Former attorney general Richard G. Kleindienst, on trial on charges of perjury, took the stand in his own defense here today and portrayed himself as the unwitting victim of charming, fast-talking con men who bankrupted an Arizona insurance firm.
Speaking in calm, measured tones and often turning to face jurors directly, Kleindienst denied knowing about the complicated financial maneuverings of convicted swindler Joseph Hauser, who authorities charge directed and eventually bankrupted Arizona's Family Provider Insurance Co. in 1976.
He said Hauser admitted being investigated by California authorities for bribery, but denied any wrongdoing, claiming, "It was just a matter of a couple of television sets." Kleindienst said he discussed the bribery case with Hauser's attorney, a mutual friend, before deciding to represent Hauser as a lawyer in other matters.
Kleindienst also testified that Hauser never revealed the details of a 1976 insurance premium siphoning scheme in which $1.8 million in dividends from Family Provider was illegally transferred to its parent company. The transfer was made so the parent company, Great Pacific Corp., which was also controlled by Hauser, could purchase two subsidiary firms. According to court testimony, Arizona insurance authorities tried to stop the deal by having the money returned to Family Provider. But they were thwarted when Hauser and his associates secretly pledged $1.1 million of the dividend to another firm.
The extent of Kleindienst's knowledge of the complicated series of transactions forms the basis of his perjury indictment. Hauser and other witnesses have testified Kleindienst knew in advance that restricted and siphoned money was being used to buy the other firms.
Kleindienst testified he met with Hauser three times in April and May of 1976 and agreed to represent Hauser in the Family Provider matter. But he said he first learned of the $1.8 million Family Provider dividend transfer when John Boden--a key Hauser associate and the then-president of Family Provider--told Kleindienst on May 20, 1976 that Arizona insurance commmissioner Joseph Trimble questioned the arrangement and ordered the funds returned within 48 hours.
Boden "said as a result of that, Trimble gave us 48 hours to return the dividend . . . to Family Provider. The next thing that happened was Hauser said, 'They want us to give it back. Do we?' I said I don't know. I'd like to find out. I'm not an expert on insurance law."
Kleindienst testified that he researched the issue that day, discussed the matter with his Phoenix law partners and concluded the dividend transfer was illegal. "I said in my opinion the insurance department is right and I would recommend you get that money back and you get it back in that 48-hour period of time," Kleindienst said.
Kleindienst testified he phoned Trimble to tell him Hauser and his associates would comply with the order. Trimble has testified he didn't talk with Kleindienst until a hearing was held on the matter days later.
Earlier, Judge Gerald Strick dismissed two of Kleindienst's 14 perjury counts.