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Protected witness, Part Two

LAW ENFORCEMENT RECORDS OBTAINED BY SALON REVEAL A TWO-YEAR EFFORT BY KENNETH STARR TO IMPEDE THE ARKANSAS PROSECUTION OF DAVID HALE.

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BY MURRAY WAAS

LITTLE ROCK, Ark. -- In early 1996, Little Rock Police Chief Louie C. Caudell faced a seemingly intractable dilemma. His detectives had forwarded to him a just-completed criminal file on Whitewater figure David Hale, documenting a scheme whereby Hale had looted his own insurance company, National Savings Life, and made misrepresentations to state regulators regarding the solvency of the firm. With the statute of limitations rapidly approaching, Arkansas prosecutors were now quietly pressing Caudell to present the Police Department's file on Hale to them for possible criminal prosecution.

But Whitewater independent counsel Kenneth Starr was adamantly opposed to prosecution by the local authorities of Hale, then the most crucial witness to his probe of President Clinton. Starr and his top deputy in Arkansas, W. Hickman Ewing Jr., had let it be known in no uncertain terms that they considered the state inquiry to be part of an effort by the Arkansas political establishment to impede their own criminal investigation of the president and then-Arkansas Gov. Jim Guy Tucker.

On Jan. 8, 1996, Mark Stodola, then the prosecuting attorney for the sixth judicial district of Arkansas, sent a letter to Police Chief Caudell inquiring about the status of the Hale investigation, noting that the statute of limitations for some criminal offenses Hale allegedly committed would expire in March. Stodola also noted that although he had heard the Police Department had completed its investigation, for reasons that were not entirely clear to him, the file on Hale had not yet been referred to his office for prosecution.

Throughout the course of the Little Rock Police Department probe of Hale, Detective Sam Williams had kept the FBI agents working for Starr's office fully apprised of any important developments in the investigation. Williams, a police captain, and Caudell, his chief, were well aware of Starr's strong personal conviction that the state prosecutor should not bring any criminal charges against his prize witness.

Three days after receiving the letter from Stodola requesting his file, on Jan. 11, 1996, Caudell sent his own inquiry to Starr seeking his advice as to how he should proceed: "As you know, Mr. Stodola asked ... the Special Investigations Division to investigate allegations that Mr. Hale filed false insurance claims and diverted other persons' money ... without their consent," Caudell wrote. "The investigative portion of this case has been completed for some time; however, at your office's request, we have postponed presenting this file for a prosecutorial decision.

"In light of the approaching statute of limitations, we anticipate presenting this file to Mr. Stodola in the near future ... I am requesting any advice you have on how to proceed in this matter."

Two weeks later, on Jan. 25, 1996, Starr wrote back to Caudell insisting that there surely must have been some kind of a "miscommunication" between their respective law enforcement agencies: "For purposes of clarification, we must correct a statement in your letter that indicates that our office made a request to your office to 'postpone' presenting the Hale file," Starr wrote. "If you believe we intended to delay the transmittal of your file to Mr. Stodola, I apologize for any miscommunication."

The correspondence between Starr and Caudell is only a portion of dozens of pages of law enforcement records obtained by Salon that reveal a two-year effort by the Whitewater independent counsel to impede the Arkansas prosecution of David Hale. Those records include the files of the Little Rock Police Department's investigation, documents from the Whitewater independent counsel's office detailing its monitoring of the state probe and state and federal court records. In addition, a half-dozen law enforcement officials with knowledge of the effort by Starr to derail the state prosecution of Hale also provided their firsthand recollections of those events for this article.

Starr and his chief deputy in Arkansas, Hickman Ewing, had alleged that the state prosecution was a politically motivated effort by allies of Clinton and Tucker meant to intimidate and discredit their prize witness, Hale. Sam Dash, a senior advisor to Starr, told the Arkansas Democrat-Gazette in March 1996 that the state investigation of Hale "could have been a strategy to embarrass or discredit an important witness in an important prosecution."

But federal law enforcement officials have told Salon that Starr's investigation did not find evidence to indicate that the state prosecution was indeed part of a conspiracy to hinder their federal investigation. And a federal judge concluded earlier this year there was no evidence of any wrongdoing or improper political motivations by state prosecutors in bringing criminal charges against Hale.

Now, numerous law enforcement officials have turned the tables on Starr. They have raised what they assert to be the very serious issue of whether Starr engaged in much the same type of conduct he might have unfairly accused the state prosecutor of -- misusing the power and authority of his office by interfering with the legitimate administration of justice by another law enforcement agency.

Such questions can hardly be dismissed as merely the charges and countercharges of competing law enforcement agencies. Disputes between law enforcement agencies with overlapping jurisdictions, conflicting missions and competing interests are a phenomenon that is hardly unique to the Whitewater probe.

