Deception & Misdirection

The Clinton Method

How Hillary launched the Clintons’ political machine with secret payoffs from a major polluter

[Continuing our series on deception and misdirection in politics and public policy.]

Campaigning last weekend, Donald Trump attacked “Hillary’s corruption” that’s “been going on for years with the Clintons,” going back to “the cattle purchase. She had a better return on cattle than guys that’ve done it all their lives? That was another beauty! . . . Public corruption is a grave and profound threat to a democracy.”

Many people who heard Trump speak may have scratched their heads at that reference. Dependent for political information on the so-called “mainstream” news media and on late-night comedians, many Americans, especially younger people, have no idea what “the cattle purchase” was. In recounting the Clintons’ Arkansas years, two recent television biographies of Clinton, on CNN and PBS, ignored the matter.

In fact, “the cattle purchase” was the earliest known instance in which Hillary Clinton, then Hillary Rodham, committed a crime. It happened in 1978-79, when she used a commodities account to launder payoffs—almost $400,000 in today’s money—to herself and her husband from the largest polluter in the state of Arkansas. It was a crime the Clintons covered up, in part by refusing during the 1992 campaign to release their tax returns for the period during which the payoffs were made.

Money from the scheme enabled the Clintons to buy a house, gave them a degree of financial security, and set them on the path that led in recent years to the industrialization of influence peddling and, to hide the influence peddling, the mass theft of government e-mails.

Everything on earth has a beginning, and the prototype for Clinton corruption was the commodities deal.

The basic elements are there: the payoffs from people who have business with the government; the scheme to hide the payoffs; the “innocent explanation,” a lie to cover it all up; the revised lie when the first lie is exposed; the revision of the revision, once the second lie is exposed; the whining and diversion (You’re attacking me ’cause I’m a strong woman!); the use of “experts” and friendly reporters to assure the public that nothing’s amiss; the use of shadowy operatives to carry out the dirty work; the granting of pardons or immunity to people who know things; the withholding or “loss” of records that would reveal wrongdoing, and the use of staffers, in the manner of an assembly line, to alter or destroy documents; and the dragging-out of the scandal, relying on people to get bored, or to give up on justice being done, or to simply forget what outraged them in the first place.

Because they got away with it, the Clintons kept doing it.


The chicken giant

It started more than 40 years ago. Against the advice of her friends, who considered Arkansas the home of inbred hillbillies and other inferior races, Hillary Rodham moved there in 1974 to be with her boyfriend Bill Clinton. She had another reason for choosing to settle in Arkansas: She had taken the District of Columbia bar exam in July 1973 and had been notified in November that she had failed—not a propitious beginning for her legal career. But in Arkansas, where Bill was born into a network of political connections and favoritism, she was able to pass that state’s bar exam and was, by Spring 1974, offered a job teaching at the University of Arkansas law school.

One measure of Bill and Hillary’s privileged status at the time is that, in a few months, she went from flunking the D.C. bar exam to becoming a law professor. “I finally got her to come visit me in Arkansas, and when she did, the people at the law school were so impressed they offered her a teaching position,” Bill Clinton said.  Who would have guessed that the process was that simple?

Together, Clinton and Rodham, fresh out of law school, made a lot of money from teaching—some $32,900 a year, more than $177,000 a year in 2016 dollars.

Hillary married Bill in 1975. In 1976, he was elected attorney general of Arkansas. In January 1977, as Bill was taking office as AG, Hillary was hired as an associate by the distinguished Rose Law Firm, said to be oldest law firm west of the Mississippi. Two years later, Bill was promoted to governor and Hillary, at Rose, was promoted to partner. She would do very little courtroom work and was mainly considered a “rainmaker,” as she was described in 1992 by the head of the firm’s executive committee. A “rainmaker” is someone who uses connections to bring business into a firm; that’s a job that’s perfect for, say, a governor’s wife. Indeed, she was so good at that job that the National Law Journal in 1988 and 1991 named her one of the 100 most influential lawyers in America—a designation that Clinton supporters took as a reference to her legal skills and intelligence, rather than to her key position in a web of influence.

The commodities scam began in October 1978, when Bill Clinton was the attorney general and the Democratic nominee for governor. He was a heavy favorite to win the gubernatorial election the next month, in a state in which Republicans had held the governorship only four years of the previous 104. He would go on to win the election with 63 percent of the vote.

Bill Clinton received critical support from Tyson Foods, based in Springdale, Arkansas. Then, Tyson was the country’s largest poultry producer. Today, it’s even bigger; Tyson is the world’s largest processor and marketer of chicken, beef, and pork, with hundreds of products and a stable of brands that includes Ball Park, Jimmy Dean, Hillshire Farm, and Sara Lee. Working with McDonald’s, Tyson developed the Chicken McNugget.

The chicken business is one of the worst-polluting industries, mainly because chickens produce mountains of chicken feces, which farmers call “manure” or, even more euphemistically, “litter.” (I grew up on a chicken farm in the Appalachian foothills in Alabama. Every day, I had to scrape my shoes.) Tyson would deal with this problem in various ways, including by dumping feces into people’s water supply. The company was dependent for its continued success on keeping politicians in its back pocket, and the Clintons were politicians.


For every quid, a quo

The company known today as Tyson Foods was founded in 1935 by John W. Tyson, who started the business by hauling 500 chickens at a time from Arkansas to Chicago and other big cities. Operations expanded over time until Tyson controlled every aspect of growing chickens and turning them into food.

When he died in a train accident in 1967, Tyson was succeeded as CEO by his son, Don. The Tyson operations expanded into beef, pork, and seafood. As the company grew into a giant that straddled the world, Don Tyson became known for leveraging his wealth into political influence and for using that influence to expand his wealth. Tyson became famous for saying, “The business of politics consists of a series of unsentimental transactions between those who need votes and those who have money.” It is, he said, “a world where every quid has its quo.”

Sitting at his desk, modeled after Thomas Jefferson’s, in an office modeled after the Oval Office—but with egg-shaped doorknobs and a rooster carved into white oak over the fireplace—Don Tyson was the cock-of-the-walk in Arkansas politics. “Big Daddy,” he was called. He would entertain himself and others lavishly, with his company airplane, his company yacht, and (as of 1994) $700,000 a year in “travel and entertainment costs” paid by the company.

Don Tyson was a member of the Arkansas mega-rich, whom some called the “Arkoromans.” David Brock, now a Clinton operative but once an investigative reporter covering the Clintons, wrote about Tyson’s method of operation.

In the late 1970s, “when the legislature was in session, they all used to stay at what was then the Marion Hotel,” one close associate of Don Tyson’s recalled. “Well, you could buy and sell them. Don would call you up and ask if you were free for dinner and he’d say, ‘Meet me at the Little Rock airport at five p.m. I want to surprise you.’ His private plane would pull up and two of the best-looking women you’ve ever seen in the skimpiest costumes you’ve ever seen would pop out. The plane would take off and a couple hours later, it would land in Bimini, where Don had a big boat.”

As Brock noted in his 1996 book The Seduction of Hillary Rodham, Tyson was interviewed by Mike Wallace for the TV news program 60 Minutes. Wallace began the interview: “We’ve spoken to people—and I’m sure you know this—who have called you, I quote, ‘ruthless, amoral, unscrupulous, mean-spirited.’ But they wouldn’t come on camera and say that, because they’re afraid of you and your power.”

My parents were chicken farmers. I can attest to the fact that the Tyson organization scared people. The company was a boogeyman, a Keyser Söze, or, as my mother put it, “the Mafia.” Wherever Tyson operated, she said, the company would buy up all the politicians and put the growers—the farmers who raised the chickens from day-old to maturity—under their thumb.

Tyson controlled the hatcheries (sources of baby chicks), the feed mills, and the process for slaughtering and marketing the mature chickens, which put the growers in a terrible negotiating position. If you antagonized the company, you could be “cut off” and financially ruined. Maureen Ogle, in the 2013 book In Meat We Trust: An Unexpected History of Carnivore America, reported what happened in 1962 when broiler growers tried to form an association, in order better to deal with Tyson and other integrated chicken companies: “Don Tyson dispatched some of his employees to the scene. Driving company trucks, they lined the road to the courthouse [where the meeting was to be held] and recorded the license plate numbers of the men and women who showed up for the gathering. Once the meeting began, the driver of one truck, his vehicle conveniently lacking a muffler, raced his engine to drown out the speakers inside the building.”

When we got reports that Tyson was moving into our territory, my mother tried to organize a growers’ union that could protect us against Tyson. I remember one day when a grower, a potential recruit for the union, was sitting in our living room, discussing things with Mom.  Referring to the corrupt, sometimes violent union boss Jimmy Hoffa, he said, “We need to make sure we don’t have some Jimmy Hoffa type come in here and run this union.” Mom was indignant: “We’re fighting the Mafia! A ‘Jimmy Hoffa type’ is exactly what we need!” She was right, at least about the level of toughness that would be required to stand up to the Tyson organization.

One day, Tyson’s reach would extend all the way to the White House.


“Best person”

By the late 1970s, one of Don Tyson’s most important assets was a lawyer and political operative in the small city of Springdale (Tyson’s headquarters), named Jim Blair. Blair represented various trucking and agribusiness concerns, and was Tyson’s principal outside counsel. (He would later become Tyson’s in-house counsel. Blair, by 1994, had served on the board of more than 20 companies controlled by Tyson.)

As Bill Clinton climbed from law professor to state attorney general to governor to president, Blair was one of his advisors, perhaps, in the early days, his most important one. Blair, 11 years older than Clinton, had been the campaign manager for Clinton’s mentor, Senator J. William Fulbright, in Fulbright’s ill-fated bid for reelection in 1974. He served as general counsel to the state Democratic Party, and was a member of the state board overseeing higher education.

Blair and his girlfriend, a political science professor named Diane Kincaid, double-dated with Bill Clinton and Hillary Rodham, and Bill officiated at Blair and Kincaid’s 1979 wedding, with a tuxedo-wearing Hillary serving as “best person.”

Bill tried to get Jim Blair an appointment to chair the federal government’s Home Loan Bank Board. (Given the Clintons’ future involvement in the crooked Whitewater real estate deal, which the board would investigate, Blair would have been of great use in that position.)  Later, Clinton named Jim Blair to the board of the University of Arkansas, where he became chairman. Diane Blair was named a commissioner of the state’s public television stations. Their close relationship, personal and political, would continue as the Clintons’ power grew.

(In the years to come, President Bill Clinton would name Diane Blair to the board of the Corporation for Public Broadcasting, an arts and propaganda arm of the government, where she would become chairman. During the Clinton administration, Diane would be Hillary’s “best friend in Washington,” as Mrs. Clinton wrote in an autobiography.)


