A Defiant McDougal Vows to Maintain Silence

“Payoff Clinton,” read the cryptic note scrawled at the bottom of a $5,081 check from Susan McDougal to a savings and loan in 1983.

Smoking gun or innocuous shorthand? Independent counsel Kenneth W. Starr’s prosecutors insist that McDougal knows the answer. But her defiance in refusing to tell all could land her in prison--again.

The latest in a years-long series of Whitewater-related trials begins Monday in Little Rock, Ark., with President Clinton’s onetime business partner facing charges of contempt and obstruction for refusing to cooperate with a federal grand jury, first in 1996 and again in 1998.

And McDougal, whose refusal to talk already has cost her 18 months in prison for civil contempt, said that she has no plans to start talking now--at least not to Starr’s people.

“It’s a matter of principle, and I’m not giving up,” she said in an interview.

Prosecutors from Starr’s Arkansas operation said their straightforward case will show that McDougal refused to tell a federal grand jury even where she was born or what she did for a living, much less what she knew about Whitewater, the failed Ozark real estate deal in which Clinton and McDougal were participants. Indeed, McDougal’s refusal to answer such questions is a matter of record.

Plans to Focus on Starr’s Office

But Mark J. Geragos, McDougal’s Los Angeles attorney, has other plans.

“I’d like to put Starr on trial,” he said in an interview.

Geragos said he would try to show that Starr has mishandled the case and that his financial ties to Clinton’s right-wing enemies have given McDougal good reason to mistrust him.

In an attempt to argue that Starr and his deputies have employed “a common scheme” of intimidation tactics against witnesses, Geragos will try to call to the stand Monica S. Lewinsky and Julie Hiatt Steele. Starr is prosecuting Steele for allegedly lying in her testimony during the Clinton-Lewinsky investigation.

“If you don’t say what they want you to say, they either threaten to indict you or they do indict you . . . ,” Geragos said of Starr’s prosecutors. “I can’t imagine that [Lewinsky and Steele] wouldn’t corroborate everything that Susan said.”

But Geragos may have to fight to have such evidence allowed in court.

W. Hickman Ewing Jr., the deputy independent counsel in charge of Starr’s Little Rock office, said he considers such testimony irrelevant. “If they seek to introduce some of the things we’ve heard about, we’ll probably move to limit it or exclude it,” he said.

Jury selection is scheduled to start Monday. The trial, expected to last a month, will be McDougal’s third in three years.

A former land investor with her late husband, McDougal was convicted of mail fraud and other financial crimes in a case brought by Starr’s team in 1996. After spending 18 months in prison for her grand jury silence, she began serving a two-year sentence on the fraud conviction. She was freed last June after just three months because of a spinal condition.

Last November, a Los Angeles County jury acquitted her on charges that she stole about $150,000 from her former employers, conductor Zubin Mehta and his wife, Nancy.

“I’m having trouble believing I’m going to trial again,” McDougal said last week.

Starr Team Casts a Wide Net

Since 1993, 15 other people have been charged in Starr’s Whitewater-related investigation, all but one of them convicted on various counts of bribery, conspiracy, tax evasion or other financial misdeeds in connection with illegal business schemes in Arkansas in the mid-1980s. While Starr’s office has looked extensively into the links of Bill and Hillary Rodham Clinton to some of these dealings--most notably the Whitewater real estate project--neither has been charged with any crime.

Starr’s convictions include such well-known figures as former Arkansas Gov. Jim Guy Tucker and Clinton friend Webster L. Hubbell, formerly the third-ranking official at the Justice Department. But McDougal’s case has proved perhaps more emotional and divisive than any other, providing a lightning rod for critics of both Starr and Clinton.

“I know where all the bodies are buried,” McDougal once boasted.

Indeed, the image of McDougal in her orange prison jumpsuit, leg irons and wrist-to-waist shackles became familiar to the public.

To Clinton’s foes, McDougal stands as a muzzled symbol of the president’s success in avoiding criminal liability for his financial dealings while he was governor of Arkansas.

But others see McDougal as a victim of overkill by Starr--a blatant example of the prosecutor’s win-at-all-costs approach.

“It seems like Starr is beating a dead horse. It seems excessive,” said Georgetown University law professor Paul Rothstein. “Starr feels he has a mission to pursue his quarry to the ends of the Earth. He’s convinced he knows what the truth is.”

In McDougal’s case, the truth has proved elusive.

Before the grand jury, prosecutors questioned McDougal about several financial matters, including Mrs. Clinton’s involvement in an industrial property, a controversial $300,000 loan from former Little Rock judge David Hale and the intriguing note on the 1983 check.

“Ms. McDougal,” a prosecutor asked her at her 1998 grand jury appearance, “what did you mean by the notation ‘Payoff Clinton’ on the check?”

McDougal would not say. “I don’t believe your office has the right to ask me any questions.”

A grand juror’s question about the same notation drew a more sympathetic response.

“I would love to tell you,” McDougal said. “I would love to tell you everything I know about it, but not with these people running the investigation. I don’t believe they’re interested in the truth.”

Geragos said it is “nonsense” for prosecutors to suggest there was anything illicit about the check or any of the other financial matters they have investigated.

“They know what it means. They know where every dime of that money went. There isn’t anything they don’t know.” The answers may come out at McDougal’s trial, he said.

But prosecutor Ewing said McDougal still has information that may be valuable to the Whitewater investigation and that her refusal to provide it even under court order represents a dangerous defiance of the law.

If she is convicted, McDougal could get 27 more months in prison, prosecutors said. Defense lawyers said that any sentence should be far lower than that, especially considering the time she has already served.

But McDougal said that prison isn’t her chief concern.

“Anyone who has done 18 months on a matter of principle wouldn’t give in if it were 18 years,” she said. “More than ever, I absolutely believe I did the right thing.”