Reprinted from The Washington Times , 5am -- May 5, 1998
McDougal, still silent, indicted again
By Jerry Seper
THE WASHINGTON TIMES
Susan McDougal was indicted yesterday by a federal grand jury for her refusal to testify about an illegal $300,000 loan she received and about a check from a failed Arkansas thrift that contained the words "Payoff Clinton."
The 12-page indictment named McDougal on two counts of criminal contempt and one count of obstruction of justice.
The former business partner of President Clinton and Hillary Rodham Clinton was accused of failing to answer questions before the grand jury on two occasions on whether Mr. Clinton knew about the loan, if he lied about it in the first Whitewater trial and what the "payoff" check represented.
The indictment, handed up in U.S. District Court in Little Rock, Ark., came after the White House refused requests by independent counsel Kenneth W. Starr to intercede in the case and encourage McDougal to testify before the grand jury.
Charles W. Bakaly III, spokesman for Mr. Starr, said that the independent counsel's office repeatedly asked Mr. Clinton to urge his former business partner to testify, but that the requests were rejected.
"We asked that the president urge Ms. McDougal to testify truthfully to the grand jury, and that was declined," he said. "We made those communications to the White House counsel's office repeatedly, and those requests were rejected.
"We are trying through every possible means to get complete and truthful information from people so we can evaluate the facts and determine what actions, if any, should be taken and what crimes, if any, should be prosecuted," he said.
McDougal, 43, served 18 months in jail on a civil contempt citation after her initial 1996 refusal to testify before the grand jury. She was named on two counts of criminal contempt of court and one count of obstruction of justice. If convicted of all charges, she faces up to 20 years in prison.
The indictment said McDougal refused during a Sept. 3, 1996, appearance before the grand jury to answer questions on whether she had ever discussed the loan with Mr. Clinton and whether he had testified truthfully during the first Whitewater trial when he said he knew nothing about it.
In a second appearance on April 23, 1998, the indictment said, she again refused to answer the questions and also declined comment on the Aug. 1, 1983, check for $5,081 drawn on James McDougal's trustee account, made payable to Madison Guaranty Savings and Loan Association and signed by Susan McDougal. The words "Payoff Clinton" were written in the notation section of the check.
When asked about the check, she said: "I won't answer your questions you ask me because I believe your whole office is conflicted and that you should not be investigating this."
Pressed by associate independent counsel Julie Myers for an answer, McDougal -- after consulting her attorney, who was outside the grand jury room -- said: "I would love to tell you. I would love to tell you everything I know about it, but not with these people running the investigation."
Miss Myers then said, according to the indictment, "We have more checks we could show you if you would like to see those." McDougal responded: "I'll see anything you got. I won't answer your questions."
McDougal's attorney, Mark Geragos, angrily denounced the indictment, saying his client had no contempt for the grand jury but was contemptuous of Mr. Starr and his top deputy, W. Hickman Ewing Jr., who has headed the Arkansas phase of the Whitewater inquiry.
"It's a sophisticated game of chicken. She didn't blink. We plan on going to trial, and my first two witnesses will be Starr and Ewing," Mr. Geragos said.
McDougal's brother, William Henley, said Mr. Starr's office, in a letter, had given his sister until noon yesterday to testify or be indicted in the case. He said she decided not to appear before the grand jury.
The grand jury wants to know if Mr. Clinton lied when he said under oath in the first Whitewater trial that he knew nothing of the Small Business Administration loan McDougal received in 1986. Proceeds from the loan were used to buy property for Whitewater Development Corp., the Arkansas real estate venture jointly owned by McDougal; her late husband, James; and the Clintons.
The McDougals, along with former Arkansas Gov. Jim Guy Tucker, were convicted on 24 of 30 fraud and conspiracy charges in the first Whitewater trial in 1996. James McDougal later became a cooperating witness and told prosecutors Mr. Clinton was aware of the loan.
The president has denied the accusations and testified on videotape in the first trial that he was unaware of the loan and had never spoken to anyone about it.
Susan McDougal is serving a two-year sentence on her conviction in the first trial and is awaiting trial on separate embezzlement charges involving Los Angeles symphony conductor Zubin Mehta.
The grand jury is scheduled to expire Thursday after two years of work. In recent weeks it has focused on McDougal's pending testimony and on questions concerning first lady Hillary Rodham Clinton's and Webster L. Hubbell's involvement in a real estate project near Little Rock.
The grand jury wants to know if Mrs. Clinton and Mr. Hubbell, indicted last week on tax charges by the Whitewater grand jury in Washington, wrote an option agreement that federal regulators said facilitated the payment of a questionable $300,000 commission to Mr. Hubbell's father-in-law, Seth Ward.
Mr. Starr has not said if he intends to ask a judge to extend the jury, although he has told reporters he was looking to wrap up the Arkansas phase of the Whitewater investigation "as quickly as possible."Copyright 1998 News World Communications, Inc.
Reprinted with permission of
The Washington Times.
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