[Congressional Record Volume 140, Number 132 (Tuesday, September 20, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 20, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
        CALL FOR INVESTIGATION OF POSSIBLE CONFLICTS OF INTEREST

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
February 11, 1994, and June 10, 1994, the gentleman from Indiana [Mr. 
Burton] is recognized for 60 minutes as the designee of the minority 
leader.
  Mr. BURTON of Indiana. Mr. Speaker, I will not take the whole 60 
minutes, but we will go into some very interesting issues tonight. 
Everybody in the country has heard about Whitewater and they have heard 
about some of the mysterious things that have happened in the 
investigation into Vince Foster's death, but there is a lot of other 
interesting things that have happened involving the Rose Law Firm in 
Little Rock, AR and Hillary Rodham Clinton and the former Governor of 
Arkansas, Bill Clinton.
  Tonight I would like to talk about two cases involving the failure of 
two savings and loans and the involvement of the Rose Law Firm and some 
possible conflicts of interest that should be investigated by the 
Federal Deposit Insurance Corporation and the Federal Savings and Loan 
Insurance Corporation, as well as the Special Counsel, Mr. Starr.
  First American Savings and Loan of Oak Brook, IL was seized by the 
Federal authorities for the Federal Government in 1986. First American 
Savings and Loan of Oak Brook was headed by former Illinois Gov. Dan 
Walker.
  Dan Lasater, a friend of Bill Clinton, had a brokerage business, 
United Capital Corp., and it traded Treasury bond futures for First 
Federal Savings and Loan of Illinois and others. Dan Lasater ran a 
brokerage firm in Little Rock, AR. He was a big contributor to Bill 
Clinton's gubernatorial campaigns, he was a friend of Bill Clinton and 
he flew Clinton around in his private jet. Lasater gave Roger Clinton, 
Bill Clinton's brother, a job and loaned him $8,000 to pay off a drug 
debt.
  Lasater's brokerage firm received a lucrative contract from the 
government of Arkansas worth $750,000 to sell State bonds for a new 
Arkansas State Police communications network. He also received millions 
of dollars in bonds for the Arkansas Development Financial Authority.
  In 1986, Lasater was convicted on drug charges. This is Bill 
Clinton's good friend. He served only part of his sentence and he was 
pardoned after serving a small part of his sentence by then Gov. Bill 
Clinton.
  In 1985, Dan Walker, the former Governor of Illinois, discovered that 
First American Savings and Loan was losing money big time on its 
Treasury bond future trades with Dan Lasater. According to court 
records, Mr. Walker lost approximately $361,000. Walker claims that 
Lasater made unauthorized trades with First Federal's money and, Walker 
told the Chicago Tribune they, Lasater & Co., had general authority to 
trade, but they were supposed to call the First American operating 
officer at the time they made the trade and they did not do that.
  Walker sued Lasater for $3.3 million for mail, wire, and securities 
fraud. The suit charged that one of Lasater's employees used First 
Federal's money to carry out what were in effect personal Treasury bill 
trades.
  Does this sound familiar? Members heard me on the floor not long ago 
talking about a gentleman named Dennis Patrick from Kentucky. He had a 
similar story. According to Mr. Patrick in published accounts, between 
$60 million and $107 million was traded in an account in his name at 
Lasater & Co. without Mr. Patrick's knowledge. They traded $60 million 
to $107 million in bond trades in his account and he did not even know 
about it. On 1 day, $23 million was traded on his account without his 
knowledge. Now when Federal regulators, the FSLIC, the Federal Savings 
and Loan Insurance Corporation, seized First American of Illinois, they 
continued to pursue the lawsuit against Lasater. They wanted to recover 
as much money as they possibly could.

