Reprinted from The Washington Times , 5am -- April 24, 1998
McDougal won't answer grand jury's questions
By Jerry Seper
THE WASHINGTON TIMES
A defiant Susan McDougal refused Thursday for a second time to answer questions before a grand jury in Little Rock, Ark., setting herself up for a charge of criminal contempt that could result in additional prison time for the convicted Whitewater felon.
Leaving the courthouse in handcuffs and shackles after a two-hour appearance, McDougal -- clad in a bright orange prison jumpsuit --told reporters she hoped the grand jury understood her reasons for refusing to answer any questions.
"I tried to explain to the grand jury my position, and I hope they understand," she said as U.S. marshals escorted her from the building.
At a news conference at a hotel across from the courthouse, McDougal's family -- including her father, mother, three brothers and a niece -- said no jury would convict her on charges of criminal contempt. They said independent counsel Kenneth W. Starr had "tortured" McDougal and said she was prepared to return to jail rather than cooperate in the probe.
"Sometimes principle is far more important than the letter of the written law," said her brother, William Henley. "Kenneth Starr is a sham. He's a liar and has suborned perjury from her earlier ... and she will have nothing to do with him."
Another brother, James Henley, said he was told that one member of the grand jury stood and personally pleaded for McDougal to testify but that she declined.
Her attorney, Mark Geragos, said that if his client is charged with criminal contempt, she would welcome an opportunity to tell her story in court.
"It's a game of chicken, and somebody's going to have to blink," he said.
McDougal served 18 months on a civil contempt citation after she declined in September 1996 to answer questions before the grand jury. A criminal contempt citation could net her six additional months in jail without a trial if prosecutors take her before a judge or up to five years if they seek an indictment and a trial.
Mr. Starr wants to know if President Clinton knew about an illegal $300,000 Small Business Administration loan McDougal received in 1986 or the property it helped buy for Whitewater Development Corp. and if he lied about it under oath during the first Whitewater trial. McDougal steadfastly has refused to answer any questions, including those that would corroborate the president's denials.
"We sincerely hope Mrs. McDougal ... will answer the questions put to her in front of the grand jury truthfully and completely," said Mr. Starr's counselor, Charles G. Bakaly III, when McDougal arrived at court. "Any witness who refuses to answer questions before the grand jury ... subjects themselves to possible criminal contempt charges."
Later, Mr. Bakaly declined to say what the independent counsel's office "would or would not do" in the case.
William and James Henley were officers in a real estate subsidiary controlled by Madison Guaranty Savings and Loan Association, the thrift at the heart of the Whitewater probe. Owned by James and Susan McDougal, Madison failed in 1989 at a cost of $50 million.
Regulators who investigated the failure said the thrift paid the subsidiary substantial commissions for land sales, including payments of $712,000 during a three-year period to Susan McDougal and her two brothers.
U.S. District Judge Susan Webber Wright denied a motion on Tuesday by McDougal's attorney to quash the Starr subpoena, saying she could not step between McDougal and Mr. Starr's authority to call her as a witness. But the judge told prosecutors to come up with a different line of questioning than in 1996.
McDougal currently is serving a two-year term on her conviction in the first Whitewater trial and is awaiting trial on embezzlement charges in Los Angeles involving symphony conductor Zubin Mehta. The $300,000 loan was at the center of four felony convictions returned against her by an Arkansas jury.
The loan approved by former Little Rock municipal Judge David L. Hale through a lending agency he owned -- Capital-Management Services Inc. -- and was guaranteed by the SBA. A portion of the loan, which was never repaid, was used to buy property for Whitewater Development Corp., the northern Arkansas real estate project owned by the Clintons and the McDougals.
Mr. Hale testified that he was pressured by Mr. Clinton for the loan -- an accusation the president has denied.
Meanwhile, opening arguments in the trial of Mr. Hale on state charges were postponed Thursday when the former municipal judge checked himself into a Little Rock hospital after complaining of chest pains.
"I can't go to trial with the defendant having a legitimate complaint in a hospital," said Judge David Bogard. "We can't proceed with the trial until they run the tests."
The judge said doctors would need 24 to 48 hours to determine if Mr. Hale had a legitimate complaint about his health.
Mr. Hale, the government's key witness in the first Whitewater trial, was charged in state court with lying to insurance regulators about the solvency of a burial insurance company he owned. If convicted, he faces three years in prison and a fine of $5,000.
In August 1997, Mr. Hale was moved from a federal prison in Texas, where he was serving a 21-month sentence in his guilty plea to unrelated SBA fraud to a hospital for treatment of "life-threatening" heart problems. Doctors later said he suffered cardiac arrhythmia after being under stress. Mr. Hale, 56, underwent bypass surgery 10 years ago, and doctors said the procedure may need to be redone.
Court officials said Thursday that the trial had been postponed until next Thursday pending a report from the Baptist Medical Center in Little Rock on Mr. Hale's condition.Copyright 1998 News World Communications, Inc.
Reprinted with permission of
The Washington Times.
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