Finances: A friend repays $45,000 grant after Webster Hubbell does not fulfill obligations. He is in prison in a federal case.

A few months before he pleaded guilty to mail fraud and tax evasion, former Associate Atty. Gen. Webster Hubbell received a $45,000 grant from a nonprofit group in Los Angeles to write articles and speak about the pitfalls of public service.

But Hubbell, a close friend of President Clinton and a former law partner of First Lady Hillary Rodham Clinton, never produced any writings and has not repaid the money.

The nonprofit Consumer Support and Education Fund began paying Hubbell in spring 1994, after Hubbell, then the third-highest-ranking official in the Justice Department, quit his job in March of that year. The organization disclosed the payment in its 1994 income tax return filed with the California attorney general in Sacramento.

The little-known nonprofit organization was established in 1990 to further various consumer and political reform causes. Endowed with proceeds from a class-action lawsuit brought by the Center for Law in the Public Interest, the organization has about $700,000 in assets.

Much of its effort has focused on funding litigation to enforce Proposition 103, the 1988 initiative that sought to cut auto insurance rates 20%, though it has given modest grants to California Common Cause and Handgun Control.

John W. Nields Jr., Hubbell’s Washington lawyer, declined to comment on the grant.

Hubbell’s failure to repay the $45,000 payment is the latest example of his money troubles and his willingness to draw on political contacts to shore up personal finances. He is serving a 21-month federal prison term for misusing $482,410 in his partners’ and clients’ money from his days at Rose Law Firm in Little Rock.

Hubbell was short on cash after he left the Justice Department. But the Los Angeles-based fund’s payment was not Hubbell’s only source of money after he left the agency.

Beginning in September 1994, the city of Los Angeles paid the Arkansas lawyer $24,750 for three months to lobby the Clinton administration to ensure that the federal government would permit Los Angeles to transfer $58 million in airport funds to city coffers.

After The Times disclosed Hubbell’s deal with the city, Common Cause charged that Hubbell appeared to be trading on his relationship with Clinton. City Atty. James Hahn attacked the arrangement because Hubbell was hired without a written contract.

In its 1994 tax return, the Consumer Support and Education Fund described the $45,000 payment as a “fellowship grant to [Hubbell] to prepare an article or series of articles on public service drawing on his personal experience at the Department of Justice. Articles will be disseminated to the public.”

In interviews, Robert L. Wolfe, president of the consumer fund, and lawyer John Phillips, who recommended Hubbell as a worthy recipient, said Hubbell failed to tell them about the magnitude of his legal troubles when they agreed to give him the money.

Phillips decided two months ago that because he had recommended Hubbell, he would personally repay the $45,000, “to protect the integrity of the fund.”

“I have a note from him, and he says he will pay it back,” said Phillips, who still considers Hubbell a friend. “It’s embarrassing, and I certainly wish it never had occurred. . . . I hope I’ll get repaid by the spring. [Hubbell] is just sick about the whole thing.”

Phillips co-founded the Center for Law in the Public Interest in Los Angeles, is a past chairman of California Common Cause and worked to create the Los Angeles city ethics panel. To further various consumer and political reform causes, Phillips also helped found the Consumer Education and Support Fund with proceeds of a settlement from a class-action lawsuit he brought in the 1980s.

Phillips and Wolfe said the idea behind the Hubbell grant was to pay a former government official to write reflective articles about the difficulties of public service, given the scrutiny that sometimes befalls public officials.

Phillips had met Hubbell soon after Clinton took office and Hubbell emerged as one of the most visible Arkansas natives in the Clinton administration. At Phillips’ suggestion, Hubbell and Wolfe conferred in Washington in April 1994.

“I thought he was perfect,” Wolfe said, citing Hubbell’s resume: former chief justice of the Arkansas Supreme Court, ex-mayor of Little Rock and a good friend of Vince Foster, the close Clinton friend and advisor who committed suicide.

By December 1994, however, Hubbell had pleaded guilty to mail fraud and tax evasion in connection with overcharging the Rose Law Firm and clients on his expense accounts and had agreed to cooperate with the Whitewater independent counsel. He began serving a 21-month sentence in federal prison in August.

Recalling the news accounts of Hubbell’s mounting legal difficulties in 1994, Phillips said: “Obviously, Hubbell had major problems that he didn’t disclose. It got worse and worse. This turned out to be a disastrous decision. He turned out to be one of the worst candidates. Nobody would be interested in what he would write.”

Wolfe said Hubbell wrote an apologetic letter last year explaining his failure to write the articles or contact him, saying that the independent counsel had gagged him. Wolfe said Hubbell still wanted to produce some writings. By then, Wolfe had little interest.

Phillips and Wolfe said no one in the Clinton administration suggested that they help Hubbell find employment.

“It was very innocent the way it came about,” Wolfe added. “I doubt there’s anyone in the Clinton administration who would know he got this grant.”

Morain reported from Sacramento and Fritz from Washington.