Jury Acquits McDougal in Embezzlement Trial

In a stunning repudiation of what some jurors called a mean-spirited prosecution long on mud-slinging but short on believable evidence, a jury in Santa Monica acquitted Whitewater figure Susan McDougal on Monday of charges that she stole from her former employers, conductor Zubin Mehta and his wife.

The jury deliberated about 16 hours over three days before exonerating McDougal on all nine counts of forgery, embezzlement and tax evasion brought by the Los Angeles district attorney’s office.

Jurors said that during their deliberations they never seriously contemplated guilty verdicts for any of the charges. While they insisted that they followed Superior Court Judge Leslie W. Light’s instructions and never considered Whitewater, some jurors questioned why charges were ever filed in the Mehta case. Some even said they found the lack of proof and protracted nature of the case troubling.

“I woke up in the middle of the night and I was angry that this was being done,” said juror Nancy Neiman, a lawyer’s daughter who teaches Spanish at Santa Monica College. “I was very disturbed that this case was brought to trial. As time went on, I became more and more indignant because I felt we were not hearing the truth.”

Jurors said they kept waiting for some substance in the prosecution’s case, but it never appeared.

Legal analyst Laurie Levenson, associate dean at Loyola University Law School, said the jurors’ reactions were not surprising. “The whole case came off as a civil dispute running amok. There was a big question as to whether this case belonged in criminal court in the first place.”

Another factor, according to Levenson: “They found Susan to be a more likable witness than the prosecution’s key witness,” Nancy Mehta.

McDougal rose to national attention for sitting in jail for 18 months rather than cooperate with independent counsel Kenneth W. Starr’s investigation of a failed 20-year-old Arkansas land deal involving her former husband, James B. McDougal, who is now dead, and Bill and Hillary Rodham Clinton.

‘You’ve Given Me My Life Back’

As she left the courtroom in Santa Monica on Monday, McDougal received a hero’s welcome from supporters. Many embraced her, and she tearfully acknowledged the well-wishers.

“Have a good life,” one woman said. “I will,” McDougal promised.

Later, she met and thanked members of her jury, embracing some on the panel. “You’ve given me my life back,” she said.

Outside the courthouse, she told reporters: “I’m speechless. . . . There was never any truth to it. I spent eight months in solitary confinement in Sybil Brand [County Jail], brought out only in chains because of this case. Thank God, today I stand here an innocent person.”

The verdict dealt a devastating blow to the prosecution in a case that was followed nationally.

Freed from the gag order that muzzled him during the trial, McDougal’s lawyer, Mark Geragos, wasted no time castigating the prosecution.

“It is another one of Gil Garcetti’s big cases that he can’t seem to manage,” Geragos said. “This man allowed somebody to ruin my client’s life for the last five years based upon the rantings of Nancy Mehta.”

Asked if the case was politically motivated, Geragos said: “Of course it’s related to Whitewater. Do you think that if her name was Susan McDonald they ever would have tried this case? Absolutely not.”

Garcetti declined to comment, leaving it to the trial deputy to speak for the office.

“We felt that the evidence merited a conviction,” said Deputy Dist. Atty. Jeffrey Semow. “The jurors obviously disagreed with us. That’s their privilege.”

He disputed that charges should not have been brought and seemed angered by the suggestion that politics played a role in his prosecution of McDougal.

“Isn’t it about time that everybody got real and stopped asking that question? . . . Obviously the last thing that we need is to assist some other unrelated agency with their prosecution. We have enough work to do for this office.”

In the end, jurors said, a case that Los Angeles prosecutors took five years to build collapsed in 10 weeks of trial under the weight of overkill and a key prosecution witness, Nancy Mehta, who was anything but reliable.

Tears welled in McDougal’s eyes as the verdicts were read in the hushed, crowded courtroom in Santa Monica where she had spent nearly three months on trial.

She looked toward the jury, mouthed the words “Thank you,” and smiled triumphantly at Mehta, who sat motionless, her hands folded primly in her lap.

“I wanted her to look at me,” McDougal said of Mehta. “She didn’t. She couldn’t.”

Mehta said she was astonished by the verdict. “How could they do that?” she asked. She acknowledged that she refused to meet McDougal’s eyes. “She stole from me,” she said.

Later, as she left the courthouse, she added, “I’m unhappy for the people of California. Would you like her to work for you?”

Starr’s office issued a written statement: “The state charges were brought in 1993 before the appointment of any Whitewater independent counsel. The case is entirely unrelated to the work of this office. It would therefore be inappropriate for us to comment further.”

McDougal was accused of forging checks and an application for a credit card, which she then allegedly used as her own while working as a personal assistant and bookkeeper for Nancy Mehta. The conductor’s wife ran an upscale rental property business from a converted potting shed on her Brentwood estate.

The prosecution alleged that McDougal covered her tracks by forging Mehta’s signature on checks to pay the charges, which she then wrote off as Mehta household expenses. She also was accused of evading state income taxes.