  Dan Walker, the former Governor of Illinois, was accused of lending 
himself $1.4 million in federally insured depositors' money and later 
ended up being convicted of bank fraud and perjury.
  Hopkins & Sutter, I know this is very complicated, but Hopkins & 
Sutter, a Chicago law firm, was the primary contractor or law firm for 
the Federal Savings and Loan Insurance Corporation. Hopkins & Sutter 
hired or subcontracted with a law firm in Little Rock, AR, called the 
Rose Law Firm to handle the suit against Lasater.
  I hope everybody will think about this, my colleagues. Lasater & Co., 
Mr. Lasater was a very close friend of Bill Clinton. He flew around in 
his private jet. They went on parties together. Lasater was convicted 
along with Bill Clinton's brother of drug dealing. Lasater paid one of 
Bill Clinton's brother's drug loans of $8,000. And after Lasater was 
convicted, he was pardoned by then Gov. Bill Clinton. Rose Law Firm is 
hired as a subcontractor for the purpose of the suit against Lasater. 
They are going to go after Lasater. And Hillary Rodham Clinton and 
Vince Foster were the two lawyers from the law firm, the Rose Law Firm, 
to go after Mr. Lasater.

                              {time}  1750

  Think about that for a minute. They are going after Lasater for the 
Federal Government at the same time that he is a very good friend of 
Gov. Bill Clinton and has been pardoned for drug trafficking by the 
Governor. Dan Lasater was convicted of drug charges in 1986, as I said, 
and served only a small part of his sentence, and was later pardoned by 
the Governor, now President Clinton.
  Now enter Hillary Rodham Clinton, Rose Law Firm's powerhouse lawyer, 
and Vince Foster. They handled the Government's suit against Lasater. 
It is hard to believe this conflict of interest could occur, but they 
are handling the case against Lasater, Bill Clinton's friend.
  Because of the close ties between Lasater and Bill and Hillary 
Clinton, she never should have been involved in this matter in any way. 
That is a big conflict of interest.
  In late 1987 a confidential settlement was reached between the 
Government and Lasater. He ended up paying $200,000 of the $3.3 million 
suit. That is all, just $200,000.
  The Chicago Tribune learned of the amount of the settlement from a 
February 1989 letter that Foster wrote to the FDIC. The letter was not 
part of the court filings. Court records show that Hillary Rodham 
Clinton and Vince Foster negotiated this settlement from $3.3 million 
down to $200,000. It started on May 8, 1987, when Hillary Rodham 
Clinton signed an amended complaint on this case that reduced the 
damages sought by the FSLIC against Lasater from $3.3 million down to 
$1.3 million. She negotiated the reduction of this down from $3.3 
million down to $1.3 million for the FDIC at a time when the guy, 
Lasater, she was supposed to be nailing to the wall was a good friend 
of she and Bill Clinton, the Governor of Arkansas. The FDIC said 
Hillary's involvement was not extensive enough to constitute a conflict 
of interest. This sounds like a whitewash by the FDIC, and to cover 
their tails the FDIC said under Federal rules existing at the time she 
did not have to inform the Federal Government about her close 
relationship with Lasater and Lasater's company. The FDIC said Hillary 
worked only 3 hours on the case. They said she was not involved in the 
final decision to settle at $200,000. The FDIC says Vince Foster did 
most of the work on this case. He was her partner at Rose. The FSLIC 
that hired Hillary and Vince Foster and the Rose Law Firm could not 
remember details of the case. The FDIC's earlier inquiry was primarily 
a review of court records and records submitted by the Rose Law Firm. 
The FDIC did not interview Hillary Rodham Clinton.

  Because of the apparent FDIC whitewash, in late February Senator 
Alfonse D'Amato of New York requested the FDIC Acting Chairman, Andrew 
Hove, to have the FDIC inspector general conduct a thorough review of 
this matter and Madison Guaranty. Hove asked the inspector general to 
complete its investigation and report to him in 90 days. That was back 
in February. Here we are in September and the report has not yet come 
down. Now why? Why has the IG's report not come down? It was demanded 
or requested by Senator D'Amato of the Senate Banking Committee and it 
was supposed to be done in 90 days, and here we are almost a year later 
or 8 months later and we have not heard a thing. I wonder if the White 
House has anything to do with stopping that report? Obviously 90 days 
are over, and we still have no report on this case.
  Thomas Scorza, a former assistant U.S. attorney who teaches legal 
ethics at the University of Chicago Law School, said the following to 
the Chicago Tribune newspaper:

       A lawyer is required to represent the interests of their 
     client zealously. There is a substantial question about 
     whether an attorney was representing a client zealously if 
     the opponent of the client is someone with whom the attorney 
     has a political, financial, and personal relationship.

