NEW YORK, Jan. 11, 1996 -- A mountain of legal
bills
- and strict self-imposed limits on outside contributions to allay
them - have put Bill and Hillary Clinton on a collision course with
bankruptcy, reveals the February issue of Money magazine.
The nation's largest financial publication reports that the
Clinton's net worth, which it had estimated at $697,000 in July
1992, is now approaching zero. The reason: The President is facing
legal bills of more than $2 million a year over his Whitewater
investments and the alleged-sexual-harassment case filed by Paula
Jones in May 1994 - and the meter is running.
Indeed, were it not for the $800,000 or so Clinton is getting
from his legal defense fund and the temporary relief offered by his
$400-or- so-an-hour lawyers who are not demanding immediate full
payment, the First Family could already be broke.
Without their legal woes, Money notes, the Clintons would be in
superb financial shape. The magazine estimates that their
investment assets have grown from about $862,000 in 1992 to as much
as $2 million today, thanks to a robust stock market and their
likely stellar- performing blind trust run by Boston-based Essex
Investment Management.
Problem is, the Clinton's liabilities have exploded
simultaneously. In 1993 their only liability was a $64,800 mortgage
on a half share of Hillary's parents' Little Rock condominium,
valued at $180,000. By mid- 1995 - the latest data available - they
owed $1.6 million in unpaid legal bills, resulting mostly from
congressional and special prosecutor probes of Whitewater. (While
the Clintons have run up more than $2.1 million in legal bills,
their Presidential Legal Expense Trust has brought in only $865,871
in contributions.) "Our problem," says Michael Cardozo, the trust's
executive director, "is that we are considered agents of an elected
official and so cannot solicit money. No direct mail. No fund
raisers. No Barbra Streisand concerts. We can't even advertise our
address or phone number."
Moreover, Money reports, to guard against any appearance of
buying favors, the Clintons have ruled out contributions from
political action committees, unions and corporations to pay their
legal bills and are limiting individual contributions to $1,000 per
person annually. the result: Their legal bills are outpacing
contributions by more than two to one.
The magazine adds, however, that the Clinton's financial cloud
has a few silver linings. For one thing, they can tap their blind
trust to pay expenses when daughter Chelsea - now attending the
$13,000-a-year Sidwell Friends school - starts college in 1997.
Then too, once the President leaves office, fund-raising limits for
the Clintons' legal bills will disappear, and their income will
likely soar, particularly if they turn to book-writing or the
lecture circuit. And should they emerge from their legal battles
unindicted, the Independent Counsel Act may provide Bill and Hillary
with federal reimbursement of their expenses.
/CONTACT: Patti Straus of Money magazine, 212-522-2695/
BOSTON, Jan. 11, 1996 -- A Northbridge man pleaded
guilty
today to concealing assets of bankruptcy debtor Linwood Mills, Inc.,
a retail furniture business which was located in Linwood,
Massachusetts.
United States Attorney Donald K. Stern stated that MAURICE
LAVOIE, 47, of 42 Thomas Street, Northbridge, Massachusetts, pleaded
guilty today to one count of bankruptcy fraud for concealing from
bankruptcy creditors and the bankruptcy trustee inventory belonging
to Linwood Mills, a company LAVOIE owns.
During a hearing before United States District Judge Nathaniel
M. Gorton in Worcester, a prosecutor stated that after Linwood Mills
filed for bankruptcy, LAVOIE transferred some of its inventory to
storage facilities in Worcester and Uxbridge and failed to disclose
the transfers in the bankruptcy proceeding.
LAVOIE faces a maximum penalty of five years' imprisonment and a
$250,000 fine.
The case was investigated by agents of the Federal Bureau of
Investigation, was referred by the U.S. Trustee's Office in Boston
and Worcester, and is being prosecuted by Assistant U.S. Attorney
Mark J. Balthazard of Stern's Economic Crimes Unit.
/CONTACT: Joy Fallon and Anne-Marie Kent of the US Attorney's
Office, 617-223-9445/
SAN RAFAEL, Calif.--Jan. 10, 1996--New City
Asset Management, Inc. of Chesterfield, Mo., a mortgage lender
specializing in sub-prime paper and mortgage fraud, announced an
alliance with Prieston Law Firm, the nation's leading provider of
mortgage fraud resolution and related industry counsel.
New City will rely on Prieston for assistance in recovery on
complex and outdated mortgage fraud cases, as well as litigation for
cases requiring legal action.
New City was formed earlier this year by industry veterans with
more than 30 years experience in quality assurance, underwriting and
servicing of portfolios pocked with bad loans and defaulted
property. The company seeks to lend its expertise in all matters of
mortgage fraud, including investigation, prevention, recovery, loss
mitigation and maximizing profitability of real estate owned (REO)
units. The company is currently working with six clients, including
several regional lenders and money centers.