But Salon has learned that questions of the propriety of Starr's office's intervening with the state prosecution of Hale have been raised not only by Arkansas law enforcement officers but also by two FBI agents and a federal prosecutor who were among those detailed to Starr's Whitewater investigation. The three federal officials said that the only proper course of conduct by Starr and Ewing would have been to take a neutral position regarding any prosecution of Hale by Arkansas authorities.

To those three federal investigators, the interventionist behavior by Starr and Ewing against the state prosecutors was only one episode in what one of them described as "a near-blind faith by Starr and Ewing in Hale" and "advocacy on his behalf that went perhaps further than that ordinarily provided by a more traditional prosecutor."

That investigator also asserted: "During any criminal investigation, you search for evidence that both corroborates and undercuts the veracity of your key witnesses. I don't know that that occurred during this particular investigation. There was oftentimes a near-blind faith by Starr and Ewing in Hale that often clouded their judgment."

The Little Rock police files indicated that Starr's office also quietly monitored the state investigation of Hale, often without the knowledge of the state prosecutors. Little Rock police Capt. Williams estimated that he provided status reports regarding the state probe somewhere between 12 and 20 times to FBI agents Steven D. Irons and David F. Reign, who were then detailed to the Whitewater independent counsel. Many of the discussions between the Whitewater independent counsel's office and the Arkansas investigators are recounted in the handwritten notes of Williams, as well as a series of memos Williams wrote to his superiors about those contacts. Those notes show Starr's position evolving from one of neutrality or nonintervention regarding any state prosecution of Hale to one of adamant opposition.

"On August 15th, 1994, I met with OIC [Office of Independent Counsel] supervising agent Mr. Steve Irons [and] ... briefed Mr. Irons on the progress of the case," Williams wrote of one of his initial contacts with Starr's office. "Mr. Irons expressed some double jeopardy concerns and obviously wasn't pleased with this development; however, he stated that the FBI's position would probably be one of neutrality. (This position was confirmed during a telephone call later that day.)"

Two months later, in late October 1994, Williams met with Stodola and another state prosecutor, at which time Williams informed them -- to their great distress -- that he was also keeping the Whitewater independent counsel in the loop regarding the Police Department's investigation: "I informed Mr. Stodola that while Mr. Irons stated that their official position was this is of no concern to them, I strongly felt that the OIC was not pleased with our investigation," Williams wrote in a memo at the time.

After that meeting with Stodola, Williams immediately called Irons and told him what had just transpired, according to police department records. Irons once more told Williams that the Whitewater independent counsel would take no position either for or against the state prosecution of Hale: "Mr. Irons thanked me for this information and again told me that their official position was one of nonintervention," according to Williams' recounting of the discussion.

In November 1994, Starr and a deputy prosecutor, Bradley E. Lerman, met with Stodola and an assistant to discuss the state probe of Hale, according to law enforcement records and sources. During that meeting, Starr did not voice any opposition to the state prosecution, though he did ask that the state not bring criminal charges during a critical time in Starr's own federal investigation.

Then, for reasons that are not known, Starr and Ewing abruptly reversed position and overruled the concerns of FBI agents assigned to the Whitewater investigation and began making demands to the state prosecutors that they not go forward with any criminal charges against Hale, according to the records and sources.

Federal Whitewater investigators say that they were not consulted concerning the abrupt shift of positions by Starr and Ewing: "There has generally been a very deliberative and corroborative atmosphere around here," recalled one of the federal investigators. "Everybody is asked for their input, from the youngest, most inexperienced legal assistant on up ... There was none of that type of discussion on this one."

Starr also put forward a proposal to the state prosecutors whereby Hale could still be punished for his local crimes even though the state prosecutors would not issue any indictment, according to the law enforcement records and sources. Under Starr's proposal, information about Hale's local wrongdoing would have been considered during a federal sentencing hearing for Hale's Whitewater crimes.

But the state prosecutors rejected Starr's proposal, saying that Hale would almost assuredly escape any significant punishment under the plan, if he were even punished at all. Under Starr's proposal, they pointed out, Hale would not even have to acknowledge whether he had committed the state crimes. The victims of Hale's crimes would not have been allowed to testify at the federal sentencing hearing. And evidence of the state offenses under Starr's plan would have been considered only in a court-ordered probation report.

The pressure that Starr brought on the state prosecutors is also reflected in Capt. Williams' handwritten notes. On Sept. 13, 1995, Williams wrote in his notes that a distraught and agitated Stodola called him to say that "the [Office of Independent Counsel] is leaning on him to back off the Hale case ... Mark says he & OIC have met several times ... He wants LRPD [Little Rock Police Department] to back his play for prosecution ... Mark says feds are really putting [the] squeeze on him."