“Red” Bone

A quick explanation of the commodities futures market:

  • Commodities are goods that, within each category, are generally considered “fungible”—one unit indistinguishable from another. Examples include gold ingots, barrels of oil, and pork bellies. A futures contract is an agreement to buy or sell a commodity at a certain price on a certain date. Such contracts can serve as a form of insurance, so that, for example, a potato farmer is protected from a collapse in the price of potatoes and McDonald’s is assured that, on a given day, it will have enough potatoes to make its french fries.
  • Futures contracts are traded, which makes them a legalized form of gambling, and can be bought on margin (purchased for a fraction of the price with the rest of the money owed, as with a down payment). If a person buys on margin, a small shift in the market can double or triple one’s investment, or wipe it out and leave the investor owing a lot of money.
  • Because an investor can lose much more than he or she invests, this market is not for the faint of heart or for people without significant financial resources. It’s estimated that more than 75 percent of people who play the commodities market lose money.

In 1978, fatefully, Jim Blair connected Hillary with a commodities broker named Robert L. “Red” Bone.

A professional poker player—he would win the “$1,000 No Limit Hold’em” event in the 1980 World Series of Poker—Bone was close to both Blair (his lawyer and poker buddy) and Don Tyson (his former boss).

Bone was, and would continue to be, notorious for violating the rules of his profession. By 1994, the Chicago Tribune reported, Bone had been “sanctioned by the CTFC [Commodity Futures Trading Commission] and the Merc [Chicago Mercantile Exchange] for an array of violations, from creating a secret interest in an account to keeping sloppy books to violating trading account margin requirements in the Merc’s cattle contract.”

In the 1970s, when Hillary Rodham arrived on the scene in Arkansas, Bone was well-connected in a world that revolved around Tyson Foods.

He began working for Tyson in 1960, got his start in commodities by doing hedge trading for the company, and served for a time as Don Tyson’s personal bodyguard. According to the New York Times, the two had been roommates when Don Tyson was, as Bone put it, “between wives.” (Obituaries for Tyson reported that he had one wife, to whom he was married from 1952 until her death in 2006. However, as The Economist noted in 1994, Tyson at that time had a “young girlfriend.”)

While working for Tyson, Bone got caught up in an attempt to corner the hard-shell egg market. He took the blame, left the company in 1973, and became a full-time commodities broker.

In February 1977, Bone opened an office in Springdale of the Chicago-based company Refco.


Rotten poultry

Founded as Ray E. Friedman and Co., Refco was a financial services company known mainly as a broker of commodities and futures contracts.

The company was named after its founder, an Iowa egg broker who had been convicted of selling spoiled chickens to the U.S. military during the Korean War, a crime that was accomplished through the falsification of time-and-date stamps. (Keep that in mind. The falsification of time-and-date stamps will play a major role in the story of Hillary’s commodities deal.) For his crime, Friedman served 23 months in prison. In 1966, he received a pardon from President Lyndon Johnson, reportedly arranged by his stepson, Thomas Dittmer, who was a military social liaison at the White House. (For information on some of LBJ’s corrupt dealings, see and .)

Also in 1966, Dittmer married the personal secretary of U.S. Senator Ralph Yarborough (D-Texas), and the couple moved to Chicago, where Refco opened its doors in 1969. Dittmer bought out his stepfather’s share of the firm in 1974.

Dittmer was known in the futures business as tough and extremely aggressive—nickname: Rambo. According to Peter J.W. Elstrom in Crain’s Chicago Business, when Dittmer and Refco acquired other firms, the firms were “Refco-ed,” that is, jobs were cut while Refco held onto as much institutional business as possible. At three firms acquired in the 1980s, an estimated two-thirds of the jobs were eliminated.

Dittmer, described as the firm’s co-founder, made so much money that his wife, collaborating with the vice chairman of Sotheby’s, was able to put together an art collection that included works by Pollock, DeKooning, and Picasso.

Between 1969, when it was founded, and 2005, when it collapsed and top officials went to jail, Refco would be sanctioned more than 100 times by the industry’s private and public regulators. (See below.) Back in the ’70s, when the firm made arrangements to help Hillary Clinton, it was just getting started.


Hillary marginalized

In 1977, “Red” Bone and Don Tyson were charged by the CFTC in connection with that attempt, mentioned above, to manipulate the price of hard-shell egg futures. In August of that year, the complaint was settled and “remedial penalties” were imposed. Bone was banned for one year from trading commodities in his own account.

Bone was removed from supervisory duties at the Refco office, but continued to work for Refco as an account executive, and signed a standard account executive agreement that obligated him to guarantee the accounts of his customers.

Then, in October 1978, just a month after the expiration of Bone’s suspension, Hillary Rodham entered the world of commodities trading, with Bone as the broker.

On her first investment—at least, if you believe the story—Hillary turned $1,000 into $6,300 literally overnight, for a $5,300 profit. Frank Greve and Angie Cannon of Knight-Ridder News Service wrote on March 31, 1994 that “Market experts said yesterday it would have been difficult—verging on the impossible—for Hillary Rodham Clinton to have made $5,300 on a $1,000 in the time frame reported for her first commodities trade. ‘It would have been impossible without bending the rules or breaking them,’ said Tom Morgan, president of Morgan Research Group Ltd. in Garnett, Kansas, a futures firm specializing in cattle, the commodity Mrs. Clinton normally traded.”

Referring to Hillary’s big score on her first day as a trader, Spy magazine mocked—

Hey, it happens. Long shots come in, royal flushes are dealt, the ’69 Mets won the World Series. The real trick, of course, is to keep such an incredible winning streak going, as Hillary did, for 10 straight months. . . .

With few exceptions, traders and industry insiders told Spy that Mrs. Clinton appears to have accomplished the impossible. They hypothesize that her gains were not profits at all, but rather the fruits of bogus trades put into her account in order to purchase influence with her husband, then the governor-elect of Arkansas. . . .

Barron’s Midwest editor and former [Chicago Board of Trade] soybean trader Jonathan Laing opines “that the trading account was used to get funds to Mrs. Clinton and her husband. . . .

Mark Powers, editor of Journal of Futures Markets, expressed skepticism over Hillary’s performance, especially given that she had zero experience. “This is like buying ice skates one day and entering the Olympics a day later.”

Michael Veatch, a retired Chicago Mercantile Exchange trader, told the Washington Post: “The thing about commodities is you’ve got to be able and willing to lose as much as you make. And she was trading like somebody who could afford to lose $100,000.”

Before the records were available, analysts consulted by the Chicago Tribune guessed that Clinton would have had to trade at least eight to 14 contracts to make such a return. The actual figure, it appears, was ten, which amounts to 400,000 pounds of livestock. “At that time,” reported the Tribune’s Laurie Cohen, “the Merc required speculators to put up a minimum good-faith deposit of $1,200 per contract to trade cattle”— a minimum of $12,000, based on ten contracts. Chicago Mercantile Exchange (Merc) rules required that margin in investors’ accounts only at the end of each day, but the standard practice of brokerage firms was to require that the money be put up in advance. The chance that an average customer would have been allowed to trade so many contracts with such a small cash deposit was zero.

William B. Crawford Jr. of the Chicago Tribune wrote in 1994:

Investors buying stock must put up at least 50 percent of the purchase price. But commodities futures are much more highly leveraged—investors need only put up 5 to 8 percent of the total worth of the contract—and volatile. In 1978, when Hillary Clinton opened her Refco account, for example, an investor could purchase one cattle futures contract for as little as $1,200, giving the buyer the right to take future delivery of 40,000 pounds of live cattle ready for slaughter.

Typically, a brokerage house at that time would require that an investor have a $50,000 net worth if he or she were to invest $1,000. The Clintons did not have a $50,000 net worth. Brokerage houses could extend credit however they chose, but that’s the point: Putting aside the apparent heads-I-win-tails-you-lose aspect of the trades themselves, Hillary got special treatment.

Mrs. Clinton’s privileged position was highlighted in a New York Times report by Barnaby J. Feder:

One point of disagreement among traders here was the significance of Mrs. Clinton’s apparent ability to begin trading with just $1,000 in her account. Some said brokers would typically demand $10,000 or more from a novice. The deposit is not a margin in the sense of buying stocks with borrowed money but rather a sum that must cover any loss a client would have if the futures contracts the client holds were sold that day.

But other traders said that there were many cases during the 1970’s [sic] of investors starting with even less of a stake. They also said that Mrs. Clinton might have been given the go-ahead because it was known that she was consulting with James B. Blair, the top lawyer for Tyson Foods in Arkansas.


It just gets better

That first day of trading was a taste of things to come. In the first month, Mrs. Clinton made a profit of $16,427, approximately $61,000 in 2016 dollars.

On January 26, 1979, Hillary made one purchase of 11 live cattle contracts and another of three live cattle contracts. She sold the contacts a month later with a net profit of $25,280, making the day of the purchase, January 26, her most successful day as a trader. Interestingly, on that day she was about a thousand miles from home, in Airlie, Virginia, chairing a board meeting of the Legal Services Corporation. Hillary had been appointed by President Carter as chairman of the LSC, which was tasked with providing legal services to the poor. “I’m Hillary Rodham, and I’m chair—whatever—person, thing, or whatever,” she introduced herself, according to the official record. The session ran all day, with a few short breaks. Hillary’s LSC income, incidentally, was reported by her as part of a “consulting” business rather than regular income, which made it easier for her to write off deductions such as $644 for depreciation on furniture, a sofa at $750, and a desk at $1,116. (In 2016 dollars, that a $4,100 desk.) The use of such deductions by an LSC chairman was unprecedented, and most likely bogus.

One day in February, she made a profit of $25,280 (roughly $93,000 in 2016 dollars), more than her salary the previous year at the Rose Law Firm. There was a day she lost $26,960, which in retrospect appears to be an effort by someone to cover his or her tracks, throwing in some losses to make the gains look honest. In any event, that one-day loss highlights one of the most bizarre aspects of the commodities deal: that Hillary, if she is to be believed, was repeatedly gambling in a single day an entire year’s salary, in a market in which the overwhelming majority of people lose money.

The trading more than tripled the Clintons’ income from $41,000 in 1977 (inflation-adjusted: about $172,000) to $158,000 in 1979 (adjusted: $580,000). Total profit for the two years was $99,537 in nine months, on an initial investment of $1,000.

From October 1978 to July 1979, when the trades were made, the price of cattle futures on the Chicago Mercantile Exchange went from 55 cents a pound to 80 cents a pound. (Again, a contract would obligate the investor to buy or sell 40,000 pounds at a fixed price on a set date.) While a legitimate investor could have made a significant profit during the time Clinton was in the market—as much as 1,700 percent if very, very lucky—Clinton-level profits of 10,000 percent were possible only if, time and time and time again, an investor snapped up the futures at the lowest point in a day, within a fraction of a cent, and dumped them at the high point of the day, within a fraction of a cent.

Spy magazine reported in 1996:

[O]n numerous occasions, according to records released by the White House, her trading account was severely under-margined—meaning that there simply wasn’t anywhere near enough collateral to cover the moves she was making.

