LITTLE ROCK -- The plea bargain by which former judge David Hale promised to fully cooperate with the Whitewater special counsel provides a key witness in the probe of the complicated Arkansas business dealings, federal prosecutors told the court.
"We're giving up potential (prison) time . . . but we're going to get a great deal of information from a man who has extensive knowledge of the areas we're interested in," said Rusty Hardin, a prosecutor with special counsel Robert Fiske, during a hearing.
Hale, 52, pleaded guilty to two counts of defrauding the Small Business Administration.
Hale claims President Clinton pressured him to make an improper $ 300,000 SBA-backed loan to Susan McDougal, a partner in the Clintons' Whitewater real estate deal.
The loan was purportedly an effort to improve the finances of Madison Guaranty Savings & Loan, owned by Susan McDougal's husband, James, another Whitewater partner.
Fiske said his office opened plea bargain negotiations. Hale quickly agreed and has spent nearly three weeks talking to prosecutors.
In addition to public claims about Clinton, Hale has made other charges of criminal wrongdoing that have not been made public, prosecutors said.
Fiske gave no indication of whether he believes Hale's charges against Clinton. But Hale, whose credibility will be an important issue at any trials, struggled in his first court performance Tuesday.
Under questioning from federal Judge Stephen Reasoner, Hale had difficulty remembering the names of anyone who had received improper SBA loans through his company, Capital Mangement Services Inc. - the charge to which he was pleading guilty.
"I can't recall right off," Hale said. After long pauses and further questions from Reasoner, Hale named several companies, including a cable TV firm controlled by Arkansas Gov. Jim Guy Tucker.
Outside court, Randy Coleman, Hale's attorney, said Madison S&L had made an $ 825,000 loan to Hale on Feb. 28, 1986.
The previously undisclosed loan was then pumped into Capital Management Services. Hale pleaded guilty Tuesday to making a false loan application to the SBA on Feb. 28, 1986.
McDougal, Hale and Tucker - all suffering financial troubles from failing real estate ventures - made a complicated series of loans and sales to each other in February 1986 in an effort to improve the financial appearances of their companies. Clinton has not been directly tied to the deals.
Madison S&L is an important part of the special counsel's investigation because its failure cost U.S. taxpayers more than $ 47 million.
"David was just carrying on business practices that have been condoned in this state for an extended period of time," Coleman said. "Those who have been in a position of authority to change things and stop them have not done so."
