
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 1, 1994                   TAG: 9404010209
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A3   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

WHITEWATER RECORDS REFUTE SOME CHARGES

Republicans have made specific accusations in the Whitewater case, alleging, for example, that President Clinton and his wife underpaid their taxes and that their real estate venture skimmed money from a failing S&L.

But there's often more to the story, and the details don't always support the GOP conclusions.

Here's a closer look at two of the accusations made by Rep. Jim Leach, ranking Republican on the House Banking Committee and the leading House GOP Whitewater critic.

When presented with conflicting information, Leach's staffers on the committee said none of the information would change his views.\ Capital gains and taxes:\ On their 1988 tax returns, the Clintons reported a $1,640 capital gain from the sale of a Whitewater model home.

Leach charges the gain should have been $20,000. He said the Clintons purchased Lot 13 out of bankruptcy for $8,000 and sold it for $28,000.

Sounds simple. But it's not. The Clintons actually owned and sold Lot 13 twice.

In 1981, the Clintons' mortgage and the sale proceeds were carried on the Whitewater corporation's books, according to documents and interviews.

When the first buyer faltered, the Clintons bought the property out of bankruptcy in 1988. They paid $8,000 and assumed the remainder of the first buyer's mortgage payments, according to Jeff Levingston, the Mississippi bankruptcy trustee who oversaw the sale.

With the mortgage assumption, Levingston has said, the Clintons' purchase price was around $28,000. Land records show they resold the lot to another couple for about $28,000.

Levingston said he thinks the Clintons probably took a loss, and "came out real short on the deal" by declaring a capital gain.

Leach said his claim of a $20,000 profit is based on a taped conversation in which the Clintons' former business partner, James McDougal, suggested that Whitewater paid the mortgage on Lot 13.

McDougal, however, has said he was referring to the mortgage involved in the 1981 sale, not the 1988 transaction.\ Whitewater profits

In a House speech last week, Leach directly challenged the Clintons' assertion they lost about $46,000 in Whitewater. He concluded the couple "received valuefrom Whitewater in excess of resources invested."

His claim isn't based on any evidence of Whitewater checks or dividend payments.

Instead, Leach reaches his conclusion by lumping in a series of financial transactions he considers Whitewater-related, including:

$26,000 Hillary Clinton's law firm earned for legal work she and another lawyer did for McDougal's Madison S&L in the mid-1980s.

The disputed $20,000 capital gain from Lot 13.

$35,000, half the $70,000 that regulators allege went into Whitewater from sources affiliated with Madison S&L. Leach argues the Clintons, as 50 percent owners of Whitewater, should consider this as income that defrayed their costs.

$55,000, or half of the $110,000 court documents allege went into Whitewater's account from a federally backed loan made to McDougal's wife, Susan, the Clintons' other partner in Whitewater.

Leach acknowledges that some "may suggest that it is stretching" to count such items as profits.

by CNB