"Approximately 15 to 20 percent of all credit losses within the
industry are a result of mortgage fraud," explained Steve Halper,
President and CEO of New City Asset Management, Inc. "There's a
pressing need for an entity that can act as a lender's silent
partner in all aspects of fraud and delinquency. In today's
climate, there's a broad array of loss mitigation and recovery
options available. There are profits to be realized and money to be
recovered from bad loans through processes which are virtually
transparent to lenders and their client base."
Founded in 1984, Prieston Law Firm resolved more than 200
mortgage fraud loans last year alone totaling over $34 million in
recovery, and is the only law firm solely devoted to mortgage fraud
resolution. Prieston's flagship service is the Mortgage Fraud
Resolution (MFR) system, a complete service covering all legal
representation pertaining to recovery within a 120-day period.
"Prieston is one of the foremost experts on mortgage fraud
resolution through litigation and non-litigation action in the
industry," Halper continued. "We wanted to offer our clients the
array of services Prieston Law Firm provides. It's a perfect fit of
both services and companies -- companies dedicated to one of the
most complex and intricate areas of mortgage lending."
Halper first approached the firm in 1992 when he headed
Citicorp's quality assurance department and sub-prime servicing and
compliance operations. New City was formed less than three years
later by Halper and several fellow Citicorp executives.
"Steve possesses the expertise and management experience
critical to successfully operating in this segment of the industry,"
explained Arthur J. Prieston, Prieston Law Firm's founder and senior
counsel. "With the explosion of automated underwriting and more
stripped down mortgage operations, the potential and incidence of
fraud continues to grow. The need for specialized providers such as
New City's analytical capabilities and Prieston Law Firm's
resolution expertise becomes increasingly vital to curbing fraud and
protecting lenders from its tragic consequences."
New City will provide lenders mortgage fraud consulting as well
as training for loan production, quality assurance and servicing
personnel. In addition, the company will purchase problem
portfolios, supervise and market REOs and in conjunction with
Prieston negotiate workouts and make whole agreements between
responsible parties involved in a fraudulent loan.
Headquartered in San Rafael, Calif., Prieston Law Firm
complements New City as well as all client's Quality Assurance
Department and in-house legal counsel, assisting in all peripheral
mortgage fraud matters including bankruptcy issues, commitment terms
and bidding instructions. Prieston Law Firm has resolved
fraudulentloans for more than 70 of the industry's leading mortgage
lending institutions, banks, credit unions and thrifts, including
Community Lending, Dollar Mortgage Corporation, Hamilton Financial
and MICAL Mortgage.
For more information on Prieston Law Firm and the Mortgage Fraud
Resolution service, contact Arthur J. Prieston at (800) 662-6100,
via fax at (415) 454-7053, or write Prieston Law Firm, 901 Tamalpais
Avenue, Suite 200, San Rafael, Calif. 94901.
CONTACT: Prieston Law Firm,
Arthur J. Prieston, (800) 662-6100
or
William Mills Agency,
Mark Wheeler, (404) 264-7204,
wmamark@aol.com.
The Company has also been advised that approvals have been
obtained for a new agreement with certain banks to establish a
committed letter of credit facility of up to $285 million with a
term to February 1997. The new credit facility will replace Kmart's
former uncommitted letter of credit facilities and is in addition to
$2.7 billion in existing bank credit lines, including letters of
credit available under existing facilities.
Pending closing, the downgrade-related early payment provisions
on approximately $550 million principal amount of real estate debt
are substantially eliminated. Final closing of the agreements is
expected before the end of February 1996, subject to certain
conditions. Upon closing, the "put" provisions will be permanently
eliminated and the previously announced modifications of the
Company's bank credit facilities would continue.
In addition, the agreements provide that amounts outstanding
under existing bank credit lines in the amount of approximately $2.2
billion will remain outstanding until October 1997, and
approximately $500 million to February 1997.
"We are on schedule to close these agreements, renegotiate our
bank credit facilities, and explore other financial alternatives
that will enhance our liquidity and financial flexibility," said
Marvin P. Rich, Kmart's Executive Vice President, Strategic
Planning, Finance and Administration.
The above summary is subject to the specific terms of the entire
agreements, which the Company has previously filed or will be filing
with the Securities and Exchange Commission.
Kmart Corporation serves America with more than 2,163 Kmart and
169 Builders Square retail outlets in all 50 states, Puerto Rico,
the U.S. Virgin Islands and Guam. Kmart International operations
extend to Canada, the Czech Republic, Slovakia, and through joint
ventures, to Mexico and Singapore.
/CONTACT: Robert M. Burton, Director, Investor Relations,
810-643-1040, or Shawn M. Kahle, Vice President, Corporate Affairs,
810-643-1021, both of Kmart/