LITTLE ROCK, Ark. — In a sweeping verdict that will intensify the Whitewater controversy as the November election draws near, a jury on Tuesday convicted President Clinton's two investment partners, James B. McDougal, his former wife Susan McDougal and Arkansas Gov. Jim Guy Tucker, of participating in a $3-million conspiracy to defraud two federally backed financial institutions.
The convictions provided a victory for embattled independent counsel Kenneth W. Starr in the first Whitewater-related case to go to trial as a result of his lengthy investigation of the president and his Arkansas associates.
Starr told reporters that he was encouraged by the outcome of the 12-week trial. "The investigation is actively underway," Starr said.
Clinton, who was the chief defense witness at the trial, expressed sympathy for the defendants "on a personal level." Asked during a brief White House appearance whether the verdicts meant that jurors did not believe him, he said: "I doubt that. I doubt that that's what was going on but you ought to ask them."
A juror said afterward that the panel questioned the relevance but not the veracity of Clinton's testimony.
"President Clinton is a very credible witness, but his testimony didn't really relate to the transactions we were dealing with," said Risa Gayle Briggs, a 41-year-old schoolteacher.
The government's star witness, former Municipal Judge David Hale, accused Clinton of being a co-conspirator. But the president was not charged in the case and immediately after the verdict his aides issued a statement noting that even the prosecution had said that Clinton played no active role in the conspiracy.
"There was one thing everyone involved with this trial--prosecutors and defense--could agree on: The president had nothing to do with the allegations that were the subject of the trial," White House special counsel Mark D. Fabiani said in a brief written statement.
Briggs, asked whether the investigation of the president should continue, replied: "No, I don't think there is enough evidence."
The case began, however, with allegations that the president and First Lady Hillary Rodham Clinton had profited illegally from an Ozark land partnership with the McDougals.
James McDougal was found guilty on all but one of the 19 counts against him. His former wife was convicted on all four of the counts against her. Tucker was judged to be guilty on two of the seven counts against him.
Hale said in his testimony that he conspired in the mid-1980s with the McDougals, Tucker, Clinton and others to defraud both McDougal's Madison Guaranty Savings & Loan and Hale's small-business investment firm, Capital Management Services.
Essentially, Hale said, the three defendants improperly used money from Madison, a federally insured institution, to leverage additional capital from Capital Management, which was funded largely by the Small Business Administration. Most of the money passed through a wide variety of real estate deals.
Bank Account
The president was linked tangentially to the alleged conspiracy because some of the money from Capital Management passed through the Whitewater bank account held jointly by the McDougals and the Clintons and because land purchased with the money was briefly held by their jointly owned Whitewater land development company. Nevertheless, there was no evidence that the Clintons were aware of the transactions.
The defense alleged that Hale concocted the conspiracy story to win leniency from the government on charges that he had defrauded the government. Hale has been sentenced to 24 months in prison as a result of a plea bargain with the independent counsel.
The verdict was not at all what most of the participants had expected. Stunned silence gripped the courtroom as the court clerk pronounced the defendants guilty on 24 of the 30 counts at issue. Not even the prosecutors had anticipated such a sweeping decision in what was a complex case with more than 700 exhibits and 35 witnesses.
Fines, Prison Terms
The defendants face fines and prison terms if their convictions are upheld on appeal.
The convictions, all felonies, carry maximum penalties for James McDougal of 84 years in prison and a fine of $4.5 million. Susan McDougal faces a maximum sentence of 17 years and a $1-million fine, while Tucker could receive a 10-year sentence and a $500,000 fine.
Sentencing has not yet been scheduled, however, and punishment is not expected to approach the maximum prescribed by law. Neither of the McDougals, who were tried as indigents, have money to pay such fines. In addition, James McDougal's poor health is likely to be taken into account by the sentencing judge.
Tucker, a multimillionaire, is the only defendant who could afford to pay a fine. He also must contend with another indictment brought by Starr that bears no direct relationship to Whitewater.
