RETURN to Clinton Crisis / Hubbell Indictment, Part II
Hubbell Indictment, Nov. 13, 1998
Full text of the Nov. 13, 1998 indictment of Webb Hubbell.UNITED STATES OF AMERICA
V.
WEBSTER L. HUBBELL
INDICTMENT
The Grand Jury- charges:
1. As more fully set forth below, from in or about March 1989 to on or about December, 27 1995, in Little Rock, Arkansas, in the District of Columbia, and elsewhere, Defendant WEBSTER L. HUBBELL, devised and participated in a scheme that corruptly impeded and corruptly endeavored to impede the functions of the Federal Deposit Insurance Corporation ("FDIC") and the Resolution Trust Corporation ("RTC"). During this period, Defendant WEBSTER L. HUBBELL withheld and concealed material facts from the FDIC and the RTC in order to obtain and maintain employment contracts for legal work from those agencies. Thereafter, both as lead FDIC and RTC attorney and billing partner at the Rose Law Firm ("the Rose Firm" or "Rose") and later, as Associate Attorney General of the Unite States, Defendant WEBSTER L. HUBBELL falsified, covered up by scheme and concealed from agents and investigators of the FDIC and the RTC the true nature of his, Rose's, and Rose's 1985-1986 billing partner's relationships with Seth Ward, Madison Guaranty, Madison Financial and a series of transactions that came to be known as the IDC/Castle Grande transactions. The IDC/Castle Grande transactions are described below in paragraphs 20 to 55. The IDC/Castle Grande transactions involved, among others, James B. McDougal, Seth Ward, Madison Guaranty, Madison Financial, and IDC. Legal work performed on IDC/Castle Grande was performed by Defendant WEBSTER L. HUBBELL, other Rose attorneys, and the 1985-1986 Rose billing partner.
2. Defendant WEBSTER L. HUBBELL practiced law with the Rose Firm in Little Rock, Arkansas, as an attorney from 1973 until September 1984. In September 1984, Defendant WEBSTER L. HUBBELL left the Rose Firm and served as Chief Justice of the Arkansas Supreme Court until on or about December 31, 1984. Defendant WEBSTER L. HUBBELL then rejoined Rose.
3. While at the Rose Firm, Defendant WEBSTER L. HUBBELL was the lead attorney and billing partner from 1987 to January 1993 for matters in which Rose represented the interests of two federal agencies, the FDIC and the RTC. As lead attorney and billing partner on FDIC and RTC matters, Defendant WEBSTER L. HUBBELL had a fiduciary duty to report all actual and potential conflicts of interest and any other adverse interests Defendant WEBSTER L. HUBBELL and Rose had with the FDIC, the RTC, and any FDIC or RTC controlled institution.
4. Defendant WEBSTER L, HUBBELL resigned from the Rose Firm in January 1993. From on or about January 21, 1993, until on or about April 18, 1994, Defendant WEBSTER L. HUBBELL was an employee of the United States Department of Justice. From May 1993 until on or about April 8, 1994, Defendant WEBSTER L. HUBBELL was the Associate Attorney General of the United States.
5. Seth Ward is the father-in-law of Defendant WEBSTER L. HUBBELL, Seth Ward was a Little Rock businessman. During 1985 and 1986, Seth Ward was an employee of Madison Financial Corporation. He is now retired.
6. Seth "Skeeter" Ward II, the brother-in-law of Defendant WEBSTER L. HUBBELL, and the son of Seth Ward, is the president and owner of POM, Incorporated.
7. James B. McDougal was a principal stockholder of Madison Guaranty Savings & Loan Association ("Madison Guaranty") and he effectively controlled Madison Guaranty from in or about January 1982 through mid-July 1986. From 1979 until December 1992, McDougal was a business partner in the Whitewater Development Company ( "Whitewater") with a Rose attorney. During 1985 and 1986, and for a brief period thereafter, this Rose attorney acted as the billing partner at Rose for matters in which Rose performed legal work for Madison Guaranty (hereinafter "the 1985-1986 billing partner").
