Clinton Lobby Efforts for Wealthy Backer Told : Campaign: Governor reportedly helped supporter, targeted in drug probe, on state bond contract.

Gov. Bill Clinton, front-runner for the Democratic presidential nomination, personally lobbied to award a multimillion-dollar state bond contract that benefited a wealthy political backer publicly known to be the target of a cocaine investigation, according to Democratic state officials and confidential FBI documents obtained by The Times.

The bonds were for a new state police radio system. Clinton’s backer, millionaire entrepreneur Dan R. Lasater, and his partners, won the contract to sell the bonds in 1985. The contract was worth $750,000 to the partnership.

After pleading guilty to federal drug charges of cocaine possession and distribution, Lasater was sentenced in December of 1986 to 2 1/2 years in prison. FBI documents show that he admitted to federal investigators that he used cocaine and gave it away to his friends, employees and business associates on more than 180 occasions.

After Lasater’s sentence was completed, Clinton granted him a state pardon in November of 1990. Before being released on parole, Lasater served six months in prison, four months in a halfway house and two months under house arrest. Clinton’s state pardon restored certain of Lasater’s rights as a citizen of Arkansas, but it had no bearing on his federal rights.

In a written statement Sunday night, the Clinton campaign said that the governor did not direct the bond business to Lasater’s firm and described the pardon as a routine matter that had been unanimously recommended by the state parole board.

The bonds, worth $30.2 million, paid for modernization of the Arkansas state police communications system. After Clinton’s lobbying efforts in the spring of 1985, three key Democrats in the Arkansas Legislature dropped their opposition to the bond contract. A big concern, the legislators say, was that they did not want the state to go into debt.

One of the legislators, Lloyd George of Ola, Ark., told The Times that Clinton summoned him to the governor’s office. “He talked to me,” George recalls, “and said, ‘Lloyd, why aren’t you going along?’

“I said, ‘I don’t know--it costs so much. . . .’ ”

During the meeting, George says, “I went over it with him--and he really sold me on it.”

The FBI documents, obtained by The Times from files developed during the Lasater drug investigation, quote one of Lasater’s partners, a retired Democratic state senator, crediting Lasater’s political support for Clinton for winning the bond contract. The partner, George E. (Butch) Locke, said in a sworn statement to FBI agents: “‘Because Lasater & Co. backed the right individual in Gov. Clinton, Lasater & Co. received the contract.”

In February, 1985, three months before Clinton lobbied the lawmakers, a boyhood friend of Clinton’s half-brother, Roger, testified in U.S. District Court in Hot Springs, Ark., that state police had named Lasater as a prospective target in a cocaine sting. The testimony came from Sam Anderson, who was convicted at the trial of cocaine distribution charges. His testimony and testimony by Roger Clinton, the key prosecution witness, was published by newspapers in Little Rock, the state capital.

A source in law enforcement at the time said the courtroom revelation, coming when it did, threatened to undermine Lasater’s bid for the bond contract. The source said that Col. Tommy Goodwin, the governor’s director of state police, who was responsible for managing the modernization project, was troubled and ordered an investigation of Lasater.

In their response to questions Sunday night about the award of the bond contract, Clinton’s campaign said “the governor had no role in the review of the proposals or the vote. The governor did not ‘steer’ the business to Lasater’s company.”

The statement, which came in response to questions from The Times, did not address Clinton’s personal lobbying of the legislators to salvage the bond issue. But the statement downplayed the significance of the Legislature’s vote, saying it was only an advisory opinion.

The statement characterized Lasater’s pardon as conditional and said: “A conditional pardon is routinely signed by the governor if there has been no dissent on the state parole board in making its recommendation. There was no discussion by the governor or his staff with the Pardon and Paroles Board.”

Lasater refused to comment when contacted by The Times.

At the time of the bond contract, Lasater had done both political and private favors for the governor. The entrepreneur, also a prominent thoroughbred horse racing figure, told the FBI that he had once given Roger Clinton a job in his Florida stables. In addition, Lasater told the FBI that he loaned the governor’s brother $8,000 to pay off cocaine debts in the summer of 1984 after Roger Clinton said cocaine dealers were “putting the heat on him and something might happen to his brother and his mother.”

