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Meanwhile, Back In Arkansas...

By Eric Pooley

TIME magazine 4-13-98

(TIME, April 13) -- Remember Whitewater? Hacking through that thorny bramble of failed land deals and shady bank loans was supposed to be Ken Starr's big mission. But since January, it has often seemed that the independent counsel, in his zeal to prove the President tried to cover up extramarital sex, had forgotten all about Arkansas. Now Starr appears ready to close up shop in Little Rock. And there's no sign that his effort--which will have consumed four years and as much as $50 million when all is said and done--will result in any charges being filed against Bill or Hillary Clinton.

Starr has said that when the term of his Little Rock grand jury expires on May 7, he almost surely won't impanel another one. The grand jury has not brought an indictment in two years, and sources familiar with the investigation say just one is in the works. Starr is said to be making another run at Clinton's pal Webster Hubbell, this time on tax charges. The problem is, Hubbell didn't provide any useful testimony in 1994, when Starr convicted him of bilking clients and partners at the Rose law firm. He isn't any more likely to do so now. And Hubbell isn't the only one who has stymied Starr. Clinton's former Whitewater partner Susan McDougal has refused to cooperate. The Clintons have had their memory lapses. And Starr has failed to turn little fish against big ones. His Whitewater endgame may amount to nothing more than a final bash at Hubbell, a scathing report on the Clintons and a stiff march into the sunset.

Starr's last-gasp witness was former Arkansas Governor Jim Guy Tucker. Already convicted for his role in one Whitewater scheme, Tucker agreed in February to cooperate with Starr's office and plead guilty to another minor charge. Some Clinton watchers thought Tucker's cooperation could devastate the President, but sources tell TIME that Tucker is not giving Starr enough to make a case against Clinton.

The prosecutor was hoping Tucker could corroborate a central allegation against Clinton: that in 1986 Clinton pressured former judge David Hale to make an illegal $300,000 loan to Susan McDougal. That allegation came from Hale, a convicted felon whose credibility took another beating last month when published reports accused him of receiving payments from right-wing Clinton haters. Clinton's other Whitewater partner, Jim McDougal, at first denied the allegation, then confirmed it--but his credibility was no better than Hale's, and he died last month in prison. Starr can't build a case around the Hale loan unless Tucker confirms Clinton's role in it. And sources familiar with Tucker's testimony say he won't do it. Though no friend of Clinton's--the two have been rivals for decades--Tucker can't or won't finger Clinton for anything. Which leaves Hillary.

Tucker's first day of secret testimony, March 18, was devoted to a six-hour tour of the Clintons' real estate history. Starr apparently hoped he would provide more details about Hillary's role in a house-of-cards residential development called Castle Grande, which Jim McDougal financed through his savings-and-loan, Madison Guaranty. Federal regulators called Castle Grande a sham. After earning $2 million in commissions and fees for McDougal's associates, it collapsed in 1989 (cost to taxpayers: $4 million), helping trigger the $50 million failure of Madison. In sworn statements to federal regulators, Hillary said she recalled doing little or no work for Castle Grande. In 1988 Castle Grande records were destroyed in what Hillary and her Rose law colleagues later called a housekeeping effort. In 1996 her billing records for the deal, which Starr had sought for two years, turned up in the White House residence; they showed that Hillary had billed at least 30 hours of work on Castle Grande. Her lawyer said that she had known the project by another name and that she was not involved in any fraud.

Malodorous as all this may be, it is not likely to add up to a case. Even if Tucker had damaging stories to tell about Hillary's role in the project, the First Lady cannot be prosecuted today for what she did in the mid-1980s because the federal statute of limitations has run out. That leaves a perjury or obstruction case against her for losing records and telling falsehoods to the FDIC or grand jury, but Starr appears to have backed away from that idea. And though the prosecutors questioning Tucker focused on Hillary's Castle Grande work, according to a source familiar with the session, "they are more interested in writing a book than bringing an indictment."

That book--the report Starr will eventually present to Congress--will contain a chapter on the further adventures of Hubbell, the former Associate Attorney General who has already spent 18 months in prison. Starr has tried to establish that when Clinton loyalists lined up some $700,000 in contracts for Hubbell in 1994, just after he resigned from the Justice Department and before he was indicted, the payments amounted to hush money. That investigation has also led nowhere, but Starr appears ready to go after Hubbell again, this time on tax charges relating to some of the $700,000. The first time Starr nabbed Hubbell, he hoped that Clinton's crony could lead him up the ladder. Now he knows that won't work. When it comes to Starr's case against the Clintons, very little ever does.

--Reported by S.C. Gwynne/Little Rock and Viveca Novak/Washington
In TIME This Week

Cover Date: April 13, 1998

The Presidents: History's Judgment
Day Of Deliverance: Judge Tosses Out Jones Case
Interview With President Clinton: "It was in the best interest of the country"
Meanwhile, Back In Arkansas...
Washington Diary: Paula, We Hardly Knew Ye
Viewpoint: What Paula Has Taught Us
McCain's Big Tobacco Deal
Whitewater: Hale Storm Rising
The Strange Case Of The Spy In The Winnebago
The Notebook: Webb Hubbell Back In The Spotlight


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