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Lest We Forget – Hillary’s $100K Cattle Scam

From Barbara Olson’s tremendous book, “Hell To Pay,” pp 138-144:

CATTLE QUEEN OF ARKANSAS

“The market was going up dramatically at that time,” Vice President Al Gore said in loyal defense of the Clintons when Hillary’s neat little cattle futures profit came to light. “That time” was October 11, 1979, three weeks before Bill Clinton was elected governor of Arkansas. Ten months later, Hillary Rodham Clinton and Governor Clinton made $100,000 in profit on a $1,000 investment. Eat your heart out Bill Gates.

When the story broke of how lawyer and commodities trader Jim Blair helped Hillary Rodham make a fortune in cattle futures, the first response of the White House was to react with feigned indignance.

“Hillary and Jim were friends; he gave her advice,” said aide John Podesta, later to become White House chief of staff. “There was no impropriety. The only appearance is being created by the New York Times.” Consider the chutzpah of that defense. The mean old New York Times making up nasty things about Hillary Clinton.

“Do they have to go weed their friends out and say they can only have friends who are sweeping the streets? “Podesta asked rhetorically, without a hint of the embarrassment he must have felt in making such an absurd statement.” They have friends who are high-powered lawyers. They have friends who write books, who write poetry.”35

In other words, what should we expect among members of the meritocracy? How unfair to deny the Clintons the friendship of poets and commodities traders.

Jim Blair was certainly no street sweeper. He had made millions of dollars himself trading in commodities. The White House could only defend Hillary by adopting an Arkansas perspective on the whole deal. In the end what did it matter if Blair helped a friend make a little of her own?

The story intensified in April 1994, when the first couple was forced to pay an additional $14,615 in back taxes and interest after it was learned that the first lady had made more money on commodity trades than had been revealed to the public or to the IRS.36

After trying to hold back the details of the deal, the White House released the facts one by one.

At first, we were told that Hillary “consulted with numerous people, and did her own research,” an aide to the first lady explained.37 The American people were left with the image of Hillary, shrewd investor, thumbing through the Wall Street Journal.

Then the White House acknowledged that she had indeed received a small helping of advice, “but not on a specific date or specific trade.”

The White House next conceded that Jim Blair—Springdale lawyer, former Fulbright aide, major figure in the Arkansas Democratic party, and the man Bill Clinton later married to Diane Kincaid—was one of several people who had given Hillary some advice in dealing with the market. When that story would no longer hold, Dee Dee Myers—always one of the most forthright, and therefore routinely humiliated, members of the Clinton team—said, bluntly, “I think it’s become clear that [James Blair] placed most of the trades.”38 But surely he had been guided by the Wall Street Journal.

Blair, of course, also worked for Tyson Foods, the poultry giant and largest employer in Arkansas, and a major Clinton donor. He bought land and made deals on behalf of the corporate giant. He would later become the company’s general counsel.

The company is run by “Big Daddy” Don Tyson—a man who wears a khaki uniform, which is required of all employees, with his name stitched on its breast; a political kingpin; a wheeler-dealer and corporate egoist. In keeping with his oversized persona, and perhaps the helping hand his general counsel gave to the president-to-be, Tyson’s office is a replica of the Oval Office.

“It would be irresponsible to my company and my industry if I didn’t have any influence,” Tyson said in a speech in Alabama. “Clinton understands the needs of business. There were several times in our company’s growth that we could have taken opportunities outside of the state, but we chose to stay in Arkansas because he understands the balance between economic development and environmental issues.”39

Hillary’s cattle futures were purchased through Robert L. “Red” Bone of the brokerage firm of Refco, Inc. It was Jim Blair who had put her in touch with Bone—who had previously worked for Tyson for more than a decade. Bone was an inveterate gambler, a high-profile, high-stakes poker player well known to the pit bosses of Las Vegas. He was a gambler at the office as well. The year before, Bone’s sharp practices had led the Chicago Mercantile Exchange to accuse him of allocating trades to investors after determining the winners and losers, a practice known as “straddling.” Bone was punished by having his license to trade pulled for one year.40

The deal was arranged in the following way. All Hillary had to do was put $1,000 of her own money into a block of cattle futures at a time when her husband, then the attorney general, had a thirty point lead for the governorship. How did Hillary make out?

From her initial investment of $1,000, she came away with $99,537. Among the community of experts, there is general agreement that between 75 percent and 90 percent of commodity players lose. And no one turns $1,000 into $100,000. “The average retail customer has about as much chance of that kind of success as I have of driving to Hawaii,” one Chicago-based investment advisor noted.41

At one point in the trading, Hillary was $60,000 in the hole, with less than $40,000 in her account. Typically, an investor would be asked to pay the margin. Hillary was not, and she held on to the commodities until she hit pay dirt. (Later, the White House would explain that she quit at that point because she was pregnant with Chelsea, and just did not need the additional stress of investing.)

