When the drama called Whitewater is finally told, President Clinton’s former friend James McDougal may be cast as hero, fool or knave. But he will doubtless be a central character.
Imprisoned for fraud and beset by heart disease and psychiatric disabilities, McDougal went from being Clinton’s friend and business partner to a central witness against the president and his wife in the investigation by independent counsel Kenneth Starr.
That probe began in 1994 by looking into the Ozarks land venture, but it now has been expanded to include allegations over whether the president sought to cover up an affair with former White House intern Monica Lewinsky.
McDougal died Sunday at a Ft. Worth hospital. He was 57 and just weeks away from completing most of a 3 1/2-year prison sentence for fraud that stemmed from Starr’s inquiry into the Clintons’ 1978 investment in a failed Arkansas land-development deal. The president has maintained there was nothing improper about that business deal. On Sunday, Clinton put aside their differences to issue a statement of sorrow in McDougal’s memory.
“I am saddened to learn about Jim McDougal’s death today,” Clinton’s statement said. “I have good memories of the years we worked together in Arkansas, and I extend my condolences to his family.”
The men worked side by side during the 1970s as aides to then-Arkansas Sen. J. William Fulbright. While Clinton rose in politics, McDougal took the helm of a tiny Arkansas thrift, Madison Guaranty Savings and Loan Association, and turned it into a private piggy bank for local politicians and friends, according to federal investigators.
Under McDougal’s leadership, Madison finally collapsed at a cost to taxpayers of $60 million by some estimates.
On Sunday, McDougal was rushed from prison to the county-run Smith Hospital in Ft. Worth, where doctors worked on him for just over 20 minutes before pronouncing him dead at 12:01 p.m. A medical examination was not scheduled until Monday, and the cause of death has not been determined.
More Top Picks How We Test
Facing the possibility of an extended prison sentence after his 1996 conviction for 18 felonies, McDougal became a central cooperating witness in Starr’s Whitewater investigation. While McDougal could provide investigators with background information and anecdotal tales, he had exhausted his use as a potential witness against the president by lying repeatedly under oath during the long-running investigation, according to attorneys familiar with the probe.
After he began cooperating with Starr, McDougal changed his testimony. In particular, he began corroborating the story of Arkansas businessman David Hale that the two men had in 1986 funneled proceeds from a phony loan to the Whitewater venture made by McDougal and his former wife, Susan, and then-Gov. Bill Clinton and his wife, Hillary.
McDougal also was a key witness as prosecutors investigated the fraudulent Castle Grande real estate development south of Little Rock, Ark., for which Hillary Rodham Clinton conducted work as a partner in the Rose Law Firm.
Last spring, Whitewater prosecutors came across evidence that provided some support for an allegation by McDougal that Bill Clinton in the early 1980s took out a loan from McDougal’s savings and loan to support Whitewater. In his videotaped testimony in 1996 at McDougal’s trial, the president denied ever having taken out a loan from the S&L.
In an interview last year, McDougal said that he and Clinton agreed to get the loan off the S&L’s books by shifting the loan to another Arkansas businessman to pay off instead of Clinton.
During the mid-1980s, when bank regulators began to probe his phony loans, McDougal underwent treatment for a heart disease, blocked carotid arteries and a manic depressive condition, according to court records and the January 1996 testimony of Dr. Robert Gale, who treated McDougal.
As his financial world collapsed, McDougal retreated to an Arkadelphia, Ark., mobile home and watched television from a plastic-covered reclining chair or entertained FBI agents. He took his meals at the nearby Western Sizzlin steakhouse, arriving about an hour before the lunch and dinner rushes and ordering the grilled chicken sandwich. For health reasons, McDougal always set aside the bun. The steakhouse waitresses became McDougal’s surrogate family, and he brought them T-shirts if he traveled and left $20 tips if he had the means.
“Once this stuff with Whitewater started happening, it never went over $5,” waitress Tanya Fox, 27, said about his tips.
With his shaved head and trademark gray fedora, McDougal was a striking, antic figure. He would arrive at court hearings in a soiled, double-breasted pinstriped suit carrying a plastic bag with a few belongings in it.
With great ceremony, he would place his bowed, brass-tipped cane on the defense table, then offer a cordial smile to the reporters.
Susan McDougal has been in jail serving an 18-month contempt sentence for refusing to answer Starr’s questions before a grand jury. She has repeatedly accused Starr of conducting a witch hunt against Clinton.
“Jim is like a character out of a Shakespearean drama,” said Pulitzer Prize-winning author James B. Stewart, who interviewed McDougal extensively for his 1996 Whitewater book, “Blood Sport.”
“In his life, there were some great truths, there was great drama and there was great potential,” Stewart said. “You can’t not develop a personal relationship with Jim. For all his flaws, I considered him a friend.”