Hubbell Guilty Plea Closes Starr’s Arkansas Inquiries

With a guilty plea in hand from onetime Justice Department official Webster L. Hubbell, independent counsel Kenneth W. Starr declared Wednesday that his exhaustive, five-year investigation of President and Mrs. Clinton’s controversial Arkansas dealings is over.

Starr’s pronouncements came minutes after Hubbell, an old golfing friend of President Clinton’s, pleaded guilty to two charges arising from the Whitewater controversy and was quickly sentenced to one year’s probation.

The proceeding closed a painful episode for the Clintons, particularly for First Lady Hillary Rodham Clinton. Preparing to kick off her campaign for the U.S. Senate, she had faced the embarrassing prospect of having to testify in August at Hubbell’s trial about legal work she and her former law partner did on what investigators maintain was a sham land deal.

But Starr refused to close the door completely on all facets of his inquiry. In a disclosure befuddling many observers, he said that his office and a grand jury are continuing to look into two other matters. Starr refused to say what those matters are.

“The matters that I’m referring to are matters before the grand jury, and therefore I just cannot comment as a matter of law,” he said.

And when asked whether the Clintons remain in legal jeopardy, Starr said: “That I can’t comment on.”

The Clintons issued a statement wishing “a brighter future” for the 51-year-old Hubbell and his wife, Suzanna, who also had been charged in the tax-evasion case.

Hubbell was clearly eager to move forward, declaring outside the federal courthouse that “after five years, it’s over. . . . As of this moment, life begins again.”

Hubbell faced a maximum of five years in prison and a $250,000 fine for evading taxes and scheming to conceal legal work he did in Arkansas in the 1980s.

During a 45-minute hearing, U.S. District Judge James Robertson acknowledged that under federal sentencing guidelines Hubbell’s guilty pleas, combined with a 1994 conviction stemming from the Starr investigation, normally would require incarceration.

But Robertson said that the unusual nature of the case allowed him to sign off on the no-prison plea bargain that had been worked out between Hubbell and Starr.

Under terms of that deal, the judge also declined to impose any fines and agreed to drop all charges against Hubbell’s wife, his accountant and his tax attorney in connection with the alleged tax-evasion scheme. Hubbell admitted that he had failed to pay tax liabilities amounting to more than $500,000 from his consulting jobs--work that investigators have said they suspect was arranged as “hush money.”

The plea bargain, Starr said, was “just and appropriate.”

Starr had failed to win convictions in the recent obstruction trials of Whitewater figure Susan McDougal and Julie Hiatt Steele, a minor figure in his investigation of the relationship between President Clinton and former White House intern Monica S. Lewinsky. He said that publicity surrounding his investigation would have made it “extraordinarily difficult” to find an impartial jury and “the profound interest in finality” made a quick resolution in the Hubbell case attractive to everyone.

Not that everyone agreed on exactly what Hubbell admitted to doing.

Starr insisted that Hubbell, in pleading guilty to a broad charge outlined in an indictment brought last year, had effectively admitted that he schemed to conceal his role in a bogus Arkansas land deal known as Castle Grande. Specifically, Starr said, he failed to tell federal authorities about the true nature of legal work that he and Mrs. Clinton did on the deal at the Rose Law Firm in Little Rock, Ark.

The 1,050-acre project has proved particularly sensitive for the first lady ever since her missing billing records on Castle Grande mysteriously reappeared in the White House in 1996, some two years after Starr subpoenaed them.

But Hubbell’s lawyer, John Nields, said it was “wild and inaccurate” to suggest that Hubbell pleaded guilty to anything connected with the first lady. The Castle Grande project was never mentioned in court, and Hubbell and his lawyer pointed out that the plea agreement refers specifically to Hubbell’s failure to disclose to federal regulators a potential conflict of interest in an unrelated savings and loan lawsuit in which he was involved.

“Mrs. Clinton did nothing wrong, and what I pleaded to today has nothing to do with Mrs. Clinton or Castle Grande” or other matters connected to her, Hubbell said outside the courthouse.

Hubbell said that as part of the plea agreement he had recently been questioned by Starr’s investigators and told them that he had “no knowledge” of any wrongdoing by President or Mrs. Clinton.

The plea bargain also ensures that Starr’s office will not prosecute or investigate Hubbell again. Hubbell clearly relished that fact, noting that he, his wife and friends are “no longer in jeopardy.”

Named as the third-ranking official at the Justice Department early in the Clinton administration, Hubbell soon became enmeshed in Starr’s Whitewater investigation over allegations that he had stolen, through overbilling, about $400,000 from his law firm and its clients in Arkansas. Forced to resign his post in 1994, he later pleaded guilty to mail fraud and tax evasion.

Hubbell could not even admit to his wife that he had stolen the money, he recounted in his 1997 autobiography. “I couldn’t say it. I danced around the absolute truth.”

As part of his 1994 plea agreement, Hubbell agreed to assist Starr’s investigators in their Whitewater inquiry, but Starr later deemed him uncooperative. And, after Hubbell finished a 15-month prison term in late 1996, he found himself once again a target of Starr’s investigation. He was indicted twice in 1998, once in connection with Castle Grande and again over taxes on his consulting deals.

With Hubbell’s new guilty pleas, Starr said that the Arkansas/Whitewater phase of his investigation--the cornerstone of his historic review--is finished. “That part has been concluded by today’s activities,” Starr said.

Although Hubbell’s pleas came on the day that the independent counsel law under which Starr has served expired, he can continue his investigation indefinitely under terms of the law.

It was widely assumed that the end of the Hubbell case would leave Starr with only one chief task: completion of a final report to Congress on his five-year investigation, which began as a review of the Clintons’ financial dealings in Arkansas before his presidency and expanded to include matters at the White House and Clinton’s attempts to cover up his relationship with Lewinsky. But Starr said Wednesday that there are “two aspects of our investigation that are in fact ongoing.”

Several legal observers who have followed Starr’s case were perplexed by his comments, unsure what matters he might still be investigating.

Starr declined to say whether his office is still investigating allegations raised last year that Nathan Landow, a wealthy Democratic contributor from Maryland, may have attempted to buy the silence of Kathleen Willey, who accused the president of making an unwanted sexual advance.

Speculation that Starr might bring perjury charges against Clinton over the Lewinsky affair have died down recently, and Joseph E. diGenova, a former independent counsel during the George Bush administration, said he does not see that happening.