How far under-margined? The records indicate that, on June 27, 1979—during Hillary’s single biggest trade with Refco (and one that would turn out to be the most profitable)—she invested in 30 cattle futures contracts. Such a trade would have required a $60,000 margin deposit, yet her available balance was only $25,011. It wasn’t the biggest deficit she was to incur. On July 12, Hillary’s account showed a net loss of $61,270. According to regulations, she should have added $92,364 to avoid being terminated. Still, no more cash was added, and Refco covered the deficit. . . .

[H]ow likely was it that Refco would take such a risk on behalf of a neophyte customer?

Not very, according to Gerald Celente, director of the Trends Institute in Rhinebeck, New York, and a former trader with Refco. “I cannot believe that Refco would back her losses and cover her margin call,” Celente says. “When I was dealing with them, they always demanded immediate payment for margins. I have to pay promptly, or else they would have closed my account. . . . Sure, had I been given the same treatment [Hillary] got, I would have cleaned up, too.”

And just what did happen to other Refco customers who didn’t keep up their margins? Last year, USA Today reported that, on July 12—the same day Hillary avoided a more than $90,000 deficit—Refco customer Stanley Greenwood’s investments “were liquidated when he failed to post $48,000 to cover his losses.” And in a suit filed against none other than Red Bone himself, another customer, Randall Barnes, said he had to give Bone a mortgage on his farm in 1978 to cover his trading losses.

And there’s another problem with Hillary’s trading pattern. As noted by financial columnist Caroline Baum and speculator Victor Niederhoffer in a 1995 article in National Review, it would have made sense for Hillary to make money in cattle futures during a period when prices were rising, except for this: On the few large trades on which Hillary made almost all of her profits, she was betting that prices would fall. James Glassman of the Washington Post, writing in the New Republic: “She made five consecutive winning trades on the short side [that is, betting the price would drop] in cattle and hogs . . . in April and May—a glorious coup.”

The degree of Hillary’s supposed luck was, it turns out, measurable. The Journal of Economics and Statistics used a computer model to estimate the odds against Hillary’s trades being legitimate: more than 250 million to 1.

That may be an understatement. Baum and Niederhoffer calculated the odds of making Clinton-level profits legitimately at 31 trillion to 1. That’s less than 1/100,000th the chance of winning the PowerBall jackpot.

George Soros, the radical billionaire, is one of the most successful businessmen in the world, with a reputation for manipulating markets. As noted by Baum and Niederhoffer, Hillary made 80 times as big a return on her investment in nine months as Soros had made in his best year ever, in 30 years trading.

Newsweek, then owned by the Washington Post, reported initially that Hillary had benefitted from a “sweetheart deal.” The magazine later backed off the report. (That was not the last time that Newsweek backed off in its reporting on the Clintons. Famously, the magazine in 1998 suppressed a reporter’s story about President Clinton’s affair with Monica Lewinsky. The story was leaked to, and broken by, an upstart website, the Drudge Report.)

Another Newsweek article, co-authored by Eleanor Clift, one of Hillary’s strongest supporters in journalism, noted that Hillary “made big money in a roller-coaster market and got out with her profits—either a very shrewd investor, or a woman with very good friends.”

“The chances of Hillary having legitimately made that money without some grandfather making sure only the winning trades were going into her account are lower than a meteor hitting you when you leave your office today,” a trader told Newsday.

Joe Gressel, a 19-year veteran of the Chicago Mercantile Exchange trading pits, was quoted by Claudia Rosett in the Wall Street Journal during Hillary Clinton’s first U.S. Senate campaign: “It’s a mockery of the profession to say you took a thousand dollars and made a hundred thousand. Around here, we’re flabbergasted that she’s bamboozled the people of New York state.” A former Refco clerk said, “When Hillary came forward and said she was doing her own trades, I knew immediately she wasn’t telling the truth.”

Futures trader F.H. “Chuck” Goslin, in a book about his profession, wrote:

Based on my experience, what happened here was that someone else trading with Mrs. Clinton’s broker periodically would tell him something like the following: “Take fifty of those cattle we sold near the highs of the day and put them in Hillary’s account instead of mine.” Since the trades the office was doing were not assigned to specific accounts until after the close, this switch would have been easy to do. Then, within a few days, these big profit trades would be closed out. The net result of these trade manipulations: Without any real risk or effort, Hillary (and Bill) Clinton ended up a hundred thousand dollars richer. The records show that as soon as the total profits generated by this simple, but effective, trade manipulation reached just under $100,000, the account was closed. . . .

This little “trick” of moving trades from one account to another after the results are known is a familiar one to many people in the business.

James Glassman, then a financial columnist for the Washington Post, wrote that, “After the New York Times broke the story on March 18 [1994] about Rodham Clinton’s success in cattle, I called my commodity trader friends to find out how she did it. They all suspected the same thing—‘allocated trades.’”

Jim Blair denied that Mrs. Clinton got special treatment. Specifically, he denied that she benefitted from the allocation of profitable trades to her account and losing trades to the accounts of other investors.

Hillary’s profits had to come from somewhere. Chuck Levitt, a 30-year veteran of the livestock market, told the Boston Globe: “Keep in mind, anybody who buys a futures contract, somebody else has to sell one, which means that, if she made $100,000 during that period, somebody else, or a number of people, lost that amount of money at the very same time. It’s a zero-sum game.”

That is why commodities futures trading works well as a device for making payoffs. Simplified, it goes like this: Imagine a game in which Person A and Person B, who’ve never met, each bet $100,000 on the flip of a coin. Person A bets heads, Person B bets tails, and the coin comes up heads. $100,000, minus the bookie’s share, is transferred from Person B to Person A, and there is no record that they ever had contact. But wait! What if Person A bets heads, Person B bets tails, and it comes up tails? Doesn’t that spoil the plan? No. The bookie simply switches the bets after the coin is flipped so that Person A appears to have bet tails and Person B appears to have bet heads, and Person B still loses. Remember: Person B wants to lose, to transfer money to Person A without a record of the transaction.

Hillary is Person A.


Whitewater: an aside

Interestingly, the commodities deal may have helped pave the way for Whitewater, an equally famous Clinton scandal. In 1992, Jim McDougal, the man behind the Whitewater scheme, told the New York Times that Hillary in 1980 approached him for advice on putting money in tax shelters, in order to avoid taxes on the profits she made in her dealings with Blair—presumably the commodities money.

For those unfamiliar with Whitewater: Democratic operative Jim McDougal, hoping to make the Clintons financially secure, involved them in the Whitewater Development Corporation, a real estate scam that would come to epitomize Clintonite corruption. McDougal diverted funds from a savings-and-loan to cover Whitewater losses, got caught, and died in prison. Susan McDougal, who was married to Jim McDougal during the scam, was convicted of fraud and conspiracy and served 18 months in jail for contempt after refusing to answer questions about whether Bill Clinton lied; she was pardoned by President Clinton as he left office. Bill Clinton’s successor as governor, Jim Guy Tucker, was convicted of three counts of fraud in connection with the scandal. A total of 15 persons were convicted of 40 crimes in connection with Whitewater, and President Clinton pardoned four of them, counting Susan McDougal. All the Clintons’ records on Whitewater were subpoenaed, but the records vanished. Two years later under mysterious circumstances, Rose Law Firm billing records related to Whitewater materialized in the White House residence. The complete story of corruption during the Clinton administration is summarized by the Wall Street Journal at .




What money?

When the Clintons were asked, during the 1992 campaign, how they got the money in December 1980 to make a down payment on a house, they prevaricated. According to the New York Times, March 18, 1994:

During the 1992 Presidential campaign, the Clintons and their aides gave conflicting accounts when asked to explain where the couple got the money to make a $60,000 down payment on a house in 1980. During the campaign, aides declined to release the Clintons’ tax returns for the late 1970’s [sic] and did so again today.

When the question of the down payment first arose, the campaign said it had come from an investment by Mrs. Clinton, one that the officials declined to describe. At another point, the officials released a statement in Mrs. Clinton’s name that said the money had come from “our savings and a gift from my parents.”

Did you catch that? “During the campaign, aides declined to release the Clintons’ tax returns for the late 1970’s and did so again today.” Remember that, in her final debate with Trump, Hillary said, “He is the first candidate ever to run for president in the last 40-plus years who has not released his tax returns . . . ”

In fact, when Knight-Ridder reporters in 1994 asked Bill Clinton about the returns, he stormed out of the interview.

The Internal Revenue Service audited the Clintons with respect to their 1979 tax return, focusing on the commodities deal. The agency reportedly gave them a clean bill of health, but the Clintons did not release the return for that year or earlier years.

When Hillary’s 1978-79 commodities profits came to light in 1994, White House spokesmen claimed that she had invested in cattle, hogs, copper, soybeans, sugar, lumber, and copper, although Refco brokers said that most of her profits were in cattle, a small portion in soybeans and hogs. They released Hillary’s monthly brokerage statements, which referred to account on which her first name was misspelled. The monthly statement was missing for the month that included the day on which she made more than 40 percent of her total all-time commodities profit.

CFTC rules required that brokerages like Refco keep records of trades for five years. In the matter of Hillary’s cattle futures, that period had expired almost a decade before the matter came to public attention. Notably, when the case was reexamined in 1994, and the Clintons released partial records covering the commodities period, they reported an $80 unreported loss for 1979, and an unreported $6,498 gain from the brief period that Hillary, using a different broker, played the commodities market in 1980. Back taxes, penalties, and interest totaled $14,615, which they paid. (That wasn’t required, as the state of limitations had run.)

When, 18 months after the 1992 campaign was over, the Clintons finally released their 1977-1979 tax returns, experts quoted in the news media described the documents with terms like “careless” and “inconclusive,” featuring “highly informal bookkeeping” which was blamed on the Clintons’ accountant back in Little Rock and on sloppy records related to the Whitewater real estate deal. Also, the Clintons supposedly failed to notice statements that had been mailed to them by their new commodities broker.


Hillary? Who’s that??

Regarding the commodities deal, the story kept changing. (Sound familiar?)

In 1994, when the Clinton commodities deal was brought to public attention, White House spokesman John Podesta said that “Hillary and Jim [Blair] were friends. He gave her advice,” he said. “There was no impropriety. The only appearance is being created by the New York Times.” Podesta currently serves as chairman of the Clinton presidential campaign. George Stephanopoulos, senior advisor to President Clinton, said of the trades: “So what? She was good and she was lucky.” Stephanopoulos is currently chief anchor and chief political correspondent for ABC News.

White House spokespeople at first claimed that Hillary personally controlled the account, except for taking some advice from Blair. How smart she was, with no experience in the field, to out-trade men who had traded for years! The Los Angeles Times noted “the White House portrayal of Mrs. Clinton as an exceptionally canny and attentive commodities trader.”

