Can 50,000 People Be Wrong?

In a little rock hotel suite littered with court files, transcripts and crumpled soft drink cans, Susan McDougal leaped up from a laptop computer as a scene from “A Streetcar Named Desire” flashed across the television screen during the Academy Awards.

“Ah’ve ahlwuhs relied on the kindniz of stranguhs,” McDougal drawled, long and slow with Blanche DuBois, her eyes shining, one hand fluttering over her heart.

“There I am,” McDougal declared in her Arkansas twang. “Story of my life.”

Not entirely. A former business associate of Bill Clinton’s, McDougal went to jail for 18 months because she refused to answer questions from the Whitewater grand jury in 1996. She also served three months for her convictions that year at a Whitewater trial involving the collapse of two financial institutions. The time behind bars transformed the ex-wife of a flamboyant, slightly shady businessman into a national symbol of courage . . . or folly . . . or presidential cover-up.

But all the while, the 44-year-old McDougal was broke and relying on strangers. And the strangers have been kind.

Twice since Labor Day, McDougal’s adversaries have hauled her into court. Twice she has turned the tables, putting her accusers on trial. And twice she has been vindicated by juries. In November, a jury in Santa Monica acquitted her of stealing from her former employers, famed conductor Zubin Mehta and his wife, Nancy. Last month, in her second Whitewater trial, a federal jury in Little Rock cleared her of obstructing Kenneth Starr’s investigation. The same jurors deadlocked on two counts of criminal contempt involving McDougal’s defiance of a court order to tell the grand jury about her personal and business dealings with Bill and Hillary Rodham Clinton during his years as governor of Arkansas.

And consider this: Her defense fund estimates that some 50,000 people have written to encourage her or to contribute. It has raised slightly more than $100,000. Her Los Angeles lawyer, Mark J. Geragos, donated his time, and five members of her California jury traveled to Little Rock in a show of support. Two of the women took her clothes shopping. Another gave her a haircut.

The jurors became a point of curiosity in Little Rock, where the local press dubbed them the McGroupies, and a network television reporter compared them to Deadheads.

“Just what is it about Susan McDougal that would, for wild example, compel . . . jurors from her last trial in California to spend Spring Break in a drab courtroom inside a gloomy old post office in Little Rock?” an editorial in the Arkansas Democrat-Gazette pondered.

Why, indeed, do so many defend a woman who has been accused, not once, but twice, of playing fast and loose with other people’s money? A woman prosecutors say extricates herself by spinning dramatic tales casting herself as the victim?

The girl can’t help it. McDougal is funny, earthy and charming. She has a way of growing on people. Her jurors in the Santa Monica case say they had no opinion of her when they exonerated her. It was only when they met her at dinner afterward that they came to like her.

She is not the same, somewhat flighty woman who went to jail back in 1996. She’s not even the same woman who couldn’t keep still in the Santa Monica courtroom. In their attempts to break her, authorities turned this magnolia to steel.

*

When Susan McDougal finally ended her silence at the two most recent trials, jurors responded. The California jury foreman, a 24-year-old actor and Ivy League blueblood, was among those who showed up in Little Rock to support her. His reasons had nothing to do with being a trial groupie. “I respect her fortitude,” Rufus Gifford says. “I would love to know what she knows, but I think she’s stood her ground and you have to respect that.”

Besides, he adds, “She’s so damned sweet.”

“She was a wide-eyed wonder,” recalls Dr. Dan Martin, a high school friend with a medical practice in their hometown of Camden, Ark. “She had a genuine enthusiasm for all things.” But she’s also “trusting and she’s stubborn. That’s probably what got her where she is.”

Looking back, McDougal, who lives in Redondo Beach, can’t help but agree: “I never see trouble coming until it’s too late.”

She’s impulsive.

She signed on with Geragos at their first jailhouse meeting, slightly more than two years ago, because she liked his shoes. He wore loafers, she recalls, deep brown and highly polished. “The shoes were perfect. And I said, ‘OK, this is a detail guy.’ ”

She sings country songs with a strong, plaintive voice. We can feel her pain. She does a hilarious send-up of “Coal Miner’s Daughter,” giving an impromptu performance one night in a limo in San Francisco: “Ah might be ignorant, but ah ain’t stupid.” She has a thing for Elvis, Loretta Lynn and karaoke. Raised a Baptist, she now counts a rabbi and a priest among her advisors.

She always orders dessert.