  And make no mistake about it, Hillary Rodham Clinton and Bill Clinton 
had a very close relationship with Lasater, and this was not made known 
when Hillary Rodham Clinton took on that case. In looking at the 
settlement he went on,

       Were they, the Rose Law Firm and Hillary Rodham Clinton, 
     looking after Lasater's interests or the interests of the 
     Federal Deposit Insurance Corporation?

  Actually the Federal Savings and Loan Insurance Corporation. Scorza 
told the Chicago Tribune that Hillary Rodham Clinton should not have 
worked on the case, especially since the final settlement was 
confidential.
  William Wernz, a former chairman of the Minnesota Lawyers 
Responsibility Board for the Minneapolis Tribune said that the bar 
association model rules define as conflict of interest instances where 
it is likely a lawyer,

     might pull a punch because he or she has some relationship 
     with the other side or some third party of interest.
       Law and accounting firms are usually barred from 
     representing the Federal Government in S&L cases if they have 
     personally represented the S&L or if they have personal links 
     to the persons targeted by the lawsuit,

and that was specifically the case with Lasater and company. Dan 
Lasater was a friend of Bill Clinton's. He contributed generously to 
Bill Clinton's campaign for Governor. He flew Clinton around in his 
private jet. They had parties together, they went out together all of 
the time.
  Dan Lasater gave Roger Clinton a job and loaned him a large sum of 
money to pay drug debts, and after Lasater was convicted on drug 
charges and served a small part of his sentence, then Gov. Bill Clinton 
pardoned him.
  Yet his wife, Hillary Rodham Clinton, who knew Lasater very well, 
took the side of the Government in the case against Lasater, reduced 
the settlement from $3.3 million down to $200,000 and the FSLIC was 
literally screwed out of all of that money from $3.3 million down to 
$200,000. There was definitely a conflict of interest that she did not 
let the American people know or the FSLIC know about.
  Here is a related problem: Home Federal Savings and Loan of 
Centralia, IL, was also seized by Federal regulators. Home Federal's 
former president, King Betz, sued Lasater and company for $4.6 million 
for unauthorized trading. He chose the Rose Law Firm to handle his suit 
and Hillary Rodham Clinton was a big partner in that law firm, and he 
chose the Rose Law Firm to handle his suit because the issues involved 
were similar to the issues in First American.
  After the Federal Government took over Home Federal, the Federal 
Government continued the case, and they had the Rose Law Firm carrying 
the case for them.
  Thomas Mars represented Lasater on the other side of the table 
against the Home Federal Federal Government suit, so you had on one 
side of the table the Rose Law Firm of which Hillary Rodham Clinton was 
a partner, like the case I just cited, and on the other side was this 
guy named Thomas Mars.
  Now where did he come from? He had previously worked at the Rose Law 
Firm. So you have on one side of the table negotiating for the Federal 
Government the Rose Law Firm, and you have a former lawyer in that same 
law firm representing Lasater. Does that sound like some conniving, 
some peculiar circumstances? Mars had previously worked at the Rose Law 
Firm where he had worked on the American suit. He worked on the First 
American suit that I just talked about. Therefore, he may have had some 
inside information on the Government's case since the case he worked on 
at the Rose Law Firm was very similar.
  King Betz, the man who started the case in the first place for Home 
Federal Savings and Loan, was advised by Vince Foster of the Rose Law 
Firm to accept a $250,000 out-of-court settlement in September of 1989, 
and he agreed to the settlement. But he did not know that both sides of 
the table were being worked by the Rose Law Firm and a former lawyer 
who worked for the Rose Law Firm.
  King Betz says that Vince Foster was handling his suit and never told 
him about Mar's potential conflict of interest or the Clinton's ties to 
Lasater.
  According to the Chicago Tribune, when Betz was told that Mars 
previously worked with Foster and Hillary Rodham in the First Federal 
case for the Rose Law Firm, Betz said, ``He can't do that. He could 
have confidential information.'' But the cat was already out of the bag 
or in the bag because he had already signed off on the $250,000 
settlement on a suit that was supposed to be for $4.6 million.
  There are some questions that need to be answered by the Rose Law 
Firm and by the FSLIC and the FDIC concerning these two cases.
  First, when will the FDIC inspector general issue its report on 
Hillary Rodham Clinton, First American, and Madison Guaranty? Is this 
report being delayed until after the election? It was ordered in 
February, was supposed to be done in 90 days, and here we are in 
September, 7 weeks before the election, and we still do not have the 
report. Why? That needs to be done quickly.

