Clinton Intermediary Kept in Touch With Hubbell

In public, President Clinton and First Lady Hillary Rodham Clinton for nearly three years have maintained a firm distance from former Associate Atty. Gen. Webster L. Hubbell since their longtime friend resigned and pleaded guilty to fraud and tax-evasion charges. But in private, the Clintons have stayed quietly in touch with Hubbell--through a trusted White House aide who has acted as a confidential go-between.

During the 16 months that Hubbell spent in prison, the White House aide, Marsha Scott, frequently visited him. Scott, according to several of their friends, checked on him and reassured him of the first family’s concern.

And when Hubbell was first appearing before a grand jury investigating the Whitewater controversy, Scott traveled to Little Rock to confer with him.

“Marsha would drop by and visit when Webb was in town to meet with the independent counsel people,” said Breda M. Turner, a friend at whose residence Scott and Hubbell met to talk.

Scott’s visits with Hubbell in late 1994 through 1996 and her relaying of any messages from the Clintons are certain to stir controversy.

Clearly, Scott is a personal friend of long standing with the Clintons, Hubbell and his wife, Suzanne. Scott and Hubbell were in the same graduating class at Little Rock’s Hall High School. She and Clinton have known each other for 30 years.

“We were brought up here to say, ‘If he’s my friend--he’s my friend,” said Michael C. Schaufele, Hubbell’s close friend and accountant in Little Rock. “Yes, he made mistakes. But that might be the time he needs you the most.”

In the more than two years since an independent counsel began investigating Whitewater, suspicion has hung over Hubbell and the Clintons--intensified by Hubbell’s announcement this month that he would no longer cooperate with federal investigators.

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Prosecutors have long been frustrated by Hubbell’s insistence that he could not recall certain transactions involving himself and Mrs. Clinton when both were partners at the Rose Law Firm in Little Rock. Last week Hubbell invoked his right against self incrimination, declining to provide documents to a House committee.

Meanwhile, investigators are trying to determine how Hubbell obtained a number of well-paying business engagements after he resigned his No. 3 job at the Justice Department--including a deal with an affiliate of Indonesia’s Lippo conglomerate.

Hubbell has maintained that the deals are his private business. But some Republicans have flatly asked whether they amounted to “hush money.” Scott’s visits may provoke new questions about the possibility of a support network connected to the White House that has sought to buoy Hubbell’s resolve during the investigation and assure him that he has not been abandoned.

As the Whitewater inquiry winds toward its end and Hubbell tastes his first weeks of freedom since being released from his federal sentence, his friends say that he now believes he may be a target for further prosecution.

“His first priority is to find a job,” said Schaufele, a friend since high school. “He wants to get his life straight. But right now, a lot of things cloud that issue.”

Scott referred questions Monday to others at the White House. Lanny J. Davis, a White House special counsel, said that Scott kept in regular touch with Hubbell “purely on a personal level, as an old friend, not in an official capacity. She certainly did not carry messages to and from anyone.”

Laura Shores, Hubbell’s lawyer, said that her client and Scott are “very good friends.” Shores declined to discuss the matter further.

Hubbell resigned from the Justice Department in March 1994. He was imprisoned the next year on fraud and tax charges stemming from his bilking of $482,410 from former clients and partners at Rose, where he and Mrs. Clinton had been partners. He was released from federal supervision this month.

Scott, 49, worked 30 years ago with Bill Clinton on the staff of Sen. J. William Fulbright (D-Ark.). Scott later moved to Santa Cruz, Calif., where in 1992 she helped lead Clinton’s presidential campaign in Northern California. She is now a top political affairs aide.

Another senior White House aide, Deputy White House Counsel Bruce R. Lindsey, acknowledged before a Senate investigating committee last year that he and Scott occasionally talked about the Hubbell family’s situation, but added: “We certainly never had any discussions about anything that could be done about it--simply sort of commiserated about how tough it is on them all.”

