Close Clinton Aide Targeted in Whitewater

White House Deputy Counsel Bruce Lindsey, a close friend and political confidant of President Clinton, has been notified formally that he is a “target” of the government’s Whitewater investigation and could be indicted for actions that he allegedly took during Clinton’s 1990 gubernatorial campaign, sources said Thursday.

If independent counsel Kenneth W. Starr persuades a federal grand jury to indict Lindsey, the White House lawyer would be the highest-ranking current Administration official ensnared in the lengthy, wide-ranging investigation, which began with allegations aimed primarily at Clinton and his wife, First Lady Hillary Rodham Clinton.

Lindsey’s indictment would be a devastating personal blow to Clinton, who relies on his longtime friend for advice on a broad range of political and private matters. Rarely does Clinton leave the White House without the slender, bespectacled Lindsey at his side.

It would move Starr’s investigation to its closest point to the President and, if Lindsay agreed to cooperate, would provide the prosecutor with a witness who has intimate knowledge of Clinton’s political and financial activities over more than a decade.

The anticipated charges against Lindsey, 46, involve failure to report cash withdrawals from an Arkansas bank used to fund “get-out-the-vote” efforts in Clinton’s 1990 campaign for governor of Arkansas. A banker who participated in the transaction this week pleaded guilty to two misdemeanor charges arising from failure to file required cash-transaction reporting forms with the federal government.

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Lindsey, who served as treasurer of Clinton’s 1990 campaign, could not be reached for comment. But his lawyer, Allen R. Snyder, heatedly denied the allegation that Lindsey covered up the movement of 1990 campaign cash. “It is absolutely not true, and it doesn’t make any sense,” Snyder said in an interview Thursday evening.

White House Press Secretary Mike McCurry issued a one-sentence prepared statement: “The President has known the status of the Lindsey inquiry for some time and is convinced he has done nothing wrong.”

McCurry said that the matters under investigation took place several years ago and do not relate to Lindsey’s service at the White House. He added that there has been “no change in Bruce’s employment status.”

But another senior White House aide suggested that Lindsey had offered to resign and that the President had not yet decided whether his departure would be necessary.

Starr’s investigation already has yielded indictments of several others, including former Associate Atty. Gen. Webster L. Hubbell, another of the President and the First Lady’s closest friends. It has also led to the resignation of several top Clinton advisers.

Sources said that Lindsey recently received a letter from Starr formally notifying him that he is a target of the investigation. Although the letter does not necessarily mean that he will be charged, such letters are often sent by prosecutors shortly before they seek an indictment.

Starr is known to be eager to act before a five-year statute of limitations on the alleged acts expires on May 25.

Starr’s case against Lindsey is said to rest primarily on the testimony of Neal T. Ainley, former president of the Perry County Bank who pleaded guilty earlier this week to charges of concealing from the Internal Revenue Service five cash withdrawals totaling $52,500 by Clinton’s gubernatorial campaign in the fall of 1990.

Under law, the Internal Revenue Service must be notified of all transactions exceeding $10,000.

Perry County Bank loaned $180,000 to the Clinton campaign in 1990. In the two transactions in question, $30,000 was withdrawn on May 25 before the primary election and $22,500 withdrawn on Nov. 2 before the general election.

According to sources, the money was distributed to leading members of Arkansas’ African American community by a man named Carol Willis, whose work on Clinton’s gubernatorial campaign earned him a position at the Democratic National Committee.

Lawyers for Lindsey have acknowledged that he withdrew $30,000 in November in four checks of $7,500 each, which is legal. But they have denied that Lindsey ever instructed the bank not to file so-called currency transaction reports with the IRS.

In fact, Snyder noted, Lindsey filed a public campaign financial disclosure report shortly after the transaction that stated that the money was used for get-out-the-vote efforts.

“It is mystifying that anyone would believe he would break the law to try to keep secret information that he filed publicly just a few days later,” Snyder said.

At the time of the 1990 election, the Perry County Bank was run by longtime Clinton supporter Herby Branscum Jr., who was appointed state highway commissioner after Clinton’s reelection in 1990. Another bank official, Robert Hill, was later appointed by Clinton to the state banking board.

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These activities are unrelated to allegations that Clinton’s 1984 gubernatorial campaign failed to disclose about $35,000 it received from a fund-raiser hosted by James B. McDougal, who was a partner with the Clintons in an Ozark project called Whitewater Real Estate Development Corp., which is at the root of Starr’s investigation. Some of those donations are alleged to have been withdrawn illegally from McDougal’s now-defunct Madison Guaranty Savings & Loan.

Starr was appointed by the courts to investigate allegations that money from Madison Guaranty may have found its way illegally into Clinton’s pocket through his Whitewater investment. But because Starr was given broad latitude, the inquiry quickly spread to other matters related to Clinton’s tenure as governor of Arkansas.