                              {time}  1800

  Now, here are some questions that need to be answered by the FDIC and 
the new independent counsel, Mr. Starr, if he is investigating this, 
and I think he probably will, and in full and complete congressional 
investigations and hearings: Did Hillary Rodham Clinton and/or the Rose 
Law Firm inform the Federal Government of her and her husband's ties to 
Dan Lasater? I do not believe she did, but we need to know if she did. 
This is regarding the First American. If they did not inform the 
Government of their ties to Dan Lasater, then why did they not? Because 
it was obviously conflict of interest.
  To what extent was Hillary Rodham Clinton involved in the suits? They 
said it was only 2 or 3 hours. But she signed or got the agreement to 
reduce the suit from $3.3 million down to $1.3 million, so she was very 
conversant with it and very actively involved in it.
  Specifically what role did Hillary Rodham Clinton have in the final 
decision to settle the suit for $200,000 down from the $3.3 million? If 
she was involved, how were her actions affected by her ties to Dan 
Lasater and Lasater & Co? Who was responsible for handling the case: 
Hillary Rodham Clinton, Vince Foster, or both? Obviously they were both 
partners in the Rose Law Firm. There had to be a conflict there.
  Who decided who would handle this case? If Vince Foster was handling 
the case, why was Hillary Rodham Clinton involved at all?
  We do know for sure, the FDIC has said that Hillary Rodham Clinton 
signed the amended complaint reducing the damages sought from $3.3 
million to $1.3 million.
  Now, involving the Home Federal case, why was not King Betz, the 
chairman there, told about Thomas Mars' conflict of interest? He was a 
former lawyer with the Rose Law Firm defending Lasater. Why was not 
Betz told about the ties between the Clintons and Lasater? Was the FDIC 
informed about any of this? Did Thomas Mars, the former employee of the 
Rose Law Firm, use inside information to arrange a $250,000 settlement 
on an over $4 million original suit?
  These are questions that need to be answered. The more we get into 
the machinations of the Clintons, the more we find all kinds of 
chicanery from Whitewater to Madison Savings & Loan to these two 
savings and loan institutions in Illinois to the Angel Fire development 
in New Mexico.
  There are so many questions that need to be answered. That is why we 
need full and complete congressional hearings, not just the facade we 
saw with the Committee on Banking, Finance, and Urban Affairs in the 
House just a few months ago. The people of this country have a right to 
know if there is corruption in this Government. They have a right to 
know if Hillary Rodham Clinton had a conflict of interest when she was 
representing these individuals for the FDIC; I mean, her husband was 
the Governor. He was a friend of the man that she was supposed to be 
nailing to the wall, and she reduced the claim from $3.3 million down 
to $200,000. There are all kinds of questions that need to be answered, 
and the only way the people of this country are going to know the facts 
is for us to have complete and thorough congressional hearings, and 
they need to be held as quickly as possible.