8. Madison Guaranty was a state chartered savings and loan association. It was subject to state regulation by the Arkansas Securities Department. Madison Guaranty was also subject to federal regulation by the Federal Home Loan Bank Board ("FHLBB"), the Federal Savings & Loan Insurance Corporation ("FSLIC"), and later by the FDIC and the RTC.
9. Madison Financial Corporation ("Madison Financial") was a wholly-owned subsidiary and service corporation of Madison Guaranty.
10. The Arkansas Securities Department is an agency of the State of Arkansas. The Governor of Arkansas appoints the Arkansas Securities Commissioner, and the Arkansas Securities Commissioner serves as the head of the Arkansas Securities Department. The Arkansas Securities Commissioner also serves as the Savings and Loan Supervisor. From 1985 to in or about 1990, Beverly Bassett Schaffer served as the Arkansas Securities Commissioner.
11. The Industrial Development Company ("IDC") was a company that, until October 1985, owned approximately 1,100 acres of land and a sewer and water facility located south of Little Rock, Arkansas (collectively "IDC property" or "IDC/Castle Grande property").
12. POM, Incorporated (POM"') was a parking meter manufacturer whose corporate organization was prepared by Defendant WEBSTER L. HUBBELL. Defendant WEBSTER L_ HUBBELL, his wife Suzanna Ward Hubbell, his father-in-law Seth Ward, his brother-in-law Seth Ward II, and other individuals owned POM from 1981 until October 1989. In October 1989, Defendant WEBSTER L. HUBBELL and Suzanna Ward Hubbell conveyed their ownership interest in POM to Seth Ward II. Defendant WEBSTER L. HUBBELL served as POM's corporate secretary from 1981 until 1987. Defendant WEBSTER L. HUBBELL served as corporate counsel for POM from 1981 to 1993. POM was a client of Rose.
13. The FHLBB was the principal federal agency that until 1989 oversaw the regulation of federally insured savings and loan associations, including Madison Guaranty.
14. The FSLIC was a federal agency that insured and regulated state chartered savings and loan associations, including Madison Guaranty.
15. The FDIC was a federal agency that insured the deposits of financial institutions. On or about February 7, 1989, the FDIC agreed to act as the FSLIC's agent for managing and/or liquidating certain savings and loan associations. On February 28, 1989, the FHLBB determined that Madison Guaranty was insolvent, and the FDIC agreed to serve as Madison Guaranty's managing agent. The FDIC thus began operating Madison Guaranty.
16. The RTC was a federal agency that managed and/or liquidated certain savings and loan institutions. A federal law enacted on August 9, 1989, established the RTC as a temporary agency to manage and/or liquidate certain savings and loan institutions. The RTC subsequently replaced the FDIC as Madison Guaranty's managing agent.
17. Frost & Company ("Frost") is a certified public accounting firm in Little Rock, Arkansas. In 1984 and 1985, Frost performed audits of Madison Guaranty. Jimmie D. Alford, then a partner at Frost, supervised the audits of Madison Guaranty.
Rose Law Firm Representation of Madison Guaranty During 1985-1986
18. From on or about April 23, 1985, until on or about July 14, 1986, and for a brief period thereafter, the Rose Firm performed legal work for Madison Guaranty pursuant to a retainer agreement whereby Madison Guaranty paid Rose a monthly fee in advance of legal services rendered by Rose to Madison Guaranty. During this period, the 1985-1986 billing partner acted as the Rose billing partner on all Madison Guaranty matters.
19. From on or about April 23, 1985, to December 1985, the Rose Firm represented Madison Guaranty before the Arkansas Securities Department in its efforts to:
(1) secure approval from the Arkansas Securities Department to issue preferred stock; and
(2) obtain a broker-dealer license.
In connection with this representation, the Rose Firm submitted Frost's audits of Madison Guaranty to the Arkansas Securities Department.
