A federal judge has granted Whitewater Independent Counsel, Kenneth Starr, a six- month extension of the empaneled grand jury. In a motion filed Apr. 22, 1997, Starr cited "extensive evidence of possible obstruction of the administration of justice" unearthed by his investigations to date. "Empaneling a new grand jury at this time would cause unnecessary delay and would be a waste of resources," Starr argued. He also stated that additional witnesses would testify before the grand jury and further subpoenas would be forthcoming. Here is the Apr. 22 motion and the judge's order.

 

 

IN THE  

UNITED STATES DISTRICT COURT  

EASTERN DISTRICT OF ARKANSAS 

WESTERN DIVISION 

 

FILED 

APR 22 1997 

JAMES W McCORMACK, CLERK 

 

IN RE GRAND JURY PROCEEDINGS  

No. GJ-96-3 

 

MOTION TO EXTEND GRAND JURY 

 

The United States, by Independent Counsel  

Kenneth W. Starr, moves the Court for an Order  

extending the term of the grand jury empaneled on  

May 7, 1996, for an additional six months, to and  

including November 7, 1997. In support of this  

Motion, the United States states the following: 

 

Rule 6(a)(1) of the Federal Rules of Criminal  

Procedure provides in part: "The court shall order  

one or more grand juries to be summoned at such  

time as the public interest requires." The matters  

being investigated by this grand jury are matters of  

great public interest, and its work has not been  

completed. 

 

A. Background  

 

1. On September 23, 1993, the grand jury for the  

Eastern District of Arkansas returned an indictment  

against David Hale and two others, alleging fraud  

against the Small Business Administration relating  

to Hale's small business investment company,  

Capital Management Services, Inc. The matter was  

being handled at that time by the United States  

Attorney's Office for the Eastern District of  

Arkansas. On or about the day of his indictment,  

certain allegations were made publicly by Hale  

concerning President Clinton and James B.  

McDougal. 

 

2. In October l993, the Resolution Trust  

Corporation (RTC) referred a number of  

allegations to the U.S. Attorney's Office for the  

Eastern District of Arkansas relating to the  

administration of the Madison Guaranty Savings &  

Loan Association, whose principal owner James B.  

McDougal had been a business partner with  

President William Jefferson Clinton and Mrs.  

Hillary Rodham Clinton in the Whitewater  

Development Corporation. 

 

3. In early November 1993, the United States  

Attorney for this District recused herself and her  

office in these matters. Responsibility for the  

prosecution of David Hale, et al., the investigation  

of the matters in the RTC's Madison referrals, and  

the allegations of Mr. Hale, was assumed by the  

Fraud Section of the U.S. Department of Justice.  

 

4. On January 12, 1994, President Clinton asked  

Attorney General Janet Reno to appoint an  

independent counsel. 

 

B. The Fiske Investigation 

 

5. On January 20, 1994, since the applicable  

provisions of the Ethics in Government Act had  

lapsed, Attorney General Reno appointed Robert  

B. Fiske Jr. as regulatory independent counsel,  

pursuant to 28 C.F.R. 603.1. Mr. Fiske assumed  

responsibility for the prosecution of Hale, et al., the  

handling of the RTC's Madison referrals, and  

related allegations. 

 

6. Mr. Fiske was given jurisdiction and authority  

by the Attorney General, in part, to investigate  

whether any individuals or entities had committed  

a violation of federal criminal or 

 civil law relating in any way to President William  

Jefferson Clinton's or Mrs. Hillary Rodham  

Clinton's relationships with (1) Madison Guaranty  

Savings & Loan Association, (2) Whitewater,  

Development Corporation, or (3u) Capital  

Management Services. 

 

7. Mr. Fiske came to Little Rock in late January  

1994. Almost immediately there were allegations  

which caused him to take testimony before an  

existing grand jury in this District. Thereafter, on  

March 23, 1994, Chief United States District Judge  

Stephen Reasoner empaneled another grand jury  

(hereinafter, ''Additional Grand Jury") to be solely  

dedicated to hearing matters within the jurisdiction  

of the Independent Counsel. 

 

8. In March 1994, David Hale pled guilty and  

entered into a plea agreement with the Office of  

Independent Counsel Fiske, agreeing to cooperate  

in the investigation. 