  I commend to my colleagues the following February 3, 1994, Chicago 
Tribune article:

       The special prosecutor appointed to scrutinize the business 
     dealings of the president and first lady will focus on their 
     role in an Ozark land development called Whitewater.
       But there is another case buried deep in court records that 
     could prove equally troubling to Bill and Hillary Rodham 
     Clinton, particularly if Robert Fiske, the Republican special 
     prosecutor and former U.S. attorney in New York, makes good 
     on his pledge to publish a report on the Clinton's political 
     and business relationships when the president was governor of 
     Arkansas in the 1980s.
       It involves a court case the first lady helped settle when 
     she was a high-powered lawyer in Little Rock and the 
     government was trying to sort out the problems of a bankrupt 
     Illinois savings and loan.
       The Illinois S&L case suggests that Hillary Clinton, as a 
     private attorney, had a glaring conflict of interest. As an 
     attorney for the Federal Deposit Insurance Corp., she 
     helped negotiate a secret, out-of-court settlement that 
     ended the government's suit against a family friend and an 
     influential benefactor of her husband.
       But the political problems the case could pose for the 
     president and his wife may go far beyond the narrow questions 
     about the first lady's conduct as a lawyer, which she 
     defends.
       As in Whitewater, the Illinois case places the president 
     and his wife once again in an association with an unsavory 
     wheeler-dealer who had strong personal ties to the Clintons 
     and even stronger financial ties to the Clinton 
     administration in Little Rock.
       In Whitewater, the trouble stems from the Clintons' 
     business relationship with James McDougal, the guiding force 
     behind Madison Guaranty, an Arkansas savings and loan that 
     went broke and cost taxpayers more than $47 million. Fiske 
     will examine whether Clinton or his gubernatorial campaign 
     benefited from McDougal's favorable treatment by a state 
     agency in Arkansas when Clinton was governor.
       In the Illinois case, the problem stems from the Clintons' 
     friendship with Dan Lasater, a convicted felon whose high-
     flying bond trading firm played a hand in the troubles of 
     several savings and loans, including First American Savings 
     and Loan Association, an Oak Brook institution headed by 
     another politician, Dan Walker, who was governor of Illinois 
     from 1973 to 1977.
       It all started in 1979 in an unlikely venue--the Oaklawn 
     Park racetrack in Hot Springs, Ark. Clinton's mother, the 
     late Virginia Kelley, had a passion for thoroughbred 
     horseracing, and her box at the track was next to Lasater's.
       An Arkansas native who grew up in poverty in Kokomo, Ind., 
     Lasater started a hamburger chain when he was 19 and was 
     wealthy by the time he met Mrs. Kelley and Clinton's half-
     brother, Roger, at the racetrack. In just over two decades, 
     Lasater had sold his first hamburger chain; moved to 
     Arkansas; founded the Ponderosa Steakhouse, a nationwide 
     chain of 650 family restaurants; started a bond trading firm; 
     and nurtured his love for horseracing.
       The racetrack friendship soon blossomed into an 
     introduction to Clinton, who was trying to regain the 
     governor's mansion after losing an election in 1980, 
     according to a Clinton family friend.
       By early 1983, Lasater had given Roger Clinton a job at his 
     Florida horse farm; Clinton had reclaimed the governor's 
     mansion; and Lasater's bond firm had been added to a list of 
     brokerage firms eligible to underwrite state bond issues, a 
     classification that generated millions of dollars in business 
     for his firm, according to published reports.
       Over the next two years, the ties between Lasater and the 
     Clintons grew stronger.
       The Clintons benefited from the relationship. Lasater 
     contributed money to the governor's campaign; lent Roger 
     Clinton $8,000 to pay off a drug debt; sponsored fundraising 
     parties at his offices; made his private plane available to 
     the ambitious young governor for campaign jaunts; and 
     encouraged his staff to donate to the governor's campaign, 
     promising higher commissions to compensate for the donations, 
     according to published reports. At one point in 1985, he also 
     made his plane available to squire celebrities to a charity 
     function organized by Hillary Rodham Clinton.
       Lasater benefited from the closer ties, too. In the summer 