Rose Law Firm And The IDC/Castle Grande Transactions
20. From August 1985 to December 1986, Defendant WEBSTER L. HUBBELL and other Rose attorneys, including the 1985-1986 billing partner, performed legal work for, provided legal advice to, and represented Seth Ward, Madison Guaranty, and Madison Financial in a series of real estate and financial transactions between and among Seth Ward, Madison Guaranty, Madison Financial, and IDC.
21. In August 1985, Defendant WEBSTER L. HUBBELL opened a file at Rose for Madison Guaranty labeled "Matter #5 - IDC."
22. From August 1985 to October 1985, Rose attorneys represented Madison Guaranty in the purchase of the IDC property from IDC. Madison Guaranty purchased the IDC property through its subsidiary, Madison Financial, and Seth Ward, who acted as a nominee purchaser.
23. On or about September 24, 1985, Seth Ward and Madison Financial entered into an agreement ("the original September 24, 1985 agreement") whereby:
(1) Seth Ward would take title to a portion of the IDC property;
(2) Madison Guaranty would loan Seth Ward the purchase price on a nonrecourse basis:
(3) Madison Guaranty would have an option for at least 270 days to purchase the IDC property from Seth Ward at any time for the amount of the nonrecourse loan plus all accrued interest; and
(4) Seth Ward would receive payment of "commissions" from Madison Financial when the IDC property was resold.
Defendant WEBSTER L. HUBBELL's secretary at Rose typed a September 23, 1985, draft of the original September 24, 1985, agreement from information and documents she received from Defendant WEBSTER L. HUBBELL.
24. On or about October 4, 1985, Seth Ward and Madison Financial purchased the IDC property from the IDC. A Rose attorney attended the October 4, 1985, closing on behalf of Seth Ward, Madison Guaranty, and Madison Financial.
25. Shortly after the October 4, 1985, purchase of the IDC property, the IDC property was renamed and became known as Castle Grande.
26. On or about October 15, 1985, -- after the actual closing of the October 4, 1985, sale of the IDC property Madison Guaranty loaned Seth Ward on a nonrecourse basis $1.15 million for his purchase of a portion of the IDC property. The portion of the IDC Property purchased by Seth Ward included the sewer and water facility that was located on the IDC property. The $1.15 million loan from Madison Guaranty to Seth Ward funded Seth Ward's October 4, 1985, purchase of his portion of the IDC property. Seth Ward did not pay for the IDC property with his own money, nor did he exercise any control over his portion of the IDC property. Seth Ward's role as a nominee purchaser of a portion of the IDC property enabled Madison Guaranty to avoid existing regulatory restrictions on savings and loan associations that limited Madison Guaranty's investment in Madison Financial to six percent of Madison Guaranty's total assets (hereinafter "six percent rule").
27. On or about October 18, 1985, a Rose attorney billed Madison Guaranty for work identified as "Research on what approvals, permits, etc. are necessary to operate sewer and water facilities; multiple telephone conferences with state agencies; memo to W. Hubbell."
28. On or about November 20,1985, the 1985-1986 billing partner personally billed Madison Guaranty for work identified as "Conference with S. Ward; conference with W. Hubbell."
29. On or about November 26, 1995, the 1985-1986 billing partner personally billed Madison Guaranty for work identified as "Conference with S. Ward; conference with T. Thrash; conference with W. Hubbell."
30. In or about February 1986, Madison Guaranty officials learned that the FHLBB would conduct an examination of the institution beginning on or about March 4, 1986. The purpose of the examination was to assess Madison Guaranty's compliance with federal banking laws as of February 28, 1986.
31. On or about February 28, 1986, Madison Guaranty completed several real estate transactions that related to the IDC/Castle Grande property, including the IDC/Castle Grande property held by Seth Ward. The transactions were intended, in part, to conceal Seth Ward's role as a nominee purchaser from the FHLBB by paying off Seth Ward's $1.15 million loan from Madison Guaranty before the FHLBB examiners began their examination of Madison Guaranty.
