Key Fraud Witness Under Fire But Prosecutors Promise Corroboration Coming

The federal loan fraud trial of Gov. Jim Guy Tucker and two former business partners of Bill and Hillary Clinton seemed in recent days more like a trial of the main prosecution witness, David Hale.

To be sure, Hale did testify that the defendants were at the center of a loan fraud conspiracy a decade ago. He detailed lies that he said had been told to obtain five loans from a federally subsidized small business lending company he ran, and testified that these loans had benefited the three defendants and their friends.

He also said he had attended a meeting where he discussed one of the loans with Clinton, who was then the governor, and James McDougal, who along with his former wife, Susan, is now on trial with Tucker.

But under a barrage of questions from defense lawyers, Hale, 54, a former municipal judge, also told of nearly a dozen illegal loans to himself or companies he secretly controlled during the same period, 1985-86. Those transactions led to his indictment in 1993 and his subsequent plea agreement, in which he became a government witness.

The cross-examination of Hale not only elicited a number of seeming contradictions in his statements about the loans to the defendants, but also gave the jury an opportunity to hear of shell corporations, lies to investigators and forgery involving the loans to himself.

He acknowledged that he had never intended to repay the loans that went to his companies, yet another admission that could detract from the bite of his accusations against the defendants.

By the end of the week, as Hale’s testimony was drawing to a close, W. Ray Jahn, the lead prosecutor, was gamely trying to rehabilitate him in the eyes of the jurors.

Other members of the prosecution team said testimony corroborating his own would come later and that although he had been a “crook and a liar” before, he was telling the truth now.

Responding to reporters’ questions on the courthouse steps, W. Hickman Ewing Jr., a deputy to Kenneth Starr, the independent counsel for Whitewater-related cases, said: “Everybody is supposed to be accountable for what they did. And the fact that one person robbed six banks and another person robbed one bank doesn’t mean that that one bank wasn’t robbed.”

Although Hale was permitted to testify about the meeting that he said he had had with Clinton and McDougal, the prosecution failed to introduce more testimony from him about what he has publicly described as Clinton’s involvement in the scheme.