ase is Now Firm” in the Washington Weekly, in 1985 the Whitewater land investment of the Clintons and McDougals was in trouble. The individual lots of the land development were not selling and Jim McDougal approached Capital Management Services, Inc. run by David Hale, a former Arkansas banker and municipal judge. Hale's firm was authorized by the federal Small Business Administration to lend federally guaranteed and subsidized loans to small businesses operated by minorities and the disadvantaged. "McDougal told me he wanted to ‘clean up’ some problem loans with our friends in the 'political family'," Hale said.Just before Christmas, now Governor Bill Clinton approached Hale at the steps of the Capitol building. "Are you going to help Jim and me out?" Clinton asked according to Hale. This meeting was witnessed by Trooper L.D. Brown who in later confirmed Hale's version of the story to Whitewater investigators. The next meeting was in February of 1986, where Hale, Clinton and McDougal were all present. Hale said he felt heavily pressured into approving a SBA loan for $300,000 to Susan McDougal who was a partner in Whitewater. Susan McDougal, who was a millionaire, was not legally qualified for a SBA loan. Clinton, Hale and McDougal conspired to defraud the federal government. The loan was never paid back, and records show that at least $110,000 of this money found its way into the Whitewater account.The Whitewater partnership did poorly and finally dissolved in 1992, leaving the Clintons reporting a net loss of more than $40,000. The McDougals took full control of the business practices. In July of 1993, the FBI raided Hale's office and found documents outlining the illegal loan. Hale was now under investigation for unrelated charges and offered to reveal incriminating evidence against now President Clinton in return for a plea bargain. However, the prosecuting U.S. Attorney in Little Rock, Arkansas, Paula...