Stodola, now an attorney in private practice, declined to comment for this story. Charles G. Bakaly III, the spokesman for the Whitewater independent counsel, said Starr and other prosecutors in his office "followed the letter and spirit of the law" while consulting with the state authorities. Hale's attorney, Tona M. De Mers, when asked for comment on behalf of her client, said: "I don't think so."

In a telephone interview, Williams denied that the Little Rock Police Department had any political motivations in conducting its probe of Hale: "I saw our role as being assigned to investigate thoroughly and present our findings to the prosecutor," Williams said. "It was never our intention -- and I don't think it was anybody's -- to intentionally interfere with anybody else's investigation. But that is one of the reasons for making sure that we had all of the notifications we had made -- to the state prosecutors, the OIC and the FBI -- because we did not want to interfere with anybody's investigation."

The police captain also said that he saw no evidence of any improper motives by either the state prosecutors or the Whitewater independent counsel regarding the conflicting positions they took regarding the state prosecution of Hale: "I don't have any evidence of anybody doing anything for an ulterior motive." He added: "Our sole mission was to maintain the integrity of the Police Department and the investigation and I think we did that."

Over the course of the next several months, the pressure by Starr on the state prosecutors intensified, according to law enforcement records and four sources.

On Sept. 21, 1995, Starr senior advisor Dash told three of the state prosecutors that if the local law enforcement officials were going to proceed with an indictment of Hale, they could in turn find themselves facing federal witness tampering charges.

By December 1995, Williams had completed the criminal file on Hale, but did not turn it over to the state prosecutors. With the statute of limitations rapidly approaching, Stodola wrote Chief Caudell inquiring about the status of his investigation.

Even after the file was turned over to his office, Stodola was still fearful of defying Starr, several sources said. Searching for bureaucratic cover, Stodola then asked both the Little Rock Police Department and the Arkansas insurance commissioner to back his prosecution of Hale. Ultimately, however, it was Stodola's career prosecutors who pressed Stodola to stand up to Starr and inform the Whitewater counsel that he would ultimately file a criminal information charging his prize witness.

Defiantly, Stodola wrote Starr on Feb. 13, 1996, to inform him that he was proceeding with filing charges against Hale. Five months later, in July 1996, the state prosecutors swore out an arrest warrant against Hale and that December formally filed criminal charges against him.

Despite the state prosecutors' defiance of Starr, law enforcement sources said, Starr's actions had caused a significant delay in the presenting of the Little Rock Police Department's file to the Arkansas prosecutors. Intimidated by Starr, Stodola also delayed the filing of criminal charges against Hale. The cumulative effect of those various delays, sources said, was to significantly weaken the state's ability to prosecute its case against Hale.

Later, in February 1998, Starr stunned members of his own staff when he personally made an appearance at a federal sentencing hearing for Hale and praised him for "his contrition" and "humble spirit." It is fairly routine for federal prosecutors to make such appearances for their cooperating witnesses. And Hale had been an especially valuable witness to the Whitewater probe: Information Hale provided to prosecutors led to the convictions of Gov. Tucker and Jim and Susan McDougal, the Clintons' partners in their failed Whitewater land venture, and to guilty pleas from four other individuals.

But it was the deeply personal nature of Starr's comments that surprised several of the career law enforcement officers then working for the Whitewater independent counsel's office:

"In my own dealings with Judge Hale, I have seen, I have witnessed his contrition," Starr said at the hearing. "I believe ... that he is genuinely remorseful of his criminal past. I have been impressed with his humble spirit."

A month after that court appearance, in March 1998, Salon first disclosed allegations that Hale had received numerous cash payments and other gratuities from conservative political activists during the time he was a cooperating witness to Starr's Whitewater probe. Within days, Hickman Ewing told reporters that no law enforcement officers working for the Whitewater independent counsel had even an inkling that Hale might have received such payments until they learned about them from the press.

To some of the federal law enforcement officials who were privately troubled by Starr's intervention with Arkansas prosecutors and his deeply personal comments about Hale during Hale's federal sentencing hearing, the fact that the Whitewater independent counsel was caught off-guard by the allegations of the covert payments to Hale came as no surprise.

"It follows that when a prosecutor develops a blind faith in a witness, it should hardly surprise anyone when it turns out that that prosecutor was also blind to certain things their witness might have been up to."
SALON | Sept. 30, 1998

Murray Waas is an investigative reporter for Salon in Washington.

Also contributing reporting to this story was George Wells, a freelance writer who has covered the federal courts for more than a decade for the Arkansas Gazette. Research assistance by Nat Parry and Deidre Hussey.





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