Whitewater defense attorneys are attacking the credibility of star government witness David Hale and his story of financial corruption implicating President Clinton and his former business partners and Gov. Jim Guy Tucker.
The de facto prosecution of Hale will resume Monday in front of the jury assembled to judge Tucker and co-defendants James and Susan McDougal on fraud and conspiracy charges.The exercise is crucial to defense attempts to portray Hale as a liar and thief, defense lawyer Bobby McDaniel said. "If the jury is going to hear the truth about David Hale, they're going to have to hear it from us . . . ," he said.
Hale pleaded guilty in 1994 to using his federally backed small-business investment company to defraud the government. He confessed to illegally doling out illegal loans to benefit himself, his associates and friends.
Testifying for a fifth straight day Friday, Hale was forced by defense lawyer Sam Heuer to admit to crimes that did not involve the defendants. Heuer showed how Hale and two other prosecution witnesses illegally collected close to $1 million from Hale's company in 1986.
Defense lawyer George Collins also got Hale to admit he hasn't paid taxes on at least $63,000 that Hale said he'd received from FBI agents while cooperating in the Whitewater investigation.
Federal investigators seized Hale's business records in July 1993 and he was indicted for fraud. He admitted to devising an intricate scheme in 1989 to fool the Small Business Administration. The plan funneled money from an associate's client's account through Hale's lending firm to several companies he controlled and then back to his lending company.
Hale insisted that he, Tucker and the McDougals used a similar scheme in 1986. He testified they began plotting in late 1985 to structure deals that would infuse money into his company to attract federal matching funds he could then lend at Tucker's and McDougal's direction.
He has said that then-Gov. Clinton attended a planning meeting on one of the loans in 1986 and pressured him to make a $300,000 loan to Mrs. McDougal.
Clinton has called Hale's account "a bunch of bull" and is scheduled to testify by videotape for the McDougals. The couple were his and Hillary Rodham Clinton's partners in the failed Whitewater land development in northern Arkansas.
Deputy Independent Counsel W. Hickman Ewing Jr. said he understood the defense's attack on Hale's credibility.
"Obviously, the defense would like to try David Hale," said Ewing. "David Hale broke lots of laws. He used his (small business investment corporation) as a piggy bank."