Indictment Bid in Whitewater Expected Soon

Special counsel Kenneth W. Starr is expected to seek indictments soon against a number of key players in the financial scandal linked to President Clinton’s investment in the Whitewater real estate development, according to sources close to the case.

Starr is said to be preparing wide-ranging indictments for a special grand jury in Little Rock, Ark., against some well-known political figures, including Gov. Jim Guy Tucker of Arkansas and former U.S. Associate Atty. Gen. Webster L. Hubbell, who was once a partner with First Lady Hillary Rodham Clinton in the Rose Law Firm in Little Rock.

Also virtually certain to be named, according to these sources, are Clinton’s partner in the Whitewater deal, James B. McDougal; McDougal’s former wife, Susan, and a number of lesser-known employees of the failed Madison Guaranty Savings & Loan, which McDougal once owned.

So far, sources said, there is no indication that Starr is considering bringing indictments against either the President or First Lady Hillary Rodham Clinton. But coming on the heels of a GOP election sweep, the indictments would add to Clinton’s political problems by refocusing attention on allegations previously made public that he benefited from McDougal’s efforts to fund their joint real estate venture in the Ozarks with cash from the savings and loan.

Already, Whitewater and related activities have caused considerable embarrassment for the President and Mrs. Clinton and have led to the resignation of at least three top Administration officials, including Hubbell.

At the White House, spokesman Barry Toiv said that he was unaware of the impending indictments.

The indictments are expected to be based in part on leads provided to the special counsel by David Hale, a former Little Rock municipal judge who claims that Clinton and McDougal persuaded him in the mid-1980s to make an illegal, federally backed loan of $300,000 to Susan McDougal. One-third of the money was then used by the Whitewater Development Corp. for a land purchase.

Beginning in 1979, the Clintons and the McDougals were partners in a resort development known as Whitewater Estates in the Ozark Mountains. The partnership has attracted attention not only because savings and loan money might have been channeled to the firm but because the Clintons invested less than the McDougals.

Republicans have charged that McDougal, an old friend of the Clintons, saw Whitewater as a backdoor way of making payoffs to the President, who at the time was serving as governor of Arkansas.

The President has said that Whitewater was nothing more than a poor investment that produced no income for his family. He has also denied Hale’s story that Clinton pressured the then-judge to lend money that Susan McDougal later funneled, in part, into Whitewater.

Hale’s version of the story has drawn some support, however, from testimony by one of Clinton’s former bodyguards, L.D. Brown, an Arkansas state trooper who often has been at odds with the former Arkansas governor. Brown has claimed that he witnessed a meeting in which the then-governor told Hale: “David, you are going to have to help us out. We need to raise some money.”

Hale has been cooperating with the special counsel’s office in an effort to win a reduced sentence on an unrelated fraud charge to which he pleaded guilty last June. In a motion filed in federal court last week seeking to delay Hale’s scheduled sentencing on Dec. 5, Starr indicated for the first time publicly that he has taken Hale’s allegations seriously.

Starr told U.S. District Judge Stephen M. Reasoner in Little Rock that “the importance of not sentencing Hale before the completion of this investigation cannot be overemphasized” because his “cooperation touches directly on some of the most sensitive matters of the investigation.”

He described Hale’s cooperation as “extensive and continuous.”

Starr is known to be finished reviewing evidence pertaining to charges that Hubbell billed the Rose Law Firm for personal expenses and that some of those expenses were charged to the Resolution Trust Corp. in connection with work that the law firm did for the RTC after Madison Guaranty was seized in 1989.

A close friend as well as a former law partner of Mrs. Clinton, Hubbell resigned from the Justice Department after these allegations became public. Similarly, allegations related to Whitewater have been responsible for the resignations of White House Counsel Bernard Nussbaum and Deputy Treasury Secretary Roger C. Altman.

Tucker is a Democrat who succeeded Clinton as governor in January, 1993. He won reelection on Nov. 8 despite indications that he was on the brink of indictment. It is ironic that Tucker has been drawn into the Whitewater controversy since he and Clinton have never been close political allies.

As a private citizen, Tucker obtained a number of loans from Madison Guaranty that were never repaid.

As of earlier this week, none of the suspects on Starr’s list of potential defendants had been notified of impending indictments, according to their lawyers and other sources.