 

9. On June 30, 1994, the Independent Counsel Act  

was reauthorized and signed by President Clinton;  

Attorney General Reno made an application to the  

United States Court of Appeals for the District of  

Columbia Circuit, Special Division' setting forth  

the history of the matter to that point. She  

concluded that the circumstances of the matter  

called for the appointment of an independent  

counsel pursuant to 28 U.S.C. 592(c)(1)(A),  

because investigation by the Department of Justice  

or the allegation" of violations of criminal law by  

McDougal and other individuals associated with  

President and Mrs. Clinton in connection with  

Madison Guaranty Savings & Loan, Whitewater  

Development Corporation, and Capital  

Management Services, Inc., would present a  

political conflict of interest. She asked that 

 the court appoint a statutory independent counsel  

as  soon as possible. 

 

C. The Independent Counsel Investigation Begins  

Before the Prior Grand Jury  

 

10. On August 5, 1994, the Special Division  

appointed Kenneth W. Starr a" the statutory  

Independent Counsel. The Court conferred  

jurisdiction "to investigate whether any individuals  

or entities have committed a violation of any  

federal criminal law, other than a Class B or C  

misdemeanor or infraction, relating in any way to  

James B. McDougal's, President William Jefferson  

Clinton's, or Mrs. Hillary Rodham Clinton's  

relationships with Madison Guaranty Savings &  

Loan Association, Whitewater Development  

Corporation, or Capital Management Services,  

Inc." 

 

11. The Independent Counsel was also given  

jurisdiction to investigate other allegations or  

evidence of violations of federal criminal law  

connected with, or arising out 0f that investigation;  

and to investigate any obstruction of the due  

administration of justice, ox any material false  

testimony or statement in violation of federal law. 

 

12. The Additional Grand Jury met diligently from  

its empanellment on March 23, 1994. It was  

extended twice - from 12 months to 18 months;  

and then again from 18 months to 24 months, the  

Court finding, pursuant to Rule 6 of the Federal  

Rules of Criminal Procedure, that such extension  

was in the public interest. 

 

13. On June 7, 1995, that grand jury returned an  

indictment charging then-Governor Jim Guy  

Tucker and one other person with conspiracy and  

false statements regarding Capital Management 

 Services, and a conspiracy to defraud the United  

States relative to taxes, along with two others. The  

trial of that case has been delayed. The case was  

originally dismissed on September 5, 1995, but  

reinstated after an appeal by the Independent  

Counsel. That matter is now set for trial in this  

District for September 22, 1997. 

 

14. On August 17, 1995, that grand jury returned  

an indictment charging James B. McDougal, Jim  

Guy Tucker, and Susan McDougal The trial of that  

case began on March 4, 1996. 

 

15. On March 23, 1996, the term of the Additional  

Grand Jury expired. It could not be extended  

further. At that point the Independent Counsel's  

investigation of the core matters and related  

matters was not complete. 

 

D. The Independent Counsel Investigation  

Continues With This Grand Jury 

 

16. The Independent Counsel filed a Motion for  

Access to grand Jury setting forth why it was in the  

public interest that it be allowed access to another  

grand jury. By public motion and also in camera,  

the work of the prior grand jury, as well AS certain  

delays encountered by that grand jury, were  

presented to this Court. 

 

17. The Court granted the Independent Counsel's  

Motion, and on May 7, 1996, this grand jury was  

empaneled. The Office of Independent Counsel has  

concluded inquiry into certain matters which have  

been the subject of the grand jury investigation, but  

will not be able to conclude certain matters within  

its jurisdiction prior to the present expiration of the  

term of the grand jury. 

 

 

18. This grand jury has generally met the first and  

third weeks of every month, hearing testimony  

from between one and three days each time it has  

met., For example, the grand jury met three full  

days at their last two sessions, held April 1-3, and  

April 15-17, 1997. 

 

19. After this grand Jury had been empaneled, the  

trial of James B. McDougal, Jim Guy Tucker, and  

Susan McDougal concluded on May 28, 1996,  

with all three defendants being found guilty on  

multiple counts. Mr. Tucker and Mrs. McDougal  

were sentenced thereafter. 

 

20. Before the date originally set for sentencing,  

the United States approached both Jim McDougal  

and Susan McDougal and offered both of them the  

opportunity to assist the United States in its  

continuing investigation by providing truthful  

information. 

 

21. On August 20, 1996, Susan McDougal was  

subpoenaed before this grand jury. When she  

declined to testify on September 4, l996, this Court  

entered an Order compelling her testimony and  

granting her immunity. Upon her further refusal to  

answer questions before the grand jury, she was  

ordered held in contempt by this Court. She  

remains in contempt. 

