August 19, 2011
On August 19, 1996, Tucker, convicted on three counts of fraud, received a sentence of two years of house arrest and was fined $319,000.
The Whitewater controversy itself isn’t as well-known for involving Tucker as for involving President Bill Clinton and Hillary Clinton.
The events leading up to the scandal started in the late 1970s, when the Clintons were looking to supplement their income through investing, and they eventually found some real estate to do so.
The Clintons went in on the property with a man whom Bill knew in college – James McDougal – and his wife Susan.
To purchase the property, the four formed a corporation, the Whitewater Development Corporation (named after the river bordering the property), on June 18, 1979.
However, the high interest rates at the time led to low buyer interest in the property, which was to be developed into vacation homes.
Thus, the project became a substantial financial failure, was subsequently mothballed, and the Clintons, wanting to cut their losses, became passive partners in the venture.
McDougal, seeking to cover his losses, looked into banking investments.
He acquired two banks in the early 1980s and renamed them the Madison Bank & Trust and the Madison Guaranty Savings & Loan.
He used loans from the banks to completely finance a new real estate venture, Castle Grande, which was against state regulations (which he evaded using various money laundering tactics).
In 1986, the plan was uncovered by federal regulators, who began investigating the matter.
In 1989, Castle Grande failed, defaulting on its loans.
This contributed to the collapse of Madison Guaranty, which, at a cost of $73 million, federal regulators took over.
Due to a New York Times piece printed in March 1992, the Justice Department opened an investigation into the failed Whitewater deal.
After years of criminal investigations by the Office of the Independent Counsel, 15 people were convicted, including Jim Tucker, but excluding Bill and Hillary Clinton.
After the smoke cleared, the public wasn’t happy with the investigation.
Since the controversy involved complex facts and laws, and spanned several decades, it was frustratingly difficult for most Americans to effectively follow, and seemed to produce few results.
His convictions didn’t stem from acts related directly to Whitewater, but from separate projects that were connected to Madison Guaranty through fraudulent loan schemes (apparently, these were very common for the institution).
Because of the public backlash against the investigations, Congress let the Independent Counsel Act, the law that created the Office, expire on June 30, 1999.
Tucker himself wasn’t fortunate enough to receive a presidential pardon from Clinton as he left office, and thus served his sentence and paid his fine.
In the end, Whitewater wasn’t the political grave for the Clintons that their political opponents hoped it would be.
The same can’t be said, however, for the Independent Counsel Act.