According to that version of the story, she got into the market at the behest of Blair, but made her own investment decisions, based in part on information she gleaned from the Wall Street Journal. One of the elements of her story that attracted the most public ridicule was that her perusing of the Journal had made her a world-class expert on cattle futures.

For her story to hold together, she had to claim special knowledge and insight; she had to claim that she knew more about cattle futures than Blair and the other investors in her circle, because they lost money—Blair, for one, lost $15 million—while she made an almost 10,000 percent profit.

Hillary—or, at least, a White House official speaking for Hillary—said she dealt with Bone directly, that “she was trading with Mr. Bone, she talked to Mr. Bone.”

But Bone told the New York Times, “I can’t recall ever dealing with the Clintons.”

Stephen Labaton of the Times wrote of Blair’s attempt to fix that part of the story: “After Mr. Blair suggested that Mr. Bone was trying to protect the Clintons’ privacy and recommended that a reporter try to talk to the broker again, Mr. Bone against insisted that he had no recollection of ever trading for the Clintons.”

Bone’s claim was peculiar because, given that Hillary’s account was not properly funded, Bone himself would have had to cover any losses she might incur, if she couldn’t come up with the money. Her potential losses exceeded the Clintons’ annual income or net worth. Covering Hillary to that degree represented an unusual level of commitment on Bone’s part, on behalf of someone—the wife of the state attorney general, who became, as of that January, the First Lady of Arkansas—whom he said he couldn’t “recall ever dealing with.”

Of course, as always with Hillary Clinton, her story changed as discrepancies were uncovered and other facts came to light. Blair’s role as her advisor got larger, but, in the new version, she still made decisions about contract size and she still placed the orders herself.

Then, per the Washington Post, the official story was that “she was not a passionate trader who kept up with every move of the market.” While she had a non-discretionary account—that is, one for which the client was supposed to make all the decisions—Blair claimed that “Bone sometimes made trades on behalf of clients even if they had not authorized them.”

John Aloysius Farrell, in the Boston Globe, April 12, 1994, almost three and a half weeks after the commodities deal because known to the public: “White House aides acknowledged yesterday that the Clintons’ old friend, James Blair, played a much more prominent role in the Refco trading than they had previously said. In many cases, Blair, after talking with Mrs. Clinton, actually issued the buy and sell orders, the White House said.”

“I can find no regulations of the Chicago Mercantile Exchange covering 1978 and ’79 that make it improper for one private citizen to call in an order for another private citizen,” said Blair.

The new version: Blair was now to be considered her commodities futures advisor and the person who issued the orders. Other changes: Compared to the details in earlier versions, the total profit was about $5,000 higher than previously acknowledged, and Hillary quit the business after Chelsea’s birth, not before the birth as she had claimed.

Previous accounts of the commodities deal were “inoperative,” said a White House aide.

Five weeks after the story broke, Hillary, wearing a pink and black outfit, met with representatives of the news media under a portrait of Abraham Lincoln, in what came to be known as the “Pretty in Pink” press conference. Broadcast live by ABC, NBC, CBS, and CNN, it dealt with both the commodities deal and the Whitewater real estate deal.

Hillary’s performance at the press conference elicited ridicule even from some friendly reporters. Connie Bruck in the New Yorker:

[I]n the press conference, when a reporter asked, for the third time, about the shifting accounts of Blair’s role, Hillary reiterated that they were her trades, despite the fact that “very often he placed them for me,” and then fell back on what was apparently her last resort—contrition, not for wrongdoing but for having given insufficient attention to the press’s needs. And the reason for that, she pointed out, was that she was so absorbed in working for the common good. “I’m not in any way excusing any confusion that we have created. I think we have created it because I don’t think that we gave enough time or focused enough. You know, I have been travelling, and I’m more committed to health care than anything else I do. I probably did not spend enough time, get as precise . . . ”

A reporter asked gingerly, “Do you wonder since then, if maybe your broker might have, because of your position or your husband’s, might have given you some kind of unfavorable—or, you know, a favored advantage?” Hillary’s response: “There’s really no evidence of that.”

Hillary was asked about that big risk she was taking. (Remember that, if she was telling the truth, she had risked more than her family’s net worth or annual income.)

Q: . . . [W]hen you first started with $1,000, did you believe you were putting at risk more than $1,000?

A. I believed that was certainly possible, yes.

Q. Then why did you take such a risky investment?

A. Because I didn’t think it was that big a risk, because I thought that Jim and the people he was talking with knew what they were doing. And, you know, I’ve read a letter to the editor that somebody sent me from one of your newspapers, I think, which talked about a woman who invested $1,000 during the same time and made $750,000. Well, she had a stronger stomach than I did. I couldn’t do that.

That woman cited by Hillary, who invested $1,000 during the same time she invested, and who made $750,000 off that $1,000 investment, could not be reached for comment, or proven to exist.

Hillary explained that she took so long to deal with the commodities controversy because she was just not comfortable handling such matters in public. She felt like “a fairly private person leading a public life. I’ve always believe in a zone of privacy. . . . I feel, after resisting for a long time, I’ve been rezoned.”

Hillary said she got involved in commodities futures trading to “create some financial security” for her family and because she “didn’t think it was that big a risk.” She was right. Based on the overwhelming weight of the evidence, it is clear that, for her, there was no risk at all.



In March 1994, in the wake of criticism of Hillary Clinton over the commodities deal and a real estate scam called Whitewater, a group of Clinton supporters bought a full-page ad in the New York Times for $49,000, proclaiming that the negative attention on Hillary was because of her stature as a strong, articulate woman.

Spy magazine reported that, the view of some Clinton supporters, she was under attack for being “a new type of presidential spouse, a major policymaker.”

Ann Lewis, a Democratic operative who would later serve as White House Communications Director, said that criticism of Hillary’s activities have to do with “the way women are changing the political system by their activity, and . . . Hillary Clinton is both an actor and a symbol of that change.” (Lewis is the sister of Barney Frank, then a member of Congress from Massachusetts. Frank, you may recall, was reprimanded by the U.S. House for fixing 33 parking tickets and otherwise aiding a prostitute who operated out of his house, and he was a major proponent of corrupt, racist lending policies that helped cause the 2008 financial crisis.)


The backdating party

So what happened to “Red” Bone and Thomas Dittmer? And what really happened behind closed doors at Refco?

The cattle futures market collapsed late in 1979, just after Hillary got out. Bone and his customers lost a lot of money, some losing their homes and some, in the words of the New York Times, “frantically selling their high priced toys.”

Shortly thereafter, Bone and Thomas Dittmer, the head of Refco, were charged by the Chicago Mercantile Exchange with violating regulations on trading position sizes in 1978 and ’79. (A “position” is a binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, at a given price.)

Five months after Hillary closed her account, Bone was accused by regulators of “serious and repeated violations of record-keeping functions, order-entry procedures, margin requirements and hedge procedures” in connection with Refco cattle futures trades. According to the Washington Post, the charges included “allocating trades to the accounts of investors after he knew whether those trades had made money or lost money. Through that operation, favored customers would be guaranteed of making money at the expense of other customers.”

Bone admitted in late 1979 to allocating trades, according to Elizabeth J. Robbens, a lawyer who had represented Refco. But, Sara Fritz and John Broder reported in the Los Angeles Times, “Robbens insisted that, while Bone has acknowledged allocating trades, none of his clients ever complained that they were treated unfairly.” Of course, it’s unlikely that a client would complain if, as in this case, transferring money from one client to another was the plan all along.  “ . . . Buying blocks of contracts and allocating them to customers after the market closed was dismissed as a time-saver by Bone and other Refco workers, even though they were aware it violated the guidelines of the Chicago Mercantile Exchange,” according to Fritz and Broder.

During the downturn that immediately followed Clinton’s withdrawal from the market, Refco’s clients lost money, but Refco CEO Dittmer made a substantial gain, allegedly by doing the opposite of what he was advising clients to do. Blair charged that Dittmer would tell investors to bet on falling prices, then force prices up, or he would say to bet on rising prices, then dump supplies on the market to drive the price down. That led to legal action against Refco by investors.

In connection with a lawsuit, Hayden McIlroy, a Refco customer, testified to the activities of fellow trader Ira Brill, as allegedly described to him by Brill. Brill’s job, McIlroy said, “was to hold the orders and not turn them in until Springdale [the Springdale office of Refco] had called him after the market closed and given him customer account numbers, and how they wanted those orders divided between all customers in the Springdale office.” (Interestingly, McIlroy had been briefly represented in the lawsuit by Hillary Clinton, which raises the possibility that she knew in some detail how things worked behind the scenes at Refco.)

According to the Los Angeles Times, Brill said that he had been the floor broker who had filled the Clinton orders. He said that he bought and sold cattle in 600-contract lots for Refco, and that those trades were not assigned to specific accounts until after the market closed. Such lots were known as “600 orders.”

Refco brokers Bill McCurdy and Stephen Johns testified under oath about the atmosphere at Refco one day in August 1979, just after Hillary exited the market. Refco’s Springdale brokers had been chastised by supervisors in Chicago for allocating trades. To the Springdale gang, that meant that records had to be fixed. That meant turning back the clock—literally. McCurdy:

We locked the doors with the people that worked there still left there. I don’t believe “Red” Bone was there at that time. And it was approximately 2:30 in the afternoon and he said . . . . “We’ve got to go back and individually time and date stamp all these ‘600 orders’” that had been ordered out of Chicago. And we sat down and changed our clocks back and the dates back and took the “600 orders” and matched up and stamped enough orders to match the 600 that had originally gone in. . . . It was pretty close to dark when I left.

The back-stamped records apparently covered the day, June 27, 1979, that Hillary made the trade that would be her most profitable, eventually earning her $43,760. It was one of three days for which the White House was unable or unwilling to provide daily trading statements.


Confirmation of cheating

In November 1981, Bone accepted a $100,000 fine, a three-year suspension from trading in his own account, and a one-year suspension from trading for customers. He had been caught violating the terms of his 1977 agreement with the CFTC, by holding an interest in a futures account he traded in the name of another Refco broker. Bone had received $1.2 million of the $1.5 million profit made from the account, according to the CFTC.

In March 1994, the exchange confirmed that Bone had been, in fact, disciplined for allocating trades during the period in which Hillary Rodham traded. Bone often traded without orders from his clients, and, according to the publication Securities Week, “at the end of the day the winning and losing trades would be allocated to the accounts selected by Bone.”

The 1979 charges against Dittmer and against Refco itself were similar to those made against Bone. Settling the case , Dittmer agreed to a six-month suspension. It was the first time the chairman of an exchange member firm had been suspended by the Chicago Mercantile Exchange. The fine imposed on Refco was $250,000, the largest that the exchange had ever imposed on a futures broker.

…not that it seemed to bother Dittmer very much. Leo Melamed, chairman emeritus of the exchange, would describe an encounter with Dittmer shortly after the fines were imposed. “He [Dittmer] told me: ‘I made a few million, and you took a few thousand back. So what?’” (By the way, Dittmer and Melamed were close enough that the former hosted the latter’s retirement party in 1991, transforming his home into a facsimile of a trading room “with interconnected phones at each table and a bank of computer terminals and of machines that scrolled Melamed’s life story,” as described by James Ring Adams in the American Spectator.)


