5,000. Palmer was later pardoned. Chris Wade, a Flippin real estate agent who pleaded guilty in 1995 to bankruptcy fraud and making a false loan application, has fully paid $3,000. He also was pardoned. Neal Ainley, the former president of the Perry County Bank who pleaded guilty in 1995 to misdemeanor charges of failing to report and then lying to the FDIC about withdrawals made by then-Gov. Bill Clinton's 1990 re-election campaign, has fully paid $1,000. Steve Smith, a University of Arkansas, Fayetteville, professor who pleaded guilty in 1995 to a misdemeanor charge of conspiring to divert government-backed loan proceeds, has fully paid $1,000. Smith also was pardoned. Former Gov. Jim Guy Tucker has paid his $25,000 fine for his 1996 conviction. He was fined $6,000 in the sham-bankruptcy case that hasn't been resolved, so this amount isn't yet due. William J. Marks Sr., a Boston businessman, hasn't paid anything on his $6,000 fine, although he has made payments on his restitution, which must be paid first. John Haley of Little Rock, Tucker's former attorney, has fully paid $30,000.
Link.
If the facts are right, the math is wrong. This man has only payed just over 1/10 of 1 percent. 1 percent of $2.04 million is $20.4 thousand. But then, what good is it to point that out?
She blames the government for the heart attack that killed her ex-husband in prison.
When Jim McDougal died, he was just about to give his testimony about his, his wife's and the Clinton's involvement in the Whitewater case. The government Susan McDougal blames was Bill Clinton's government. Yet she points the finger of blame at Starr, regardless of the fact that he did not control the prison in which Jim McDougal's drugs were denied. Janet Reno did.
Next time you see the unctuous scheister fraud Geragos on TV, imagine the fetid stench that surrounds this man constantly of the lies and corruption he wallows in everyday, to be able to afford to give away $51,000 Mercedes to idiots like Susan McDougal. The Clintons and their criminal minions are above the law, and the law is being trampled in the dust.
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