The Consortium

Kenneth Starr's Ill-Starred Real Estate Deal

Since 1994, Republican special prosecutor Kenneth Starr has been scouring the back woods of Arkansas for evidence to convict President Clinton's friends in the Whitewater scandal. Two of Clinton's friends in the Whitewater land deal are now on trial. Clinton is an expected witness.

But Starr has a mysterious land deal in his own past, one with striking parallels to Whitewater. As a Justice Department official in the 1980s, Starr plunked $20,000 into an obscure outfit called "Lubbock AK Ltd." Starr says it was a total loss. But hie won't divulge the names of his partners By Robert Parry

WASHINGTON -- Special prosecutor Kenneth Starr, who heads the two-year-old-plus Whitewater investigation into Bill and Hillary Clinton's failed Arkansas real estate venture, had a busted real estate deal in his own past. But while prying into the Clintons' Whitewater land scheme, Starr has kept secret key details of his investment in an outfit known only as "Lubbock AK Ltd."

Starr's financial disclosure forms listed "Lubbock AK Ltd." as a holding during the 1980s and early 1990s, when Starr served in the Reagan-Bush administrations. The forms, however, gave no address, no listing of his partners and no other information to aid in tracking down the company.

Authorities in Lubbock, Texas, and the Texas state capital in Austin could locate nothing about Lubbock AK in their business records. However, Texas law requires that limited partnerships be registered with the secretary of state's office and that the partnership certificate state the names of the limited partners, the name of the general partner, the principal place of business and the amounts invested.

For his part, Starr rebuffed requests for an interview about the holding. Only after I contacted law professor Samuel Dash, ethics adviser to the Whitewater investigation, did Starr instruct his personal lawyer, Terry Adamson, to speak with me.

But Adamson offered only sketchy details about Lubbock AK. He described it as "a start-up exploratory fund for possible acquisition of property" in Texas. "Someone wanted to start a business and asked the Starrs for a $20,000 investment, but it never started. ... Like some business ventures, it does not get to the point of documents. It was a loss."

Adamson said Starr and his wife invested $20,000, as limited partners, in 1982 and lost it all. Starr "would have liked his money back," said Adamson. "He chalked it up to life's experience."

Still, Starr never declared the $20,000 loss as a tax write-off, according to Adamson. It was unclear why. As for Starr's associates, Adamson refused to give names, citing "the privacy of the individuals." He only would characterize the partners as "a small group of acquaintances" from Texas.

Lubbock AK vs. Whitewater

Ironically, Starr's Lubbock AK investment has several parallels to Clinton's Whitewater venture that is at the center of Starr's investigation. Both partnerships were started at a time of rapid appreciation in real estate values, with an eye toward cashing in on the boom market. Both Clinton and Starr were senior law-enforcement officials at the time of the investments: Clinton as attorney general of Arkansas in 1979 when the Whitewater partnership formed and Starr as counselor to U.S. Attorney General William French Smith in 1982. Like Starr, Clinton claimed to lose tens of thousands of dollars, although the exact amount has remained in question.

Lubbock AK adds one more question mark to Starr's fitness for his job as Whitewater special prosecutor, an issue that has dogged him since his appointment in August 1994. A federal three-judge panel, headed by conservative Appeals Court Judge David Sentelle, picked the conservative Starr after ousting another Republican, Robert Fiske. Conservative activists and some Republicans in Congress had objected to Fiske for supposedly lacking aggressiveness.

Before removing Fiske, Judge Sentelle had lunch with two of his conservative political patrons from North Carolina, Sens. Jesse Helms and Lauch Faircloth, both vocal critics of President Clinton and strong advocates for a tougher Whitewater probe. The three North Carolina conservatives insisted that they did not discuss Whitewater.

Sentelle cited the appearance of a conflict of interest for ousting Fiske (his interim appointment by Attorney General Janet Reno). But Starr seemed to have far more conflict problems. As U.S. solicitor general under President George Bush, Starr lost his government post because of Clinton's 1992 election. In 1994, Starr was active in Republican politics and even volunteered his legal assistance to Paula Jones, a former Arkansas state employee who had filed suit against Clinton for alleged sexual misconduct. Starr's well-known ambition to rise to the U.S. Supreme Court also would stand a far better chance if Clinton loses in November.

Then, this month, new conflict-of-interest charges arose in The Nation magazine. An article by Joe Conason and Murray Waas cited Starr's dual role in investigating officials at the Resolution Trust Corp. while simultaneously continuing as a senior partner in his law firm, Kirkland & Ellis, which had been sued for professional negligence by the same RTC officials.

The RTC accused Kirkland & Ellis in May 1993 of "aiding and abetting breaches of fiduciary responsibility" at the First America Savings Bank in Colorado. The suit echoed similar complaints about Hillary Clinton's Rose Law Firm for its representation of a savings and loan owned by the Clintons' Whitewater partner, Jim McDougal. But this past January, with Starr's Whitewater investigation bearing down on senior RTC officials, the RTC agreed to a secret settlement of the suit, saving Starr's firm, Kirkland & Ellis, an estimated $700,000.

Starr saw no conflict in his dual roles. But other independent counsels, such as the Iran-contra affair's Lawrence Walsh and Fiske, left their law firms to avoid such appearance problems. Starr didn't, earning more than $1.1 million in 1994 as a senior partner at Kirkland & Ellis and as a member of the firm's management committee.

Starr's refusal to explain the circumstances of his own failed real estate partnership and to identify his associates could raise new doubts about a Republican lawyer who is scouring Arkansas for every unsavory detail about President Clinton's past business deals.

Without disclosure of Starr's partners, it's impossible to judge potential conflicts when Starr was an influential figure at the Justice Department in the 1980s. His refusal also looks like a classic case of hypocrisy.

(c) Copyright 1996 -- Please Do Not Re-Post

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