32. The February 28, 1986, transactions substantially completed the disposition of Seth Ward's portion of the IDC/Castle Grande property. The proceeds from those transactions were used to pay off all but $70,000 of Seth Ward's $1.15 million loan. After February 28, 1986, Seth Ward held in his name only a small part of his original portion of the IDC/Castle Grande property, including a 22 1/2 acre commercial tract known as part of lots 27 and 28 of Holman Acres ("Holman Acres"). Seth Ward's $1.15 million loan was marked "paid in full," with the balance of $70,000 rewritten and carried over in an unsecured loan from Madison Guaranty to Seth Ward. Thus, after completion of the February 28, 1986 transactions, the terms of the original September 24, 1985, agreement provided Madison Guaranty with an option to repurchase Seth Ward's remaining IDC/Castle Grande property (Holman Acres) for the unpaid balance ($70,000) of Seth Ward's $1.15 million loan.
33. On or about February 28, 1986, the 1985-1986 billing partner personally billed Madison Guaranty for work identified as "Seth Ward."
34. On or about March 4, 1986, the FHLBB began an examination of Madison Guaranty to determine the institution's compliance with applicable federal laws and regulations. One of the FHLBB's principal areas of inquiry was land transactions with insiders, including Madison Guaranty's involvement in transactions that related to the IDC/Castle Grande property.
35. On or about March 31, 1986, FHLBB examiners requested the Seth Ward loan files from Madison Guaranty as part of the FHLBB examination of the IDC/Castle Grande transactions.
36. On or about March 31, 1986, for the purpose of paying Seth Ward commissions for the sales of the IDC/Castle Grande property, Seth Ward, Madison Guaranty, and Madison Financial executed two loans (hereinafter identified as "cross loans"). The cross loans appeared to be offsetting loans. Madison Guaranty used the cross loans to pay Seth Ward "commissions" for the resale of the IDC/Castle Grande property, even though Madison Financial bad agreed to pay Seth Ward such "commissions" pursuant to the original September 24, 1985 agreement. The purpose of the cross loans was to deceive the FHLBB about the true nature of the payments to Seth Ward. Additionally, because Madison Guaranty funded Madison Financial's obligation to pay Seth Ward "commissions" from the resale of the IDC/Castle Grande property, the cross loans effectively violated the six percent rule. Madison Guaranty officials falsely stated to FHLBB examiners that the cross loans were unrelated to each other and that the cross loans were not connected to Seth Ward's "commissions."
37. On or about March 31, 1996, Madison Guaranty and Seth Ward executed the first cross loan for $400,000. The first cross loan purported to be a loan from Madison Guaranty to Seth Ward. On or about March 31, 1986, and April 1, 1986, Madison Guaranty issued two checks in the amounts of $300,000 and $100,000 to Seth Ward pursuant to this first cross loan. Holman Acres served as collateral for the first cross loan to Seth Ward. However, under the original September 24, 1985, agreement, Madison Guaranty already had an option to repurchase Seth Ward's remaining IDC/Castle Grande property (Holman Acres) for the unpaid balance ($70,000) of Seth Ward's $1.15 million loan. By means of this first cross loan, Madison Guaranty provided funds to Seth Ward in order to satisfy Madison Financial's agreement to pay him "commissions" for his role as a nominee purchaser of a portion of the IDC/Castle Grande property without notifying or alerting the FHLBB examiners.
38. On or about March 31, 1986, Seth Ward and Madison Financial executed the second cross loan. This second cross loan purported to document a loan of $400,000 from Seth Ward to Madison Financial, when in fact Seth Ward never provided any funds to Madison Financial. The true purpose of this second cross loan was to create a fictitious paper record to offset Seth Ward's obligation to repay the first cross loan.
39. On or about April 7, 1986, Seth Ward and Madison Financial replaced the unfunded second cross loan with two modified loans that were, in substance, identical to those issued on March 31, 1986.
