Clintons’ Growing Stack of Debts Is Remnant of Lewinsky Episode

Aside from the political and emotional damage it has wrought, the protracted Whitewater and Monica S. Lewinsky investigations have left President Clinton and his wife, Hillary, facing the prospect of millions of dollars in legal debts that continue to grow.

Unlike his two Republican predecessors, Ronald Reagan and George Bush, who both left office with substantial net worths, Clinton’s family assets are relatively limited, thanks in part to the ill-fated Arkansas real estate venture that gave the landmark inquiry its name and left the Clintons without reliance on a personal nest egg.

And then there was the matter of the Paula Corbin Jones sexual harassment lawsuit.

Legal sources estimated that the first couple’s legal bills may exceed $6 million by the time the president leaves office in 2001 and could even top $10 million. It is believed that only a small part of that debt has been paid to date.

An initial private fund-raising effort to defray the Clintons’ legal bills ended in failure in December 1997, having raised only $1.3 million in more than three years. It was handicapped by a limit of $1,000 per donation and it suffered from the taint of questionable foreign contributions before organizers voluntarily abandoned it.

After a two-month hiatus, former Sen. David Pryor (D-Ark.), a longtime Clinton friend, started a new fund-raising effort with a much higher limit, $10,000 per person, and a more aggressive approach.

Beginning last February, just five weeks after independent counsel Kenneth W. Starr launched his Lewinsky inquiry, donations were actively solicited and obtained from such well-known Clinton supporters as filmmaker Steven Spielberg, actor Tom Hanks and performer Barbra Streisand, in addition to dozens of other prominent professional and business people with long Democratic ties.

Direct-mail appeals also were sent to more than 170,000 people on Democratic fund-raising lists, reaping a harvest of smaller donations. In all, about $2.2 million was realized during the first six months of this effort, known as the Clinton Legal Expense Trust.

Pryor warned that “this couple will leave the White House impoverished, and I don’t think the American people want that to take place.” In a recent interview, executive director Anthony F. Essaye said: “We’re making every effort to avoid that happening.”

Both Pryor and Essaye declined to specify how much money has been raised during the last six months pending a 12-month public report later this month.

According to Essaye, a Washington lawyer, the procedure is this: Upon receiving their legal bills, which have mounted astronomically over the last year, the Clintons review them for accuracy and then forward them to fund trustees for payment.

“We pay out as we go along,” Essaye said.

Essaye insisted that the defense fund operates independently of any political fund-raising by the Democratic National Committee. “No political contributions are being used to pay legal bills. It’s strictly us.”

But officials acknowledged some administrative overlay: Much of the legal defense money has been raised by Terry McAuliffe, a close friend of the president who headed the Clinton-Gore campaign and the 1997 inaugural committee. Beth Dozoretz, a friend of the Clintons who has raised more than $2 million in political contributions for Democrats, has assisted McAuliffe.

The rules of the legal expense trust, approved by the White House counsel’s office, are aimed at avoiding ethical problems. They prohibit donations from non-U.S. citizens, corporations, labor unions, registered lobbyists or employees of the executive branch of government.

However, Charles Lewis, who heads the nonprofit Center for Public Integrity, declared that such restrictions do not remove all ethical concerns.

“I do not lack sympathy for the president’s problem, but he faces a real dilemma here,” Lewis said. “The big donors are going to be influential persons with a strong interest in government decisions. You don’t cover such debts with $35 donations from Paducah.”

Clinton is the first incumbent president to benefit from a legal defense fund. President Nixon, after he left office, accepted donations to help cover some Watergate-related legal bills, but he paid the bulk of his legal debts himself.

However, Clinton also is the first president to be dogged by an independent counsel investigation for most of his presidency, an inquiry on which Starr has spent about $40 million. At the same time, the Clintons do not rank among the nation’s wealthy.

According to their latest financial disclosure report, which lists investments only in broad categories, the Clintons value their holdings above $1.2 million but below the $5.7 million ceiling. Aides said that the actual value was closer to the lower figure, an indication that mounting legal costs could overwhelm them.

The president’s annual income is chiefly from his $200,000 salary, which was outpaced by the first lady’s earnings of $281,000 last year. Her earnings principallywere from book royalties, which were donated to charity.

The fact that investigations by two independent counsels--Robert B. Fiske Jr. and then Starr--swept up Mrs. Clinton as well as the president have resulted in escalating legal costs for the president and his wife, who for nearly five years have had assistance from two prominent Washington attorneys and many associates in their law firms. These lawyers, chiefly Robert S. Bennett and David E. Kendall, together with their associates, often charge $500 an hour and more.

The major legal work they have performed:

Hillary Clinton, accompanied by Kendall, was questioned under oath about Whitewater financial transactions by Treasury Department investigators and the General Accounting Office in 1994 and 1995, and the president and his wife agreed to repeated interviews by Starr’s staff at the White House on Whitewater finances.

In response to a Starr subpoena, the first lady also appeared at the U.S. courthouse in Washington and testified before a federal grand jury in January 1996, shortly after copies of her long-missing Little Rock, Ark., law firm billing records showed up on a table in the White House living quarters.

The president testified by videotape as a witness in two Whitewater criminal trials in Little Rock and as a principal target of Starr’s Lewinsky investigation in videotaped testimony to the grand jury in August. His lawyers were required to monitor the entire Lewinsky grand jury investigation and later appeared repeatedly before Congress in the impeachment inquiry.

Clinton incurred other costs as a defendant in the sexual harassment lawsuit brought by Jones, testifying in a videotaped deposition last year. Before the president settled this case for $850,000, his lawyers took it through two appellate court hearings and as far as the Supreme Court.

Although an insurance policy paid slightly more than half of this settlement--and the legal defense fund the remainder--insurers maintain that they are not liable for any attorney costs resulting from the Lewinsky and impeachment investigations.

Nor would they offer any financial support if Starr should seek a criminal indictment of Clinton in the months ahead.

Two years ago, the president told a White House news conference that he was confident he could pay off all his legal debts as a private citizen after he leaves office. He could not have foreseen, however, what the last year has brought.