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Special Counsel Appoints 8 Whitewater Probe Aides : Investigation: One will focus solely on events surrounding Foster's death. Texan will try case involving loan to partner in the real estate deal.

February 24, 1994|SARA FRITZ | TIMES STAFF WRITER

LITTLE ROCK, Ark. — Special counsel Robert B. Fiske Jr. on Wednesday appointed eight lawyers to assist in his investigation of the Whitewater affair--most of them, like himself, attorneys from New York, but two of them Southerners whose style will be more familiar in President Clinton's home state of Arkansas.

Although Fiske declined to discuss details of the investigation, his appointments revealed much about the strategy he intends to use in pursuing a wide investigation of Clinton's joint investment in the Whitewater Development Corp. with James B. McDougal, the owner of a failed savings and loan.

For instance, Fiske made it clear that he regards as serious the allegations that Whitewater may have precipitated the apparent suicide last year of White House lawyer Vincent Foster. Files on the Whitewater deal were removed from Foster's office by Clinton aides shortly before law enforcement authorities arrived to investigate the suicide.

Fiske said one of his appointees, Roderick C. Lankler, a New York lawyer and former prosecutor, will be located in Washington and assigned to focus strictly on events surrounding Foster's death. Once chief litigator under New York Dist. Atty. Robert M. Morgenthau, Lankler has assisted in several New York political corruption inquiries since entering private practice in 1984.

The special counsel, appointed by Atty. Gen. Janet Reno little more than a month ago, also made it clear that he intends a fast start that will enable him to complete the investigation within a year. To that end, he said he will be ready by March 28 to prosecute former Arkansas Judge David Hale, along with two co-defendants, on loan fraud charges.

Although the charges against him are technically unrelated to Whitewater, Hale contends that he acted on Clinton's request when he loaned $300,000 from his government-subsidized venture capital investment fund to Susan McDougal, James McDougal's ex-wife and another partner in the Whitewater deal along with First Lady Hillary Rodham Clinton.

So far, sources said, Fiske has refused to offer Hale leniency in exchange for his testimony about the Clintons. But Fiske's decision to take responsibility for the Hale case, which was being investigated by the Justice Department, was seen by lawyers in the case as an acknowledgment of Hale's contention that the cases are related.

A partner in the prominent New York law firm of Davis Polk & Wardwell and a former U.S. attorney in Manhattan during the Gerald R. Ford and Jimmy Carter administrations, Fiske predictably selected mostly attorneys with backgrounds similar to his. Only three of his appointees were from outside New York.

But recognizing that his legal team may encounter some hostility from friends of Clinton in the President's home state of Arkansas, Fiske chose an experienced Texas trial lawyer with a thick Southern drawl, Russell (Rusty) Hardin Jr., to try Hale's case in federal court in Little Rock.

Fiske said he does not intend to ask for a postponement of the trial while Hardin becomes familiar with the case. He said Hardin already is working with Denis J. McInerney, a close Fiske associate who joined the investigation shortly after the independent counsel was chosen but was not officially appointed until Wednesday.

The other Southerner appointed by Fiske is William S. Duffey Jr. A resident of Atlanta and a partner in the firm of King & Spalding, Duffey has specialized in complex civil and criminal investigations, including an internal investigation of E. F. Hutton after the firm pleaded guilty to 2,001 counts of mail and wire fraud. He also participated in the internal Exxon inquiry after the 1989 grounding of the Exxon Valdez in Alaska's Prince William Sound resulted in the biggest oil spill in U.S. history.

Although Fiske is said to be undaunted by the length of time that has passed since the events of Whitewater or by the number of missing documents, he is understood to be sensitive to feelings of many former Clinton associates in Arkansas who think that they have been falsely portrayed in the Northern press as a network of "good ol' boys."

That sentiment was expressed recently by McDougal's attorney, Sam Huer of Little Rock, who said in an Associated Press interview that he resented the new round of "Arkansas-ology" that the Whitewater investigation had sparked.

As many reporters have discovered, most Arkansans involved in Whitewater have repeated their recollections so often to the news media and law enforcement officials that Fiske will be hard-pressed to find fresh witnesses whose stories have not been simplified by constant repetition.

Fiske already has met with lawyers representing many of the key figures in the case, among them Bobby McDaniel, lawyer for Susan McDougal, and Randy Coleman, Hale's lawyer.

Fiske's investigation must determine, among other things, whether federally guaranteed funds from McDougal's Madison Guaranty Savings & Loan were funneled into Whitewater.

Fiske's assistants bring an impressive record of experience in white-collar crime cases.

In addition to Lankler, Hardin, McInerney and Duffey, his staff includes Julie R. O'Sullivan, a Stanford graduate who worked with Fiske at Davis Polke & Wardwell until she became assistant U.S. attorney in New York in 1991; Patrick J. Smith, an associate at Davis Polk; Mark J. Stein, another former Davis Polk lawyer who was deputy chief of the criminal division of the U.S. attorney's office in New York, and Carl J. Stich Jr., a partner in the Cincinnati law firm of Dinsmore & Shohl.

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