40. On April 7, 1986, the 1985-1986 billing partner personally billed Madison Guaranty for work identified as "telephone conference with Don Denton." Don Denton was the Madison Guaranty loan officer who was responsible for the cross loans to Seth Ward.
41. In April 1986, FHLBB examiners questioned the two cross loans and requested information and evidence from Madison Guaranty that would demonstrate that the cross loans were not related.
42. Madison Guaranty falsely represented to the FHLBB examiners that the two cross loans were unrelated, and that the unfunded second cross loan from Seth Ward to Madison Financial was a temporary measure that evidenced Madison Financial's intention to purchase Holman Acres from Seth Ward. However, under the original September 24, 1985, agreement, Madison Guaranty already had an option to repurchase Seth Ward's remaining IDC/Castle Grande property (Holman Acres) for the unpaid balance ($70,000) of Seth Ward's $1.15 million loan. Holman Acres was collateral for Seth Ward's $400,000 loan from Madison Guaranty. Madison Guaranty represented to the FHLBB examiners that Seth Ward's attorney, Defendant WEBSTER L. HUBBELL, would draft an option agreement to document further Madison Financial's intention to purchase Holman Acres from Seth Ward.
43. On or about April 30, 1986, Seth Ward, on the advice and with the assistance of Defendant WEBSTER L. HUBBELL, entered into a written employment agreement with Madison Financial.
44. On or about May 1, 1986, the 1985-1986 billing partner drafted an option agreement for Seth Ward and Madison Financial. The May 1, 1986 option agreement purported to give Madison Financial the option to purchase Holman Acres, even though the original September 24, 1985, agreement provided Madison Guaranty with an option to repurchase Seth Ward's remaining IDC/Castle Grande property (Holman Acres) for the unpaid balance ($70,000) of Seth Ward's $1.15 million loan. Also, on May 1, 1986, the 1985-1986 billing partner personally billed Madison Guaranty for work identified as "conference with Seth Ward; telephone conference with Seth Ward regarding option; telephone conference with [Seth Ward's accountant]; prepare option."
45. On or about May 5, 1986, Madison Guaranty presented the option agreement to FHLBB bank examiners. The manner in which the option agreement was presented to the FHLBB bank examiners by Madison Guaranty had the effect of deceiving the FHLBB about the true nature of Seth Ward's cross loans.
46. From on or about June 6, 1986, to on or about June 11, 1986, Madison Guaranty and Seth Ward executed documents that released Seth Ward from any personal liability on Seth Ward's $70,000 and $400,000 loans from Madison Guaranty. The effect of the releases was that Madison Guaranty had no recourse against Seth Ward personally for his $70,000 and $400,000 loans. Rather, if Seth Ward defaulted on the two loans, Madison Guaranty could only recover Holman Acres. On or about June 9,1986, Madison Guaranty loaned Seth Ward another $70,000 to pay off his earlier (February 1986) $70,000 loan. Holman Acres served as collateral for this second $70,000 loan. Also, on or about June 10, 1986, Madison Guaranty gave Seth Ward a new, unsecured loan for $93,000. Seth Ward did not repay the $93,000 loan.
47. On June 10, 1986, the 1985-1986 billing partner billed Madison Guaranty for work identified as "telephone conference with R. Massey; conference with S. Ward."
48. From in or about August 1985 to June 1986, the 1985-1986 billing partner and other Rose attorneys billed Madison Guaranty for numerous conferences and contacts they had with Seth Ward and others at Madison Guaranty and Madison Financial about and related to the IDC/Castle Grande transactions.
Relationships with Madison Guaranty
and Completion of the IDC/Castle
Grande Transactions
49. On or about June 19, 1986, as a result of the FHLBB's 1986 examination of Madison Guaranty, the FHLBB sent a letter to Madison Guaranty's Board of Directors that directed them to meet with the FHLBB in Dallas, Texas in July 1986. The letter indicated that the FHLBB's 1986 examination discovered "matters of serious supervisory concern including unsafe and unsound practices, instances of noncompliance with [a] July 19, 1984, Supervisory Agreement and regulatory violations." The letter directed Madison Guaranty to cease transacting business with various entities including but not limited to IDC. The letter also directed Madison Guaranty to cease financing any additional sales of real estate owned by Madison Guaranty or its subsidiaries, like and including Madison Financial.
