Whitewater scandal

The Whitewater scandal was an American political scandal which developed in Bill Clinton's first term as president, after the death of deputy White House counsel Vincent Foster. After Foster's death it was learned that chief White House counsel Bernard Nussbaum had removed documents concerning the Whitewater Development Corporation from Foster's office. President Clinton and his wife had invested in this corporation; the Clintons were accused of fraud in connection with this investment during the U.S. Securities and Exchange Commission's investigation of the bankruptcy of Madison Guaranty, an Arkansas trust company.

Preface to Whitewater

Starting in 1978, Bill and Hillary Rodham Clinton, created a business named Whitewater Development Corporation with friends and Little Rock, Arkansas residents Jim McDougal and his wife, Susan McDougal. As real estate values began a steep decline, their investment of over $200,000 and hopes of lucrative vacation property had deteriorated and the venture failed.

Related Topics:
1978 - Hillary Rodham Clinton - Little Rock - Arkansas - Jim McDougal - Susan McDougal

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Seven years later, in 1985, Jim McDougal set his sights on investment into local residential construction, labeling the project "Castle Grande". With the sale cost floating around $1.75 million for the 1,000 acres (4 km²) he intended to purchase, McDougal was presented with a financial burden outside of his own means. Borrowing from his own Savings and loan, Madison Guaranty, he could only take a maximum of $600,000 to be compliant with the corresponding law.

Related Topics:
1985 - Castle Grande - Savings and loan

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McDougal subsequently involved several others to produce the additional funds, including Seth Ward, an employee of the bank who helped funnel the additional $1.15 million required. To avoid potential investigations, the money was moved back and forth amongst several other investors and intermediaries each with a different reason.

Related Topics:
Seth Ward - Investors

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However, in 1986, their scheme was unveiled by federal regulators who realized that all the necessary funds for this real estate venture had come entirely from Madison. In July of that year, the McDougals were forced to resign; Seth Ward fell under investigation as well as the lawyer who helped him draft the agreement, Hillary Clinton.

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