Just a tempest

In 1994, after the commodities deal story broke, Melamed would provide cover for the Clintons, calling the scandal “a tempest in a teapot.”

Melamed said that he reviewed the trading records and offered his assessment. He said his opinion was that, regarding the failure to meet the standard margin requirements for novice investors, Mrs. Clinton “did nothing wrong” and that “Hillary Clinton did not herself violate Chicago Mercantile Exchange rules” even though “at times Mrs. Clinton’s account had been thinly margined . . . ”

In other words, she received special treatment, but that wasn’t her fault.

Interestingly, Melamed, the most prominent person in the industry to suggest that Hillary was innocent, seems to have given away the game in an interview with Charles Babcock of the Washington Post. In May 1994, regarding newly released records, Melamed said, “The new records also raise the possibility that some of her profits, as much as $40,000, came from larger trades ordered by someone else and then shifted to her account.” Oops. Melamed quickly attempted to recover from his gaffe, claiming that “Even allocated trades would not necessarily have benefitted Clinton.” As “Chick” Goslin noted in his book on futures trading, Melamed’s effort at damage control “was too late; the lethal damage to Hillary Clinton’s case had been done.”

Another seeming admission from Melamed came in 2000, when, according to the Wall Street Journal, he told a journalist in a telephone interview that, in looking at the Clinton case, he had examined only the rules of the exchange—the rules that govern brokers, not clients. Regarding any private understanding with her broker, he said, “Those are not things I was looking for, nor did I give a damn.”




The one that brung ya

What exactly did Tyson get for its money back in Arkansas?

As Bill Clinton was running for president in 1992, David Maraniss and Michael Weisskopf of the Washington Post wrote about the “key equation” in Arkansas: “Chickens equal political power.” Bill Clinton, they wrote, was “a governor comfortable with the cozy, one-of-the-boys interplay between big business and government.”

Tyson, the largest employer in the state, was profoundly involved in Arkansas politics before, during, and after Bill Clinton’s time as governor. During that period, Tyson got some $9 million in government loans; seats were open on state boards that governed the industry, and Tyson wanted its friends in those seats; and the state government made decisions on environmental issues that greatly affected the company.

Outright bribery is actually rare in U.S. politics. In the vast majority of cases in which politicians get secret payoffs, there is no obvious quid pro quo. It’s more like in The Godfather: “Someday, and that day may never come, I’ll call upon you to do a service for me.” He does you a favor, and, in return, you owe him one. Or what you need to do to repay him is simply understood, with no communication necessary.

When I was a young reporter covering politics, I discovered that the owner of a string of car washes had sold parts of his business to up-and-coming politicians at below-rock-bottom prices. As far as I could tell, it was perfectly legal. Only a few of his beneficiaries got very far in their political careers, but it didn’t take many successes to make his investment worthwhile. A single zoning decision by one member of his team could be enough to pay back the money he had spent on a slew of them.

Among Tyson’s top concerns was the weight limit on trucks. The limit in Arkansas was 73,000 pounds, which would put Arkansas companies at a disadvantage compared to companies in surrounding states, which were raising their limits during this period. The higher the limits, the more chickens could be transported per truck run. Besides, the issue had an emotional resonance to Don Tyson, whose father started Tyson Foods in the 1930s as a chicken-trucking business.

Bill Clinton was elected governor in 1978 with the backing of Don Tyson, who expected him to raise the limit. But Bill Clinton forgot the political principle that “You dance with the one that brung ya”—that you stay loyal to those who made your success possible. Given Tyson’s support, especially given the commodities deal, which involved the risk of people getting caught and going to jail, Tyson must have felt betrayed. In Bill’s 1980 race for reelection—the governor at that time had a two-year term—Tyson backed Clinton’s Republican opponent.

Clinton was burdened by increases in car registration fees and by the Carter administration’s placement of “refugees,” freed from Cuban prisons, at Fort Chafee, where they rioted. A minor factor, but a telling one, was that his administration got caught wasting taxpayers’ money on “green energy” projects. According to a timeline by the Clinton House Museum, Clinton’s reelection was hurt when “the newly created Energy Department shelled out $2,000 for a lakeside conference retreat. The Energy Department also rang up a $37.50 bill for corkscrews at a dinner party. When news came that the Special Alternative Wood Energy Resources project–which was designed to train low-income Arkansans to chop wood and distribute it to the needy–had spent $62,000 to produce six woodchoppers and just three cords of wood, the public was outraged.”

Clinton lost that election in 1980. Hillary took personal change of his comeback, from neutralizing women who might come forward with stories about Bill, to dumping his bearded, hippie-looking advisors, to changing her own image—dyeing her hair, replacing her glasses with contact lenses, and taking Bill’s last name as her own, so as to be seen as a proper First Lady for Arkansas. From that point forward, the Clinton would do what was necessary to win. When Bill regained the governorship in 1982, he moved quickly to raise the truck weight limit to 80,000 pounds. Reportedly, he didn’t even have to be asked. The Clintons knew what was expected of them.


Chicken [litter]

One thing that was expected was that Tyson and the poultry industry as a whole would not be impeded very much by environmental regulations.

Maraniss and Weisskopf in the Washington Post in 1992:

Nearly half of the 600 miles of streams in the northwest part of Arkansas where the poultry industry is centered are considered so polluted by chicken and livestock waste that they are off-limits to swimming.

Virtually every tributary of the White River, a world-class trout stream in the heart of the Ozarks vacationland, is contaminated by fecal coliform, and many by nitrates, threatening the drinking water supply for 300,000 people, according to officials at the state’s Pollution Control and Ecology Department. In five northwestern counties, chickens produce 500,000 tons of waste, known as litter, each year—equivalent to the output of 4 million people. . . .

At the time, there were approximately 2.4 million people in Arkansas.

Oceans of contaminated water used in plants where the birds are killed, plucked and packaged . . . are chemically treated to varying degrees of cleanliness and then discharged directly into streams or municipal treatment plants.

But a greater environmental threat is caused by the way chicken farmers empty their cages and dump dry litter on cropland. Some farms in the state have become so saturated that new loadings of litter lie on the surface and quickly wash into streams. As a result, the streams are often teeming with fecal bacteria. More ominous is the presence in the water of high levels of nitrates known to cause blue baby syndrome. Nitrates also spawn algae, which reacts with chlorine in treated drinking water and can create cancer-causing byproducts.

In 1968, Tyson bought a poultry processing plant in Green Forest, a small town (1980 population: 1,609) in northwest Arkansas near Missouri. For years, the plant discharged a volume of waste so great that the town’s water treatment facility couldn’t properly handle it. By the late 1970s, the chicken plant accounted for more than 90 percent of the town’s waste.

In his autobiography, Sid McMath, who served as governor in 1949-53, described efforts to fight the pollution produced by Tyson—efforts that failed.

Residents affected by the pollution of their water brought suit against Franz Foods, Tyson’s subsidiary, for maintaining a public nuisance. The suit was settled in 1976. In the settlement agreement, Tyson pledged not to discharge waste material into the city’s sewage treatment plant that would in any way alter the condition of Dry Creek, either visually or chemically. Tyson further promised that it would refrain from violating any city ordinance or county, state, or federal regulations or laws relating to the safety and purification of the water supply. . . .

By the 1980s the city’s sewage treatment plant was discharging waste stronger than domestic raw sewage. In May 1983, a sinkhole opened in Dry Creek and the creek’s entire flow ran directly into the ground. . . .

Such streams as Dry Creek have an intimate contact with the ground-water system through sinkholes. The effluent . . . was discharging into Dry Creek, above the sinkhole. With its limestone formation easily dissolved by water, surface water in the stream regularly permeates to shallow aquifers and the water frequently submerges and reemerges downstream. . . . The principal industry in Green Forest, Tyson Foods, was also the principal polluter.

McMath noted that Shipman Springs, a shallow aquifer, “went septic.” One state anti-pollution worker remarked that, when he saw Shipman Springs, “It frightened me.” The pond, which had been stocked with trout, had to be bulldozed. Other wells and aquifers began to show contamination. The city filled the sinkhole with concrete, but it reopened a few feet away.

Maraniss and Weisskopf of the Washington Post described the events:

As the treatment facility became overloaded, town officials borrowed Tyson’s equipment to siphon off sludge and dump it on local fields, according to a lawsuit filed by residents. But despite the known risks of a sinkhole opening in Dry Creek, state officials did not enforce the original 1977 permit requirement that Tyson pre-treat waste before sending it to the Green Forest facility. No fines were issued, no legal action was taken to shut down the Tyson plant or the treatment facility and no pleas for federal help were made by Arkansas authorities.

The worst fears came true in May 1983, shortly after Clinton was elected governor for the second time. A sinkhole developed in Dry Creek, and through it partially treated sewage from the Tyson plant drained into the ground water at the rate of 1 million gallons a day. . . .

Many residents of the low-income farming town drew their water from household wells and developed chronic dysentery. Steve Work, who owns a gift shop outside Green Forest, was told by a doctor that his symptoms resembled salmonella, a bacteria [sic] that can be transmitted by poultry. Work also noticed globs of grease in his drinking water. But he did not connect his illness to the ground water until an aquifer on a neighbor’s property turned septic a year later, killing hundreds of fish in the once pristine spring.

“The buzzards were camped right below the stream. We went down to investigate and it smelled like sewage,” he recalled recently. “If those fish hadn’t died, I believe I would have.”

Seventeen months after the disaster began, Governor Bill Clinton declared the town a disaster area. A lawsuit by local residents would hold Tyson Foods responsible for 43 violations of the Clean Water Act.

In 1990, Governor Clinton convened an Animal Waste Task Force to produce recommendations for protecting the environment. But, according to Larry Snodgress, one of three environmentalists in the 28-person group, the panel was so weighted in favor of industry and bureaucracy it was “virtually doomed from the start.” The chicken feces problem was put aside, to deal first with liquid livestock waste, and the eventual proposal was, according to the Washington Post, “less stringent in part than the voluntary measures promoted by the state in recent years.” The subcommittee on chicken “litter” was headed by a poultry executive.

Tyson is on environmentalists’ radar as one of the country’s worst polluters. The organization Environment America reported:

Corporate agribusiness is emerging as one of the biggest threats to America’s waterways – contributing to dead zones from the Chesapeake Bay to the Gulf of Mexico and even threatening our drinking water. Tyson Foods, Inc. is “one of the world’s largest producers of meat and poultry.” The company’s pollution footprint includes manure from its contract growers’ factory farm operations, fertilizer runoff from grain grown to feed the livestock it brings to market as meat, and waste from its processing plants. . . .

