APRIL 12, 1996
Margaret Warner is joined by Sara Fritz of the Los Angeles Times to take a close look at the Whitewater Tucker trial now going on in Arkansas.
MARGARET WARNER: A trial that's now underway in Little Rock, Arkansas, has been the latest point of focus in the complicated tale known as Whitewater. The defendants are the present governor of Arkansas, Jim "Guy" Tucker and Susan and James McDougal, President and Mrs. Clinton's former partners in the failed Whitewater real estate venture. They face a 21-count indictment accusing them of fraud and conspiracy in their use of $3 million in government-backed small business loans. The trial began last month, and for the past two weeks, the jury has heard from the key prosecution witness, David Hale, a former municipal judge. We get an update now from Sara Fritz, a reporter for the Los Angeles Times who's been covering the trial. Thanks for joining us, Sara. We just said they've been accused of fraud and conspiracy, but what exactly is it that Jim "Guy" Tucker and the McDougals are accused of doing?
SARA FRITZ, Los Angeles Times: (Little Rock) Margaret, according to the government, these three men, Tucker, Hale, and McDougal, sat down at a kitchen table one night in mid 1985 and came up with a complex financial scheme that eventually would be valued at about $300 m--or $3 million, and would defraud both the savings & loan owned by McDougal and the government- backed Small Business Investment Corporation owned by Hale. Essentially, what they did was take money from McDougal's savings & loan and pass that money through accounts in both institutions, thus, to fool the auditors, make the institutions both look solvent, and then they drained some of that money out for their own investments, mostly in real estate.
MARGARET WARNER: And who was it who was going to benefit from this scheme, just the three of them?
SARA FRITZ: Well, the beneficiaries are primarily McDougal, Tucker, and Hale, and some of their business associates here in Little Rock, the people that Hale likes to call the political family.
MARGARET WARNER: I see. And how did David Hale come to be now testifying against Tucker and the McDougals?
SARA FRITZ: Well, in 1993, Hale was finally caught by the SBA. They sent a, a federal agent down here to search his office, and he knew he was in trouble. And so he went to the government with this story and used this story to bargain for leniency to essentially plea bargain on his own case.
MARGARET WARNER: And then how is the President, how does the President figure into this in terms of the prosecution's case?
SARA FRITZ: Well, Hale says that, that Clinton was a part of this scheme, although he is not charged. Hale recalls a night when he went out to a land sales trailer out in South Little Rock, met with McDougal and then Governor Clinton, and he was pressure to make what would eventually be a $300,000 loan to Susan McDougal. And that loan would be improper not because the McDougals failed to pay it, which they did, but because when Hale filed the application for the loan, he lied about the purpose of the money. It's probably a good idea here to mention that this loan is what connects all of this to Whitewater. Whitewater was the real estate development that the McDougals and the Clintons shared, and for a time, some property that was purchased with this money was briefly in the Whitewater account.
MARGARET WARNER: Let me, let me interrupt you there. I'm sorry, but let's go back to Hale's testimony just on this particular case. What were the most telling points he did manage to make against Tucker and the McDougals?
SARA FRITZ: Well, I think--
MARGARET WARNER: This meeting and anything else?
SARA FRITZ: This, this was definitely the centerpiece, these two meetings that I've described, one at the kitchen table and the other at the trailer. His impact on this, I think, is best understood by looking at this as kind of two trials. One is the trial in the courtroom in which the three defendants are being tried, and Hale's credibility in that trial was undermined considerably by the defense. But there's the other trial which is in the court of public opinion in which the governor, now the President of the United States, Bill Clinton, is being tried, and I think Hale by mentioning the governor, then governor, now President, over and over, succeeded in creating headlines and making the Whitewater story, reviving the Whitewater story again.
MARGARET WARNER: So now when the defense attorneys got their shot at David Hale, what was their main line of, of argument? What did they try to bring out to impeach him?
SARA FRITZ: Mainly, they used an interview that Hale did in 1989 with the FBI at a time when McDougal was under investigation. And in that interview, Hale told none of these details. He told none of this story. He talked about all of these transactions, and the story was very different. In addition, they used transcripts of interviews he'd done with the TV networks showing that there were enormous inconsistencies in his story, and essentially, they succeeded in portraying him, in their words, as a liar and a con man.
MARGARET WARNER: And did they also try to impeach what he was saying about the President, President Clinton?
SARA FRITZ: Yes. And in that regard, they tried to prove that his allegations were political. They noted that after the federal agents raided his office in 1993, Hale immediately called a man named Justice Jim Johnson here in Arkansas, who's noted for his opposition to Clinton, and Johnson put Hale in touch with Citizens United, which is an outfit that has done a lot of anti- Clinton propaganda, and it was with their help that he came up, he developed his story.
MARGARET WARNER: So where does this trial go from here, the trial against Tucker and the McDougals?
SARA FRITZ: We have a couple of more weeks of prosecution witnesses, most of them minor witnesses, and then the defense will begin to put on its case.
MARGARET WARNER: And is that when the President will be videotaped--
SARA FRITZ: Right.
MARGARET WARNER: --in testimony as sort of a lead defense witness?
SARA FRITZ: Right. The President's videotaped testimony will be the beginning and the centerpiece of the defense. You know, the President denies that he was involved in this at all. He's called it a bunch of bull.
MARGARET WARNER: And finally, Sara, going back to the larger Whitewater investigation where the President is a target, how does this case connect, or what will the outcome of this case mean to the larger Whitewater investigation?
SARA FRITZ: Well, the government is hoping that if they win a conviction here these three defendants will then begin to cooperate with them and tell them things they want to know about President Clinton's financial misdeeds or alleged misdeeds, and obviously, if they win this case, Whitewater goes on, but if they lose, these people are not going to cooperate.
MARGARET WARNER: Well, Sara, thank you very much. Thanks for helping us shed at least a little light on this complicated picture.
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