LITTLE ROCK, Arkansas (AllPolitics, April 2) -- Called by the defense in Susan McDougal's trial to bolster its charge of mistreatment by Independent Counsel Ken Starr, Julie Hiatt Steele testified Friday that she felt pressured to back up the story of a presidential accuser and was indicted when she refused to lie.

Steele said that she was indicted on charges of obstruction of justice and making false statements after she challenged part of the story of her onetime friend, former White House volunteer Kathleen Willey.

Willey has been a focus of the Monica Lewinsky portion of Starr's investigation, looking into whether there was an attempt to illegally cover up Willey's allegation that President Bill Clinton made an unwanted sexual advance toward her in the White House in 1993. Steele claims that Willey asked her to lie by saying that Willey told her previously about the alleged encounter with Clinton.

Steele, who goes on trial in early May, insisted she told the truth regarding Willey in her sworn testimony before two federal grand juries. She said she could have saved herself $500,000 in legal bills "by changing my story" to support Willey's version of events.

The only time she has lied about the case, Steele said, was to a Newsweek reporter investigating the Willey matter and that she "felt horribly guilty" afterwards.

"I'm not going to lie anymore," Ms. Steele said under questioning by a defense lawyer. She was composed and assertive during her two hours on the witness stand.

Steele also testified that in November 1998, after her grand jury appearances, she was "invited to a secret meeting at the Office of the Independent Counsel to clarify my testimony. I believed I was to support Kathleen Willey's version of the story."

Were you able to do that? asked McDougal attorney Mark Geragos.

"I couldn't do it. I left the meeting in tears. I didn't know anything," she replied.

McDougal is on trial for contempt and obstruction of justice charges stemming from her refusal to answer questions before Starr's Whitewater grand juries. McDougal said she did so because she was afraid Starr would charge her with perjury if she didn't say what he wanted.

Her lawyers are trying to prove she was justified because of prosecutorial abuse. Steele, they believe could be important to their case.

But prosecutors said they have evidence that Steele was indeed told by Willey about the alleged encounter with the president and that Steele repeated the information to others.

Prosecutor Julie Myers asked Steele whether she had also told the story to the National Enquirer and TIME magazine. Steele denied selling the story but admitted selling a photograph of Willey and the president to the publications. She said she was embarrassed about it but needed the $9,000 for her son's special-needs schooling.

Steele's testimony was allowed by U.S. District Judge George Howard in a surprise decision that threw the prosecution for a loop. After hearing a preview of Steele's story, the judge ruled Tuesday that she could testify regarding what he called the "modus operandi" of Starr and his deputies.

Prosecutors fought against Steele's appearance, saying it would set a "dangerous precedent" making it easier for the defense to put the independent counsel on trial instead of McDougal.

Steele is the only witness known to be under indictment by Starr's grand juries looking into the Lewinsky matter.

The Little Rock prosecutors trying McDougal spent Thursday huddled with their Alexandria counterparts, trying to get up to speed on the Steele case.

Though Steele has been considered a minor player in the Lewinsky drama, Starr's prosecutors questioned her brother, one of her daughters, her former attorney and her neighbors and friends before she was indicted. Steele also told the judge that she suspected Starr's office investigated the adoption of her son, now 8.

A grand jury subpoenaed Steele's daughter's boyfriend and Steele said they even "asked if he had sex with me." The judge ordered jurors to disregard that remark.

The McDougal trial is in its fourth week. It is expected to go to the jury next week.

CNN's Bob Franken and the Associated Press contributed to this report.

Friday, April 2, 1999

• McDougal trial: Steele says she was punished for telling the truth
• Bush under growing pressure to take stand on national issues
• Gore raises $8.9 million
• Crossfire transcript: Sen. John McCain calls for resolve in Yugoslavia
• First chapters: 'Ol' Strom: An Unauthorized Biography of Strom Thurmond'
• President Clinton's Easter message
• Gore campaign mulls poll problem
• Recent poll results about Al Gore

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