(Hubbell’s wife is a presidential appointee at the Interior Department and makes $66,639 a year. Two of their four children are now in college. Another is in high school.)

In a recent interview with The Times, a friend of Scott described Scott’s concern about Hubbell’s well-being in greater detail--and told how she served as a line of communication between Hubbell and Mrs. Clinton.

“She was taking messages from the first lady to Webb. . . . And she was bringing back messages from Webb to the first lady,” the friend said.

“She was going back and forth [with Mrs. Clinton] on how he and his family were being taken care of, how they were doing financially, what else was needed,” said the friend, who spoke on condition of anonymity.

The first lady instructed Scott on “what to tell Webb, what they were doing for him, what Marsha was to bring back,” the friend said.

Several other friends of Scott described how she regularly visited Hubbell at the minimum-security prison in Cumberland, a town in western Maryland about a two-hour drive from Washington.

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“She’s been out [to the Cumberland prison] a number of times,” said Roy “Tee” Turner, an investment banker who has known Hubbell since the 1980s.

It was at Turner’s residence in Little Rock that Scott and Hubbell also conferred. At least two of the visits occurred in late 1994 and in 1995, while Hubbell was in town to meet with staff of the Whitewater independent counsel.

They would talk privately in the Turners’ guest house. “It was a good spot for them, because they could just come and go as they pleased. . . . It was a safe haven back then,” recalled Turner.

A tearful, contrite Hubbell had agreed to cooperate with Whitewater investigators at that time, in December 1994, when he pleaded guilty to the fraud and tax-evasion charges. But the staff of Independent Counsel Kenneth W. Starr has been frustrated by Hubbell’s inability to recall certain key events.

Most notable were transactions at Madison Guaranty Savings & Loan--an Arkansas thrift at the center of the Whitewater inquiry because of a variety of insider transactions. Both Hubbell and Mrs. Clinton, while partners at the Rose Law Firm, had dealings with Madison.

According to a Federal Deposit Insurance Corp. report issued last September, the first lady drafted a real-estate document in 1986 used to “deceive” regulators about a property transaction that generated more than $300,000 in questionable commissions for a Madison representative. The representative was Seth Ward, Hubbell’s father-in-law.

Mrs. Clinton has said that she remembers nothing about her work on the matter. Hubbell, too, has told investigators that he has no recollection. The collapse of Madison Guaranty has cost U.S. taxpayers $50 million.

Upon his release from federal supervision earlier this month, Hubbell issued a statement thanking his loyal friends--and saying that, though he had once cooperated with the ongoing investigations, he no longer would do so.

“That cooperation has not benefited me at all,” he said. “In return, I was subjected to more investigations. There is no apparent purpose in continuing down this path.”

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In an appearance before the Senate Banking, Housing and Urban Affairs Committee last year, Hubbell told members that he began his arrangement with the Lippo affiliate in the summer of 1994, shortly after leaving the Justice Department.

Hubbell refused to say what he was paid or what work he did. A Senate Governmental Affairs Committee subpoena delivered last week to Lippo’s offices in Los Angeles demands all related company records.

Another of Hubbell’s employment deals under investigation is the oral, no-bid contract he was given in late 1994 by the city of Los Angeles Department of Airports.

Investigators from the U.S. Department of Transportation who later questioned Hubbell said that he “claimed to not know how Los Angeles came up with the idea.” Hubbell said that he had apprised the White House, probably through Scott, of his hiring, according to a report by the transportation inspector general. “He noted that Scott was from California and was familiar with California people and issues,” the report said.

The inevitable delicacy of contacts with Hubbell shows the dilemma shared by friends who remain loyal--including those who might be tempted to hire him.

“Whoever hires him can expect to face a lot of questions,” said Basil V. Hicks Jr., a friend in Little Rock who has known Hubbell since law school. “I would think it would be a concern for someone who is going to employ him. It causes distraction.”