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Blind Trusts Can Be Big Moneymakers for Presidents

May 21, 1993 GMT

WASHINGTON (AP) _ George Bush’s blind trust was worth $1.3 million at last count, mostly holdings from his days as a Texas oilman. Jimmy Carter’s included his peanut farm in Plains, Ga., which made him a millionaire president in 1978.

Blind trusts, often used by presidents and other government officials to avoid potential conflicts of interest, can also be lucrative sources of income. Bush, for example, made nearly $200,000 last year from his.

President and Mrs. Clinton, who reported 1992 assets of between $534,000 and $1.7 million, haven’t yet established a blind trust for their holdings but are ″moving toward″ doing so, the White House says.

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White House spokeswoman Dee Dee Myers told reporters Thursday the Clintons ″had been in the process of (setting up a trust) for awhile, and are nearing completion on the details.″

″The sooner the better,″ said Stephen Gillers, an ethics specialist and professor at New York University Law School. ″It should have been done on Jan. 19, but May 19 is better than June 19.″

Jan. 19 was the day preceding Clinton’s inauguration.

In January 1981, soon after he was inaugurated, Ronald Reagan converted his personal wealth - except for two residences - into $740,000 in cash and put it in a blind trust. The trust earned $66,026 in 1985.

When he became vice president in 1981, Bush set up his blind trust, which has been managed by a company belonging to a longtime friend, Houston millionaire Will Farish. Bush goes every year to Farish’s 10,000-acre Lazy F Ranch in Beeville, Texas, to hunt quail and other game birds.

Presidents, government officials and members of Congress set up blind trusts to transfer control of their investments to a trustee, often a friend, attorney or financial institution. The official has no control over how the assets are handled and no knowledge of the trust’s operation.

The arrangement is designed to help officials avoid conflicts and the appearance of conflicts of interest in their policy decisions.

″It’s essential,″ Gillers said in an interview. ″We as a people want to be confident that people who exercise public power do so in the public interest and not in their own interest.″

President Lyndon B. Johnson, his wife and two daughters had $3.5 million in a blind trust in 1964.

Carter’s blind trust, which totaled $784,300 in 1978 and $529,300 in 1979, consisted of his incorporated peanut farm and a 63 percent share of his family’s peanut warehouse. The farm made him a millionaire in 1978 despite continuing losses from the warehouse business, which lost more than $300,000 in 1977 and $73,000 in 1978 under the management of Billy Carter, the president’s brother.

Jimmy Carter’s longtime friend, Atlanta attorney Charles Kirbo, administered the trust and pumped loans of more than $500,000 into the warehouse business from Carter’s farming company.

By 1979, Jimmy and Rosalynn Carter found their net worth cut by inflation to $893,300 from $1 million a year earlier.

With the guidance of trustees and savvy investment managers, blind trusts can turn a tidy profit.

But things can sometimes turn sour, as happened recently with Sen. Christopher Bond, R-Mo. Bond filed a lawsuit in federal court this month alleging fraud and securities violations by a New York investment adviser who had managed the senator’s blind trust since 1985.

The lawsuit contends Bond’s trust, which had assets of $1.3 million before 1990, was wiped out by investments in risky securities. Because of the terms of his trust, Bond said, he was unaware of the investment decisions.