50. On or about July 11, 1986, the FHLBB met with Madison Guaranty's Board of Directors and ordered Madison Guaranty to remove certain senior management officials, including James B. McDougal, from Madison Guaranty and Madison Financial.
51. On or about July 14, 1986, Seth Ward presented to Madison Guaranty a backdated version of the original September 24, 1985, agreement ("the backdated September 24, 1985 agreement") between Seth Ward and Madison Financial. Defendant WEBSTER L. HUBBELL's secretary at Rose typed the backdated September 24, 1985, agreement from information and documents she received from Defendant WEBSTER L. HUBBELL. The backdated September 24, 1985, agreement: (1) increased the commissions owed to Seth Ward; and (2) excluded Holman Acres from Madison Guaranty's 270-day option to repurchase the IDC property held by Seth Ward.
52. On or about July 14, 1986, the 1985-1986 billing partner wrote and sent by hand delivery a letter to Madison Guaranty that returned to Madison Guaranty advanced legal fees paid by Madison Guaranty, formally ending the retainer relationship between Rose and Madison Guaranty.
53. On or about July 15, 1986, Defendant WEBSTER L. HUBBELL met at Rose with officials of Madison Guaranty and Madison Financial to discuss matters that related to Madison Guaranty.
54. On or about December 11, 1986, Seth Ward sent Madison Guaranty a letter and quitclaim deed to Holman Acres to satisfy Seth Ward's indebtedness to Madison Guaranty. The quitclaim deed was prepared by Defendant WEBSTER L. HUBBELL. The effect of the quitclaim deed was to discharge Seth Ward's obligation to repay his second $70,000 loan and his $400,000 loan from Madison Guaranty (the loans that purported to use Holman Acres as collateral). The quitclaim deed caused monetary losses to Madison Guaranty because Seth Ward retained all of his second $70,000 loan and $300,000 of his $400,000 loan.
55. In 1986, the FHLBB issued examination reports on Madison Guaranty that described the IDC/Castle Grande transactions as involving insider dealing, fictitious sales, and land flips.
56. From March, 1989 to on or about December 27, 1995, in Little Rock, Arkansas, the District of Columbia, and elsewhere, Defendant WEBSTER L. HUBBELL devised and participated in a scheme that corruptly impeded and corruptly endeavored to impede the functions of the FDIC and the RTC. Defendant WEBSTER L. HUBBELL further schemed to falsify, conceal and cover up the true nature of Defendant WEBSTER L. HUBBELL's, Rose's and the 1985-1986 billing partner's relationships with Seth Ward, Madison Guaranty, Madison Financial, and the IDC/Castle Grande transactions as described in paragraphs 20 to 55 (hereinafter "IDC/Castle Grande transactions" or "IDC/Castle Grande matter"). The purpose of the scheme was to defraud the FDIC and the RTC of money by means of false and fraudulent pretenses, representations, statements and promises; to deprive the FDIC and the RTC of their rights to Defendant WEBSTER L. HUBBELL's honest services; to conceal by false, evasive and misleading statements and material omissions the true facts about and related to Defendant WEBSTER L. HUBBELL's, the Rose Firm's and the 1985-1986 billing partner's relationships to and with Seth Ward, Madison Guaranty, Madison Financial and the IDC/Castle Grande transactions; and to cause and create undue delay and unnecessary confusion in investigations by the FDIC and the RTC.
