SUSAN MCDOUGAL ON TRIAL
				The Clinton Scandal Nov. 23, 1998 (Embezzlement Acquittal) Nov. 24 1998 Update March 8, 1999 (Jury Selection - Federal Trial) March 10 Update March 11 Update Discuss the Case March 16 Update March 18 Update March 22 Update March 23 Update March 24 Update March 25 Update March 30 Update April 1 Update April 2 Update April 5 Update (Morning) April 5 Update (Afternoon) April 7 Update (Morning)

LITTLE ROCK, Ark. (Court TV) — The Independent Counsel's Office alleged for the first time Thursday that a fraudulent $300,000 federal loan taken out by Susan McDougal in 1996 was used to help pay off an earlier loan taken out in President Clinton's name.

In testimony at McDougal's obstruction of justice and criminal contempt trial, FBI agent Mike Patkus outlined how the loan could have benefited then-Arkansas governor Clinton.

Clinton has testified he knew nothing about the fraudulent Small Business Administration-backed loan McDougal received. He also said under oath that he never had any financial transactions or loans from the failed savings and loan, Madison Guaranty, owned by McDougal and her late ex-husband James.

But Patkus testified that he discovered a $27,600 loan from Madison S&L to Clinton taken out in 1982 while pouring through microfilm records of the failed thrift.

Patkus then traced for the jury a series of complex transactions that showed how the 1982 Clinton loan allegedly came to be reimbursed through the $300,000 loan McDougal took out four years later.

Patkus, an accountant, said Whitewater real estate agent Chris Wade paid off most of the $27,600 loan in Clinton's name and then was reimbursed from proceeds by another bank loan McDougal took out. McDougal then took the proceeds from the fraudulent $300,000 loan and paid off the bank loan used for Wade.

Thursday's testimony was further evidence that, after failing to charge Clinton and first lady Hillary Rodham Clinton in the five-year Whitewater investigation, Starr's office plans to use McDougal's trial to air the evidence they gathered against the first family.

McDougal is charged with defying a federal judge's order to testify before the federal grand jury that investigated the Whitewater matter and the Clintons' financial dealings. Prosecutors allege her refusal to testify has kept them from determining if Clinton committed perjury.

Thursday, Starr's prosecutors introduced a series of Whitewater loan documents, in an effort to show the close relationship between McDougal and the Clintons. Each one of the eight documents introduced at the trial bears the signature of the Clintons, McDougal and her late ex-husband James.

The documents show that the bank loan for approximately $200,000 used to purchase the Whitewater property in northern Arkansas was repeatedly extended by the bank for over a decade.

McDougal's lawyer intends to use the trial to raise questions about Starr's tactics, charging in opening statements Wednesday that prosecutors wanted his client to falsely implicate the Clintons in wrongdoing.

"She was not going to cooperate with an investigation that was totally flawed and corrupt," attorney Mark Geragos said.

Geragos told jurors Wednesday he would show that his client is being "used as a pawn ... to get the president or the first lady."

Starr prosecutor Mark Barrett said "we vigorously and categorically deny that" Starr's office had sought perjured testimony from McDougal to implicate the Clintons.

Starr has documents, but no central witness to testify against the president and Hillary Rodham Clinton, whom he has been investigating since 1994 as was his predecessor, Robert Fiske, in connection with the 1980s real estate venture known as Whitewater. The Clintons were partners with McDougal and her late husband, James, in the venture. This is McDougal's third trial in three years. She was convicted of fraud charges brought by Starr in 1996. She served 3 months of a 24-month term before U.S. District Judge George Howard Jr., the same judge presiding at this case, freed her because of a bad back. Her ex-husband, James McDougal, was also convicted for Whitewater-related crimes and died in prison.

More recently, Susan McDougal was acquitted in an embezzlement case pressed by conductor Zubin Mehta and his wife, Nancy.

McDougal has expressed her belief that Starr and his team encouraged Mrs. Mehta to go forward with the embezzlement case in California state court. Starr has repeatedly denied involvement.

The Associated Press contributed to this report.

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