As for the stubborn streak, suffice it to say that it took several minutes of cross-examination one day in March before she’d answer a prosecutor’s simple yes or no question: Had she been fairly convicted by a jury in that very same Arkansas courtroom of misapplying funds from a small business loan? McDougal repeatedly balked at the prosecutor’s use of the word “fairly.” She claims that a key prosecution witness, David Hale, lied in that trial, independent counsel Kenneth Starr’s first big Whitewater win and a planned step in obtaining testimony from the McDougals about their dealings with the Clintons.

Although her involvement was minor, Susan McDougal served more time than any other Whitewater figure. She has ridden life’s roller coaster with gusto, and she’s paid the price.

A person held in civil contempt by an Arkansas federal court normally would not be locked up in L.A.’s tough county jails. But prosecutors used McDougal’s then-pending embezzlement trial to transfer her from a federal medical facility in Texas to Sybil Brand Institute, and then to L.A. County’s Twin Towers jail, where she was isolated in a glass cell for as many as 23 hours a day, ostensibly for her own protection. The hours she sat handcuffed--while meeting with lawyers or going back and forth to court--aggravated a congenital back condition. Once, she was chained to a toilet in a holding cell in the Santa Monica courthouse.

McDougal’s supporters say she was deliberately treated harshly in an attempt to break her. Authorities deny it. And, like so many points of dispute in this case, there is scant proof one way or the other.

She never complained, say her allies. Except on national television--29 times--her critics are quick to add.

“I have a way of making people want to kill me,” she says. Attorney Geragos says McDougal pushes buttons in authority figures. As for the button she pushes in him: “I just hate seeing her get pounded.”

In Little Rock, journalists asked whether her L.A. entourage had somehow fallen for McDougal’s charms. The implication, of course, was that folks in Arkansas were wise to her.

Tell that to Fred Darragh, the retired businessman who founded the Little Rock branch of the American Civil Liberties Union. During her trial, he gave her the run of his nine-acre spread just west of town. She holed up in his pool house, far from prying eyes. “I would have done anything I could,” says Darragh, who is 82 and confined to a wheelchair. “She’s a hero of mine for standing up to Ken Starr.”

Joan of Arkansas, fans call her. The sainted Susan McDougal, Arkansas’ only living martyr. Stroll with her down the bathhouse streets of Hot Springs, swing through her hometown, or stop for some barbecue and deep-fried fruit pies at the Pig Pit in Arkadelphia, and supporters emerge from the woodwork. Some of them reach out to touch her; others whisper her name as she passes by.

Even in the courtroom, the scene resembled a biblical laying-on-of-hands as McDougal grasped and hugged and thanked supporters four at a time, tears welling in those wide-set brown eyes. “God bless you. I really appreciate it. Thank you. God bless.”

Of course, some people in this country--undoubtedly the one-third who can’t stand Bill Clinton--brand her a convicted felon, practically spitting out the words.

Where you stand on Susan McDougal, and there is little middle ground, says much about whether you are the sort of person who pushes the envelope or colors inside the lines. Her closest friend, Claudia Riley, says simply: “I’ve always considered Susan to be the epitome of all that is good and noble.” Former employer Nancy Mehta, the conductor’s wife, considers her a thief, even though McDougal was acquitted of the charges. “Would you like her to work for you?” Mehta says in ominous tones.

McDougal’s most powerful nemesis, Starr, long has said he considers her a felon looking for “a license to lie.” Lately, however, he has been far more circumspect, declining to discuss her in detail even as he tries to refurbish his image on the talk-show circuit.

McDougal inspires gallantry in others. Three men put their lives and careers on hold to protect her interests--her lawyer, Geragos, who is 41; co-counsel Eugene “Pat” Harris, 40, who is also her fiance; and brother Bill Henley, 50, who runs a legal services business in Huntington Beach.

Call them the “three amigos”: Geragos is the smooth legal strategist and quotable spin-meister. He is personable, buoyant and popular with the press. Harris is quiet, the worrier who anticipated the worst possible scenario. He handled the behind-the-scenes legal work and soothed McDougal. As for Henley, well, he was the enforcer, the amigo who kept reporters at bay, slapped subpoenas on his sister’s enemies and squired visiting California jurors around Little Rock.

The amigos accompanied McDougal in December when California Attorneys for Criminal Justice honored her with its first Profiles in Courage award. At the luncheon in San Francisco, about 600 jaded criminal lawyers rose to their feet and applauded--three times--as she urged them to keep up the good fight against overzealous prosecutors.

During the three months I covered her embezzlement case, gag orders and protective amigos kept me from McDougal. When we finally spoke, in a courthouse cafeteria, she said, “You look nice today and I’m not just sucking up.”