57. In March 1989, after the FDIC became Madison Guaranty's managing agent, the FDIC retained Defendant WEBSTER L. HUBBELL and Rose to handle a civil lawsuit on behalf of Madison Guaranty, entitled Madison Guaranty v. Frost & Company ("Frost"). Defendant WEBSTER L. HUBBELL was the lead attorney and billing partner for Madison Guaranty, the FDIC, and, later, for the RTC on the Frost case. In the Frost case, which began in 1988, Madison Guaranty sued Frost & Company, Jimmie D. Alford, and other individuals for alleged accounting malpractice in connection with Frost's audits of Madison Guaranty. Seth Ward's Madison Guaranty loans were at issue as potential damages in the Frost case. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that Defendant WEBSTER L. HUBBELL and Rose had actual and potential conflicts of interest with the FDIC and the RTC in regard to the Frost case. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the true nature and extent of the legal work Rose performed for Madison Guaranty from on or about April 23, 1985, until on or about July 14, 1996.
58. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that Defendant WEBSTER L. HUBBELL and Rose performed legal work for and provided legal advice to Seth Ward, Seth Ward II and their companies from 1975 through and including 1993.
59. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that Rose performed legal work for Madison Guaranty before the Arkansas Securities Department in 1985. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that Rose submitted Frost's audits of Madison Guaranty to the Arkansas Securities Department.
60. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that during 1985 and 1986 Rose attorneys billed Madison Guaranty for legal services performed in connection with the IDC/Castle Grande transactions.
61. It was a part of the scheme that Defendant WEBSTER L. HUBBELL knowingly and intentionally concealed from the FDIC and the RTC actual and potential conflicts of interest and other adverse interests Defendant WEBSTER L. HUBBELL and Rose had with the FDIC and the RTC. Defendant WEBSTER L. HUBBELL concealed these conflicts even though on or about December 28, 1987, October 3, 1990, and November 24, 1992, Defendant WEBSTER L. HUBBELL signed legal services agreements with the FDIC and the RTC that obligated Defendant WEBSTER L. HUBBELL and Rose to disclose to the FDIC and the RTC all actual and potential conflicts of interest and other adverse interests Defendant WEBSTER L. HUBBELL and Rose had with the FDIC and the RTC.
62. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL made false statements about such adverse interests to Rose members, the FDIC and the RTC. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL made false statements to the FDIC, the RTC and other federal investigative bodies about and related to his previous failure to have disclosed such material information.
63. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that documents created by Rose, including Seth Wares IDC/Castle Grande documents, were at issue in a lawsuit entitled Ward v. Madison Guaranty, filed in 1987 by Seth Ward against Madison Guaranty. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL concealed his involvement in Seth Ward's Castle Grande related loans, which were at issue in the Ward litigation.
64. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC the fact that Defendant WEBSTER L. HUBBELL prepared, served and filed documents related to writs of garnishment in the Ward v. Madison Guaranty case. The writs of garnishment and accompanying documents purported to advance monies to Seth Ward from Madison Guaranty.
65. During 1989, while Defendant WEBSTER L. HUBBELL was lead counsel for the FDIC and the RTC on the Frost case, Defendant WEBSTER L. HUBBELL read 1986 FHLBB examination reports of Madison Guaranty that described the IDC/Castle Grande transactions as involving insider dealing, fictitious sales and land flips. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC his work and the work of other Rose attorneys, including- the 1985-1986 billing partner, for Seth Ward, Madison Guaranty and Madison Financial on the IDC/Castle Grande transactions.
