February 21, 1998 in Nation/World

Ex-Governor Tucker Agrees To Guilty Plea In Tax Fraud Case Says He’ll Cooperate With Starr’s Prosecutors About Financial Dealings Involving Clintons

Susan Schmidt The Washington Post
 

Former Arkansas Gov. Jim Guy Tucker agreed to plead guilty to fraud Friday and cooperate with prosecutors from independent counsel Kenneth W. Starr’s office who want to question him about financial transactions and other matters involving President Clinton and Hillary Rodham Clinton.

Based on discussions with Tucker, Starr’s office said that prosecutors believe Tucker’s cooperation “will constitute substantial assistance to the United States.” Prosecutors have wanted to ask him about the Clintons’ involvement with a failed Arkansas savings and loan and about Hillary Clinton’s legal work on the Castle Grande real estate development south of Little Rock, Ark., a project federal officials have described as a series of sham loan transactions.

Hillary Clinton has said she remembers few details of her work on the project while working as a lawyer at Little Rock’s Rose Law Firm. Tucker was involved in some of the Castle Grande transactions.

Starr’s office also has been investigating whether there were efforts in the 1992 campaign and after the Clintons arrived in Washington to conceal legal work Hillary Clinton did for Madison Guaranty Savings and Loan, or to try to derail a federal criminal investigation of Madison. Tucker’s lawyer, William H. Sutton of Little Rock, declined Friday to say what Tucker is prepared to tell prosecutors, but he confirmed there have been discussions about the parameters of what he will say.

Tucker, who had a liver transplant a year ago, told reporters in Little Rock he agreed to plead guilty because he is still very ill. He could have spent five years in prison if found guilty.

“That would have been the equivalent of a death sentence for me,” he said after entering his plea. “I had to recognize that the risk of conviction was very high,” Tucker said. “My family has been through a nightmare for four years. It’s time that came to an end.”

Under the arrangement - reached in the midst of jury selection for the tax fraud trial - Tucker and a co-defendant agreed to plead guilty to a single conspiracy count in exchange for a recommended sentence of probation and financial restitution to the government. The two were partners in a cable television company and were charged with creating a sham bankruptcy to avoid paying taxes on profits when they sold the company. A third partner pleaded guilty earlier, and the three will make restitution of $3 million to the IRS under the agreement.

Starr’s office also has been seeking the cooperation of Tucker and two other potentially central witnesses - Susan McDougal and Webster Hubbell - in prosecutors’ three-year-long investigation of the Clintons. The plea agreement comes as most of Starr’s staff and resources are consumed by the Monica S. Lewinsky investigation in Washington.

Tucker was convicted of bank fraud in 1996 along with the Clintons’ former Whitewater partners, James and Susan McDougal, Madison’s former owners. Tucker was involved in real estate transactions with McDougal and another key witness in the Whitewater probe, David Hale, a local judge who ran a federally backed loan company and pleaded guilty to defrauding the Small Business Administration.

Hale and McDougal have said that Clinton, while governor, urged Hale to make a $300,000 loan to Susan McDougal - one that was made on fraudulent terms and never repaid. Prosecutors have wanted to question Tucker about what he knows of any dealings between Clinton and Hale.

Tucker was forced to resign the governorship after his conviction but avoided imprisonment because of his illness.

James McDougal became a cooperating witness in the investigation after his conviction in exchange for a reduced jail sentence. Susan McDougal has refused to cooperate and is in jail for contempt of court.


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