A:

The Whitewater scandal refers to a real estate controversy involving former President Bill Clinton and his wife Hillary. In 1978, when Bill Clinton was attorney general of Arkansas, he and his wife partnered with James and Susan McDougal to purchase 220 acres of land that would become the Whitewater Development Corporation. The real estate venture failed, costing the Clintons a reported $40,000 in losses. James McDougal subsequently entered the banking industry, forming Madison Guaranty Savings and Loan.

In 1986, federal regulators investigated another real estate investment backed by James McDougal. The investigation led to McDougal's resignation from Madison Guaranty and the eventual collapse of the bank. Questions surrounding the Clintons' involvement in the Whitewater deal grew during President Clinton's first term in office and an investigation into the legality of the Whitewater transactions was launched.

The investigation, led by special prosecutor Robert B. Fiske, found that Clinton had pressured David Hale into making a loan that benefited both Bill Clinton and Madison Guaranty. Fiske proceeded to issue a grand jury subpoena to President Clinton and his wife for documents related to Madison Guaranty. While the Clintons initially reported the records as missing, the documents eventually were found and the Clintons were cleared of any wrongdoing.

The investigation continued, with Kenneth Starr at the helm and businessman David Hale as the star witness. Starr alleged that Bill Clinton, during his term as governor of Arkansas, pressured Hale to make an illegal $300,000 federally-backed loan to Susan McDougal. The allegation lost much of its credibility after Hale was convicted of numerous felonies. But the Starr investigation went on to include the Lewinsky sex scandal and several other controversies involving the Clintons. All three inquiries into the Whitewater land deal yielded insufficient evidence to charge the Clintons with criminal conduct. However, several of their associates were convicted as a result the investigations.

(For other high profile scandals, read Eliot Spitzer - Man of a Thousand Scandals.)

This question was answered by Bob Schneider.

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