Sentencing delayed for McDougal Postponement suggests he's aiding prosecutors in Whitewater probe

Former partner of Clintons

Ex-Governor Tucker, in poor health, gets probation, $25,000 fine


LITTLE ROCK, Ark. -- A federal District Court judge delayed sentencing for James B. McDougal in the Whitewater case yesterday, suggesting that McDougal has agreed to cooperate with prosecutors and that they hope he has information that will move the case forward.

McDougal, the partner of President Clinton and first lady Hillary Rodham Clinton in the Whitewater real estate deal, had been scheduled for sentencing on fraud and conspiracy charges yesterday afternoon before Judge George Howard Jr.

But at midmorning the judge announced that the sentencing would be delayed until November. Howard immediately imposed a gag order on McDougal, his lawyers and the prosecutors involved in the case.

A second defendant, former Arkansas Gov. Jim Guy Tucker, was sentenced to probation and community service on related charges.

Neither McDougal nor his lawyer were at the courthouse yesterday. But a person involved in the case said that McDougal agreed Aug. 9 to cooperate with prosecutors and that the judge ordered a 90-day sentencing delay then. That order was sealed until yesterday.

McDougal was a political ally and a business partner when Clinton was governor of Arkansas in the 1980s. When the Whitewater matter became an issue in the 1992 presidential race, Clinton campaign aides urged the garrulous McDougal not to talk to reporters.

Still, it is far from clear that he has anything damaging to say about the Clintons or that he would be a credible witness if he did.

Before the gag order was imposed, lawyers in the case had speculated that he would be most valuable to prosecutors if he could provide documents to help their investigation.

People who spoke on condition they not be named said a deal between McDougal and the prosecutors might involve information he could offer about loans for another land development that figures in the Whitewater case, Castle Grande.

Hillary Clinton involved

Hillary Clinton, then a lawyer in Little Rock, did some legal work on the Castle Grande development, but the extent and nature of her involvement is a subject of much dispute.

Investigators found the Castle Grande deal to be riddled with fraud, but Hillary Clinton has never been accused of wrongdoing.

Citing the gag order, Kenneth W. Starr, the chief Whitewater prosecutor, refused yesterday to talk about McDougal. He said, "I am not confirming, and I am not denying."

McDougal was convicted on 18 felony counts of conspiracy and fraud relating to Madison Guaranty Savings and Loan, a savings association he owned. It failed in 1989 at a cost to taxpayers of more than $60 million.

Some of the charges against him relate to a fraudulent loan that was used in part, prosecutors say, to pay expenses for the Whitewater land development. McDougal, his wife at the time and the Clintons were partners in that venture.

Fifteen of the counts carry a maximum sentence of five years in prison and a fine of up to $250,000. The remaining three counts carry a maximum sentence of two years in prison and a fine of up to $250,000.

Tucker's four years of probation include 18 months under a modified form of house arrest. Under the house arrest, he would be allowed to leave home only for work, church or medical treatment.

Lectures on family values

He was also ordered to give lectures on family, educational and social values at Arkansas high schools and junior high schools, and to pay a fine of $25,000 and restitution of nearly $300,000, including interest, to the Small Business Administration.

His voice trembling, Tucker, 53, pleaded for leniency yesterday on the grounds of his health. He is on the waiting list for a liver transplant at the Mayo Clinic. The judge acceded to his request, saying, "A sanction of prison would be as cruel as the grave."

McDougal's former wife, Susan H. McDougal, is to be sentenced today on four felony counts in the case. She faces a maximum sentence of five years in prison and a fine of up to $250,000 on three of the counts, and two years in prison and a fine of $250,000 on the fourth count.

Prosecutors had pressed for the maximum sentence against Tucker in hopes that it would encourage him and his two co-defendants to cooperate.

Prosecutors appeared dumbfounded by the judge's lenient sentence. He had wide discretion in sentencing because the crimes occurred before the enactment of federal sentencing guidelines.

There are mixed views on just how valuable McDougal would be to prosecutors. He has demonstrated that he has intimate knowledge of some of the Clintons' business dealings, including Hillary Clinton's lucrative trading in commodity futures. In the late 1970s, she parlayed a $1,000 investment into nearly $100,000.

But McDougal proved dismal on the witness stand. He was the only one of the three defendants to take the stand, and some jurors said after the trial that they would have acquitted him and his two co-defendants on many of the charges had they not heard his testimony.

McDougal suffered a mental breakdown in the 1980s. And his conviction on 18 felony counts goes to the heart of his credibility.

Pub Date: 8/20/96

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