By Susan Schmidt
Starr and his legal staff have -- for the first time in the four-year investigation of the president -- assembled evidence that they believe requires a report to the House. The independent counsel statute mandates that such a report be made whenever prosecutors find "any substantial and credible information . . . that may constitute grounds for an impeachment."
With the White House and members of Congress from both parties clamoring for a quick end to the Lewinsky inquiry, Starr's goal is to finish the Lewinsky report and submit it to the House by the end of May, the sources said.
The independent counsel's final report on Whitewater -- the Arkansas land deal that was the original reason for his investigation -- and several other matters later added to his probe could take months longer to put together, but that report would go to the federal judges who appointed Starr and would not raise impeachment issues. Any new indictments by Starr could delay both reports.
The independent counsel is investigating whether Clinton perjured himself or tried to obstruct justice in the Paula Jones case regarding an alleged sexual relationship with former White House aide Lewinsky. Starr also is investigating whether Clinton friend Vernon E. Jordan Jr. helped get Lewinsky a job offer in New York in an effort to influence her Jones testimony.
A team of lawyers in Starr's office has been working for about a month to draft portions of the Lewinsky report, the sources said. The report is expected, they said, to include testimony from a parade of witnesses who have appeared before the grand jury since January, secret tape recordings of Lewinsky discussing what she described as her affair with Clinton and an array of other evidence -- such as gifts of books and jewelry, receipts, White House entry logs and phone records -- meant to corroborate various statements Lewinsky made on the tapes.
It's not clear whether Starr will advance conclusions as part of his report on the Lewinsky evidence, but the submission of a report to the House is an implicit finding that potentially impeachable offenses may have occurred.
Prosecutors still lack testimony from the central figures in the investigation. Both Clinton and Lewinsky, in sworn statements to Jones's lawyers, denied any sexual relationship. The president so far has shown no willingness either to testify before Starr's grand jury or to give any detailed public statement about his relationship with Lewinsky.
Lewinsky has demanded immunity from prosecutors for any testimony she might give, and her appearance before the grand jury has been on hold until Chief U.S. District Judge Norma Holloway Johnson rules on her lawyer's motion seeking to enforce an immunity agreement he says Starr made and then reneged on. Once Johnson's decision is made, Lewinsky will likely appear before the grand jury or face indictment for perjury in her sworn statement, legal observers said. Linda R. Tripp, the onetime friend who secretly tape-recorded Lewinsky's conversations with her about Clinton, is cooperating with Starr's office and the independent counsel plans to bring her before the grand jury after Lewinsky.
One Whitewater-related matter that could become part of Starr's report to the House, the sources said, concerns separate allegations of perjury by the president, but sources close to that investigation said that decision has not yet been made. Starr could simply include the issue in the final report on Whitewater and related matters he must prepare for the three-judge appeals court panel that appointed him.
During the 1996 bank fraud trial of his former Whitewater business partners James B. and Susan McDougal, Clinton denied under oath that he knew about a fraudulent, federally financed $300,000 loan made to a shell company owned by Susan McDougal. A portion of the loan proceeds benefited Whitewater Development Corp., which was jointly owned by the Clintons and the McDougals.
Arkansas businessman David Hale, who made the loan, testified as a cooperating witness at the trial that he, Clinton and James McDougal discussed it. James McDougal, who died last month, became another cooperating witness in the Starr probe and told a grand jury last year that Clinton knew some of the loan was going to the Whitewater investment.
In recent weeks, a third figure convicted at that trial -- former Arkansas governor Jim Guy Tucker -- has agreed to cooperate with Starr and appeared before the grand jury in Arkansas. Tucker was involved in land transactions with Hale and McDougal and served as Hale's business lawyer.
What form the final Whitewater report will take has not been decided, a source knowledgeable about Starr's office said. "It's unclear whether it will be a full explanation of all the events, or a truncated version that says, 'We've investigated all these issues and not brought indictments,' " the source said. "There is a view of a large number of people that you should either bring indictments, send an impeachment report to the House on anything related to the president or say virtually nothing. You shouldn't, as a prosecutor, trash someone's reputation unless you are doing an indictment or impeachment report."
The Lewinsky matter, as Starr noted last week, "is simply one branch of the investigation." And while most Whitewater-related lines of inquiry are completed -- at least tentatively -- some important areas are still being investigated and have the potential to reopen those matters already closed.
On the front burner is an active grand jury investigation in Washington of former associate attorney general Webster L. Hubbell, a longtime friend of both Clintons and former law partner of Hillary Rodham Clinton. Starr already has sent Hubbell to prison once for defrauding his partners and clients at Little Rock's Rose Law Firm. Now, Starr is investigating whether more than $500,000 in consulting fees arranged for Hubbell by White House aides and Clinton supporters was intended to buy his silence in the face of prosecutors' questions about the Clintons' dealings with Madison Guaranty, the now-defunct savings and loan at the heart of the tangled Whitewater inquiry.
Sources close to the investigation said Starr was on the verge of bringing new charges against Hubbell when the Lewinsky scandal broke in January, diverting lawyers and FBI agents to the new phase of the investigation. But there has been renewed activity before grand juries in both Little Rock and Washington in recent weeks. If Starr intends to indict Hubbell in Little Rock, he is facing a deadline of May 7, when the grand jury term there expires.
However, if Hubbell decided to cooperate in the investigation, it could potentially reopen many areas of the Whitewater inquiry. At the top of the list would be any new information he could provide about whether the first lady testified truthfully regarding legal work she did in the 1980s for Madison, particularly involving a large Madison real estate project south of Little Rock known as Castle Grande. Hubbell and his father-in-law, Seth Ward, were also involved in Castle Grande. The Federal Deposit Insurance Corp.'s inspector general found that Hillary Clinton drafted a real estate option for Ward that was a device to pay him hundreds of thousands in unearned commissions and allowed Madison to deceive regulators. Prosecutors also may bring new criminal contempt-of-court charges against Susan McDougal for refusing to testify before the grand jury about the president's knowledge of the $300,000 loan. McDougal has already spent 18 months in jail on civil contempt charges for refusing to testify and is now serving a two-year sentence on her bank fraud conviction.
If Starr reindicts her, he will have to act before the Little Rock grand jury expires.
Starr's office has spent years investigating events at the White House that now appear to be concluding without charges. Each line of inquiry has generated memos running hundreds of pages, a source knowledgeable about the office said, but "they might never see the light of day" if the independent counsel does a bare-bones final report. Among those issues are:
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