Clintons Cough Up Back Taxes On Newly Discovered ProfitsBy John M. Broder
Los Angeles Times
President Clinton and his wife, Hillary, on Monday paid the government $14,615 in back taxes and interest on newly discovered profits from Mrs. Clinton's commodity trading in 1979-80.
"The Clintons do not know how the error occurred but accept responsibility for it," said the Clintons' personal attorney, David E. Kendall.
Documents detailing the trading gains were found among the Clintons' personal records within the last week, but aides could not explain why they were not available at the time the couple was preparing their income taxes 14 years ago. The newly found $6,498 in profits from commodities trading in 1979-80 were simply "overlooked" at the time, a senior administration aide said.
The new profits are in addition to the nearly $100,000 in gains that Mrs. Clinton made trading in cattle futures with powerful friend James Blair at the Springdale, Ark., office of a major Chicago commodities brokerage. Officials said Monday that the Internal Revenue Service audited the 1979 return on which most of those gains were reported and found it to be in order.
Mrs. Clinton later made trades in a separate account at Stephens Inc., in Little Rock, which the White House described less than two weeks ago as a money-loser. Officials at that time provided documents that showed that the second account was opened with a $5,000 deposit and closed after Mrs. Clinton lost $1,009.
But a review of the couple's records disclosed that the account in fact yielded a $6,498 profit on a variety of trades in sugar, copper, wheat and lumber futures, some of them in substantial amounts. The Clintons are now paying $3,829 in back taxes and $10,786 in interest to the federal government and the state of Arkansas on that unreported gain.
White House press secretary Dee Dee Myers described the $6,498 profit as "a small amount of income that was previously undetected."
Kendall noted that the statute of limitations on tax evasion has long since passed and that the Clintons were making the back payments voluntarily. He said that the interest charges were calculated from IRS and Arkansas revenue department tables.
This is the first acknowledgement of money due the government by the Clintons since extensive scrutiny of their finances began in connection with the Whitewater real estate affair.
Records on that land deal are expected to be released in Little Rock Tuesday by the Clintons' partner in the Whitewater land development deal, James B. McDougal.
In announcing the back tax payment, the White House also acknowledged that in the main trading account Blair directed virtually all of the trades, contrary to their earlier assertions.
"I think it's become clear that he (Blair) placed most of the trades," Myers said.
When the trades first came to light last month, the White House said Mrs. Clinton did her own trading and portrayed Blair as one among several advisers on her account. Aides said originally that Mrs. Clinton decided when to enter the volatile cattle futures market and directed her broker, Robert L. "Red" Bone, on when and what to trade for her account.
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The White House also moved to clear up misstatements last week by President Clinton, who said that Mrs. Clinton's decision to get out of the risky commodities market came shortly before their daughter, Chelsea, was born and because Mrs. Clinton had received a margin call. A brokerage house demands a higher margin account balance when the potential losses exceed the amount of money available in a customer's account to cover them.
But a senior White House aide who briefed reporters on the newly found trading records said that he had found no evidence that Mrs. Clinton was ever subjected to a margin call.
The president had said that his wife got "cold feet" and bailed out of the market before Chelsea was born on Feb. 27, 1980. But the new documents disclose that Mrs. Clinton was actively taking large positions in commodities in January, February and March of 1980 - at one point staking out at $61,250 position in copper futures.
The very week of Chelsea's birth, Mrs. Clinton bought $29,164.80 worth of sugar futures, $41,340 worth of lumber futures and $51,450 worth of copper futures. The three trades netted her more than $10,700 in profit.
She liquidated most of her commodities positions in March and closed out the account in May with the $6,498 profit that White House aides just discovered.
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The White House also provided more complete records of her successful foray into the cattle futures market in 1978 and 1979. There were 31 individual trades executed in Mrs. Clinton's account between October 1978 and July 1979, yielding a net profit of $98,537 on an initial investment of $1,000.
Of the 31 trades, 26 were winners and only five were losers, a batting average that astounds commodities market experts. More than three-quarters of futures players lose money and Mrs. Clinton's success as a neophyte was remarkable, traders say.