On May 28, 1996, former President Bill Clinton's business partners in the Whitewater land deal, Susan and James McDougal, along with Arkansas governer Jim Guy Tucker, were convicted of fraud. The charges stemmed from the real estate dealings of Clinton and his wife along with their associates in a failed business venture from the late 1970s and early 1980s called Whitewater Development Corporation.
The controversy began when allegations were made by David Hale (an Arkansas banker who operated a savings and loan) who alleged that Bill Clinton had pressured him into making an illegal $300,000 loan to to Clinton's business partners in order to help their failing business.
Following the savings and loan crisis and the high interest rates at the time, the Clinton's and their business partners lost a substantial amount on their Whitewater investment. Following the failed business venture, James McDougal started another real-estate-focused investment with borrowed funds from his own savings and loan. However, federal regulators had discovered the investment capital to fund the real estate project was borrowed illegally and the McDougals fell under investigation.
After years of an SEC investigation, the formation of an independent counsel and a presidential subpoena, the Clinton's were cleared of any wrongdoing in the Whitewater scandal. Susan and James McDougal, along with then Arkansas governer Jim Guy Tucker (who was an attorney during the period in question) were convicted of multiple fraud charges. (To learn more, see What was the Whitewater scandal?)