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) — On the stand Wednesday, Susan McDougal testified that her late ex-husband lied about President Clinton's involvement in the Whitewater scandal to win a shorter sentence, and urged her to do the same.

"If you don't tell this story, you're going to jail," she said he warned her. Convicted of fraud, James McDougal died in prison one year ago. At one point, he even suggested that she say she had an affair with Clinton, McDougal testified.

After three long years, Clinton's former business partner was finally answering some of Independent Counsel Kenneth Starr's questions— not in front of the grand jury hearing evidence on the Whitewater scandal, but at her own trial.

McDougal is charged with criminal contempt and obstruction of justice when she refused to cooperate with Starr's investigators in 1996 and 1998.

She steadfastly declined to answer any questions then, saying she didn't trust Starr and his prosecutors and felt that they would twist her answers to suit their own goal of creating a case against President Clinton. This is her third trial in three years.

Wednesday's testimony focused on McDougal's contention that her husband urged her to tell what she called "stories" about the president, including that Clinton knew about a fraudulent $300,000 loan to his Whitewater business partners.

McDougal maintains that he told her to do this because "he did not want to die in jail," she testified. James, who at first refused to cooperate with Starr, changed his mind after he was convicted, McDougal said.

McDougal insisted that she never discussed the loan with Clinton.

James McDougal was given a light sentence for his cooperation. Facing up to 84 years, he was sentenced to only three. However, he died in federal prison in March 1998.

Mrs. McDougal said she listened as her ex-husband tried out his "outlandish" story that Clinton discussed the loan briefly with him and former municipal judge David Hale, who made the federally backed $300,00 loan.

McDougal testified that she remembered her husband testing different versions of his story, asking her: "What do you think about the way I say this, does this sound believable?"

Hale also has said Clinton knew about the loan, but Susan McDougal maintains he lied, too. For his part in the scandal, Hale has so far served 21 months of a 28-month sentence for fraud.

McDougal alleged that at one point her ex-husband suggested she could get a deal with Starr's office if she simply testified that Clinton was present for a discussion about the $300,000 loan.

"If you come in and say this you can write your own ticket," she quoted McDougal as telling her.

On Tuesday, McDougal tearfully testified that her ex-husband was "a control person," had a temper and experienced mood swings, but would not concede at first that he had a problem. She said he suffered from manic depression and had serious health problems.

McDougal described how she was in awe of her husband and trusted him. When he asked her to sign a $300,000 loan to her from Hale's Capital Management Services, she did not question him, she said.

Calling Tuesday's testimony a "cathartic" experience for his client, Mark Geragos said, "The only way she was going to get out the true story here was to tell it in a courtroom."

The jury at McDougal's trial is only responsible for determining her guilt or innocence of the two charges facing her. However, lawyers on both sides have used the trial to revive issues stemming from the Whitewater land deal and investigation themselves.

Prosecutors showed Hillary Clinton's videotaped grand jury testimony about the failed real estate scheme, reintroducing the issue just as the first lady contemplates a run for the Senate. The defense, meanwhile, has used the trial to attack Starr's tactics in the Whitewater investigation.

In addition to McDougal, the defense called communications professor Steven Smith to the stand on Tuesday. Smith, who pleaded guilty in 1995 to a conspiracy charge in the Whitewater scandal, testified that he felt the Starr prosecutors were only interested in information that supported their version of events.

He said one prosecutor, Amy St. Eve, gave him a script containing inaccurate information to read before the grand jury. He and St. Eve revised the script before he read it. Another defense witness, Richard Holiman, said he believed prosecutors subpoenaed McDougal's brothers to intimidate her into cooperating with their inquiry.

Court TV's Kathryn Rubenstein, Catherine Heins and The Associated Press contributed to this report.

Copyright© 1999 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.