Hubbell’s Role in Securing Federal Appointment Probed

Long after he had resigned his position at the Justice Department--and while he awaited sentencing on fraud and tax-evasion charges--Webster L. Hubbell could still get things done at the Clinton White House.

Or so Hubbell suggested to at least one paying customer--a stock brokerage executive in Los Angeles who had hired the former associate attorney general to help arrange his appointment to a federal position.

“I certainly have had a few things to occupy my time, but it is no excuse to neglect one’s clients,” Hubbell wrote on Feb. 10, 1995, to the executive, Nicholas H. Stonnington.

The letter was obtained by prosecutors and investigators with the House Government Reform and Oversight Committee.

Ultimately, Stonnington did not win a federal appointment. But the 3-year-old episode, details of which have not previously been reported, illustrates how important Hubbell remains to Whitewater independent counsel Kenneth W. Starr’s investigation of President Clinton and Mrs. Clinton.

If Hubbell were found to have violated the federal law against taking money to set up a federal appointment, Starr could have another legal lever to press him for information on the Whitewater affair.

More immediately, Starr is deciding whether to bring new tax charges against Hubbell, focusing primarily on income earned by Hubbell from private business deals with Democratic supporters after he left the Justice Department.

Starr’s office is weighing whether to seek Hubbell’s indictment in connection with a $100,000 payment he received in mid-1994 from a Hong Kong company controlled by James Riady, the Indonesian backer of Clinton, The Times has learned.

A grand jury in Washington that has heard evidence in the matter is scheduled to meet today.

Prosecutors also are exploring whether any of those deals, which amounted to at least $600,000, were intended to buy Hubbell’s silence in the Whitewater investigation.

With pressure on Starr increasing to wrap up the Whitewater case, prosecutors are making another effort to get Hubbell, who was Mrs. Clinton’s law partner in Little Rock, Ark., to provide more information about controversial legal work she performed.

Hubbell’s lawyer, John W. Nields Jr., said Wednesday that he would not comment on any matters regarding his client. Stonnington did not return calls on Wednesday.

How Hubbell would respond to the pressure of new criminal charges is unknown. He could insist again that he has recounted all he knows.

But those with a stake in the Whitewater controversy are watching the new confrontation for its possible implications for the Clintons and for new glimpses of Hubbell’s remarkable place in the administration’s inner circle.

Hubbell was not involved in the Clintons’ ill-fated 1978 investment that sold lots along the White River in the Ozark Mountains. But Hubbell, as an attorney at the Rose Law Firm, did work on matters pertaining to another land development near Little Rock called Castle Grande.

Mrs. Clinton’s legal work on Castle Grande has drawn intense scrutiny from Starr and congressional investigators.

Federal banking regulators--without directly impugning Mrs. Clinton--have concluded that Castle Grande amounted to a series of sham transactions that siphoned money from a federally insured savings and loan, Madison Guaranty. Madison failed at a cost to federal taxpayers of more than $50 million; the Castle Grande development accounted for nearly $4 million of the S&L;’s losses.

Also, the Rose firm’s billing records reflecting Mrs. Clinton’s 60 hours of work on this project remained missing for years before showing up on a table in the White House in January 1996.

One of the investors in Castle Grande was Hubbell’s father-in-law, Seth Ward. The belatedly discovered billing records indicated that Mrs. Clinton had at least 14 meetings or telephone conversations with Ward.

Only last Saturday, with Starr’s Whitewater grand jury in Little Rock due to expire May 7, prosecutors pressed Mrs. Clinton about the Castle Grande venture and the earlier Whitewater investment during more than four hours of videotaped questioning at the White House.

Mrs. Clinton has said in the past that she can recall little or nothing about Castle Grande.

Hubbell agreed to cooperate with Starr’s Whitewater investigation as part of a plea bargain on charges stemming from his fraudulent billings at the Rose firm. But after prosecutors found his cooperation inadequate, he wound up serving 18 months in prison and at a halfway house. He was released a year ago.

Investigators continue to sift through evidence of Hubbell’s post-government dealings for evidence of wrongdoing, putting new pressure on him.

In the matter of Stonnington, the Los Angeles brokerage executive, Hubbell received $18,000 for his efforts. Stonnington hired Hubbell at the suggestion of Alan S. Arkatov, a Democratic consultant who has worked closely in the past with administration official Mickey Kantor. Kantor was among the officials helping to line up financial help for Hubbell and his family.

In his Feb. 10, 1995, letter to Stonnington on his progress, Hubbell professed optimism.

“Bob Nash, who I know well from Arkansas, has just been appointed as head of [White House] Personnel, as well as other changes that I believe will bode well for the process in the future,” Hubbell wrote. “[A mutual acquaintance] mentioned the possibility of your interest in a short-term position [with] the information superhighway commission. This would give you exposure with several people while we worked on the other possibilities. I am putting that in motion as a possibility.”

Nash did not return messages seeking his comment.

After leaving the Justice Department in April 1994, Hubbell also met in Washington with another prospective client from Los Angeles, Eli Broad.

The two were joined by Kantor, a mutual friend who at the time was a member of Clinton’s Cabinet.

After conferring with Hubbell and Kantor over breakfast May 19, 1994, at the Four Seasons Hotel here, Broad retained Hubbell as a consultant to SunAmerica Inc., a publicly held company of which Broad is the chairman.

“The subject discussed,” Broad told a House Government Reform and Oversight Committee, “was whether Mr. Hubbell could assist SunAmerica in its public policy efforts to generate further interest in the development of a comprehensive national retirement savings policy.”

SunAmerica paid Hubbell $25,000. A spokesman for Broad said Wednesday that the executive was not available for comment. Broad, his wife and their companies have donated a total of $292,176 to the Democratic Party since the 1992 election cycle, records show.

Investigators’ suspicions about whether Hubbell was withholding information have been piqued by tapes of several telephone conversations Hubbell had while in prison.

In one call on June 19, 1996, Hubbell talked with his wife, Suzanna, about his planned memoirs and, using first names only, referred to Vernon E. Jordan Jr., the presidential advisor who had helped arrange one of his consulting deals; to White House lawyer Bruce R. Lindsey; and to Kantor. “I’m not going to breach any, I’m not going to breach anything personal,” Hubbell said. “I think that’s what you can tell Mickey. And when people want things to be private, they will always be private with me.”

Researcher Janet Lundblad in Los Angeles contributed to this story.