http://query.nytimes.com/gst/fullpage.html?res=9F0CE0DE153DF931A35752C1A965958260U.S. Investigating Clinton's Links to Arkansas S.& L. By JEFF GERTH WITH STEPHEN ENGELBERG,
Published: November 2, 1993
Federal investigators are raising questions about ties between President Clinton and an Arkansas businessman, a political patron of Mr. Clinton in the 1980's whose failed savings and loan is now under investigation.
Government officials and lawyers familiar with the case said the President was neither the subject nor a target of the investigation, which is still in its early stages.
But the inquiry focuses on questionable financial dealings involving the savings and loan, Madison Guaranty, from which Mr. Clinton benefited both personally and politically. The savings and loan's owner, James McDougal, was one of Mr. Clinton's closest associates in Arkansas and was, at various times, his business partner, political fund-raiser, family banker and senior aide when Mr. Clinton was Governor of Arkansas. Advantageous Relationship
Mr. Clinton's banking commissioner advised him in 1983 that Mr. McDougal was engaged in questionable banking practices. But the two men nevertheless maintained a business and political relationship throughout the 1980's that helped both men. When Mr. Clinton needed someone to raise $35,000 to retire debts from his 1984 re-election campaign, he turned to Mr. McDougal.
Mr. McDougal denies any wrongdoing. His lawyer, Sam Heuer, said his client was under investigation by the United States Attorney in Little Rock, Ark. Last month the Federal agency that disposes of failed savings and loans, the Resolution Trust Corporation, asked the United States Attorney in Little Rock to examine several possible violations of law in the operations of the savings and loan, including transactions that may have helped Mr. Clinton pay his campaign debts.
According to Federal officials, court documents and lawyers familiar with the case, the two Federal agencies have been trying to find out whether more than $250,000 in business loans was improperly diverted from Madison in April 1985 to several sources, including Governor Clinton's re-election campaign.
The officials said the campaign received $12,000 in cashier's checks from Madison, some of which appeared to have been paid for by the business loans. The former Clinton aide who deposited the money said neither she nor Mr. Clinton was aware of any irregularities about its source.
Investigators have asked prosecutors to see whether the campaign contributions were linked to efforts by Madison to win state approval for an unusual plan to raise new capital by issuing stock, the officials said.
Finally, prosecutors are studying a $300,000 loan from a federally sponsored lending company to Mr. McDougal's wife, Susan. The man who made the loan, David Hale, was indicted in September on unrelated charges.
In an effort to win leniency from prosecutors on the eve of his indictment, Mr. Hale offered prosecutors information about Mr. Clinton and other Arkansas politicians, but was unable to reach a plea agreement. Mr. Hale asserted in interviews with reporters that Mr. Clinton had personally pressed him to make the $300,000 loan.
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