Grand Jury Indicts Susan McDougal For Contempt
Her attorney calls the latest charges 'piling on'
LITTLE ROCK, Ark. (AllPolitics, May 4) -- Susan McDougal, a former business partner and friend to President Bill Clinton and first lady Hillary Rodham Clinton, has been indicted by a Whitewater grand jury for criminal contempt and obstruction of justice.
The two counts of criminal contempt and one count of obstruction of
justice stem from McDougal's refusal to answer questions in front of the grand jury last week about the first family's business dealings, including a savings and loan check signed by McDougal marked "payoff Clinton."
McDougal's attorney, Mark Geragos, said it is unprecedented for someone who already has served 18 months for civil contempt to be indicted for criminal contempt and obstruction of justice.
"She's probably guilty of contempt, but it's not contempt of the grand jury, it's contempt for this independent prosecutor," Geragos said. "She is not going to be bullied by him ... It's a sophisticated game of chicken. She didn't blink.
"It's nothing more than just piling on," Geragos added. "It's shameful ... It makes me angry, both as her lawyer and an American."
Geragos said McDougal welcomes the chance for a jury trial on a criminal contempt charge since it would allow her to question
the motives and alleged conflicts of interest of Independent Council Ken Starr and his staff.
Geragos said Starr and Hickman Ewing, a lawyer on Starr's staff, would be the first two witnesses called in the contempt trial.
McDougal was taken, in handcuffs and chains, into the U.S. District
courthouse in Little Rock on April 23, but she refused to answer questions. Monday's indictment against McDougal, obtained by The Associated Press, includes a partial transcript of McDougal's appearance.
During the session, she was questioned about a $5,081.82 check marked "payoff Clinton," the McDougal had signed over to the Mackson Guaranty Savings & Loan. The S&L had been owned by McDougal and her late ex-husband James.
The August 1983 check was drawn from a McDougal account and paid to Madison Guaranty, the court record said.
"Since your last appearance before the grand jury in September 1996 we have been able to obtain a copy of this check and confirm it's your handwriting on the check. You signed this check, correct?" a prosecutor for Starr asked.
"May I go out and see my attorney?" McDougal responded.
The indictment does not spell out what prosecutors thought the money was used for, but indicated they were interested in it because it related to Clinton's 1996 videotaped testimony. The president testified under oath that he never received a loan or had financial dealings with the failed S&L.
The Little Rock grand jury expires on Thursday and Starr has indicated he would not seek its extension.
Starr spokesman Charles Bakaly said the Office of the Independent Counsel has made several requests through the president's lawyers that the president urge McDougal to cooperate with the grand jury probe.
"We made those communications through the White House counsel's office repeatedly and that request was rejected," Bakaly said.
It's vital for prospective witnesses to say what they know so investigators can determine if crimes were committed, Bakaly told reporters when he announced the indictment.
McDougal has said she would not answer questions about the Clintons'
business dealings because Starr wanted her to lie.
In a statement, White House Counsel Charles Ruff reacted strongly
to Bakaly's comments about the president.
"The president has always urged everyone to tell the truth," Ruff said. "At the same time, he understands that it is not appropriate for him to intervene personally in this matter.
"Any suggestion by the Office of Independent Counsel or its public
relations advisor that the president should do otherwise is reckless and
irresponsible."
Clinton's personal lawyer, David Kendall, issued a statement saying
Bakaly's suggestion that Clinton had "injected" himself improperly into
McDougal's case were "wholly false."
Said Kendall: "The Independent Counsel has sought, again, to prosecute Ms. McDougal, and this indictment will now be tried to a jury. Independent Counsel Starr, through his public relations officer, has seen fit to assert that the president, by his public statements, has somehow improperly 'injected' himself into the investigation of Ms. McDougal. This claim is wholly false. The president's statements have been both accurate and appropriate. Ms. McDougal has at all times been represented by her own counsel. It is for the public to judge what the Independent Counsel's motivations may be."
McDougal recently completed an 18-month jail sentence for civil contempt relating to her earlier refusal to testify. She is serving a prison sentence for her 1996 conviction on fraud charges relating to a failed savings and loan that was the center of the Whitewater investigation.
Whitewater prosecutors had told McDougal last week she faced indictment if she refused to testify, her brother said.
William Henley, McDougal's brother, told The Associated Press his sister got a letter from prosecutors about possible charges last Thursday.
"She was threatened that she would have to talk by midmorning [Monday]
or those things would be done," Henley said in a telephone interview with the AP. "I think they are going to be done."
Her brother said if she is indicted, she wants to go to trial and present evidence about allegations that Whitewater witness David Hale got financial aid from critics of Clinton.
"I think it [a trial] is going to give us an opportunity to
show what a tainted investigation this was .... If it will give us
the opportunity bring evidence forward and to bring witnesses
forward, Susan is more than willing to go through this," Henley told the AP.
The first lady is unlikely to be indicted by the Little Rock Whitewater grand jury in its final week, according to sources familiar with the investigation.
Sources say Starr would have to be certain of a conviction before he would proceed against the first lady, a standard some call impossible to reach.
But Mrs. Clinton has been a major focus of the probe. The grand jury viewed five hours of taped testimony by the first lady as recently as last week.
Of particular interest is legal work for Whitewater partners Jim and Susan McDougal, work Mrs. Clinton did while employed by the Rose Law Firm.
Sources say it is more likely the grand jury might indict Webster Hubbell, Mrs. Clinton's former law associate and former Justice Department official. Sources say the grand jury has focused on money -- nearly $700,000 -- that Hubbell made after he left the Justice Department from work arranged for him by many Clinton friends. The main questions are, was it hush money intended to impede the Whitewater investigation, and were other people involved?
Hubbell was indicted by the Washington grand jury last week on tax fraud charges connected with the payments.
Starr's investigation continues, but appears this week will conclude the Little Rock portion of the probe. It is possible, but not at all likely that Starr could ask for a new grand jury in Little Rock.
In Washington, two sources familiar with Starr's investigation tell CNN that close Clinton friend Vernon Jordan and the president's private secretary, Betty Currie, will appear before the Washington grand jury this week.
That grand jury is investigating President Bill Clinton's relationship with former White House intern Monica Lewinsky and whether the president lied under oath about the nature of that relationship.
Jordan is a key player in the investigation. He arranged for Lewinsky to see a lawyer after she was subpoenaed in the Paula Jones sexual harassment suit and later found Lewinsky a job in New York with Revlon. Starr wants to know if Jordan was trying to help Clinton buy
Lewinsky's silence.
Currie also is a central figure in the investigation. The president
contends in a sworn affidavit that Currie is the person Lewinsky was visiting at the White House after she was transferred to a job at the Pentagon. The president also asserts it was Currie who asked Jordan to help find Lewinsky a job. Finally, it was Currie who took possession of certain gifts the president gave Lewinsky, after Lewinsky was subpoenaed by Jones' attorneys.
CNN's Bob Franken and The Associated Press contributed to this report.
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