Whitewater Report Appears to Back Clintons on Losses : Inquiry: GOP investigator confirms real estate deal turned sour, to the tune of $42,191, sources say. But finding does not lay probe to rest.

Investigators have determined that President Clinton and First Lady Hillary Rodham Clinton lost $42,191 on their investment in the Ozark real estate venture known as Whitewater, according to sources familiar with a preliminary report resulting from the inquiry.

Even though the report sets their losses at $4,000 less than the Clintons’ own estimate, results of the investigation are likely to be viewed as welcome news by the President and his political allies.

Not only does the report appear to support the Clintons’ contention that they lost money and were only “passive” investors in Whitewater, but it also represents the judgment of former U.S. Atty. Jay B. Stephens, a Republican who had been critical of the Clinton Administration on other matters.

Stephens and his law firm, Pillsbury, Madison & Sutro, prepared the report at the request of the Resolution Trust Corp., the agency that investigates failed savings and loans. The RTC, using the report on Madison Guaranty Savings & Loan, now must decide whether to file lawsuits to try to recover millions of dollars in losses by the failed thrift owned by the Clintons’ partner in Whitewater, James B. McDougal.

Yet Stephens’ report by no means lays the Whitewater controversy to rest. The report did not examine all the issues in the Whitewater case, nor is it expected to influence the broader Whitewater investigation of independent counsel Kenneth W. Starr.

In fact, Clinton’s critics are likely to be pleased that Stephens found evidence that some deposits into the Whitewater bank account came from McDougal’s Madison Guaranty. It is illegal for officers of a government-backed savings and loan to divert money to their own use.

While he found no indication that the Clintons were aware of these transactions, the information collected by Stephens does not dispute allegations that McDougal, a longtime Arkansas political ally of Clinton’s, intended for his Whitewater partners to share in the benefits of his mismanagement of the government-backed thrift.

It is ironic that Stephens’ report follows closely the Clintons’ version of events surrounding the Whitewater controversy.

Last year, the President was embarrassed when congressional hearings revealed that White House aide George Stephanopoulos, enraged by the RTC’s choice of a political foe to investigate the matter, had contacted top Treasury Department officials improperly to express his dismay. Yet there is no evidence that the Treasury ever intervened in the RTC inquiry.

In the past, the Clintons have defended themselves against allegations of wrongdoing in the Whitewater matter by noting that they did not profit from their joint investment with McDougal and his then-wife in the Ozark development.

Initially, they set their losses at $68,900. But later, under intense scrutiny from Republicans, they revised that figure to $46,137.

Although Stephens’ figure differs slightly from theirs, it essentially supports their account of the case. Furthermore, sources said, the evidence gleaned by Stephens supports the Clintons’ claim that they did not play an active role in the management of Whitewater until McDougal fell ill in 1986.

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Nevertheless, the report leaves open the possibility that money from Madison Guaranty could have benefited the Clintons if the investment had been profitable. Stephens estimated that shareholders could have anticipated profits of about $95,000 at the outset.

In Stephens’ view, the Clintons’ investment was doomed by slow sales in the White Water Estates development, lower lot prices than initially anticipated and substantial, unexpected increases in commercial interest rates.

Sources said that Stephens found reason to believe that some of the money McDougal put into the Whitewater bank account came directly from Madison Guaranty, which later failed because of his mismanagement. At least $88,022 in deposits in the Whitewater account could be traced back to Madison Guaranty, these sources said.

But some of McDougal’s deposits only passed briefly through the account and were not spent on the partnership. For example, the report cited a $30,000 “bonus” that McDougal received from a Madison Guaranty subsidiary and deposited in the Whitewater account to cover a check of the same amount that he wrote to the late Sen. J. William Fulbright (D-Ark.), Clinton’s political mentor.

It is not known to what extent the Clintons were aware of McDougal’s transfers of money from Madison Guaranty to Whitewater. Stephens’ report was based entirely on documentary evidence, which does not reveal any personal conversations between McDougal and the Clintons.

But there is no question that McDougal contributed more than the Clintons to Whitewater, as Republicans contend, even though they had agreed to split any profits 50-50.

Before May 31, 1986, sources said, Stephens found that McDougal had contributed $158,523 to cover the company’s losses while the Clintons contributed only $32,970. In fact, the Clintons made no contributions after May, 1980.

The Whitewater partnership was established in June, 1978, with the purchase of a plot of scenic land in the Ozark Mountains with a $20,000 down payment derived from an unsecured bank loan.