Disgraced judge's testimony could pose threat to Clinton Whitewater trial begins today for Ark. governor, president's ex-partners

March 04, 1996|By LOS ANGELES TIMES

LITTLE ROCK, Ark. -- After living in seclusion under government supervision for nearly two years, David Hale is on the verge of attaining the national forum he has been seeking since he stepped forward to accuse President Clinton of participating in a criminal conspiracy.

Hale, a former municipal court judge whose whereabouts have been kept secret, will emerge to tell his story publicly for the first time when he testifies as the government's star witness in a Whitewater-related trial beginning in Little Rock today.

The impact of his testimony will reach far beyond the federal courtroom in which the trial is to be held. How the public judges Hale's credibility could help determine whether the Whitewater saga further damages the Clinton presidency.

Even though the president was not charged in this case, his advisers believe that he has as much at stake as the three defendants -- Arkansas Gov. Jim Guy Tucker and the president's investment partners in the Whitewater land development, James B. McDougal and his former wife, Susan. Mr. Tucker and Mr. Clinton were never business partners, but they had mutual friends.

During the expected two-month trial, the nation -- as well as the jury -- will get an opportunity to decide whether Hale or the president is telling the truth about the events in question. For that reason, the president's reputation and political future could be riding on defense lawyers' efforts to discredit Hale, who has pleaded guilty to two fraud charges.

Hale, who managed an investment company, will tell the jurors that it was then-Governor Clinton who persuaded him in the mid-1980s to make government-backed loans that were used improperly to bolster the president's former investment in the Ozarks land deal known as Whitewater.

Mr. Tucker and the McDougals were among the major recipients those loans. In a 48-page indictment issued in August, the three were charged with obtaining about $3 million in federally backed loans from Hale under false pretenses.

In response to Hale's allegations, Mr. Clinton, who has been called to testify for the defense, will strongly deny that he played any role in obtaining the loans for the McDougals or Mr. Tucker. "A bunch of bull" is the phrase that Mr. Clinton has sometimes used to characterize Hale's account.

Not since Hale made his allegations against Mr. Clinton in a series of interviews in 1993 has he been available for comment, even to the Senate Whitewater Committee.

New evidence expected

Thus, even though Hale's story has emerged as a central element of independent counsel Kenneth W. Starr's investigation of the president's home-state business activities, it has never been scrutinized in a public judicial forum.

Mr. Starr, who has indicated that he plans to build his case around Hale's testimony, is expected to produce new evidence supporting Hale's story that Mr. Clinton asked him on two occasions to lend money to the McDougals.

In their own defense, Mr. Tucker and the McDougals will insist that while Hale may have defrauded the government by making imprudent loans with federally backed funds from his small-business investment corporation, the three did nothing wrong by accepting the money.

In an effort to undermine Hale's credibility, the defense also will portray the former judge as a habitual thief and liar.

'Who do you believe?'

"The key question will be whether David Hale or the president is more truthful," said Chicago attorney George B. Collins, who is representing Mr. Tucker. "The president has not led a life of crime; David Hale has lived a life of crime. The question is: Who do you believe?"

Among other things, defense lawyers will emphasize that Hale's testimony is part of a plea bargain he struck with Mr. Starr to gain leniency in his own fraud case. In doing so, they will try to create the impression that Hale concocted his story of political intrigue to save himself from years in jail.

Hale does not dispute allegations that he defrauded the government by making improper loans from his company, known as Capital Management Services.

The company's losses were absorbed by the federal Small Business Administration, which backs loans made by investment corporations such as Hale's to small enterprises.

Defense attorneys will emphasize Hale's criminal record and press the witness to acknowledge that he has received numerous legal and financial benefits from Mr. Starr since pleading guilty to reduced charges in March 1994.

Hale has not been seen in public since he was whisked away from the courthouse by FBI agents two years ago, after his guilty plea in this case. He is said to be holed up in a townhouse somewhere outside Arkansas.

If convicted on all 11 counts, Mr. Tucker could be sentenced to 52 years in prison and fined $2.75 million. Mr. McDougal faces 19 counts; Ms. McDougal eight.

Lawyers say they expect jury selection to take most of the first week.

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