A convicted insurance swindler testified today that former U.S. attorney general Richard G. Kleindienst was "the quarterback" who was "calling the shots" in a series of complicated financial manuevers that led to the collapse of Arizona's Family Provider Insurance Co. in 1976.
Joseph Hauser's testimony contradicted Kleindienst's assertions that he was unaware of the details of Hauser's fraudulent dealings. The extent of Kleindienst's knowledge of Hauser's operations is the central question in the 14-count perjury indictment on which Kleindienst is being tried.
As Kleindienst sat at the defense table taking notes and peering at his former legal client, Hauser testified he hired Kleindienst to help land a lucrative Teamster Union insurance contract and to help solve problems with Family Provider and another Arizona company because "we needed help from the top."
Hauser said he met with the former White House official seven to 10 times between April and June of 1976, but could not recall when the two first met because "I met people from the top from all over the country. It wasn't that significant.
"We went over the overall program, when I got into the business, what I was doing," Hauser testified. "We laid our cards on the table.
"I told him I was being investigated by the FBI for a period of time. I was expecting an indictment. I explained who my attorney was. He said I was in good hands and not to be concerned."
Hauser said at another meeting the two men discussed the planned acquisition of the National American Life Insurance Co. (NALICO), using dividends diverted from Family Provider.
It was that dividend arrangement that Arizona insurance officials said was illegal under state law and helped lead to the perjury indictment against Kleindienst.
Hauser said when he complained to Kleindienst that Arizona authorities might hold up the NALICO deal, "he must have repeated five times, 'Don't worry about Arizona. That's my problem. I'll take care of it.' "
But as Hauser finished a grueling second day on the witness stand, major inconsistencies emerged in his testimony. The main contradiction concerned Hauser's recollection of a discussion he had with Kleindienst about the NALICO acquisition.
On Monday, Hauser testified a number of officials were on hand for the meeting. During today's cross-examination, he said the NALICO deal was discussed during a "private discussion" between him and Kleindienst.
As Kleindienst's attorney Michael Scott read from the previous day's testimony, the former attorney general grinned, and Hauser said, "I don't see anything different in the testimony I just gave."
As he has with other prosecution witnesses, Scott challenged Hauser's credibility, getting him to admit that he committed perjury in testimony before a California grand jury at his own criminal trial and at Security and Exchange Commission hearings.
Scott also tried to prove that Hauser was not candid in his disclosures to his attorneys. When Hauser appeared to not answer questions directly, Scott asked the trial judge to intervene as Scott and Hauser argued with each other.
Hauser maintained he "never lied as a trial witness."
Hauser, who was sentenced to 30 months in prison as a result of a May, 1980, California fraud conviction for misuse of Teamster pension funds, has been placed in the government's witness protection program and has received immunity for testifying in the Kleindienst case.
He said the federal government has paid him $70,000 in the past five years for testimony in several trials, including the FBI's celebrated Brilab (for bribery labor) investigation in New Orleans.