 

22. Jim McDougal, one of the three persons named  

in the Independent Counsel's original grant of  

jurisdiction, entered into a cooperation agreement  

with the Independent Counsel's Office on August  

8, 1996. He has been interviewed extensively by  

attorneys and agents. Based on information Mr.  

McDougal provided, additional subpoenas have  

been and continue to be issued  on behalf  

of the grand jury, both for testimony and  

records. Mr. McDougal testified before this grand  

jury on April 2 and 3, 1997.  

 

23. The grand jury cannot complete its  

consideration of the information and testimony  

provided by Jim McDougal, and related documents  

and testimony, before its presently scheduled  

expiration date. There are additional witnesses to  

testify, and additional subpoenas for documents  

need to be issued. Moreover, the information  

provided to the grand Jury by Jim McDougal  

emphasizes the continued need to obtain the  

testimony of Susan McDougal. Empaneling a new  

grand jury at this time would cause unnecessary  

delay and would be a waste of resources. 

 

24. This grand jury has also heard extensive  

evidence of possible obstruction of the  

administration of justice relating to the matters  

within the Independent Counsel's jurisdiction. That  

portion of the investigation cannot be completed  

by May 7, 1997. 

 

25. The conduct of the overall investigation has  

been delayed in some respects by a failure of  

persons and/or entities to make timely ox complete  

production of documents pursuant to grand jury  

subpoena. 

 

26. There have been efforts by some persons and  

entities to challenge grand jury subpoenas through  

the filing of motions to quash, or resisting  

compliance even in the face of a motion to compel  

by the Independent Counsel. This has led to grand  

jury litigation under seal, some of which is  

ongoing. 

 

27. In addition, there have been assertions of  

privileges which, in some instances, the  

Independent Counsel believes are unfounded and  

invalid, and which have been or will be the subject 

 of additional grand jury litigation. 

 

28. Some witnesses and entities have refused to be  

interviewed and/or to produce documents  

voluntarily, taking the position they will not testify  

or produce documents absent a subpoena.  

 

Conclusion 

 

The Independent Counsel has been vested with  

jurisdiction to fully investigate and prosecute  

certain matters. This includes authority to  

investigate and prosecute federal crimes that may  

arise out of the above described matters, and all  

related matters, including perjury, obstruction of  

the administration of justice, concealment and  

destruction of evidence, and intimidation of  

witnesses. This grand jury has dedicated much time  

to these important matters. It would impede and  

further delay the investigation of these matters if  

this grand jury were discharged and a new grand  

jury had to be summoned. 

 

For all of these reasons, and for those reasons  

which have been made known to the Court in  

camera, it is respectfully requested that the Court  

issue an Order Extending the term of this grand  

jury an additional six months to November 7,  

1997.  

 

Respectfully submitted, 

 

KENNETH W. STARR Independent Counsel 

 

By : (s) W. Hickman Ewing, Jr.  

Deputy Independent Counsel 

 

 

------------------------------------------------------- 

 

 

IN THE UNITED STATED DISTRICT COURT  

EASTERN DISTRICT OF ARKANSAS  

WESTERN DIVISION 

 

IN RE GRAND JURY PROCEEDINGS 

 

No. GJ-96-3 

 

FILED  

U.S. DISTRICT COURT  

EASTERN DISTRICT ARKANSAS 

 

APR.22,1997 

JAMES W. McCORMACK, CLERK 

 

ORDER 

 

Before the Court is the motion of the United  

Stated, by Independent Counsel Kenneth W. Starr,  

for and Order extending the term of the Grand Jury  

empaneled on May 7,1996, for an additional six  

months, including November 7, 1997. The United  

States submits, and this Court finds, an extension  

of the grand jury is in the public interest pursuant  

to Rule 6 of the Federal Rules of Criminal  

Procedure in order for the grand jury to conclude  

its investigations of matters pending before it. 

 

IT IS THEREFORE ORDERED that the term of  

grand jury 96-3 be extended for a period of six  

months to and including November 7,1997. 

 

Dated this 22nd day of April 1997. 

 

/s/Susan W. Wright 

United States District Judge 

 

THIS DOCUMENT ENTERED ON DOCKET  

SHEET IN COMPLIANCE WITH RULE 58  

AND/OR 9(A)FRCP ON 4-22-97 BY JP