Tyson Foods Inc. and its subsidiaries dumped 104 million pounds of pollutants into waterways from 2010 to 2014 – the second highest volume of toxic discharges reported to [EPA’s Toxic Release Inventory] for those years.

That figure for Tyson is higher than the waterways-pollution volume for the environmentalist-reviled ExxonMobil, Koch Industries, and International Paper combined. Fifty-five percent higher, in fact.

It is a sign of how deeply the environmental movement has been corrupted, that environmentalists have made little of Hillary’s ties to Tyson. As long as a politician lines up ideologically with the movement, nothing else matters—not even being secretly on the payroll of polluters.


Unindicted co-conspirator

Ross Perot during the 1992 campaign dubbed Bill Clinton “chicken man” because of his ties to Tyson and to the poultry industry. When Clinton won, “Big Daddy” Don Tyson’s reputation, deserved or not, was as the man who put the Clintons in the White House. And the chief counsel of Tyson Foods, Jim Blair, and his wife Diane were considered the best friends of the President and First Lady.

As often occurs in the Clintons’ circle, influence leads to scandal.

After the 1992 election, as the Clintons were staffing the new administration, U.S. Representative Mike Espy, angling to become secretary of agriculture, visited Tyson Foods to secure the support of the Tyson organization. Once installed in office at the Agriculture Department, Espy became a magnet for its gifts—including inaugural dinner tickets, tickets to a Dallas Cowboys football playoff game and a Chicago Bulls basketball game, a trip on a Tyson jet, and money from the Tyson Foundation for his girlfriend to go to college.

Twenty months into the Clinton administration, Espy resigned. A grand jury heard from former Tyson pilots who said they delivered envelopes of cash intended for Bill when he was governor. One recalled, “We would hold [the money] and you could see it if you pressed against [the envelope]. You could see the hundred dollar bills there.” But that aspect of the investigation went nowhere, as President Clinton’s attorney general, Janet Reno, ordered the independent counsel (special prosecutor) to limit his investigation to the Espy gifts.

Based on the gifts from Tyson and from Sun-Diamond Growers, a California agricultural cooperative, Espy was charged on 30 counts related to the acceptance of illegal gratuities. Prosecutors struggled to prove that the gifts had induced Espy to take specific actions. Under Espy, the USDA blocked new standards intended to prevent fecal contamination, rules that reportedly would have cost Tyson $30 million. (The rule was ultimately blocked by a court.) Also under Espy, the department reversed itself on rules related to trawling, which critics alleged was done to benefit Arctic Alaska Fisheries, owned by Tyson. But neither policy was linked successfully to the gifts.

Espy’s chief of staff was convicted of making a false statement to authorities, and sentenced to 27 months.

Sun-Diamond was convicted but the conviction was overturned on appeal for failure to prove the quid pro quo, while another company, a crop insurance firm named Crop Growers Corp., pleaded guilty in connection with the case.

Don Tyson and his son John were named as unindicted co-conspirators in the case, and granted immunity from prosecution in return for their testimony to the grand jury. (John, an alcoholic and cocaine addict who claims sobriety since 1990, took over from his father as CEO of the company in 1996.)

In 1997, the company itself pleaded guilty in the Espy case and agreed to pay $6 million in penalties, including a $4 million fine and $2 million to cover the cost of the investigation. Don Tyson himself entered the plea. As part of the deal, the company promised to deal with government officials ethically in the future, and, in return, escaped a harsher punishment—being barred from selling its products to the military and to school-lunch programs.

Jack Williams, a company lobbyist, and Archie Schaffer, an executive and company spokesman, were convicted of providing gifts to Espy. Williams was also convicted of lying to investigators. According to independent counsel’s report, Schaffer helped Espy fake his travel itineraries, making a birthday party look like a poultry industry meeting, concealing the ownership of a plane that Espy used, and otherwise creating the false impression that Espy was on an official business trip for which he could be reimbursed by taxpayers.

Schaffer was well-connected in Arkansas politics. His wife was Beverly Basset Schaffer, the state securities regulator, appointed by Bill Clinton, who helped delay the collapse of Madison Guaranty Savings & Loan, costing taxpayers as much as $60 million. (Madison was the S&L control by the Clintons’ business partner, Jim McDougal, who ended up dying in prison.) And Archie Schaffer’s aunt was Betty Bumpers, the wife of U.S. Senator Dale Bumpers (D-Arkansas). [For more information on those two connections to Archie Schaffer, see the endnotes.]

In his last month in office, President Clinton pardoned Williams and Schaffer.

In 2012, during Schaffer’s last week on the job at Tyson, an admiring blogger, Rex Nelson, predicted that a thousand people would show up for the retirement party at which they would be treated to chicken jambalaya, boiled shrimp, and catfish. Nelson’s blog post on Schaffer included tributes from former U.S. Senator David Pryor and Schaffer’s uncle by marriage, former U.S. Senator Dale Bumpers. Schaffer, quoted by Nelson, thanked Tyson Foods for standing by him during his and his wife’s legal troubles: “The company was very supportive and continued to pay my legal fees or I would have never made it.”

As for Espy, he also did well following his adventure in the Clinton administration. After his acquittal, he returned to the practice of law. He represented plaintiffs in the Pigford scandal, in which unfounded charges of racial discrimination on the part of the U.S. Department of Agriculture became the basis for a fraudulent settlement that cost taxpayers more than $2.2 billion. Money that should have gone to poor farmers regardless of their race was distributed with race as the determining factor.  Meanwhile, payments that were supposed to go to African-American farmers went, in many cases, to people who had never been farmers at all. See the conservative American Thinker at and the liberal The Atlantic at .



Brent Riffel, in his dissertation at the University of Arkansas, wrote about Tyson’s history. During the Clinton administration, “The plight of Tyson’s contract poultry growers continued to worsen, and though some tried to organize once more, they had little recourse. Tyson began to encourage immigrants from Central America and Southeast Asia to borrow money to start their own grow-out operations. Within a decade, though many of these new arrivals, such as the Hmong immigrants from Laos, faced bankruptcy as they quickly learned the stark realities of poultry farming. The plight of poultry growers was largely ignored by the media as attention turned to Tyson’s more high-profile problems—many of which stemmed directly from its ties to President Clinton.” It wasn’t just the growers who were worse off. During the 1990s, Tyson, in its plants, turned increasingly to “low-skill, low-wage immigrant workers.”

In 2002, the company was charged with conspiring to import illegal aliens into the U.S. to work at the company’s processing plants. Both the company itself and six employees were indicted. Spokesmen claimed that the recruitment was done by a handful of managers acting contrary to company policy.

The government charged that Tyson over the previous decade had gradually replaced unionized workers with illegals, and that two executives in Springdale knew about the smuggling of workers and helped aliens obtain counterfeit documents.

The company itself was cleared of criminal wrongdoing, but the charges led to two guilty pleas and a suicide by Tyson managers.

In 2011, Tyson was fined $5.2 million for bribing two Mexican veterinarians, by creating no-show jobs for their wives. The men were bribed to provide Tyson with export certification from three poultry processing plants in Gomez Palacio, in north-central Mexico. The money was paid, according to the New York Times, to keep inspectors “from making problems at the plants.”

Several top Tyson executives were told of the scheme, including the chief administrative officer, a vice president for internal audit, and an executive who would become head of Tyson International.  They acknowledged that the wives had to be taken off the payroll, and appointed a three-member committee to determine a better way to continue the payment of the bribes.

To repeat: Told of the scheme, Tyson executives appointed a three-member committee to determine a better way to continue the payment of the bribes.

The company switched to a fake-invoice system. Two years later, a company lawyer ordered a halt to the activity.

The responsible executives were never prosecuted or even publicly named. Bribery of foreign officials and maintaining false records to cover up bribery are felonies under the Foreign Corrupt Practices Act, which calls for prison sentences of up to 20 years and for fines of up to $5 million for individuals and $25 million for companies.

David Barboza wrote in the New York Times in 2002, “critics say that both Tyson’s growth and its transgressions arise from the same devil-may-care philosophy that the Tyson family, which tightly controls the company, has imbued it with from the start. ‘The history of this company has been living on the edge,’ said John McMillin, a food analyst at Prudential Securities.”

Forbes reported in 2004 that, as part of efforts to instill the right sort of values in company employees, all were required to carry around in their wallets a plastic card with a list of principles, including “We strive to be honorable people.”


Greasing the skids

In recent years, Tyson has continued to use its political connections to expand its business opportunities. For example, it tried to get the Navy to run its ships on chicken fat.

“In 2007, Congress set a goal of producing two billion gallons of advanced biofuels within five years,” the Brookings Institution reported in 2012. “But today, firms can only generate around 40 million gallons of the stuff—98 percent less than the original plan’s total.”

The failure to meet that 2012 goal—and the failure of such projects as Solyndra—only increased the federal government’s resolve to make the military “green.” (You may recall that Solyndra, a solar-panel company co-founded by a major Obama donor, got $535 million in loan guarantees, but went belly-up, leaving taxpayers on the hook. It was one of many such flops.)

Today, there is lots of money to be made from the government’s “green” push.

Tyson hoped to get some of that money. It partnered with two different companies to cash in on the “green” military—ConocoPhillips, co-processing Tyson’s vegetable, beef, pork, and poultry fat/grease with hydrocarbon feedstock, and Syntroleum, which refines vegetable fat and Tyson’s animal fat into diesel and jet fuel. According to the Wall Street Journal, the raw materials for the latter partnership come from “chicken fat, beef tallow, and a range of greases and oils . . . leftovers from Tyson’s meat-processing plants and other food-processing factories and restaurants.”

The Associated Press reported in 2007 that “Tyson Chief Executive Richard Bond said the joint venture with Syntroleum was part of Tyson’s effort to become a leading player in the renewable energy business.” The Tyson/Syntroleum project, known as Dynamic Fuels, attracted, for its bio-refinery in Louisiana, $100 million in Gulf Opportunity Zone Bonds, issued through the Louisiana Public Facilities Authority.

The Tyson/ConocoPhillips deal was supposed to have the capacity to generate 175 million gallons of diesel annually. But it folded in mid-2009, when the dollar-a-gallon credit from taxpayers was cut to 50 cents, which meant that the venture was no longer economically viable.

Two years ago, REG [Renewable Energy Group] Synthetic Fuels acquired Syntroleum and Tyson’s share of Dynamic Fuels.  According to a press release, “REG paid Tyson approximately $16.5 million in cash at closing and retired approximately $13.5 million of Dynamic Fuels’ indebtedness to Tyson. REG has also agreed to make up to $35 million in future payments to Tyson tied to product volumes at the Geismar [Louisiana] bio-refinery over a period of up to eleven and a half years.” City Wire (Arkansas) reported that “Tyson Foods is getting out of the $150 million Dynamic Fuels venture the company spearheaded beginning in 2007 and has not lived up to its potential. The plant, which has sat idle since November 2012, won’t be Tyson’s Foods’ problem much longer as the meat giant has agreed to sell its 50% stake to Renewable Energy Group for an estimated $65 million.”