On July 12, 1979, Hillary’s relationship with Refco remained intact even though she owed more than $100,000; but poor Stanley Greenwood, a fellow Refco investor, had his investments terminated when he failed to post $50,000 to cover his losses.42

By way of comparison, had Hillary instead invested $1,000 in the first offering of Microsoft stock in 1986, she would have made $35,839 by March 1994. The premier technology investment of our times, therefore, pales in comparison to what she had made on the world’s oldest commodity: livestock. Hillary’s cattle future investment gave her a 9,987 percent profit.43 Later, when asked of her incredible success as a novice in the tough world of commodities trading, Hillary denied any preferential treatment with the illuminating statement: “I was lucky.”

Unless you believe in good fairies, luck had nothing to do with it. It is pretty obvious that Hillary had something better than luck. She had well-placed friends who wanted her to have $100,000. The likelihood of such a return on such an investment was close to lottery odds, twenty-four chances in a million.44 This was in a decade in which no speculator made more than $400 profit a day with one contract of cattle futures. Yet Hillary managed to make $5,300 a day. Such a return would have required her holding thirteen contracts, involving 232 tons of beef with a value of $280,000.

The New York Post explained, “There is no way that the commodity exchange or a broker would permit a novice speculator to control $280,000 worth of cattle with a skimpy investment of $1,000. Not, that is, unless a friend, guardian or partner guaranteed her investment.”45

It seems unlikely that Hillary could have been unaware of the magnitude of this straddle or that her wins were at the expense of others. (Blair himself was a designated loser, losing millions on the cattle deals.) Many commodities traders suspected Hillary of allocated trading—an illegal procedure in which a broker buys block trades, waits for the win, then allocates it to favored customers after the fact. Just a few months after Hillary’s “lucky” day in commodities trading, Refco–specifically Hillary’s broker Red Bone–was disciplined by the Chicago Mercantile Exchange Board for “serious and repeated violations of record-keeping functions, order-entry procedures, margin requirements and hedge procedures.”

One person who has done well during the Clinton years is the man who provided the nexus between Red Bone, Jim Blair, and Bill Clinton. That man is Don Tyson. During the Clinton-era, Tyson’s company benefited from millions of dollars in state loans, tax breaks, and the relaxation of environmental regulations. He received $8 million in tax concessions for plant and workforce concessions, as well as $900,000 in state grant monies to build roads and upgrade sites for a $40 million processing plant in Pine Bluff.46 What was especially extraordinary was the kid glove treatment Tyson received from a governor who at least affected a tough and uncompromising stance on protecting the environment.

Before Clinton was elected, the state had reissued a license for a Tyson plant with the proviso that the company had to work out a plan with Green Forest city officials to treat its wastes, tons of chicken feces that the plant dumped into nearby Dry Creek. With Clinton in office, it soon became clear that nothing would have to be done to clean up the plant and save the river. Unfortunately, the runoff of chicken feces ultimately filtered into the town drinking water, sickening local residents and forcing Governor Clinton to declare the locality a disaster area.47

Tyson was not only an overt financial contributor to the Clintons. As reported by Time magazine in 1994, allegations of envelopes of cash coming from Tyson’s headquarters to the Clintons in the governor’s mansion had surfaced by Independent Counsel Donald Smaltz. These allegations were never pursued, however, because Smaltz’s request to widen his probe was shot down by Attorney General Janet Reno.

However murky the background, what is clear is that Hillary and her husband did quite well during their personal decade of greed. But one could not say that they were entirely uncharitable. Journalist Lisa Schiffren learned that Hillary donated to the less fortunate. Dozens of bags of old clothing she, Chelsea, and Bill had worn were given to charity, and Hillary valued these donations between $1,000 and $2,300 each year for tax deductions. She meticulously listed each item, and gave a value for them, including $10 for Bill’s old running shoes and $1 for each pair of Bill’s and Chelsea’s old underwear.

__________________

35. New York Times, February 18, 1994.
36. Washington Post, April 12, 1994.
37. Newsweek, April 25, 1994.
38. Newsweek, April 11, 1994.
39. New York Times, March 18, 1994.
40. Washington Times, April 3, 1994.
41. Ibid.
42. USA Today, April 7, 1994.
43. Time, April 1, 1994; New York Times, April 11, 1994.
44. National Review, February 20, 1994.
45. New York Post, April 1, 1994.
46. Washington Times, April 3, 1994.
47. New York Times, March 18, 1994.

It’s also nice to be reminded how the Clintons allowed Tyson’s to rape the Arkansas environment in return for their little “favors.”

And how Al Gore defended them.

Good times!

This article was posted by Steve Gilbert on Saturday, November 10th, 2007. Comments are currently closed.

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