LITTLE ROCK, Ark. (AP) _ The Clintons’ partner in the Whitewater land venture attracted Dallas Cowboys owner Jerry Jones as an investor in another development – selling lots on Franklin D. Roosevelt’s vacation island of Campobello.
The investors led by Arkansas banker James McDougal bought nearly half of the island, which is part of the Canadian province of New Brunswick though it’s located only a few hundred yards off the coast of Maine.
McDougal and his then-wife Susan were partners with Bill and Hillary Clinton in the Whitewater Development Co. Inc., an earlier development project in the Ozarks.
McDougal also controlled Madison Guaranty Savings and Loan, which failed in 1989 costing federal taxpayers at least $47 million.
A special counsel has been appointed to investigate questions about the relationship between Whitewater and Madison. The Clintons have emphatically denied any wrongdoing. They did not invest in the Campobello project.
Documents on file at the state securities department here show that about six years after the Clintons and McDougals bought 230 acres in northern Arkansas in 1978, McDougal brought two other well-known Arkansans into the Campobello venture.
Jones, an energy millionaire who later bought the Cowboys pro football franchise, and Sheffield Nelson, a former gas executive who lost to Clinton as the Republican nominee in the 1990 gubernatorial race, became limited partners in Campobello with Madison Financial, a subsidiary of Madison Guaranty.
They invested in 1984, a year after McDougal’s original ownership group paid $825,000 for some 3,900 acres on the island. An international park, a provincial park and small villages comprise the rest of the three-mile-by- nine-mile island.
″We invested because it had potential,″ recalled Nelson.
The project planned for 973 lots, most under three acres, to be developed for vacation or retirement homes. More than 100 were sold before Madison and McDougal headed toward collapse
Documents show Nelson and Jones jointly invested $600,000 and owned 25 percent of the Campobello development venture before they got out in 1988, a year before the federal takeover of Madison.
Madison paid Jones and Nelson $725,000 in 1988, according to a Madison report.
In an April 1988 letter to federal regulators about the settlement, a then- executive of Madison said Nelson and Jones agreed to waive legal claims against Madison Financial.
Nelson said the settlement came after the investors pressed the then- management of Madison for an accounting of ″our share of the take.″ Nelson said he and Jones were paid back their initial investment plus ″the cost of the money.″
Jones, in Atlanta this week for his Cowboys’ defense of their Super Bowl championship, did not return two telephone calls to his Dallas office.
Roosevelt’s father bought a home on Campobello in the late 19th century and the future president’s battle with polio began there in the summer of 1921. The story was depicted in a play and movie about FDR called ″Sunrise at Campobello.″
″Campobello … the island that inspired the dreams of a lifetime and captured the heart of a president … an island that will enchant you with its awesome, natural beauty,″ said a sales brochure. FDR used the island as a summer retreat.
Federal regulators and McDougal paint starkly different pictures of Campobello.
McDougal blames mismanagement after he left the running of Madison in 1986 because of health problems and mounting federal regulators’ pressure.
″They were selling lots for $25,000 like hot cakes,″ McDougal said. ″So what do they do when I left? They just stopped.″
But a 1986 Federal Home Loan Bank Board examiner’s report found ″significant problems with this project that create serious doubts about its overall feasibility.″
While 113 lots had been sold, the report said all were small waterfront lots and that there appeared to be little demand for the larger inland lots. It also noted the damp and foggy climate, distance and difficulty in travel to the island and the fact that ″development depends on the lot owners installing their own well and septic systems.″ ( OILSR Were the Lot Offerings REGISTERED with HUD and Who were FINANCING the Lots besides US S&L Madison ? JBW )
By then, the report said, Madison had already sunk $3.7 million into the project and was committed to spending $5 million more.
The Resolution Trust Corp., the federal agency created to salvage the savings and loan mess, will soon begin selling the land. Its book value listed by Madison was $2.9 million.
″As to what the market value is, we’ll see,″ RTC spokesman Steve Katsanos said in Washington.