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Witness: McDougal Loan Paid Clinton Debt

By Pete Yost
The Associated Press
Friday, March 12, 1999; Page A4

LITTLE ROCK, March 11 Kenneth W. Starr's investigators alleged today for the first time that a fraudulent loan to Susan McDougal in the 1980s was used to retire a $27,600 debt in Bill Clinton's name that was taken out for their Whitewater land venture.

In opening testimony at McDougal's trial on charges of obstruction of justice and contempt, FBI agent Mike Patkus told jurors he would have liked to ask her "whether Bill Clinton had any knowledge" about the link between the two loans, but she refused to answer questions before a grand jury.

Prosecutors have used the early stages of McDougal's trial to air evidence they say calls into question the president's sworn testimony during a 1996 criminal trial.

Clinton testified then that he never received any loans from the failed savings and loan owned by James B. and Susan McDougal and also knew nothing about the fraudulent $300,000 loan she received in 1986.

Patkus testified that, using microfilm records, he discovered that the McDougals' S&L had made out a loan and cashier's check totaling $27,600 to Clinton, then Arkansas governor, in 1982.

The check which does not bear Clinton's endorsement paid off an earlier debt in the Whitewater real estate venture started by the Clintons, McDougal and her then-husband, James, who died last year.

Patkus then traced for the jury a series of complex transactions that he said showed how the 1982 Clinton loan came to be reimbursed through the $300,000 loan Susan McDougal took out from a Small Business Administration-backed lender four years later.

The agent said that Susan McDougal paid off part of the Clinton loan and that Whitewater real estate salesman Chris Wade paid off the rest, using money he borrowed from Madison Guaranty, the McDougals' S&L;

The FBI agent testified that the Wade loan was eventually paid off with a check from Whitewater, which was replenished with money from a bank loan to the McDougals, who then used money from the $300,000 loan to Susan McDougal to pay off the bank.

Patkus testified that he discovered the microfilmed copy of the Clinton check in early December 1996 after James McDougal tipped off Starr's office about it. Starr's office got the original check in 1997 from the trunk of an abandoned car hit by a tornado south of Little Rock.

Clinton's lawyer, David E. Kendall, has suggested in the past that James McDougal simply made out the check and that Clinton didn't know about it.

Outside the courthouse, Starr deputy Hickman Ewing said, "The question remains whether Bill Clinton knew about it or not."

Of Susan McDougal, who listened intently to Patkus's testimony, Ewing said, "She smiled in the courtroom like maybe she knows the answers."

Patkus revealed that he and another FBI agent had discovered a handwritten document from Madison Guaranty identifying apparent borrowers. "B Clinton" is among the names on the paper, Patkus said.

McDougal has repeatedly refused to testify about the loans, despite being granted limited immunity from prosecution after being convicted in May 1996 on four felony counts relating to the $300,000 loan.

She is charged with two counts of criminal contempt and one count of obstruction of justice.

© Copyright 1999 The Washington Post Company

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