     of 1985, Clinton successfully lobbied the Arkansas 
     legislature to approve a contract for Lasater to sell $30.2 
     million in bonds for the new state police radio system. 
     The contract netted Lasater's firm $750,000, according to 
     a report in The Los Angeles Times.
       Meanwhile, Lasater spread his financial wings beyond 
     Arkansas, signing deals to trade Treasury bond futures with 
     several savings and loans, including Walker's First American. 
     The S&Ls were trying to compensate for their money-losing 
     mortgage lending operations by engaging in the high-risk 
     deals being peddled by Lasater.
       But things began to sour in late 1985, both in Illinois and 
     in Arkansas.
       At First American, Walker discovered that Lasater's bond 
     firm didn't have the magic touch. According to court records, 
     Walker's S&L lost at least $361,572 in T-bond futures trades 
     made by Lasater's firm.
       ``They had general authority to trade, but they were 
     supposed to call the (First American) operating officer each 
     time they made a trade,'' Walker said in a telephone 
     interview. ``They did not do that.''
       Meanwhile, law enforcement officers in Arkansas had started 
     picking up reports that Lasater had another problem: He was 
     distributing cocaine to friends and business associates at 
     swank parties he threw in Little Rock and Hot Springs.
       Walker struck first, filing a 1985 suit against Lasater's 
     bond firm alleging that the company committed mail, wire and 
     securities fraud by using First American funds for 
     unauthorized T-bond futures trades.
       Walker never got Lasater in court. First American was 
     seized in 1986 by federal officials, who later charged the 
     former Illinois governor with lending himself $1.4 million in 
     federally insured deposits. Walker was eventually convicted 
     of bank fraud and perjury.
       Federal officials also collared Lasater; they convicted him 
     of cocaine possession and trafficking in 1986.
       Meanwhile, the federal regulators who seized First American 
     decided to pursue the savings and loan's $3.3 million suit 
     against Lasater to see if they could recoup some money for 
     American taxpayers, who funded the billion-dollar bailout of 
     hundreds of bankrupt savings and loans, including First 
     American.
       The government's deposit insurance fund hired the Rose Law 
     Firm in Little Rock, where Hillary Clinton was a powerhouse. 
     Rose had successfully solicited the government's legal work 
     on failed savings and loans in Arkansas months earlier.
       The Lasater connection caused no end of problems for Gov. 
     Clinton. During his re-election campaign in 1986, Clinton 
     came under attack from his Republican opponent for steering 
     state contracts to Lasater while Lasater was under 
     investigation for drug trafficking.
       Clinton acknowledged being friends with Lasater but denied 
     knowing about Lasater's drug activities. Clinton was re-
     elected.
       In 1987, Lasater went off to serve his prison sentence 
     after giving Patsy Thomasson, another key Clinton supporter 
     and Democratic Party activist, legal authority to manage his 
     assets, according to court records.
       Most of the Rose firm's S&L legal work was handled by 
     Webster Hubbel, now the No. 3 official at the U.S. Justice 
     Department. But the firm assigned the government's suit 
     against Lasater to Hillary Clinton and Vincent Foster, who 
     later became deputy White House counsel for President 
     Clinton and who committed suicide last July.
       In late 1987, court records show, Hillary Clinton and 
     Foster negotiated a confidential settlement. Lasater paid the 
     government $200,000 in return for the dismissal of its $3.3 
     million suit against him.
       Whether Lasater got off cheaply at the expense of the 
     American taxpayer depends upon his assets at the time and the 
     strength of the evidence against him, legal experts say.
       Nevertheless, Thomas Scorza, a former assistant U.S. 
     attorney who teaches legal ethics at the University of 
     Chicago Law School, said Hillary Clinton's decision to 
     represent the government in a lawsuit against Lasater raises 
     serious questions about her professional conduct.
       ``A lawyer is required to represent the interest of their 
     client zealously,'' he said. ``There is a substantial 
     question about whether an attorney was representing a client 
     zealously if the opponent of the client is someone with whom 
     the attorney had a political, financial and personal 
