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First Lady May Be Witness in Hubbell Trial


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  • By Pete Yost
    Associated Press
    Thursday, June 24, 1999; Page A2

    In a move that could complicate the first lady's political aspirations, Whitewater independent counsel Kenneth W. Starr has named Hillary Rodham Clinton as a potential witness for the trial of former law partner Webster L. Hubbell, legal sources said yesterday.

    The independent counsel's office submitted Clinton's name April 21 as one of 63 potential witnesses in the Hubbell case, said the sources, who spoke on the condition of anonymity. Hubbell's lawyers countered with 17 possible defense witnesses May 25. The defense filed both lists under seal in federal court.

    At a hearing yesterday, U.S. District Judge James Robertson estimated the trial--scheduled to begin Aug. 9--would last five weeks at most.

    Clinton is pondering a race for the Senate from New York.

    If Starr calls her to the witness stand, it would be her second appearance to testify at the federal courthouse here.

    Her first was in January 1996, during a furor over the discovery of her law firm billing records that revealed the work she and Hubbell had done on a fraudulent Arkansas real estate development called Castle Grande.

    The billing records turned up in the White House family residence under still-unexplained circumstances in January 1996, two years after they were subpoenaed. The fingerprints of Clinton, Hubbell and former Rose partner Vincent W. Foster Jr. were on them.

    The 15-count felony indictment against Hubbell stemming from the emergence of the billing records mentions Clinton three dozen times. Hubbell, a former associate attorney general in the Clinton administration, is charged with concealing his and Clinton's legal work on Castle Grande.

    The 1,050-acre project, which federal banking regulators concluded was riddled with "insider dealing, fictitious sales and land flips," was owned by Hubbell's father-in-law, Seth Ward, and Clinton's Whitewater business partner, James B. McDougal. Federal regulators concluded that Castle Grande transactions cost McDougal's savings and loan nearly $4 million, contributing to the institution's failure.

    Starr spokeswoman Elizabeth Ray declined to comment. Clinton lawyer David E. Kendall was not available for comment.

    The billing records revealed that Clinton drafted a real estate option that pegged the price of a 22-acre slice of Castle Grande at $400,000. The government, which ended up owning the property when the S&L collapsed, got $38,000 for the parcel.

    The inspector general at the Federal Deposit Insurance Corp. concluded that McDougal's S&L used the option prepared by Clinton to deceive federal bank examiners about the payment of hundreds of thousands of dollars in real estate commissions to Ward.

    © 1999 The Washington Post Company

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