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WHEN KEY WHITEWATER FIGURE DAVID HALE FELL INTO THE GRIP OF THE FBI, HE TURNED FOR HELP TO PRESIDENT CLINTON'S MOST DEDICATED ENEMIES.
BY MURRAY WAAS | LITTLE ROCK, Ark. -- The secret criminal life of David Hale began falling apart on July 20, 1993, when FBI agents executed a surprise search warrant on his offices in a nondescript building he owned at 1910 North Grant St. in Little Rock. For Hale, the raid was his worst fear come true. According to one former employee, Hale was constantly battling an unrelenting anxiety "that he was going to be found out." He had become so fearful that he had taken to typing all his business correspondence himself, compulsively destroying the typewriter ribbons at the end of each day.
Until the FBI raid, Hale, who was then a Pulaski County municipal judge and president of a federally subsidized loan company, was a respected member of the Little Rock community. When he was a younger man, Hale had served as president of the National Jaycees. A devout Baptist, Hale was not only a regular churchgoer, but also made much of the fact that one of the many businesses he owned manufactured church pews.
But when his shadowy life was finally exposed, it became clear that Hale had been using his reputable positions to facilitate his criminal activities. He had turned his loan company, Capital Management Services, into a private piggy bank, making fraudulent and illegal loans that benefited himself and powerful Arkansas political and business figures -- the crime that brought the FBI agents to his offices that day. While president of the National Jaycees, he embezzled funds from the organization, according to records obtained by Salon. As a judge, Hale received kickbacks from a private fine-collection business he allowed to illegally operate out of his courthouse, according to former courthouse employees and law enforcement records. Even the company that manufactured church pews was used as a front to launder money for corrupt deals.
After the FBI raid, Hale did not sit quietly while the wheels of justice decided his fate. Instead, he turned for help and guidance to old friends and acquaintances, who happened to be dedicated foes of President Clinton. With the help of these friends, Hale managed to wriggle out of the legal net that had fallen on him by leveling criminal charges against Clinton, which in turn triggered the appointment of an independent prosecutor, setting off the longest, most expensive investigation of a president in American history.
But even five years later, as Clinton's political future hangs in the balance, relatively little information has come to light about the secret effort by a small group of conservative activists, funded in part by a reclusive billionaire, to use Hale's charges to try to bring down the president.
In response to evidence first reported by Salon, federal investigators are now probing allegations that Hale received cash payments and other gratuities from the conservative Clinton foes during the period he was becoming independent counsel Kenneth Starr's key witness in the so-called Whitewater case. Starr granted Hale lenient treatment in return for his testimony against Clinton in that matter.
In addition to these allegations, there is now compelling new evidence that the ties between Hale and the conservative activists were much closer than has previously been revealed. According to Hale's telephone records, which have been made available to Salon, Hale was in frequent, close contact with the two conservative political activists who directed the controversial Arkansas Project, a $2.4 million campaign to discredit Clinton, as Hale was first making his charges against the president and seeking the appointment of an independent investigator to examine his accusations.
According to the records, Hale frequently placed calls to Stephen S. Boynton, a Vienna, Va., attorney and lobbyist; and Dave Henderson, the vice president of the American Spectator Educational Foundation. Boynton and Henderson, who were close political advisors to ultraconservative Pittsburgh philanthropist Richard Mellon Scaife, oversaw the Arkansas Project, which was funded with Scaife money secretly funneled through the American Spectator and a tax-exempt foundation that runs the conservative periodical.
Boynton and Henderson had previously told Salon and other media outlets that they did not have their first discussions with Hale about his Clinton allegations until February 1994. But the telephone records obtained by Salon show that Hale had conversations with Henderson more than two months earlier -- as early as Nov. 22, 1993, with a dozen additional calls over the next several weeks as well. The records are incomplete: While they reflect telephone calls that Hale placed to Boynton or Henderson, they do not show any calls that the activists might have placed back to Hale.
The timing of these first contacts between Hale, Boynton and Henderson is significant because all three men have asserted that they did not begin working together until months after Hale made his allegations of illegal wrongdoing by the president. But Hale's telephone records directly contradict those claims.
These records detail hundreds of telephone calls placed by Hale from his home and office, as well as from the office of the now-defunct Little Rock law firm of Skokos & Coleman, which was then representing Hale. The records cover a period from early 1993 to late 1994.
The telephone records were originally obtained by investigators working for the Whitewater independent counsel's office during the course of their probe of Hale's charges. It is routine in criminal inquiries to obtain the phone records of the principal figures involved in such an investigation.
When Salon first published allegations of the payments to Hale, the independent counsel's office insisted it had never heard of such charges. Hickman Ewing, Starr's chief deputy in Little Rock, asserted, "We're convinced that none of our people had any knowledge of any such payments."
But sources close to Starr's investigation say that it was known among some Whitewater investigators that Hale was in contact with numerous conservative activists and journalists, including several associated with the American Spectator, just prior to and during Hale's cooperation with the independent counsel. Indeed, in papers filed in a federal lawsuit, Starr's office conceded it had known of Hale's connection with the American Spectator. The fact that Starr's office also had in its possession telephone records detailing Hale's contacts with the Scaife-funded Arkansas Project might also indicate that Starr's investigators knew of a possible financial connection between Hale and Clinton's critics. But the same law enforcement sources say these facts would not necessarily have caused Starr's investigators to suspect that payments were made to Hale.
"That they were in touch with one another doesn't necessarily follow that anyone from this office could have known that there might have been money that exchanged hands," a senior federal law enforcement official stated.
Henderson and Boynton have told a number of contradictory stories about their involvement with Hale and their work in directing the Arkansas Project. Boynton first told the press that he had met David Hale in February 1994. Boynton admitted meeting Hale at a Hot Springs, Ark., fishing resort owned by a mutual friend, Parker Dozhier, who has been implicated in the alleged payments to Hale. "We fished together," recalled Boynton. "We fished together many times," he said, without apparent irony.
Boynton also denied at that time that he or Henderson had ever discussed anything about Whitewater with Hale: "I vaguely remember that David was somehow involved with something about Whitewater. But that was something we have never spoken about. It was something that I only knew about from reading the newspaper. That was not part of our relationship."
Since those disclosures, Henderson has acknowledged in the press that the Arkansas Project was indeed an effort to investigate and discredit President Clinton, and that Hale assisted them in that endeavor by serving as a source of information.
Both Henderson and Boynton declined to comment for this article. When a reporter reached Boynton at home, telling him that Hale's telephone records contradicted his account as to when he first spoke with Hale, he only said, "Isn't that just splendid," before abruptly hanging up. David Bowden, an attorney for Hale, said, "I'll tell you the same thing I always tell you: David [Hale] will talk to you when it snows in hell."
N E X T+P A G E+| Hale's old family friend, segregationist Jim Johnson
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