If convicted, the woman who chose to endure nearly two years of
incarceration rather than tell Starr what she knew about Clinton's Arkansas
financial dealings could be sentenced to seven more years in prison.
The image that Mrs. McDougal cultivates as "an innocent bystander of our
generation's sleaziest witch hunt," as her legal defense fund's online biography
describes her, is sharply at odds with the financial scam artist convicted by
the Whitewater jury in May 1996.
June 29, 1998
McDougal, Though Freed, Remains Fettered
by Charges
By JILL ABRAMSON
Susan McDougal was still wearing her orange prison suit, but the look
on her face was sheer joy as she shed her cuffs and leg chains and
savored the freedom granted her last week by a federal judge in Arkansas.
But she will have little time to celebrate or relax after her official scheduled
release from a California prison on July 5.
Just eight days later, on July 13, Mrs. McDougal is scheduled to be
summoned to another courtroom to face another prosecutor. This time her
antagonist will not be Kenneth Starr, the Whitewater independent counsel
whose tactics she has compared to those of the Nazis, but a deputy district
attorney in Los Angeles. And this time the charges she faces have nothing to
do with politics, President Clinton or the Whitewater development project.
Instead, in a long-running but little-noticed court battle in California, Mrs.
McDougal, 43, stands accused of bilking Zubin Mehta, the renowned
orchestra conductor, and his wife, Nancy, of more than $150,000 when she
was their personal assistant and bookkeeper from 1989 to 1992.
Mrs. McDougal, who lived in one of the Mehta family's five luxury homes
and traveled across the United States and abroad for Mehta's concerts,
denies the charges. Her fiance, Pat Harris, said she is a victim of Mrs.
Mehta, whom he described as "a very lonely woman" who "attached on to
Susan with a fervor I've never seen."
If convicted, the woman who chose to endure nearly two years of
incarceration rather than tell Starr what she knew about Clinton's Arkansas
financial dealings could be sentenced to seven more years in prison.
The image that Mrs. McDougal cultivates as "an innocent bystander of our
generation's sleaziest witch hunt," as her legal defense fund's online biography
describes her, is sharply at odds with the financial scam artist convicted by
the Whitewater jury in May 1996.
She was found guilty of taking part in a fraudulent scheme to obtain a
$300,000 loan that was paid to a company she created called Master
Marketing. Part of the proceeds went to pay debts of the Whitewater
Development Co., in which she and her late husband, James McDougal,
were partners with the Clintons.
The charges against Mrs. McDougal in California also paint her as a
perpetrator of financial fraud. They accuse her of forging Mrs. Mehta's name
on a credit card application and fraudulently charging more than $90,000 of
personal items, including expensive clothes, hotel stays and personal air
travel. She also is accused of bilking the couple of $65,000 in falsely claimed
expenses.
On Friday, the prosecutor, Jeffrey Semow, said he expected the trial to
begin as scheduled, though the Arkansas judge who reduced Mrs.
McDougal's criminal contempt sentence to time served, on health grounds,
also ordered her to spend 90 days of house arrest in the custody of her
parents.
"As far as I'm concerned, we're still going to trial," said Semow, a Los
Angeles deputy district attorney. "I do not believe he intended to preclude
her from appearing at the trial."
Mark Geragos, Mrs. McDougal's lawyer, said in a recent interview that the
Mehta case would have been dropped long ago if the defendant were not a
prominent figure in the Whitewater investigation. Geragos said Starr's
prosecution team had used the California charges as a "club" to make Mrs.
McDougal cooperate, an accusation Starr's team denies.
Semow said he had not colluded in any way with Starr, adding that he had
no idea who Susan McDougal was when she was arraigned in December
1993.
Like Whitewater, some aspects of the Mehta case turn on murky financial
transactions. According to documents in the case, Mrs. Mehta said she knew
nothing of the credit card obtained by Mrs. McDougal in 1989 until she
received a surprise call from BankAmerica asking whether she wanted to
increase the credit limit on the card. She later learned that Mrs. McDougal
was having the credit card bills sent to a mail drop in the San Fernando
Valley.
But Geragos, responding for his client, said Mrs. Mehta knew about the
credit card. He said she had agreed to the arrangement as a way to
compensate Mrs. McDougal for additional bookkeeping services.
