McDougal Jury to Hear Starr Harassment Allegations

In a ruling that prosecutors attacked as dangerous, the judge in the Susan McDougal contempt trial decided Tuesday that the jury can hear allegations of harassment against Kenneth W. Starr’s office made by a Virginia woman under indictment in the Monica S. Lewinsky investigation.

The decision was a key victory for McDougal in trying to turn the tables on Starr and effectively put him on trial for aggressive tactics used in prosecuting her and other supporters of President Clinton.

McDougal will seek to show that Julie Hiatt Steele, a minor figure in the Clinton-Lewinsky saga, suffered the same sort of intimidation and abuse that McDougal claims Starr’s office wrought upon her.

But prosecutors said Steele’s testimony was irrelevant, and they were clearly taken aback by U.S. District Judge George Howard Jr.’s decision to allow the jury to hear it, probably on Friday.

“We’re treading on dangerous, dangerous ground here,” associate independent counsel Julie Myers told the judge.

Steele is to go on trial May 3. At the request of Starr’s prosecutors, a grand jury indicted her in January on four felony counts of obstructing justice and making a false statement in connection with her sworn testimony regarding Clinton’s alleged groping of her onetime friend, Kathleen Willey.

Steele originally had supported Willey’s version of events, saying Willey confided in her immediately after the alleged White House encounter with Clinton in 1993. She later retracted that statement in sworn testimony, saying she had been lying. But prosecutors believe the retraction was a lie, told at the urging of Clinton’s supporters.

Steele testified for 10 minutes Tuesday afternoon outside the presence of the jury, telling Howard what she would say if allowed to testify at McDougal’s trial.

She portrayed herself as a victim of unfair tactics employed by Starr’s Washington prosecutors and FBI agents, saying she was misled into thinking she might be a witness--not a target--of their investigation into the Willey episode.

“I thought I was supposed to be helping with people who might have some information about all this,” she said.

Steele testified that her daughter and her brother were called before the grand jury and that prosecutors investigated her adoption of a Romanian boy, now 8.

“Often we would hear there were agents all over Richmond [Va.] looking for people to bring before the grand jury,” Steele testified. “They had subpoenaed every financial record imaginable, every possible paper, every document,” she said.

Prosecutors in Arkansas sought to show that Steele’s testimony had nothing to do with the question of whether McDougal defied a court order to cooperate with the Whitewater grand jury.

But Mark Geragos, McDougal’s defense attorney, said Starr’s treatment of Steele “mirrors the activity that went on with Ms. McDougal”--the intimidation or criminal prosecution of witnesses who disagree with Starr’s prosecutors.

Howard ultimately agreed to allow the jury to hear limited testimony from Steele.

The judge also has allowed testimony concerning two other Whitewater figures who allege they were mistreated by Starr’s people. But lead prosecutor Mark Barrett appeared particularly disappointed by the Steele ruling. He told the judge it was “mammoth.”

“It’s something that we didn’t think we were going to have to address,” he said later.

On another matter, McDougal went back on the witness stand and answered a prosecutor’s question concerning her relationship with the president.

McDougal testified last week that her late ex-husband, Whitewater figure James B. McDougal, told her several years ago that Starr’s prosecutors would make a deal with her if she acknowledged having had an affair with Clinton.

Asked Tuesday if she ever had sex with Clinton, McDougal answered, “No.”

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O’Neill reported from Little Rock and Lichtblau from Washington.