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MCDOUGAL SAYS HE DID NOTHING ILLEGAL

Whitewater defendant James McDougal took the stand Tuesday and said there was nothing illegal about deals involving him and his co-defendants. He also offered to shoulder the blame for actions prosecutors are trying to pin on his ex-wife.

As the defense began presenting its case, McDougal said he still loved Susan McDougal and that he was responsible for the paperwork on a $300,000 loan made to her business 10 years ago. Prosecutors say the loan was misused."If the jury believes she's done anything wrong, charge it to me," Mc-Dou-gal said. He also said Gov. Jim Guy Tucker is innocent of all the charges against him.

"He's done nothing illegal that I know of. We certainly didn't enter into a conspiracy," McDougal said.

The McDougals and Tucker were indicted last August on fraud and conspiracy charges for allegedly misusing $3 million in federally backed loans obtained before Tucker became governor in 1992.

The McDougals were partners with President and Hillary Rod-ham Clinton from 1978-1992 in the Whitewater Development Corp. In the mid-1980s, McDougal ran White-water's daily operations. The Clintons have not been charged.

U.S. District Judge George Howard Jr. on Monday threw out four charges each against Tucker and Susan Mc-Dou-gal, leaving seven counts against the governor and four against McDougal's ex-wife.

Howard left all 19 charges pending against McDougal.

The charges against Susan McDougal all involve a $300,000 loan to a company called Master Marketing. The government says the money should have gone toward business expenses but that part of it was used for personal and business debts and land purchases.

Assistant Independent Counsel W. Ray Jahn denied that Monday's ruling throwing out some charges was a setback for prosecutors.

"This doesn't change the evidence (or the) indictment," Jahn said. "It presents the jury with fewer issues to resolve."

Clinton, subpoenaed by the Mc-Dougals, testified by videotape April 28. The tape is to be played once McDougal is off the stand.