Whitewater Figure
James McDougal Dies In Prison
FORT WORTH, Texas (AllPolitics, March 8) -- James McDougal, President Bill Clinton's former business partner in Arkansas and a cooperating witness in the Whitewater investigation, died Sunday while serving a federal prison term. He was 57.
McDougal died at 12:01 p.m. at John Petersmith Hospital, according to the federal Bureau of Prisons.
He arrived at the hospital in full cardiac arrest at 11:38 a.m., a hospital spokeswoman said. He was taken to the hospital by ambulance from the Bureau of Prisons medical facility in Fort Worth.
The apparent cause of death was a heart attack, but an autopsy is planned for Monday, said Todd Craig of the Bureau of Prisons. McDougal suffered from several health problems, including heart disease and blocked arteries.
McDougal was convicted in 1996 of fraud in relation to the failed Whitewater land deal. Before his conviction, McDougal did not cooperate with Whitewater independent counsel Ken Starr and said he was innocent.
After being convicted on 18 felony counts, McDougal began to cooperate with Starr's investigation in August 1996 in exchange for a reduced prison sentence. Initially facing 84 years, he
was sentenced to a three-year term and would have been released in September 1999.
His death means Clinton and his wife, Hillary Rodham Clinton, no longer face the prospect of McDougal giving damaging testimony against them. McDougal had testified extensively to the Whitewater grand jury in Little Rock, Arkansas.
Starr and his deputies met for several hours on Sunday after McDougal's death was announced.
Clinton said on Sunday in a statement: "I am saddened to learn about Jim McDougal's death today. I have good memories of the years we worked together in Arkansas and I extend my condolences to his family."
McDougal owned Madison Guaranty Savings & Loan, which was the underwriter of the failed Whitewater land deal. The institution and the land deal both failed, costing taxpayers about $60 million.
Once he began cooperating with Starr, McDougal changed his testimony and corroborated an account provided by Whitewater figure David Hale.
Hale said he and McDougal had met with Clinton in 1986 and planned a taxpayer-backed loan that was used in part to prop up the Clintons' Whitewater real estate investment. The fraudulent $300,000 loan has never been repaid, and Clinton has denied knowing about it.
McDougal's ex-wife, Susan, also was involved in the land deal and has refused to cooperate with Starr. She went to jail for contempt for refusing to answer Starr's questions before the grand jury and has remained there for 18 months.
James McDougal also was a key witness as prosecutors investigated the fraudulent Castle Grande real estate development south of Little Rock on which Hillary Clinton conducted work as a partner in the Rose Law Firm.
In a bizarre discovery, Whitewater prosecutors came across evidence that provided some support for an allegation by McDougal that Clinton in the early 1980s took out a loan from McDougal's savings and loan to support Whitewater. During his videotaped testimony at McDougal's trial, Clinton denied taking out a loan from the S&L.
McDougal said last year that he and Clinton agreed to get the loan off the S&L's books by shifting the loan to an Arkansas businessman to pay off.
A canceled cashier's check for more than $27,000 from McDougal's S&L to Clinton was found in the trunk of an abandoned car in 1997 by a garage mechanic and turned over to Starr's office.
The cashier's check tracked the story McDougal had been telling prosecutors about a loan to Clinton. The cashier's check was not endorsed.

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