After her acquittal, I invited myself to the San Francisco awards ceremony to get to know her better. McDougal was radiant, charismatic enough to light up a room, well-spoken enough to spur others to action. But even as I was moved to place one hand over my heart, every instinct told me to keep the other on my wallet. I knew from the trial that she was not above fudging her resumes or faking a credit card application. At the same time I felt oddly protective toward her.

She calls me “sweet stuff” and “baby” over the phone and rings off saying, “I love you.” It’s endearing. As much as I like her and want to believe her, the doubts lingered, nibbling at the corners. Was I being taken in? I hadn’t yet been won over. That would come much later, following a long struggle between my head and my heart.

Gifford, the California jury foreman, also wrestled with his doubts. He says they kept him awake at nights, until he finally decided that McDougal was on the level.

Gene Lyons, a Little Rock newspaper columnist, has come full circle. Initially, he says, he assumed she was as guilty of Whitewater financial shenanigans as her former husband. Now he believes she’s a scapegoat and counts himself among her admirers.

McDougal’s detractors never struggle with ambivalence. They tend to be straight-arrow types who view the world in black and white. “Young guys with a testosterone problem and angry old white guys,” as Geragos describes them.

They find her to be willful and contrary, even dangerous, as she thumbs her nose at the legal system. Speaking before the House Judiciary Committee in November, as her jury began deliberating 3,000 miles away in Santa Monica, Starr singled her out. He said her refusal to cooperate “has caused literally years of delay and expense” to his investigation. He suggested she’s covering up for Clinton, who had publicly expressed support for her when she headed off to jail for civil contempt.

For years, people have been asking her: Why, Susan? Why didn’t you just tell Starr & Co. what they wanted to hear and get on with your life? Why put up with 18 months in jail and all that that entails--the humiliation of being publicly paraded in shackles, strip-searched and locked away in solitary?

When she finally spoke under oath in a steamy federal courtroom that last week in March, McDougal was all Southern drama queen. She fanned herself, clutched at her heart, dabbed at her eyes and sobbed chokingly. “I’m sorry,” she apologized. “I’ve waited a long time to tell my story.”

Settling down, she said she couldn’t tell a lie that would hurt others. Specifically, she couldn’t tell former husband James B. McDougal’s lie--that she’d had an affair with Clinton when he was governor and that Clinton benefited from an illegal $300,000 loan taken out in her name.

Why didn’t she just say she didn’t know anything?

McDougal insisted she feared she’d be charged with perjury if she didn’t deliver what the independent counsel wanted--a point some jurors agreed with. The way McDougal described it, her decision to defy a court order was a redemptive, almost religious, experience. But the jurors sat stone-faced, seemingly unmoved by her tears and an emotional turn on the witness stand that her lawyer described as “a catharsis.”

Some media observers could barely contain their snickering. After all, she was tearfully confessing to absolutely nothing. “Now that the Divine Miss M. has finally answered all the questions, her testimony can be summed up as follows: (1) She didn’t know, and (2) Jim did it,” sniped the Democrat-Gazette. On cable, Marcia Clark, filling in for the more sympathetic Geraldo Rivera, noted--incorrectly--that she carried her own box of tissues to the witness stand and employed a tried-and-true defense: Blame it on the dead guy.

The national press, meanwhile, fixated on whether she’d actually had a romantic liaison with Clinton. McDougal had made her sidewalk denials for the television cameras. “Get over it,” she said later. “Who’s going to rot in jail for some old boyfriend?” Hatred for one’s foes, indeed, seems a far more powerful motivator.

Let there be no doubt: Susan McDougal loathes the independent counsel. She considers Starr to be evil and resents how his office has, in her view, run over the lives of her family and friends. Asked at the start of a 1996 Diane Sawyer interview what message she wished to deliver, McDougal quipped, half seriously: “That I hate the independent counsel and want them dead and their children dead. That one?” Later, when Sawyer asked if she meant it, McDougal looked into the camera for what seemed an eternity before responding.

“Yes.”

Prosecutors played the outtakes of that interview, all 31/2 hours of them, trying to convince the Little Rock jurors that McDougal deliberately thwarted their investigation.

“It’s OK to hate a little,” Rabbi Aaron Kriegel says he told her. They met at Los Angeles’ federal Metropolitan Detention Center, where he counsels inmates, and he has been her friend and chief spiritual advisor since.

McDougal is working on letting it go: “I did hate the independent counsel, I really did. I struggle with it. It’s still a struggle every day.”

After she testified, McDougal seemed lighter in spirit and far less guarded than she’d been during the months before the trial. She was emerging from her shell.

We drove through the Arkansas timberland, retracing the steps that brought an innocent from tiny Camden (pop 14,701) to Little Rock’s inner financial and political circles, then to a Brentwood mansion and finally to national notoriety. We talked about life and family and men, and we ate greasy hamburgers and dropped in on old friends.

