Whitewater Grand Jury: The End

May 5, 1998 / 5:30 PM EDT / CBS/AP

With a pizza party as a sendoff, an Arkansas grand jury that investigated Whitewater for two years finished its work today, leaving behind a new indictment of Susan McDougal and unanswered questions about a check with the cryptic notation "Payoff Clinton."

The 23 Arkansans impaneled in May 1996 bid farewell to prosecutors in the grand jury room where they spent the past 24 months examining evidence in Independent Counsel Kenneth Starr's long-running probe of President and Mrs. Clinton.

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"We were a close-knit group of people. Everybody was sad in that regard," one member of the secret panel said as the group filtered out of the courthouse about noon.

Prosecutors said evidence gathered here, which includes information about Hillary Rodham Clinton's billing records, could easily be taken up by a separate grand jury in Washington.

Charles Bakaly, a spokesman for Independent Counsel Kenneth Starr, said today it was still possible prosecutors could seek to impanel a new grand jury in Arkansas to hear additional evidence.

"We may seek to present evidence to another grand jury in Little Rock. That is a possibility, but there's been no decision about that," he said.

McDougal, who was a business partner of the Clintons in their 1980s Arkansas land dealings, was charged Monday with three felonies for refusing to tell a grand jury what she knows about the first family's business activities, including the previously undisclosed check.

The indictment was handed up by the grand jury here that this week finishes two years of Whitewater-related investigation.

As grand jurors gathered this morning in Little Rock, party favors were taken in; one of the panelists walked to the courthouse smoking a cigar.

While his prosecutors wrapped up work in Arkansas, Starr was handling some private legal work today, arguing a case before a federal appeals court in Richmond, Va., for a client, Meineke Discount Muffler. The company is appealing a $390 million judgment against it.

Independent counsels are legally entitled to work in the private sector, and Starr has worked for such clients as the tobacco industry, the NFL Players Association and Chiquita Brands International.

McDougal's attorney, Mark Geragos, said today his client remained in good spirits and that the indictment likely would harden her resolve not to be "bullied" by Starr.

"I think that this has probably increased her resolve. She feels like this has shown that this guy is totally out of control," Geragos said.

Geragos threatened to subpoena Starr and hi top deputy as witnesses at McDougal's trial. "They're going to be a central focus of her reason for not testifying," Geragos said.

Prosecutors took no action against Mrs. Clinton before the Arkansas grand jury finished work, leaving such decisions until later in the investigation, sources familiar with the investigation said.

McDougal, 43, was charged with two counts of criminal contempt for refusing to answer grand jury questions in September 1996 and again last month, and one count of obstruction of justice.

The criminal contempt citations are punishable by a fine of up to $250,000 and an open-ended prison term set by a federal judge. Obstruction of justice carries a maximum 10-year prison term with a $250,000 fine.

She already has been convicted by a jury on fraud charges related to the failed savings and loan at the center of the original Whitewater investigation. She also just finished serving an 18-month term for civil contempt of the grand jury.
Court documents attached to Monday's indictment included previously undisclosed evidence affecting Clinton.

In videotaped testimony submitted in 1996 during McDougal's fraud trial, Clinton said he never had any loans or financial dealings with the failed Madison Guaranty Savings & Loan owned by McDougal and her late ex-husband, James.

The indictment includes a partial transcript of McDougal's last grand jury appearance in which she was confronted by prosecutors with a $5,081.82 check she signed over to Madison Guaranty that was marked "Payoff Clinton."

The check from August 1983 was drawn on a McDougal account and paid to the S&L that eventually failed, the court record said.

Prosecutors do not say in the indictment what they believe the check was for, but indicated the reason they were interested in it was because it related to Clinton's 1996 testimony.

David Kendall, the Clintons' lawyer, said he believed the check involved the McDougals' effort to pay off a Whitewater related business loan at another of their banks, and that the notation simply was an accounting reminder that it went for the real estate venture involving the Clintons.