Clinton, who told reporters in 1986 that Lasater was “a substantial (political) contributor and supporter of mine,” received $3,000 from Lasater for his 1986 gubernatorial campaign. The Clinton staff said it believed the governor had flown on Lasater’s plane three or four times between 1982 and 1985.

In addition, according to state and federal records, one of Lasater’s financial partners donated $2,000 to the governor’s inaugural fund. In the spring of 1985, while the matter of the bond contract for the state police communications system was in the Legislature, Lasater provided his jet to transport celebrities to a charity fund-raiser in Little Rock promoted by the governor’s wife, Hillary.

The need for a modern police communications system became apparent in 1984, when an Arkansas state police trooper was slain in an area of the state beyond the reach of its 1940s-vintage radio system.

Goodwin, the state police director, flew to the trooper’s funeral with Gov. Clinton and spoke of the need for a new system. The question was how to finance it. As soon as a bond issue came under consideration, Lasater & Co. began efforts to obtain the bond sales contract.

Lasater Vice President Michael Drake arranged an alliance with E. F. Hutton and Little Rock-based T. J. Raney & Sons. That alliance gave the Lasater group substantial financial and political muscle in a contest that developed with Stephens Inc., the Little Rock investment house that has dominated Southern finances and gotten a lion’s share of the state’s bond business for years.

One former top state Democratic official familiar with the contest between Lasater and Stephens said a reason that the governor favored the Lasater group was because “Jack Stephens supported (Republican) Frank White big-time when he beat Clinton” in the 1980 gubernatorial race and again when Gov. Clinton came back to narrowly defeat White.

On May 10, 1985, the Arkansas state police commission, whose members are appointed by the governor, voted 4 to 2 to award the bond sales contract to the Lasater partnership. One of those who voted no, Gene Raff, said he objected because of the presence of E. F. Hutton in the partnership.

Hutton had recently pleaded guilty to a multimillion-dollar check-kiting scheme in New York.

A week later, a vote of the Arkansas Legislative Council, a joint committee of House and Senate members, fell short of endorsing the award. The council’s endorsement was not a legal necessity--but political considerations made it a practical necessity.

With the project hung up, the governor’s staff met attorneys for the Lasater group and representatives of the police commission. It was at this point that Gov. Clinton entered the conflict.

In addition to Rep. George, former Rep. William Ramsey also got a summoning note from the governor. Ramsey says he appeared in the governor’s office along with his colleague.

“He just put a little more urgency and a little bit more of his personal interest--and conveyed that to the legislative council. . , “ Ramsey says. “He got personally involved and convinced us it was the right thing to do.”

Ramsey says one issue was whether to use tax money to finance the project or to go into debt with the bond issue. He says this was the first time that Arkansas considered using bonds for something other than brick-and-mortar projects, such as school buildings.

“Arkansas was a conservative state,” Ramsey says, “and a lot of members . . . thought we ought to pay for it as we go--and not go the bonding route.” He says Gov. Clinton argued forcefully that, “if we waited until we could budget enough general revenues to do it, it wasn’t going to happen.”

A third Democrat who said he was persuaded by the governor to change his vote credited Gov. Clinton’s personal involvement with securing the council’s approval. “I remember he lobbied all of us on this,” says Bob Newman, a representative from Smackover, Ark.

“Yes, he was instrumental. He was notorious for calling you at night--10 and 11 o’clock at night.” Newman said he was among those lobbied on the phone. He said Gov. Clinton persuaded him to change his vote by assuring him that the new radio system would cover every corner of Arkansas.

In June, when the council voted a second time on the project, there was no opposition.

As far back as February, the Sam Anderson trial had publicly revealed law enforcement interest in investigating Dan Lasater and his drug use.

State and federal documents describe widespread cocaine use among Lasater, his employees, business associates and friends. They cite parties at which vials of cocaine were distributed as party favors; ashtrays filled with the white power were arrayed among the hors d’oeuvres, and cocaine was served aboard corporate jets.

The documents show that this activity prompted the Drug Enforcement Administration to list Lasater among those it had targeted for investigation as early as 1983.

