Whitewater Trial Laps Closer to Clinton

THE prosecution's key witness in the Whitewater real-estate venture, David Hale, spent his second day on the stand describing a financial scheme concocted to defraud the federal government.

A one-time Arkansas municipal judge, Mr. Hale has previously accused President Clinton of pressuring him to complete loan transactions in the deal. Hale testified that he and two Whitewater defendants hatched a plan in 1985 to use proceeds from a bogus land deal to infuse $500,000 into his small business investment company.

The money would increase Hale's lending limit, enabling the company to make loans for James McDougal and current Gov. Jim Guy Tucker - former business partners of then-Gov. Bill Clinton, Hale testified.

Hale's allegations are central to the Whitewater trial. Governor Tucker and James and Susan McDougal - Clinton's former Whitewater partners - are charged with fraud and conspiracy in a 21-count indictment. They are accused of fraudulently obtaining $3 million in federally backed loans from Hale's company, Capital Management Services., and a thrift owned by the McDougals, Madison Guaranty Savings & Loan.

The indictment against Tucker and the McDougals is based largely on allegations first made in 1993 by Hale, who pleaded guilty to fraud and conspiracy two years ago and was sentenced last week to 28 months in prison.

Hale testified that Mr. McDougal said "We're going to need need to clean up some members of the political family." Hale testified McDougal meant "Bill Clinton and maybe some of his aides and political associates and Jim Guy Tucker."

Clinton, who is not charged, has called Hale's claim "a bunch of bull," fabricated to cut a deal with prosecutors. Clinton is expected to give testimony on videotape April 27.

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