Judge Won’t Allow Hale Testimony In Whitewater Case Talks With Clinton About Fraudulent Loan Ruled Hearsay

A federal judge refused to allow testimony Wednesday from prosecution witness David Hale about two conversations he has said he had with then-Gov. Bill Clinton during the mid-1980s in which he says Clinton talked with him about making a fraudulent loan.

Hale, who has pleaded guilty to felony fraud charges, was testifying for the third day in the bank fraud and conspiracy trial of Gov. Jim Guy Tucker, D, and James B. and Susan McDougal. The McDougals, who operated a savings and loan, also were the Clintons’ business partners in the Whitewater land development.

On Tuesday Hale described a 1986 meeting with Clinton and McDougal in which he said they sought a loan on fraudulent grounds from his federally financed lending company and insisted it be put in the name of Susan McDougal’s company, Master Marketing. Hale quoted Clinton as saying, “My name cannot show up on this.” Clinton has denied having such a conversation.

Ray Jahn, lead prosecutor for the Whitewater independent counsel’s office, asked Hale Wednesday whether he had “additional conversations with Mr. Clinton alone” about the loan. Hale has said publicly over the past two years that he had other conversations with Clinton in which the plan to make the $300,000 loan was casually mentioned.

Defense lawyers objected and U.S. District Judge George Howard Jr. ruled that the conversations would constitute hearsay and ordered the question stricken.

Hale has been sentenced to 28 months in prison. He is testifying under a grant of immunity from further federal prosecution.

He has publicly alleged that shortly after an initial meeting with McDougal and Clinton, he twice ran into Clinton - once at the state Capitol and once at a shopping mall - and that Clinton pressed him during those encounters to make the loan to Susan McDougal’s company.

Clinton, who is scheduled to give videotaped testimony in the case April 28, has said that he does not recall any conversation with Hale about lending money to Susan McDougal or Master Marketing and that he is certain he never pressured Hale to make the loan.

The White House stressed this week that Clinton will refute Hale’s allegations in his testimony.