66. It was a part of the scheme that in June 1989, after employees of Madison Guaranty raised objections to the FDIC about Defendant WEBSTER L. HUBBELL's involvement in the Frost case because of his in-law relationship with Seth Ward, Defendant WEBSTER L. HUBBELL stated to the FDIC that Defendant WEBSTER L. HUBBELL and Seth Ward were not close, that they had different political affiliations, and that Defendant WEBSTER L. HUBBELL had not and would not perform legal work for Seth Ward. Defendant WEBSTER L. HUBBELL's statements to the FDIC were false, evasive and misleading, and his statements concealed material facts about Defendant WEBSTER L. HUBBELL's and others relationships with Seth Ward, including but not limited to the fact that:
(1) Defendant WEBSTER L. HUBBELL and other Rose attorneys, including the 1985-1986 billing partner, performed legal work for and provided legal advice to Seth Ward, including but not limited to legal work for and legal advice to Seth Ward on the IDC/Castle Grande transactions;
(2) Defendant WEBSTER L. HUBBELL owned businesses with Seth Ward, including POM;
(3) Defendant WEBSTER L. HUBBELL was an officer in Seth Ward's companies, including POM;
(4) Defendant WEBSTER L. HUBBELL was legal counsel to Seth Ward's companies, including POM, and to Seth Ward personally, before, during and after the Frost case; and
(5) Defendant WEBSTER L. HUBBELL performed legal work in connection with Seth Ward's lawsuit against Madison Guaranty before and during the Frost case, including but not limited to:
(a) in or about September and October 1988, Defendant WEBSTER L. HUBBELL served and filed documents on behalf of Seth Ward II and POM that related to the writs of garnishment matter, as described in paragraph 64 of this indictment, by which Seth Ward attempted to obtain monies from Madison Guaranty; and;
(b) in January 1990, Defendant WEBSTER L. HUBBELL negotiated an indemnification agreement between Seth Ward and the Little Rock law firm of Wright, Lindsey and Jennings that related to a dispute between the parties to the Ward v. Madison Guaranty case while the case was on appeal.
67. It was a part of the scheme that on or about June 28, 1989, Defendant WEBSTER L. HUBBELL sent a letter ("the June 28, 1989 letter") to Madison Guaranty's managing agent and the FDIC that stated in relevant part: I have not represented Mr. Seth Ward in connection with any issue or matter relating to his disputes with Madison Guaranty. ... I do not represent Mr. Seth Ward II in regard to any disputes he may have with Madison Guaranty. I have no intention of representing Mr. Ward or his son in the future concerning any matter relating to Madison Guaranty.
The June 28, 1989, letter was deceptive, misleading and omitted material facts about Defendant WEBSTER L. HUBBELL's relationship with Seth Ward and Seth Ward II, and their companies, including POM. The June 28, 1989, letter also omitted material facts about Defendant WEBSTER L. HUBBELL's, Rose's and the 1985-1986 billing partner's prior legal work for and relationships with Seth Ward, Seth Ward II, Madison Guaranty and Madison Financial.
68. During the pendency of the Frost case, Defendant WEBSTER L. HUBBELL's co-counsel, a Rose attorney, presented Defendant WEBSTER L. HUBBELL with Rose's 1985-1986 Madison Guaranty billing records. It was a part of the scheme that Defendant WEBSTER L. HUBBELL concealed the information contained in the billing records from the FDIC and the RTC. It was a further part of the scheme that Defendant WEBSTER L. HUBBELL falsely represented to his Rose co-counsel that Defendant WEBSTER L. HUBBELL disclosed to the RTC Rose's 1985-1986 representations of Madison Guaranty.
69. It was a part of the scheme that during the pendency of the Frost case Defendant WEBSTER L. HUBBELL concealed from the FDIC and the RTC numerous additional actual and potential conflicts of interest and other adverse interests Defendant WEBSTER L. HUBBELL and Rose had with the FDIC and the RTC, including but not limited to the fact that:
(1) during the pendency of the Frost case, Rose represented Precision Industries, a company whose president and part owner, Jimmie D. Alford, as a defendant in the Frost case;
(2) the wife of a Rose attorney who worked on the Frost case ("co-counsel's wife") previously had an ownership interest in Madison Guaranty; and
(3) Frost's lawyers deposed a Rose attorney who was a former employee of Madison Guaranty during 1985 and 1986. The Rose attorney testified that Seth Ward was "someone I wasn't supposed to send past-due letters to."
Hubbell Indictment, Part II
This article was published on Sunday, November 15, 1998
RETURN to Clinton CrisisCopyright © 1998, Arkansas Democrat-Gazette, Inc. All rights reserved.
This document may not be reprinted without the express written permission of Arkansas Democrat-Gazette, Inc.