ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, May 29, 1996 TAG: 9605290125
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
DATELINE: LITTLE ROCK, ARK.
SOURCE: ASSOCIATED PRESS
note: lede
In a major blow to President Clinton's hopes of laying Whitewater to rest before Election Day, his former business partners, James and Susan McDougal, and Gov. Jim Guy Tucker were convicted of fraud Tuesday.
Within hours, Tucker, a Democrat who succeeded Clinton as Arkansas' governor, announced his resignation.
A federal jury in the first trial to emerge from the investigation into the Arkansas real estate venture deliberated eight days before convicting all three defendants, despite the president's videotaped testimony as the star witness for the defense.
``At 5 p.m. today, the cover-up began to unravel,'' said Tony Blankley, House Speaker Newt Gingrich's spokesman.
At the White House, Clinton said he feels sorry ``on a personal level'' for his three Arkansas friends. Asked whether the verdict meant the jurors did not believe him when he testified he took no part in discussions about illegal loans, he said: ``I doubt that. I doubt that that's what was going on, but you ought to ask them.''
One juror, Risa Briggs, 41, said, ``President Clinton is a very credible witness, but his testimony didn't really relate to the transactions we were dealing with.'' Asked whether she had seen reason for any further investigation of the president, she said, ``No, I don't think there is enough evidence.''
James McDougal was convicted on 18 of 19 counts of fraud and conspiracy, and Tucker was found guilty on two of seven counts - one each of fraud and conspiracy. Susan McDougal was convicted on all four fraud-related charges against her.
Tucker said he needed to resign the governorship so he could work on his appeals. ``The people of the state should not be put through that,'' he said.
He will be succeeded by Republican Lt. Gov. Mike Huckabee, who is also the GOP candidate for Senate.
Tucker and McDougal were convicted of conspiring to arrange nearly $3million in loans from two federally backed banks, including the McDougals' Madison Guaranty Savings and Loan, via fraudulent appraisals, and using the money for certain business expenses and other improper purposes.
Susan McDougal was convicted of fraud, misapplication of funds and other charges for illegally benefiting from a $300,000 loan made in 1986, when Clinton was governor.
The prosecution's chief witness, former banker David Hale, claimed two years ago that Clinton pressured him to make the loan to Susan McDougal in the mid-1980s, while Clinton was governor. An FBI agent testified that nearly $50,000 of it went improperly to Whitewater transactions.
In videotaped testimony, Clinton denied exerting any such pressure and said he never talked to Hale about money and didn't know about the Whitewater transactions the FBI agent mentioned.
``It's not up to me to make the determination about what the verdicts mean to the Whitewater investigation or President Clinton,'' said the trial's chief prosecutor, Ray Jahn.
White House lawyer Mark Fabiani said Clinton ``had nothing to do with the allegations.''
``As the prosecutor noted in his closing argument, the man occupying the position of the office of the presidency of the United States is not on trial here,'' Fabiani said. ``There've been no allegations of wrongdoing on the part of David Hale directed toward even the president.''
During closing arguments, defense attorneys had argued that the case came down to the word of a crooked banker against that of the president of the United States.
But prosecutors said an overwhelming paper trail - 618 documents, including canceled checks and loan papers, were introduced, none of which implicated the president in any wrongdoing - were enough to convict the defendants even without Hale's testimony.
Indeed, Briggs, the juror, said the jury ``barely took into account'' Hale's testimony. ``There were so many witnesses presented and called by the prosecution that we were able to use all the other witnesses,'' she said.
Whitewater independent counsel Kenneth Starr pronounced the verdict ``a very important vindication of the jury system.''
James McDougal, 55, could get 84 years in prison and $4.5million in fines. His 41-year-old ex-wife faces as much as 17 years behind bars and a $1million fine. Tucker, 52, could get up to 10 years in prison and a $500,000 fine. A sentencing date was not set.
Tucker was convicted for his part in a deal involving the purchase of a water and sewer utility. Hale lent Tucker $150,000 that Tucker used as a down payment for the $1.2million purchase from a subsidiary of McDougal's thrift. Prosecutors said the utility was overvalued and the sale put an $800,000 profit on Madison's books at a time when examiners were closing in.
LENGTH: Medium: 90 lines ILLUSTRATION: PHOTO: headshots of Tucker, J. McDougal, S. McDougal colorby CNB