Given its environmental record, some might consider Tyson’s “green” efforts ironic. One man’s “ironic” is another man’s opportunity to cash in.




Conclusion: Getting rich the Clinton way

In 1994 in the Guardian newspaper, Michael Kelly wrote about the ultimate source of Bill Clinton’s scandals.

The President’s problems did not come about because he was a cheap political hack. They came about because he was not. For what has happened to Clinton has happened because he wanted, more than anything in life, to get to where he is today, and because he wanted this, at least in part, to do good—and because they great goal of doing good gave him license to indulge in the everyday acts of minor corruption and compromise and falsity that the business of politics demands. Bill Clinton was perceptive enough to master politics—but not perceptive enough to see what politics was doing to him.

Kelly was writing about Bill, but his analysis could have been applied to Hillary as well, except that, by 2016, we have seen that everyday acts of minor corruption grow, if unchecked, into world-spanning acts of unimaginable corruption.

The New York Times, in an editorial dated March 31, 1994, declared, regarding the Clintons’ finances: “The inescapable conclusion is that this couple, early and late, suffered from a thematic insensitivity to the normal rules of conflict of interest. At every turn of their financial life, the then-Governor and First Lady of Arkansas were receiving financial favors from individuals who had something to gain from having friends in high places.”

In the initial New York Times report written by Jeff Gerth, Blair defended the Clintons: “Do they have to go weed their friends out and say they can only have friends who are sweeping the streets? They have friends who are high-powered lawyers. They have friends who write books, who write poetry.”

Pulitzer Prize-winning commentator William Safire in 1994 wrote that “The directing of a huge bundle of money into the Clinton pocket could be classified under a word that has only been whispered in connection with this deal: bribery, in its most modern form.”

Two years later, Safire, examining Hillary’s history of falsehoods, called her a “congenital liar”—that is, someone to whom lying comes naturally. (Naturally, Clinton, in her response, twisted Safire’s words, pointing to an alternate meaning of “congenital” and slyly suggesting that he was insulting her parents: “My mother took some offense,” she told the government’s National Public Radio, “because being called a congenital liar seems to reflect badly on her and my late father.”)

Evidence of the ease with which she lies comes from a paid speech she gave on November 18, 2013 to, of all people, executives of the Chicago Mercantile Exchange, known as the CME Group following the exchange’s merger with the Chicago Board of Trade. An excerpt from her speech, published by WikiLeaks, exposes Clinton’s shamelessness as—in front of a room-full of experts, almost all of whom surely knew she was lying—she repeated the official version of the cattle futures tale.

Now, it’s always a little bit risky for me to come speak to a group that is committed to the futures markets because—there’s a few knowing laughs—many years ago, I actually traded in the futures markets. I mean, this was so long ago, it was before computers were invented, I think. And I worked with a group of like-minded friends and associates who traded in pork bellies and cotton and other such things, and I did pretty well. I invested about a thousand dollars and traded up to about a hundred thousand. And then my daughter was born, and I just didn’t think I had enough time or mental space to figure out anything having to do with trading other than trading time with my daughter for time with the rest of my life. So I got out, and I thought that would be the end of it.

(As an indicator of the level of ignorance of today’s political reporters about Clinton’s record: Politico, which presents itself as the publication of record for U.S. politics, called Hillary’s comment to the CME Group a reference to Clinton’s “past Whitewater scandal.”)

Leah McGrath Goodman wrote in Newsweek about the WikiLeaks excerpts from Clinton’s paid speeches to Wall Street bigshots: “At best, the excerpts show her oddly cavalier attitude toward matters of grave concern (the financial crisis of 2008) and potential wrongdoing (including her own). At worst, they betray her tin-eared approach to the plight of America’s struggling middle class, which she has never wanted to be a part of, and an eagerness to be embraced by the moneyed classes as one of their own.”

Daniel Gross wrote in Fortune magazine last February about the Clintons’ use of the “Wives of Wall Street” model for political couples, in which one spouse is a “public servant” while the other brings home the bacon through Wall Street or a legal practice.

For them [the Clintons], politics is the family business. There is no distinction between business careers and political careers. Holding and serving in public office provides a platform from which they can monetize experience, connections and prominence. And then they use the wealth gained through, say, speaking engagements and media tours, to lay the groundwork for the next campaign. Electoral office, business, wealth, and public service, all meld together seamlessly. . . .

For nearly two decades, Hillary Clinton served as half of a variation of the “Wives of Wall Street” model, working as a lawyer in Little Rock and serving on corporate boards (Walmart, TCBY, LaFarge Corp.) as husband Bill Clinton served in low-paying positions like Governor of Arkansas (1991 salary: $35,000 [about $64,000, adjusted for inflation]). In 1991, when Bill Clinton launched his presidential campaign, Hillary earned about $60,000 [about $110,000 in 2016 dollars] from her board seats and $110,000 [more than $200,000 today] from her work as a lawyer.

The Clintons, who have no known talents outside the world of politics and influence-peddling, are now worth more than $150 million.

In a column published last weekend, John Kass of the Chicago Tribune wrote of the connection between the Clintons’ talentlessness and their theft of 66,000 e-mails that were generated while Hillary was secretary of state.

I’ve always figured that, as secretary of state, Clinton kept her home-brew email server—from which foreign intelligence agencies could hack top secret information—so she could shield the influence peddling that helped make the Clintons several fortunes.

The Clintons weren’t skilled merchants. They weren’t traders or manufacturers. The Clintons never produced anything tangible. They had no science, patents or devices to make them millions upon millions of dollars.

All they had to sell, really, was influence. And they used our federal government to leverage it.

The assessment of James Kallstrom, former assistant director of the FBI, is harsh but accurate. “The Clintons, that’s a crime family, basically,” he said Sunday. “It’s like organized crime.”

Historian Victor Davis Hanson in National Review Online:

The Hillary/Bill fortune—generated by pay-for-play influence peddling on the proposition that Bill would return to the White House under Hillary’s aegis and reward friends while punishing enemies—hit a reported $150 million some time ago, a fortune built not on farming, mining, insurance, finance, high-tech, or manufacturing, but on skimming off money. The Clintons are simply grifters whose insider access to government gave them the power to make rich people richer.

Long gone was the Scrooge-like need to write off used underwear as charitable tax deductions or to play 4-trillion-to-one odds in rigging a $100,000 cattle-futures profit on a $1,000 “investment,” or Hillary’s decade-and-a-half as a corporate lawyer masquerading as a children’s advocate. How pathetic the minor league Whitewater cons must seem now to the multimillionaire Clintons

The Clintons and their cronies are the beneficiaries of a system that is rigged in favor of the elites, those who use family and political ties and inherited wealth to get themselves into the right schools and the right clubs and the right boardrooms. If the elites get in trouble—if their investments go belly up, if they get caught cheating in school or business or public office—they get bailed out, they get protected.

The elites have developed an entire political philosophy, euphemistically referred to as Progressivism, based on the idea that regular people are too stupid to govern themselves and should be, must be ruled—benevolently, of course—by people who are better than they are.

The law, you see, is not for the elites. It’s for the deplorables.



Dr. Steven J. Allen (J.D., Ph.D.) is vice president and chief investigative officer of the Capital Research Center in Washington, D.C.




ENDNOTES: Archie Schaffer

  • Beginning in August 1982, just before Bill Clinton won back the governorship he lost in 1980, a longtime political operative named Jim McDougal purchased Madison Guarantee Savings and Loan. McDougal once ran the youth campaign for notorious segregationist Governor Orval Faubus and had served as an aide to Bill Clinton’s mentor, Senator Fulbright. He was a partner with the Clintons in the infamous Whitewater real estate deal, which was intended to make the Clintons financially secure (and, perhaps, to hide profits from the commodities deal).

In 1984, Madison started getting into serious trouble. In January, the Federal Home Loan Bank Board issued a report questioning Madison’s lending practices and its financial stability. (Clinton, you may recall, had tried to get Jim Blair an appointment to chair the FHLBB.) The Arkansas Securities Department began efforts to shut Madison down. On January 16, 1985, Governor Clinton appointed Beverly Basset—a “longtime associate,” according to the Wall Street Journal—as Arkansas State Securities Commissioner. Subsequently, she approved unusual efforts to keep Madison afloat. When the S&L finally went bust in 1989, taxpayers lost $60 million. Jim McDougal was indicted for bank fraud, and defended by the Rose Law Firm, of which Hillary was a partner. McDougal would die in prison.

Beverly Bassett, who became known as Beverly Basset Schaffer, was married to Archie Schaffer.

  • During the Cold War, the Soviet Union attempted to get sympathetic individuals—“agents of influence”—in positions of power. Among their successful operations was a group called Peace Links, which was headed by wives of U.S. Senators (and, thus, in Washington’s crony system, above reproach). Peace Links pushed the false idea, promoted by the Soviets and the Left, that the U.S. and the Soviet Union were engaged in an action-reaction “arms race”—in essence, that each of the two countries acquired weapons, specifically nuclear weapons, only because the other one had them. (See my refutation of “arms race” theory at ). Peace Links affiliated itself with such Soviet fronts as the Women’s International League for Peace and Freedom and Women Strike for Peace. To establish its bipartisanship, the group was chaired by a Republican and a Democrat. Teresa Heinz, wife of Senator John Heinz (R-Pennsylvania), was the Republican chairman. (After Senator Heinz died, Teresa married Senator John Kerry, D-Massachusetts, who is now the secretary of state.) The Democrat chairman, and the person credited with founding the group, was Betty Bumpers, wife of Senator Dale Bumpers (D-Arkansas).

Archie Schaffer’s mother was the sister of Betty Bumpers.


ENDNOTES: The winding path from Refco

Whatever happened to Thomas Dittmer and Refco?

By the early 1980s, Refco was a major player in the commodities market, with the firm and its customers accounting for up to 40 percent of all cattle contracts on the Chicago Mercantile Exchange. In 1981, he became part of an elite group of 37 dealers who bought Treasury securities for the Federal Reserve.

The firm got in trouble repeatedly. By 1991, Crain’s Chicago Business ranked it the #1 most penalized firm in the futures business, based on its record of fines and settlements. During the company’s 36-year existence, the government’s Commodity Futures Trading Commission and the industry-controlled National Futures Association took action against Refco and its units more than 100 times.

In 1992, the CFTC fined Dittmer $590,000 for allegedly trying to corner the frozen pork-bellies market. In 1996, the Securities and Exchange Commission ordered Refco to pay $3.5 million for “concealing” an $80 million fraud by a money manager in California. In 1999, the CFTC fined Refco $6 million for record-keeping violations and lax internal controls related to trades by another money manager in California.

By the time of its 2005 collapse, Refco was the largest broker on the Chicago Mercantile Exchange. It was, according to the Wall Street Journal, “a global trading hub for corporations, government agencies, individual clients and hedge firms.”

