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By Mark Hosenball
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THIS IS WHITEWATER, FATHOMLESS and interminable, and the question is where to begin. One answer is Oct. 31, 1993, the day the national news media first reported that Bill Clinton's 1984 gubernatorial campaign had been mentioned in a criminal referral to the U.S. Justice Department. The referral-a recommendation for criminal prosecution-came from the Resolution Trust Corp., the federal agency that supervises failed savings and loan institutions. Its author was Laura Jean Lewis, then a wholly unknown investigator in the RTC's Kansas City, Mo., field office. If Whitewater proves to be Clinton's undoing, Jean Lewis may well be the person who brings him down for she is an important source for special counsel Robert Fiske, and she is arguably the only disinterested witness against the president and his wife.
So the issue now, for Fiske and everyone else, is: how credible is Jean Lewis? Iowa Rep. Jim Leach, the point man in the GOP's Whitewater offensive, has relied heavily on Lewis in charging that the Clintons know more about the scandal than they have admitted. Last week Leach filed suit against the RTC and other federal banking agencies to gain access to records about Whitewater and a thrift owned by the Clintons' Whitewater partner, James McDougal, claiming these records were being withheld to protect the president. Leach regards Lewis as a meticulous investigator who will give convincing testimony if she is ever called as a witness before Congress or in court.
NEWSWEEK'S own examination of Lewis's background and qualifications suggests a somewhat different assessment. Despite her current role as an RTC criminal investigator, Lewis, 40, is neither a lawyer nor an accountant, and she has little experience in law enforcement of any sort. She joined the RTC after working for five and a half years for an insolvent savings and loan in Dallas. This thrift, Western Savings Association, was taken over by the Feds only six months after Lewis joined the staff as a secretary to the chief lending officer-and Lewis, who became custodian of the bank's loan records, helped investigators trace the frauds that led to Western's collapse. Those who know her say she is a tough, capable woman who clearly enjoyed working with FBI agents and others in the search for leads. They also say she tended to be conspiracy minded-a zealous amateur sleuth who sometimes made "grand leaps" even when others felt the evidence was thin. "She could make an incident out of just anything," one source says.
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Although she had little formal training as an investigator, Lewis insists she got "a lot of experience" in detecting fraud during her years in Dallas. The FBI had only "a limited number" of agents who knew how to pursue S&L cases, she said, adding that "we all learned together."
Lewis got a job as a rookie RTC investigator in 1991. Her marriage was on the rocks-she was later divorced and has since remarried-and she and her husband were forced to declare bankruptcy. The RTC was already investigating Madison Guaranty Savings & Loan of Little Rock, the failed thrift run by McDougal. Lewis joined the investigating team after McDougal was tried for and acquitted of fraud. Interest in the RTC investigation picked up when questions were raised during the 1992 primaries about the Clintons' dealings with McDougal.
Lewis started digging. In September 1992, she filed a criminal referral alleging that Whitewater Development Corp., the real-estate venture Bill and Hillary Clinton had formed with McDougal in 1978, was part of a check-kiting scheme that drained Madison Guaranty of an estimated $1.5 million. She made another charge in a second referral that went to federal prosecutors in September 1993-that Madison had illegally diverted $60,500 to Clinton's 1984 campaign for governor. The first referral identified Bill and Hillary Clinton only as "potential beneficiaries" of the alleged check-kiting scheme. The second named Clinton's '84 campaign as an alleged participant in an illegal conspiracy.
Within days of filing the second referral, Lewis was informed that justice declined to prosecute the 1992 referral-and on Nov. 10, Lewis was removed from the Whitewater case. RTC sources said Lewis had a personality conflict with a staff attorney, who was also removed. Leach used a Lewis memo in charging a cover-up. Whatever the reason, word of her criminal referrals had already leaked, setting off the media frenzy that brought the scandal to the door of the Oval Office.
The key question is whether either of the Clintons was aware of any of the allegedly illegal activities at Madison. The White House has repeatedly denied they were-but Lewis, in a memo made public by Leach's office, argues that McDougal's partners, among them the Clintons, were "intelligent individuals, the majority of them being attorneys, who must have concluded that McDougal was making the [mortgage] payments for their benefit." She may be right. But if so, Lewis is invoking a much tougher standard of justice than RTC or the justice Department has applied in other S&L failures, for no one says Bill and Hillary Clinton were principals in Madison Guaranty. The final decision will be made by special counsel Fiske. Lewis, meanwhile, says she made no accusations about the president when she began investigating Whitewater: she says she was just doing her job.
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