     relationship.''
       ``In looking at the settlement, were they (the Rose Law 
     Firm) looking after Lasater's interests or the interests of 
     the FDIC?'' Scorza asked.
       Hillary Clinton's office declined to respond to specific 
     questions about the case but issued a general statement 
     defending her legal ethics. ``Our view is that Hillary 
     Clinton, when a lawyer at the Rose Law Firm, acted with the 
     utmost integrity and professionalism. I have no reason to 
     believe otherwise,'' said her press secretary, Lisa Caputo.
       To avoid even the appearance of a conflict of interest, 
     Scorza said, Hillary Clinton should not have worked on the 
     Walker S&L case--especially because the final settlement was 
     confidential. The Tribune learned of the amount of the 
     settlement from a February 1989 letter that Foster wrote to 
     the FDIC; the letter was not part of the court filing.
       There's no evidence in the court case that the Rose Law 
     Firm or Hillary Clinton ever disclosed to their client, the 
     FDIC, the ties between the Clintons and Lasater or Thomasson, 
     who was representing Lasater's interests at the time of the 
     settlement. Thomasson, who later became executive secretary 
     of the Arkansas Democratic Party, is now director of the 
     White House Office of Administration.
       David Barr, an FDIC spokesman, said FDIC attorneys are 
     trying to locate records on First American to see if the Rose 
     Law Firm notified the FDIC about any potential conflict of 
     interest.
       A law firm can be banned from receiving further work from 
     the FDIC and the Resolution Trust Corp., which disposes the 
     assets of failed S&Ls, if it misleads FDIC officials about a 
     possible conflict of interest, Barr said.
       The First American case isn't the only problem for the 
     firm, which Hillary Clinton left before her husband assumed 
     the presidency.
       The FDIC is trying to determine whether the Rose firm 
     misled federal regulators about a potential conflict of 
     interest when the firm represented the deposit insurance fund 
     against the accountants who worked for Madison Guaranty. 
     Hillary Clinton had represented Madison, the savings and loan 
     at the heart of Whitewater.
       In addition, FDIC officials are looking into the case of 
     Home Federal Savings and Loan of Centralia, another failed 
     Illinois institution, which is very similar to the First 
     American case. It is not known whether Hillary Clinton was 
     directly involved in the Home Federal case.
       The Rose Law Firm represented Home Federal in a $4.6 
     million suit against Lasater's company for unauthorized 
     trading. But what is unusual about this case is that Lasater, 
     too, was represented by an attorney with ties to Rose.
       King Betz, former president of Home Federal, said he 
     initially hired the Rose Law Firm because the claims in his 
     suit were nearly identical to those in the First American 
     case. He said that Vince Foster was the lead attorney in the 
     case and that he had no contact with Hillary Clinton. After 
     the government took over Home Federal, it continued the case.
       Meanwhile, though, Thomas Mars, a Rose attorney who had 
     worked with Foster and Hillary Clinton in the First American 
     suit against Lasater, left the Rose firm. Months later, he 
     started representing Lasater against Home Federal, which was 
     still represented by Rose.
       Legal experts say the Rose Law Firm should have notified 
     Betz and the FDIC about Mars' potential conflict of interest. 
     Because Mars worked on the First American suit, he could have 
     had inside information that gave him an advantage in 
     negotiating a settlement for Lasater in the Home Federal 
     suit.
       Betz says Foster never told him about Lasater's ties to the 
     Clintons. He also failed to advise Betz about Mars' potential 
     conflict of interest. Betz said Foster advised him to accept 
     a $250,000 out-of-court settlement in September 1989.
       ``We were told by the attorneys that we were not going to 
     get any more (money),'' said Betz, who agreed to the 
     settlement. When told that Mars had previously worked with 
     Foster and Hillary Clinton in the First Federal case, Betz 
     said: ``He can't do that. He could have confidential 
     information.''
       Mars denied any wrongdoing. ``There was nothing funny going 
     on. Everything was always on the up and up. Everything was 
     done in a businesslike manner,'' he said.

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