Hubbell, 3 Others Enter Pleas of Not Guilty in Tax Fraud Case

Whitewater figure Webster L. Hubbell pleaded not guilty Friday to conspiring to evade taxes on hundreds of thousands of dollars of income, some of it arranged by friends of President Clinton. Hubbell’s wife and two of his close friends from Arkansas declared their innocence as well.

“Not guilty, your honor,” the former associate attorney general said at his arraignment before U.S. District Judge James Robertson, a Clinton appointee.

Hubbell’s wife, Suzy, tax lawyer Charles C. Owen and accountant Michael C. Schaufele followed Hubbell to the lectern in Robertson’s courtroom and entered innocent pleas.

John W. Nields Jr., the Hubbells’ lawyer, said the 10-count indictment is invalid because it is “not within the scope” of Whitewater prosecutor Kenneth W. Starr’s authority.

Nields also said that prosecutors impeded Hubbell’s 5th Amendment right against self-incrimination by using documents obtained from him under a grant of immunity. Nields said it may be necessary to hold a Kastigar hearing: a proceeding in which prosecutors are required to show that their case against Hubbell is not tainted by evidence he supplied under a grant of immunity. Hubbell was given a limited immunity grant by Starr’s office shortly after the 1996 presidential election, Nields said last weekend.

Nields’ objection apparently is based on the fact that the grand jury charges obtained by Starr are beyond the original mandate of the investigation: the Clintons’ ties to their Whitewater business partners James B. and Susan McDougal. However, the three appeals court judges who appointed Starr as independent counsel in 1994 expanded his jurisdiction Jan. 6 this year to cover the Hubbell matter, according to a court document filed in the case.

K. Chris Todd, Schaufele’s lawyer, said that in the coming months “the judicial process will clearly show his innocence.” Owen’s lawyer, Drake Mann, did not comment. Starr’s three-man trial team, led by prosecutor David Barger, left by a side door and did not comment.

Hubbell faces up to 41 years in prison and $2.25 million in fines if convicted of all nine felonies with which he is charged. He already has served 21 months for his 1994 guilty pleas of tax evasion and mail fraud involving nearly $400,000 in the late 1980s and early 1990s belonging to former clients and the Little Rock law firm where he and Hillary Rodham Clinton were partners.