Whitewater trial nears end

May 13, 1996
Web posted at: 11:20 a.m. EDT

LITTLE ROCK, Arkansas (CNN) -- Closing arguments were to begin Monday afternoon in the federal fraud and conspiracy trial of President Clinton's former Whitewater business partners.

Accused in the case are James McDougal, who managed the failed Whitewater real estate venture in northern Arkansas; his ex-wife, Susan; and Arkansas Gov. Jim Guy Tucker, Clinton's successor in that post.

The three were indicted in August 1995 for allegedly misusing $3 million in federally backed loans obtained before Tucker became governor in 1992.

Tucker and James McDougal are accused of conspiring to defraud McDougal's now-defunct Madison Guaranty Savings & Loan and David Hale's government-backed lending company of more than $2.5 million in loans. Susan McDougal is charged in connection with a $300,000 loan that was never repaid.

There have been 35 witnesses, including Clinton, and 618 exhibits since the trial began March 4. The case is expected to go to the jury on Wednesday.

Clinton not charged

The president is not a defendant, and the Whitewater real estate project, a 230-acre (93 hectares) residential development in which he and first lady Hillary Rodham Clinton were investors, has played only a limited role in the trial.

But in considering some of the charges in the 19-count federal indictment, the jury must decide whether to believe Clinton or Hale, a former Arkansas investment banker who was the prosecution's star witness.

Hale accused Clinton of pressuring him into extending an illegal $300,000 loan to Susan McDougal in 1986. However, Clinton, in videotaped testimony played in court last Thursday, denied the allegations.

"Any suggestion that I tried to get any money from him or tried to keep that a secret or put any pressure on him: These things are simply not true. They didn't happen," Clinton said.

Some charges dropped

A few of the charges against Susan McDougal and Tucker were dismissed by Judge George Howard Jr. The counts remaining against all three mainly involve the misuse of loan funds.

All three defendants rested their cases immediately after Clinton's testimony was played, claiming he refuted Hale's allegations and showed the former banker to be a liar.

James McDougal faces charges of loan fraud in deals surrounding his savings and loan, which collapsed in 1989 and cost taxpayers more than $60 million.

Susan McDougal and Tucker also are accused of fraudulently obtaining illegal loans to finance real estate deals in the mid-1980s.

Whitewater special prosecutor Kenneth Starr has rested his case largely on the testimony of Hale, who owned a small business investment company and testified he made improper loans to the McDougals and Tucker.

In his testimony, Hale admitted several fraudulent transactions other than those to which he had pleaded guilty. He also admitted he lied to the judge who accepted his plea bargain in 1994 and lied again when he was given a reduced sentence of 28 months in jail.

Reuters contributed to this report.

Related stories:

• Both sides rest in Whitewater - May 9, 1996
• President Bill Clinton's Whitewater testimony - May 9, 1996
• Clinton Denies Wrongdoing In Whitewater - April 29, 1996
• Barbour Takes A Jab At Clinton's Whitewater Testimony -- April 26, 1996

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