It collapsed two months after the company raised $670 million in an initial public offering.

The collapse came after CEO Phillip R. Bennett, who succeeded Dittmer as CEO in 1998 and as chairman in 1999, admitted that he had concealed a $430 million debt through transactions between different companies controlled by Refco. He was sentenced to 16 years in prison. Former Refco president Tone Grant, accused of hiding $1.1 billion in debt and expenses, denied wrongdoing but was convicted and received a 10-year sentence; he died in prison. Refco’s outside lawyer, Joseph Collins, was also convicted in the case and received a sentence of a year and a day. The law firm at which he had been a partner, Mayer Brown, settled for an undisclosed amount for its role. (Among Mayer Brown’s lawyers is Mickey Kantor, who served as trade representative and commerce secretary in the Clinton administration. Kantor is a longtime Hillary Rodham Clinton associate going back to her days at the Legal Services Corporation. The LSC, by the way, was supposed to provide legal services for poor people, but, under Hillary’s chairmanship during the Carter administration, functioned in effect as an employment service for members of the National Lawyers Guild, the legal arm of the Communist Party.)


Into the tall grass

The Refco story takes us on a winding path, one that shows how Clinton-style corruption works.

In its permutations, it infiltrates business and politics, infecting everything it touches.

The Refco path leads to MF Global, and from there to a politician named Jon Corzine (and Goldman Sachs and taxpayer bailouts), to former vice presidential nominee John Edwards and government-employee unions and a case of rummaging through taxpayers’ records and an official’s use of a fake e-mail account and Silicon Valley and Bill Clinton’s “body man,” the Clinton Global Initiative, and Chelsea Clinton’s crooked father-in-law. Also, Marc Rich and the Pardongate scandal, and the terrorist Abu Nidal, and Hillary Clinton’s campaign chairman John Podesta and Podesta’s former lawyer, who’s now investigating Hillary’s e-mail scandal.

Follow the yellow brick road, starting at Refco.

Refco’s assets were sold in 2005 to Man Financial (later MF Global) for $282 million in cash and $41 million in liabilities. MF Global itself collapsed in 2011. Its CEO at the time was former U.S. Senator and New Jersey Governor Jon Corzine [see endnotes] who was blamed for the collapse because he had invested heavily in European sovereign (government) debt, particularly the bonds of economically troubled “PIIGS countries,” Portugal, Ireland, Italy, Greece, and Spain. In effect, Corzine was betting that those governments would get bailed out, as his former company, Goldman Sachs, had been bailed out. Regarding some $1.5 billion that vanished during this period, Corzine told a congressional panel in December 2011: “I simply do not know where the money is, or why the accounts have not been reconciled to date.” Most of the money was later recovered. See .

Corzine is a key node in the corruption network. A former CEO (1994-1999) of Goldman Sachs, which was bailed out by taxpayers during the 2008 financial crisis, he was an early supporter of Hillary Clinton’s 2008 campaign for president. Clinton, a key supporter of the bailout, would make $675,000 for three speeches to Goldman Sachs executives following her time as secretary of state.

While serving in 2003-2005 as chairman of the Democratic Senatorial Campaign Committee, Corzine helped arrange the nomination of Senator John Edwards of North Carolina for vice president. Edwards had won his Senate seat in 1998, defeating Republican incumbent Lauch Faircloth. Faircloth’s loss, after he was targeted by the Clintons, was seen as revenge for Faircloth’s role in exposing the Clintons’ political corruption, as well as corruption in the administration of Washington, D.C. Mayor Marion Barry. Edwards, a trial lawyer (i.e., plaintiffs’ lawyer) who made a fortune pursuing questionable lawsuits as an “ambulance chaser,” campaigned for office as the faithful husband of his cancer-stricken wife while he was conducting an affair with a woman who traveled on his campaign plane as his videographer. Members of the news media helped him cover up the scandal.

While governor, Corzine had an affair with the head of a Communication Workers of America unit representing 16,000 state employees—they were both married to others—and, after they reportedly broke up, he paid $15,000, for unstated reasons, to her brother-in-law, who had been forced out of a government job after being accused of improperly accessing the tax records of Corzine’s adversaries. The brother-in-law sued over Corzine’s unkept promise to land him a private sector job, and Corzine settled the case, paying him $362,500.

Then there’s Lisa Jackson. While governor, Corzine appointed her to be his environmental director and, briefly, chief of staff. Jackson went on to be President Obama’s Environmental Protection Agency administrator, where she got caught using a fake e-mail account (“Richard Windsor,” named after her dog and her home town) to hide government records. Despite that background of official corruption, she did well for herself: After leaving the EPA, she became a vice president at Apple, where she heads all “social policy initiatives.” She is also on the board of the Clinton Foundation. For more on Jackson and “Windsor,” see Green Watch, May 2013, at .]

One more thing about MF Global:

During its collapse, MF Global paid $125,000 to a consulting firm, Teneo. Teneo is run by Doug Band, President Clinton’s former “body man,” his top person aide, sometimes described as a surrogate son to Clinton. Band reportedly came up with the idea of the Clinton Global Initiative, which, each year, brings much of the world’s elite together in Manhattan. Bill Clinton got a contract with Teneo, reportedly worth $3.5 million a year. Isabel Vincent and Melissa Klein wrote in the New York Post:

Clients paid staggering monthly retainers—up to $250,000—to Band’s company. They were reportedly encouraged to give to the Clinton Foundation and, in turn, foundation donors were encouraged to use the services of Teneo.

“The idea for Teneo was to have Fortune 400 companies pay large monthly stipends in exchange for access to Band, Clinton and their massive international network. The group would ‘consult’ with the companies, offer strategic advice and help them overcome issues in various countries across the globe,” [Daniel Halper of the Weekly Standard] wrote in Clinton Inc. . . .

Clinton was the key to Teneo’s success. “The two needed the president,” a source told Halper. “It was he who they were selling to their corporate clients. Or, more precisely, it was their proximity to power—President Clinton, and his wife, who was then secretary of state—and their own Rolodexes, which were a natural extension of the work they had done over the years for the Clintons.” Clients included Bank of America, Dow Chemical, UBS Wealth Management and Coca-Cola.

Band is still considered close to the Clintons, though there was reportedly some strain in the relationship after Clinton’s daughter Chelsea and her husband Marc Mezvinsky demanded equity stakes in the firm. Mezvinsky, formerly of Goldman Sachs, is the son of two members of Congress: former TV news reporter Marjorie Margolies-Mezvinsky, who represented Pennsylvania in the U.S. House, and Ed Mezvinsky, who represented Iowa in the U.S. House, chaired the Pennsylvania Democratic Party, and pled guilty to 31 counts of bank fraud, wire fraud, and mail fraud, serving five years in prison.

But, wait, there’s more…

The Clintons may not have been the only ones to benefit from allocated trades at Refco. A Refco client, Abdullah Darwaish, then chairman of the Abu Dhabi Investment Authority, would later be charged by lawyers for the country’s ruler, Sheikh Zayed, with having winning trades allocated to his personal account and losing trades allocated to government accounts. That was during a period in which oil-rich Abu Dhabi, part of the United Arab Emirates, was pulling in $1 billion a month.

James Ring Adams reported in the American Spectator about Refco’s relationship with the Bank of Credit and Commerce International (BCCI):

Refco compiled a remarkable record of dealings with troubled Middle Eastern banks and bankers. In 1982, a new division called Refco International began placing orders for a Dubai-based businessman named A.W. Galadari. Galadari owned the Union Bank of the Middle East, one of the largest in the United Arab Emirates. When Union Bank crashed in 1983, Refco dunned him for the $6 million margin in his account. Galadari also wound up owing $20 million to Drexel Burnham, and large portions of both debts are still outstanding.

But the biggest loser with Refco was BCCI itself. From 1983 to 1985, the bank speculated recklessly in the futures market on U.S. Treasury bonds. The futures were a bet on the direction of interest rates and required split-second timing; one incredulous auditor found that BCCI was buying contracts and leaving them in desk drawers. Estimates of the losses reach $860 million, although BCCI may have dumped other losses on this debacle. And if trades were intentionally matched, such practices could be used to disguise a deliberate looting of the bank. Because the names of two senior Saudi intelligence officials appear on some accounts, some investigators speculate that money was funneled to the CIA’s covert operations. Refco was one of the four brokers that handled these trades.

BCCI, at one point the seventh largest bank in the world, was a criminal enterprise, catering to terrorists, arms merchants, drug lords, and anyone else needing its services for illicit activities. Saddam Hussein, Fatah founder Abu Nidal, and the Medellin drug cartel used BCCI, which investigators came to ridicule as the “Bank of Crooks and Criminals International.” U.S. and British investigators determined that the bank had been “set up deliberately to avoid centralized regulatory review, and operated extensively in bank secrecy jurisdictions. Its affairs were extraordinarily complex. Its officers were sophisticated international bankers whose apparent objective was to keep their affairs secret, to commit fraud on a massive scale, and to avoid detection.”

When BCCI collapsed, the scandal swept up prominent politicians and businessmen like Bert Lance, Jimmy Carter’s budget director, and Clark Clifford, an advisor to Presidents Truman, Kennedy, Johnson, and Carter, although they were depicted as innocent dupes. (Clifford was tried and acquitted at trial.)

BCCI’s contact man for the Abu Nidal terror group was a man based in Iraq named Samir Najmeddin or Najmedeen. BCCI would provide him with letters of credit, presumably for arms deals with Iraq. He would often be accompanied by an American whom a witness identified as Marc Rich. Rich, who was later indicted for dealing with Iran during the U.S. hostage crisis and for tax evasion—he’s considered the biggest tax cheat in American history—was pardoned by President Clinton on Clinton’s last day in office. Prior to the pardon, Rich’s ex-wife, Denise, had given more than a million dollars to Democrats, including more than $100,000 to the Hillary Clinton campaign for the U.S. Senate and $450,000 to the Clinton Foundation. The mysterious, last-minute pardon seemed connected to the money. Even former President Jimmy Carter remarked, “I don’t think there is any doubt that some of the factors in his pardon were attributable to his large gifts. In my opinion, that was disgraceful.”

John Podesta, then White House chief of staff, was lobbied at least seven times for the Rich pardon by his own former lawyer Peter Kadzik (who “[k]ept me out of jail” in the Monica Lewinsky case, Podesta once noted). Kadzik is now the assistant attorney general in charge of the investigation into the Huma Abedin e-mails; Podesta now chairs the Hillary Clinton presidential campaign.

So this we know: Regardless of whether Hillary Clinton is elected president, she and her cohorts will keep investigative reporters like me busy for the rest of our professional lives.


Dr. Steven J. Allen

A journalist with 45 years’ experience, Dr. Allen served as press secretary to U.S. Senator Jeremiah Denton and as senior researcher for Newt Gingrich’s presidential campaign. He earned a master’s…
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