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James B. (Jim) McDougal (August 25, 1940 – March 8, 1998), a native of White County, Arkansas, and his wife, Susan McDougal (the former Susan Carol Hendley), were financial partners with Bill Clinton and Hillary Rodham Clinton in the real estate venture that led to the Whitewater political scandal of the 1990s. Starting in 1982, McDougal operated Madison Guaranty Savings and Loan.

On April 14, 1997, McDougal was convicted of eighteen felony counts of fraud and conspiracy charges. The counts had to do with bad loans made by Madison in the late 1980s. As his savings and loan was federally-insured, the $68 million was paid by taxpayers. During the McDougal case, special prosecutor Kenneth Starr requested a reduced sentence for McDougal because of McDougal's assistance in the investigation.

He joined with his wife, from whom he was later divorced, and the Clintons to borrow $203,000 to buy land in the Ozark Mountains for vacation homes. When the development failed, he attempted to cover the losses with S&L funds. McDougal was prosecuted for fraud in 1984 and hired the Rose Law Firm which Hillary Clinton was a partner of to defend him. Questions remain in regard to Mrs. Clinton's Rose Law Firm billing records on Madison Guaranty and how much work she actually did. McDougal also held a fundraiser that paid off Clinton's then campaign debt of $50,000. Madison cashier's checks accounted for $12,000 of the funds raised.

Jim McDougal was also found by federal regulators to have made fraudulent loans with regards to his Castle Grande project that was a real estate development about 10 minutes south of Little Rock. The project was a 1,050-acre (4.2 km²) lot where he hoped to build microbrewery, shopping center, a trailer park and other future projects in 1985. The sales price was $1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his S&L assets in the project. So, he put in $600,000 of Madison money and then for the difference had Seth Ward put in the remaining $1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse loan. Jim worried that if federal regulators found out the S&L could be shut down, since it had already been operating under orders to correct its lending practices.

Jim McDougal, a staunch Democrat, was a former aide to the late U.S. Senator James William Fulbright. He later was a political science professor at Ouachita Baptist University in Arkadelphia in Clark County. Another Arkansas politician, Bob Cowley Riley, lieutenant governor from 1971-1975, also taught political science at OBU.

McDougal died of a heart attack in federal prison in Fort Worth, Texas.[1]

In 1982, McDougal made a failed bid for the United States House of Representatives against the Republican incumbent John Paul Hammerschmidt in Arkansas's northwesterly Third Congressional District. Hammerschmidt, who had a reputation for excellent constituent services, polled 133,909 votes (66 percent) to McDougal's 69,089 (34 percent). Coincidentally, Clinton himself had been defeated by Hammerschmidt in this same district in 1974.

References

• Washington Post time line
• CNN whitewater report
• CNN report
• CBS
• CNN Report: McDougal had no access to his heart medication nor doctors just before his death
• Hickman Ewing reduced Jim McDougal's prison sentence in exchange for testimony that Susan McDougal refused to confirm.
• PBS, WGBH educational foundation, Frontline, [2]
• "Appraiser on Madison Loans in Plea Accord" NY Times, By STEPHEN LABATON, Published: December 6, 1994 [3]