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McDougal: Watch Out, Ken Starr

Susan McDougal declared herself ready for a renewed battle with Kenneth Starr after she was acquitted of embezzlement charges Monday in a case surrounded by hints of the Whitewater affair.

"Everything that's happened to me in recent years has been about Bill Clinton," McDougal said Monday after the jury acquitted her on all nine counts, including forgery and failure to pay state income taxes.

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CBS News Correspondent David Dow reports that McDougal is preparing for a February trial in Arkansas for refusing to testify before Starr's grand jury investigating the president. Starr, the independent prosecutor, has accused McDougal of contempt and obstruction of justice.

"When people say to me, 'Are you scared of Ken Starr?' I think, he'd better be scared of me because I'm on my way back," McDougal said.

McDougal spent 18 months behind bars for refusing to testify against President Clinton in the Whitewater affair.

McDougal, 44, was accused of stealing $50,000 from conductor Zubin Mehta and his wife, Nancy, when she worked as bookkeeper and personal assistant to Mrs. Mehta from 1989 to 1992. She could have gotten up to four years in prison.

The case took five years to get to trial. By then, Ms. McDougal had become famous for her steadfast refusal to testify against her friend Clinton.

"There was never anything to it," she said of the embezzlement charges.

She also served 3 1/2 months of a two-year sentence in a Whitewater-related loan fraud case before being released because of a painful back condition. Also convicted in that case were her ex-husband James McDougal, who died in prison, and former Arkansas Gov. Jim Guy Tucker.

The California case seemed a Hollywood-style subplot of a Washington scandal, though jurors were warned by the judge not to consider McDougal's Whitewater involvement or possible ulterior motives by prosecutors.

Outside the jury's presence, defense attorney Mark Geragos said Starr had promised to make the embezzlement charges go away if McDougal would testify. When she refused, he alleged, Starr "propped up" the case and urged prosecutors to move on the defendant.

Geragos didn't change his story after the verdict: "Of course it's related to Whitewater. You think if her name was Susan McDonald they would try this case?"

Starr's office said in a statement that the California charges were brought before the appointment of any Whitewater independent counsel and were unrelated.

Several jurors called the 10-week trial a waste of taxpayers' money.

"As time went on I became morand more indignant," juror Nancy Nieman said. "I was very disturbed that it came to trial. I don't know how this got through the system."

They said they abided by Superior Court Judge Leslie Light's order to "wash Whitewater from our minds." They also said Mrs. Mehta - who testified that McDougal forged checks and credit card receipts without her knowledge - was not believable.

"There were too many holes in her story," said the jury foreman, Rufus Gifford. "I simply didn't believe she didn't know what was going on."

McDougal described her employer as a sister-like friend who showered her with gifts. She said they became inseparable, lunching together in fine restaurants and shopping "like tornadoes" at the best stores in Beverly Hills.

Eventually, McDougal moved into the Mehta home.

She portrayed Mrs. Mehta as a lonely woman whose husband traveled abroad most of the year and left her to manage their finances.

Mehta flew to Los Angeles from Munich, interrupting a concert schedule to testify that his wife was not a compulsive shopper and that their spending habits should not be on trial. But he admitted whatever he knew of the family finances was told to him by his wife.

Geragos said he believes his client's victory has pulled the rug out from under Starr and his team.

"They were counting on a conviction here," Geragos said. "A conviction would have devastated Susan. There's only so much one person can take."

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