For McDougal, her long ordeal already was fading in the rearview mirror. “I had my day in court. I got to tell my story. I’ve waited a long time. For me, it’s over.”

*

To understand how she evolved into an accidental hero, one has to backtrack to her roots.

The middle child of seven, Susan began her life as a fixer and peacekeeper who catered to her father, an irascible former Army sergeant who told me his family doesn’t like him to talk much to reporters because, as he puts it, “I swear a lot.”

“My father’s tough,” older brother Bill Henley agrees. “The only thing he knew about raising children was that they should pass inspections on Saturday mornings, and that they should never get a bad report card. Her job, every day of her life, was to please my father.”

Even as a youngster, Susan had wild ideas, at least by Camden’s standards. Her Sunday school class prayed for her after she delivered a seventh-grade report that concluded communism was good because it got people sharing.

In the family photo albums are pictures of Susan riding a toy tractor, shooting baskets, wearing bathing suits. She was a tomboy with a bookworm bent, who sang in the church choir. She thought that she’d wind up a minister’s wife.

After high school, she won a scholarship at Ouachita Baptist University in nearby Arkadelphia. The summer before her senior year, she met 35-year-old political science professor James McDougal, who’d been a top aide to Arkansas’ legendary U.S. Sen. J. William Fulbright. Always drawn to what her brother calls “eggheads,” Susan told friends that she thought Jim “talked like a book.”

Jim McDougal favored elegantly tailored suits and drove a yellow Mercedes. A recovering alcoholic, ardent political junkie and skilled raconteur, he was an Arkansas classic. His wheeling and dealing blended politics, money, schmooze and real estate--”dirt deals,” he called them.

A colleague at Ouachita introduced them. “I was attracted to her from the moment we met,” he wrote in his memoir, “Arkansas Mischief.” “She had an upbeat personality, and her quick-witted repartee hinted at high intelligence.”

On an early date, they went water-skiing with the Rileys. “A picture lingers in my mind of Susan in her black bathing suit,” Jim wrote. “I asked her where she had gotten those curves. ‘They just showed up,’ she said.”

“Susan was instantly enamored,” Claudia Riley recalls. “She idolized him. She was happy to throw her lot in with him.”

Susan and Jim McDougal married on May 23, 1976, a month before her 22nd birthday. Bob Riley, Claudia’s husband and a former Arkansas lieutenant governor, presided, and a young power couple attended the wedding: Bill Clinton and Hillary Rodham. Bill and Jim were old friends, both having worked for Fulbright a decade earlier.

But Susan’s choice of spouse wasn’t a big hit with her family. Her father told her: “You know, you’re marrying this old man and you’re going to wake up every morning to the sound of a hacking cough.”

In 1978, two years into their marriage, the McDougals invested in 230 acres along the White River in northern Arkansas. Susan named it Whitewater. The idea was to subdivide it and develop vacation homes. They gushed over Jim’s latest dirt deal when they met the Clintons at Black-Eyed Pea, a restaurant in Little Rock. The four became partners, and two decades later their ties, personal and financial, continue to draw intense scrutiny from the independent counsel.

In late 1978, Clinton was elected governor--the youngest in the nation. Jim abandoned the Whitewater project to work as his economic advisor. “Whitewater fell by the wayside,” Susan says. It was the first glimmer of a pattern that would dominate, then destroy their marriage, Susan says: Jim would launch a project, then abandon it, “and I would have to pick up the pieces.”

The job in the governor’s office paid peanuts, and by the time Clinton’s reelection chances were sinking at the end of his first term, so were the McDougals’ finances--and their marriage. They decided to “move to the country,” Susan says. On a whim, Jim bought the tiny Bank of Kingston, Ark., in 1980. “It was a pretty little storefront bank,” she says. “It looked like a candy store.” The following year, Jim bought into a savings and loan he renamed Madison Guaranty.

The McDougals continued to carry the lion’s share of the debt while Whitewater languished. But Madison prospered. And Susan worried. She pleaded with Jim, “You can’t keep buying things. It’s going too fast.” (His memoir acknowledged her unhappiness.)

By late 1984, federal regulators were looking into Madison’s lending practices. As the pressures built, Susan consulted a marriage counselor. Around Memorial Day 1985, Jim packed Susan’s bags into her car. “He told me, ‘You have become a total downer.’ He wasn’t mad. He just wanted me gone so he could run without a leash.”