This explanation has created problems. Mrs. McDougal did not claim the
payments as compensation on her taxes and is charged with state income tax
fraud.
Geragos also contended that his investigators recently found several receipts
from purchases on the credit card that had been signed by Mrs. Mehta
herself. He said a former bookkeeper for the Mehtas is expected to provide
testimony that may further undercut Mrs. Mehta's credibility.
The Mehtas' financial records, which form the backbone of Semow's case,
show several transactions in which Mrs. McDougal is accused of making
unauthorized personal purchases and charging them to her employers. In
1991, these records say, she bought a dress and a belt for herself at a
Malibu boutique called Nikki's and reported the $412 expense as a hotel
charge for Mehta in Tokyo. Investigators for the prosecution said the store
manager had told them that Mrs. McDougal wore the items out of the store.
She also charged hotel stays and thousands of dollars of personal air travel to
the Mehtas, according to a financial audit by the couple's accountant, Alan
Byron, who testified at Mrs. McDougal's preliminary hearing in 1994.
The years she worked for the Mehtas were to be a balm for her broken
marriage to McDougal and the trail of financial failures she left behind in
Arkansas. In 1989, without a job or permanent place to live, Mrs.
McDougal and her boyfriend, Harris, decided to move to Los Angeles.
There, an employment agency sent Harris, who had experience in real estate,
to the Mehtas, who were looking for someone to manage their properties.
For more than three years, Mrs. McDougal spent considerable time with
Mrs. Mehta, a former actress who played a small part in the television
comedy "Bewitched." Mrs. Mehta became so close to Mrs. McDougal that,
Byron said, "It was a relationship where she entrusted Susan McDougal with
100 percent of anything and everything."
It was a heady change from Arkansas, where Mrs. McDougal grew up as
one of seven children in tiny Camden. She met James McDougal at Ouachita
Baptist University, to which she had won a scholarship and where McDougal
taught political science. McDougal was active in Democratic politics and
became friendly with Bill Clinton. Mrs. McDougal has denied her
ex-husband's accusations, published in an article in The New Yorker in
1997, that she and Clinton were romantically involved while he was
governor.
After two years in Los Angeles, Harris left the Mehtas' employ to attend law
school at the University of Michigan, and Mrs. McDougal replaced him at a
salary of $38,000. The disputed bookkeeping fees were to be paid in
addition to that.
The arrangement went smoothly until Mrs. Mehta received the call from
BankAmerica. In July 1992, just as Clinton was being nominated as the
Democratic candidate for president, Mrs. Mehta and her lawyer, Grant
Gifford, confronted Mrs. McDougal about their suspicions about the credit
card and she was fired. After reviewing her financial records and finding
more than $150,000 in billings she contends were phony, Mrs. Mehta took
her complaint to the district attorney's office in fall 1993. Mrs. McDougal
was charged in December.
Harris said Mrs. Mehta often bought Mrs. McDougal expensive clothes and
other gifts. "There's no way Susan took a penny from that woman that wasn't
given," he added.
Mrs. Mehta, through Gifford, declined to be interviewed.
Harris said the Susan McDougal who let herself be dominated by James
McDougal in Arkansas and Mrs. Mehta in California has become a much
bolder person in prison. Although Mrs. McDougal declined to be
interviewed for this article, she has said in past interviews that the turning
point was her decision not to cooperate with Starr. That decision was
reached with her family, including her mother, who as a young woman in
Belgium, joined the Resistance in World War II. Mrs. McDougal has likened
her decision to resist Starr to her mother's defiance in the war. She has said
she will not testify before Starr's grand jury unless he steps aside, because
Starr will force her to lie.
In a televised interview with the CNN talk show host, Larry King, last
February, Mrs. McDougal said her legal troubles have left her life "in tatters."
She said she met weekly with a prison rabbi, to whom she confessed her
hatred of Starr, who re-indicted her in May on criminal contempt charges for
her refusal to testify before his grand jury. That trial is set for Sept. 28 in
Little Rock, Ark..
"Rabbi says it's OK to hate a little," Mrs. McDougal told King. "It helps you
do the right thing."
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