The Clinton campaign statement Sunday said Goodwin, the state police director, had “checked with various law enforcement agencies at the time (1985) the financing arrangements were being determined and found that no investigation of Lasater was being conducted.”

In 1984, Roger Clinton was arrested after he sold cocaine to a state undercover agent. The arrest came during a sting, which had been approved by the governor--who was aware that his brother had cocaine problems and was a target of a state and federal task force of investigators.

Roger Clinton pleaded guilty to conspiracy to distribute cocaine. His older half-brother, the governor, accompanied him to court. Afterward, Bill Clinton told reporters outside the courthouse: “I hope the publicity this case received will discourage other young people from involvement with drugs and will increase public awareness of the staggering dimensions of the drug problem in our state and nation.”

After his guilty plea, Roger Clinton was sentenced to two years in prison. In exchange for a reduction in his sentence, Roger Clinton agreed to testify against his boyhood friend, Sam Anderson, an attorney, when Anderson went on trial in Hot Springs in February, 1985.

During his testimony, Roger Clinton said that Lasater had loaned him the $8,000 after the younger Clinton had gotten “in deep trouble with drug dealers.” Anderson, testifying in his own defense, said that Roger Clinton had told him that he had been approached by state police investigators and that he was “very, very frightened . . . totally frightened to death.’ ”

He said Roger Clinton informed him that the investigators wanted to “set up” three people, including Lasater, for drug arrests.

Clinton aides said Sunday night that they did not know whether the governor was aware that Lasater had hired his brother.

A state police investigator interviewed Lasater at that time--while the police commission was still considering bond proposals. Goodwin, the state police director, says he does not recall assigning the officer to conduct the interview.

However, according to the state and federal documents, Lasater told Goodwin’s investigator during their interview that he had used cocaine. In spite of this, neither police officials nor anyone else in state government, including the governor, apparently raised questions about Lasater’s proposal to sell the bonds to finance the police radio system.

Six months after Lasater & Co. won the bond contract, Dan Lasater became the target of a joint federal-state task force investigating cocaine distribution in Little Rock. During this investigation, which continued through the spring and summer of 1986, Goodwin says he briefed the governor from time to time.

Goodwin says he did this because of the governor’s curiosity. “He did not have a special interest in the case . . . but it was the talk of the town.”

The Clinton campaign said Sunday night: “Gov. Clinton did not monitor the investigation and was not briefed by Col. Goodwin, according to what Col. Goodwin told us in a conversation this evening. There is no recollection by the governor’s staff of any knowledge of the investigation.”

Roger Clinton was named an unindicted co-conspirator and testified against Lasater during grand jury proceedings.

In October of 1986, Lasater was indicted, along with two of his partners, on drug charges. Lasater was charged with possessing and distributing cocaine; his partners pleaded guilty.

He and his associates were “blatant in their cocaine use,” then-U.S. attorney George Proctor said.

As part of his guilty plea, Lasater agreed to make detailed statements about his cocaine use and the people he gave cocaine to during parties, business meetings and as part of his business entertainment.

He listed as many as 180 instances.

Federal and state documents report that Lasater said he “maintained his supply (of cocaine) in his pockets and even snorted cocaine at his office.”

In his application for a pardon, Lasater said that the cocaine was used in social situations, and he compared it to “paying for dinner and drinks for my friends . . . .

“I shared my success with them in that manner.

“If we were in a social setting and cocaine was available, anyone who wanted to could participate . . . . I never sold cocaine, ever.”

Lasater’s application noted that he sought the pardon to restore his rights to carry firearms needed to teach his young sons “the skills of the woods.” A state pardon is necessary before any convicted felon can apply to federal authorities for a firearm permit. Clinton’s parole board was unanimous in recommending that the governor grant the pardon.

He did so.

State Securities Commissioner Joe Madden told The Times that Lasater’s pardon would be a positive factor if he reapplied for the securities trading license he forfeited after his felony drug conviction.

“A pardon is something the commission would have to look at,” Madden said. A prominent Arkansas attorney said the pardon could be “worth big bucks to Lasater” by giving him renewed access to various state-regulated licenses useful in his business enterprises.

Times staff writers Richard E. Meyer, Douglas Frantz, Robert Jackson, Patrick McDonnell and Ronald J. Ostrow contributed to this story.