What should have been a crashingly dull paper case took on a life of its own as the lawyers squabbled, the judge scolded, and key witnesses dropped catty details from the witness stand. As a result, the trial lasted three times longer than anticipated.

The 43-year-old Whitewater figure wore white nearly every day. The courtroom was usually packed, and many of the courtwatchers seemed to side with McDougal. She greeted them like a hostess at a party.

Whitewater was a taboo topic at the trial. The judge ruled that Starr’s probe of Clinton and the McDougals was irrelevant and should play no role in the embezzlement case.

The Story of a Soured Friendship

Beyond the courtroom theatrics and arid accounting details, the trial told a more human story about a friendship that bloomed between two women and then soured.

In her testimony, Mehta downplayed the relationship while McDougal emphasized it, employing an engaging, shop-till-you-drop defense. Both called their men to the stand in supporting roles.

McDougal worked for the Mehtas from 1989 to 1992--before the Whitewater scandal made her a national household name. Before long, according to testimony, Susan and Nancy came to resemble one another.

McDougal dyed her hair blond like Mehta’s and wore it long and parted on the side like she did. According to testimony, she tried on Nancy’s clothes while Mehta was away. After a while, she looked and sounded so much like her employer that a grocery store clerk addressed her as “Mrs. Mehta.”

As the witnesses focused on details of purchases made six to eight years ago, the testimony was numbing. But the spending evidence also offered a glimpse at the lives of a couple for whom money seemed to be no object. There were tales of Nancy’s bulk purchases of beauty supplies and designer girdle-top pantyhose; fresh steaks bought every other day for the family’s ill-tempered pet borzoi; even a plane seat purchased for a wedding cake, which was flown from Los Angeles to San Francisco.

McDougal initially was charged in October 1993 with two felonies--grand theft in excess of $100,000 and forgery of some 303 checks worth $140,353.86. Over the years, the number of counts against her grew to 10, and then to 12, and the amount allegedly taken grew to over $150,000.

But as the trial neared its end, the judge jettisoned three counts and whittled down the sum allegedly taken, saying that the evidence could support only about $50,000--just $5,000 more than Zubin Mehta paid for a tea set he bought his wife in Israel.

The cost of running the courtroom during the trial was 10 times that. Without even considering the costs of the five-year investigation, the trial cost $510,678, based on the county’s estimate of $9,457 a day in court costs and salaries of the judge, clerk, stenographer, bailiff and prosecutors.

Geragos estimated that the total cost of prosecuting McDougal, based on documentation he has seen, would exceed $1.75 million, considering the salaries of investigators, jailing and transporting her during the eight months she spent in Los Angeles’ county jail system.

Legal Woes Are Not Over

The prosecution portrayed McDougal as a money-grubbing con artist who would do anything to recover the riches she had enjoyed as the wife of James B. McDougal, a Daddy Warbucks-style Arkansas banker-politician.

She once drove a Jaguar, claimed an income of $200,000 a year, and was a mini-celebrity in Arkansas for television commercials in which she appeared astride a horse, Lady Godiva-style, wearing hot pants and shilling for one of the couple’s developments.

But with her marriage and business in ruins, McDougal accompanied her boyfriend, Pat Harris, to California in 1988 to start afresh. He, and then she, went to work for Nancy Mehta.

The defense portrayed Mehta as a lonely, wealthy matron who clung to McDougal, converting her into a constant shopping, dining and moviegoing companion. The two, according to testimony, were “like sisters.” Some days, they raided Nancy’s closet and tried on clothes together until 2 a.m. Some days, they went to the movies twice.

The relationship ended bitterly when Mehta accused McDougal of stealing after receiving calls from a bank investigator while traveling with her husband in Europe during the summer of 1992. According to her testimony, one bank official related that a large number of checks on her account appeared to be forged. Later, when she returned home, an official from another bank asked Mehta if she wished to raise the spending limit on a card she claims she didn’t know she had.

But McDougal denied stealing from Mehta during her testimony. “I wouldn’t have had to,” she said. “She would have given me anything.”

The defense dropped huge hints that the embezzlement case was politically motivated, and McDougal maintains that Starr offered her an immunity deal that included dismissal of the California charges if she would cooperate. Starr’s office denies it.

Jailed instead for contempt in the Whitewater case, McDougal spent eight months of her 18-month sentence in the Los Angeles County jail system. She sued over the conditions, and in July 1997 was transferred under court order to a less harsh federal lockup. She was freed from custody in June.

Her Whitewater woes have not ended. McDougal faces a federal court trial in Arkansas in February for obstruction of justice for her refusal to cooperate with the Starr probe.

“Everything that has happened to me has been so that I would tell some story that is not the truth about Bill or Hillary Clinton,” she said.

This time, she says she’ll be ready.

“When people say to me, you know, ‘Are you scared of Ken Starr?’ I always think, he ought to be scared of me--because I’m on my way back,” McDougal said.

Times staff writers Josh Meyer and Greg Krikorian contributed to this story.