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McDougal Has Shielded Clinton, Her Prosecutors Say

Courts: She has withheld key information that could reveal whether president lied about his ties to S&L, Starr attorneys contend at start of her contempt trial.

March 11, 1999|ERIC LICHTBLAU | TIMES STAFF WRITER

LITTLE ROCK, Ark. — Federal prosecutors told jurors on Wednesday that Whitewater figure Susan McDougal has withheld key information that might help them determine whether President Clinton lied in court about his financial connections to a failed savings and loan in the 1980s.

But the attorney for the 44-year-old McDougal, now facing a second stint in prison for contempt of court, said she would love to tell everything she knows about the complex financial dealings--so long as independent counsel Kenneth W. Starr's prosecutors are not asking the questions.

McDougal "didn't have any corrupt motive" in refusing to cooperate with an Arkansas grand jury investigating Clinton's connection to the Whitewater affair, Los Angeles defense attorney Mark Geragos told jurors. "What she had was a resolve that she was not going to be used as a pawn by somebody else to get the president and the first lady."

The volley of accusations came on the first day of testimony at the federal trial of McDougal, a former business partner of Bill and Hillary Rodham Clinton who now lives in Redondo Beach.

Her defiant refusal to cooperate with Starr's investigators already landed her in prison for 18 months for civil contempt, and she now faces up to 27 months on criminal charges of contempt and obstruction of justice because of her continued silence.

The jurors include several factory workers, a security guard and a truck driver who quipped during jury selection that he "wouldn't want [Starr] mad at me."

Watching from the court gallery were a half-dozen of McDougal's relatives, along with a Southern California woman who sat on the Santa Monica jury that acquitted McDougal in November on charges of stealing money from conductor Zubin Mehta and his wife, Nancy.

McDougal a Celebrity

McDougal has become a celebrity in Little Rock, known as much for the commercials she filmed years ago for real estate development--she rode a white horse in one--as for her role in the Whitewater controversy.

But Starr's prosecutors immediately sought to squash whatever sympathy jurors might hold for McDougal, portraying her as a roadblock to a legitimate investigation. By refusing to answer questions before the Whitewater grand jury, first in 1996 and again in 1998, McDougal victimized the court system even though she was given an immunity deal to protect her from self-incrimination, prosecutor Mark Barrett said in his opening statement.

Barrett said McDougal was in a unique position to answer key questions on several issues, including whether Clinton received a $27,600 loan in 1982 from Madison Guaranty, a savings and loan then owned by McDougal and her then-husband, James.

Barrett told jurors several times that Clinton, in video testimony entered as evidence in several Whitewater trials, denied ever receiving a loan from Madison.

But through "an act of God," Barrett told jurors, investigators discovered a box-load of Madison documents in the trunk of an abandoned car that was overturned in an Arkansas junkyard during a 1997 tornado.

Among the documents was a $27,600 check from Madison to Clinton. Found separately was a $5,081 check, dated 1983, from McDougal to Madison, with the note "Payoff Clinton" at the bottom. Barrett said he believes that money may have gone to pay off part of the original loan to Clinton.

With James McDougal now dead and the Clintons in the White House, Susan McDougal holds the key to explaining the transactions, Barrett said.

"We're not trying the president," W. Hickman Ewing Jr., head of Starr's Arkansas operation, said in an interview outside the courthouse. Whether McDougal's testimony would incriminate Clinton or clear him, he said, "the fact is the grand jury was entitled to hear from Susan McDougal."

But defense attorney Geragos said in his opening statement that he will present evidence, including testimony from McDougal herself, showing Starr's inquiry "had nothing to do with a search for the truth but was a search to convict or tarnish the president of the United States at any cost."

He recounted an offer from Starr's team to McDougal after she was convicted in 1996 on Whitewater-related tax and fraud charges. The prosecutors offered not to oppose a move for probation in the case and to assist McDougal with her California legal troubles--so long as she cooperated with them, he said.

"You know who we want and you know what we want," Geragos quoted the independent counsel's office as telling McDougal.

"We vigorously and categorically deny that that happened," Barrett told jurors.

Tape-Recording Played

The first evidence in the case featured a tape-recording of one of McDougal's grand jury appearances, in which she repeatedly told grand jurors that she did not trust Starr's people enough to answer their questions.

Geragos gloated to reporters later that the tape--and McDougal's resolute stance--made such a strong impression that he would not have bothered giving an opening statement if he had known prosecutors were going to play it.

"That tape is about as compelling a piece of evidence as one could ever have," he said.

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