Former White House Travel Chief Faces Theft Charges : Probe: Billy R. Dale is accused of embezzling more than $68,000. Associates say he is the victim of a witch hunt.

The former head of the White House travel office was indicted on theft charges Wednesday in an investigation that is also reviewing the conduct of two friends of President Clinton.

Billy R. Dale, the former travel office director who was a career civil servant, was charged by a federal grand jury with embezzling more than $68,000 over a six-year period, using funds deposited by news organizations for reporters to travel with the President.

Associates of Dale, 57, who is expected to plead not guilty, said the case is bound to shed light on internal workings of the Clinton White House and on what some said is a “political witch hunt” aimed at Dale by Clinton associates who had business or personal interests in the travel office.

Justice Department sources said their inquiry into Clinton supporters Harry Thomason and Catherine Cornelius is “still open.” Complaints about the travel office by Thomason, a Hollywood producer, and Cornelius, a distant cousin of the President, led to last year’s firing of Dale, a longtime employee of the travel office, and six others on grounds of poor management and possibly improper conduct.

Neither Dale nor his attorney, Steven C. Tabackman, was available for comment Wednesday. But Tabackman said recently that an indictment of Dale was expected “for something he simply did not do.” Other sources close to Dale said that while his record-keeping may have been sloppy, he never converted money belonging to others to his own use.

Five of the fired travel office employees were later rehired, and separate inquiries by the White House and the General Accounting Office raised questions about the White House’s handling of the affair.

Friends of Dale have charged that Thomason owned an air-charter business that wanted a share of the White House travel business, and that Cornelius had expressed desires to run the White House travel operation. In his trial next year, for which no date has been set, Dale’s attorneys are expected to portray both as “heavies” who ultimately caused Dale’s legal troubles.

Robert S. Bennett, Thomason’s Washington lawyer, said Wednesday that “Mr. Thomason is not the target of any investigation. He did absolutely nothing improper and had no interest in getting the travel business.” Cornelius could not be reached for comment.

White House Press Secretary Dee Dee Myers declined comment on the indictment but pointed out that the Administration had revamped the travel office last year and cooperated with investigators.

In statements to reporters, Tabackman has suggested that his client was made a scapegoat because presidential aides were embarrassed by the furor that arose over the firing of Dale and others. He has vowed to question everyone allegedly involved in the dismissals, including Thomason, Cornelius and possibly First Lady Hillary Rodham Clinton.

Congressional Republicans have said they may hold hearings on the matter next spring.

Dale, who faces a maximum possible punishment of 20 years in prison if convicted of the two-count indictment, began converting travel funds to his own use in February, 1988, the grand jury charged. Prosecutors believe that Dale used media money to help build a house, but his friends insist he kept a petty-cash fund only to take care of unexpected requests of the White House press corps.

Dale kept his petty-cash records in a black notebook and an envelope that now are missing, associates said.

Times staff writer Ronald J. Ostrow contributed to this story.