By then, she was involved with Harris, a protege of Jim’s. “Pat was the complete opposite of Jim McDougal.” As for Jim, he was dating the first of a series of young women. The McDougals remained friends, though, and in April 1986, she says he left a message on her answering machine, asking for a favor they had previously discussed. Would she sign papers taking out a $300,000 Small Business Administration loan?

Susan says she signed the papers, which stated the money was for her advertising business, which did not exist. But she didn’t read them. It may have been the worst decision of her life, but at the time, it didn’t seem like that big a deal. “Throughout my marriage we had borrowed money,” she says. “It seemed like the most natural thing in the world to do--go sign some loan papers.” She turned the check over to Jim. It was deposited in their joint account. What happened after that is of keen interest to the independent counsel. The prosecutors want to know if any of the money reached Clinton.

Several weeks later, Jim suffered a stroke. She was visiting him when he ran into the street in his bare feet and passed out. Shortly afterward, federal regulators seized control of Madison. The S&L; failed, costing taxpayers more than $60 million, and the McDougals were broke.

Jim recovered and moved to San Diego but returned to the Rileys’ by the end of 1987. He showed up on Christmas Eve, Claudia recalls, “with his shaving gear in a Piggly Wiggly sack and his cat.” Claudia told Susan she’d look after Jim. Susan and Harris moved to California to spend a year in the sun before he headed off to law school. Her year of fun turned into a strange three-year odyssey into the lifestyles of the richer and more famous. It would land her deeply in trouble.

An employment agency dispatched Harris to the Brentwood estate of conductor Zubin Mehta and his wife, Nancy, a former actress. He managed the couple’s five upscale Westside rental homes until he left for a better-paying job. Susan took his place as Nancy’s assistant. The women became inseparable.

McDougal’s courtroom tales of massive shopping sprees and restaurant feeding frenzies provided the cornerstone of her defense in the embezzlement trial--that Mehta was a spendthrift who kept poor track of her money and gave McDougal anything she wanted.

They even came to resemble each other. A photo of McDougal at her parents’ home sends a chill. It was taken at the Mehtas’. Her hair is blond, her lashes long and black, her lips outlined perfectly. She was the spitting image of Nancy Mehta.

Susan and Nancy went on a fitness kick, buying running suits and shoes. The butler drove them in the Rolls-Royce to the end of San Vicente Boulevard and dropped them by the ocean.

“She would flat-out start running as fast as she could,” Susan recalls, “and I would be trying to keep up with her. The first restaurant we’d come to, we’d stop and eat.”

They took ballet lessons: “We looked like little dancing piglets in pink tutus,” says Susan.

McDougal left Mehta during the summer of 1992, accused of stealing $150,000. Already, the Whitewater storm was gathering.

Jim McDougal started the controversy by talking with a reporter about Whitewater in March 1992, when Clinton’s first presidential campaign was in full swing. By then, McDougal’s financial empire was in ruins, and Jim was feeling abandoned by his friend, headed toward high places. “I wanted Bill Clinton to feel my pain,” he explained in his memoir. Four years after he took his story to the press, he was convicted of bank fraud and Susan of aiding and abetting in the misapplication of loan funds. (Jim died in prison last year.)

Starr has acknowledged that the convictions were a planned first step aimed at winning the McDougals’ cooperation in his probe of the Clintons. Jim rolled over. He tried to bring Susan with him.

“He told me it could be a lot of fun, that we would be together,” she says. “We could pay the Clintons back for not being good friends to us. We could be a team again and it would be a lark.”

She was tempted, she says, by an offer of leniency: probation, no federal tax investigation, no Mehta case, no new charges. But Harris reminded her: “A lie isn’t just for today. A lie is never the end of it.”

As her grand jury date neared, “I began to think about everything and to think about my life and the corners I had cut and the things that I had done that were not exactly right, and I thought, ‘That’s how you got here!’ I was at a point where my life had to mean something. And it meant something to me not to lie, not to do the easy thing.” She came clean with her family, telling them she’d gotten off track. Later, she told them she was ready to go to jail.

McDougal left the Little Rock courthouse Sept. 9, 1996, shackled at the hands, feet and waist. No one expected her to spend more than a couple of weeks in jail. But she was passing through the looking glass. Over the next 18 months, she would see the insides of five different jails.

The harsher her treatment, the deeper she dug in her heels. She emerged from behind bars with a steely strength and newfound maturity. The change was so remarkable, she couldn’t stand watching herself on the outtakes shown at her contempt trial. “I am so beyond her,” she says. “Her eyes are not with us.”

But she’s not quite beyond Whitewater. Starr still is deciding whether to retry her on the contempt charges that split the jury. This month, she is testifying about her experiences with Starr before a congressional committee considering whether to keep or abolish the independent counsel’s office.