Clinton ‘Happy’ at Acquittal of 2 Arkansas Bankers

LITTLE ROCK, Ark. â€”  In a verdict welcomed by President Clinton, a federal jury on Thursday acquitted two bankers of four fraud and conspiracy charges stemming from allegations that they improperly used bank funds to help boost Clinton’s political career when he was governor of Arkansas.

Despite six days of deliberation, however, the jury was unable to reach a verdict on seven other criminal counts, and a judge declared a mistrial on those charges.

The trial against Perry County, Ark., bankers Herby Branscum Jr. and Robert M. Hill--which featured testimony by presidential confidant and unindicted co-conspirator Bruce Lindsey as well as the president himself--delivers a blow to Whitewater independent counsel Kenneth W. Starr.

Deputy independent counsel W. Hickman Ewing Jr., who prosecuted the six-week case, said that he and Starr have not yet decided whether to seek a retrial on the seven remaining charges.

“We’re disappointed,� Ewing said. But he asserted that the outcome would not affect other aspects of Starr’s investigation. “Obviously, we’d just as soon have had guilty verdicts. But this verdict has nothing to do with . . . any other matters still under investigation.�

Starr’s investigation, which has ranged far from the original real estate deal that is the case’s namesake, also includes First Lady Hillary Rodham Clinton’s legal work in Arkansas for Madison Guaranty Savings & Loan, the failed thrift at the heart of the Whitewater case, and the disappearance of her law firm billing records, long sought by investigators.

Starr was recently given authority to investigate the firing of White House travel office employees and the improper gathering of FBI background files by presidential aides.

So far, Starr’s investigation has obtained 12 guilty pleas or convictions.

The verdict Thursday provides an enormous measure of relief to the president, whose close friends and onetime investment partners, James B. and Susan McDougal, along with former Arkansas Gov. Jim Guy Tucker, were convicted in May of unrelated fraud and conspiracy charges stemming from the Whitewater investigation.

In a statement, Associate White House Counsel Mark D. Fabiani said: “The president is happy to learn the news that a jury has acquitted [Branscum and Hill] of significant portions of the independent counsel’s case against them. . . . This decision by a jury of 12 Americans ought to lay this matter to rest once and for all.�

Although only the two bankers were defendants in the trial, the case hung to a large extent on the believability of Lindsey, a deputy White House counsel and close friend of the president who was treasurer of Clinton’s 1990 gubernatorial campaign, from which some of the charges stemmed.

Lindsey was named an unindicted co-conspirator in the second count of the 11-count indictment, a charge on which the jury cleared Branscum and Hill.

In that count, prosecutors attempted to prove that the bankers had conspired with Lindsey to conceal $52,500 in cash withdrawals by Clinton’s gubernatorial campaign.

The defense alleged that Lindsey wanted to keep the withdrawals confidential so that political opponents would not be alerted.

Jurors apparently accepted the testimony of Branscum, Hill and Lindsey that no conspiracy had existed, even though documents reporting the withdrawals were not filed.

Jurors also acquitted the bankers of:

* Conspiring to hide from the Internal Revenue Service cash withdrawals of $30,000 and $22,500 by the Clinton for Governor campaign.

* Causing a false entry to be made in the bank’s books to cover a $3,000 check made out to Branscum in October 1991. The government contended that the money was used to reimburse political contributions; the defendants said that it was payment for legitimate business expenses.

* Misapplying the money from the $3,000 check to Branscum.

* Causing the president of their bank to certify incorrectly to the IRS that the bank had properly documented all cash transactions of more than $10,000 as required by law.

But the jury was unable to decide on seven remaining charges involving allegations that Branscum and Hill improperly funneled $10,000 of their bank’s funds to the 1990 campaign.

The prosecution sought to convince jurors that Branscum and Hill contributed heavily to Clinton’s gubernatorial campaign in hopes of winning appointments to state commissions. In fact, after the election, Clinton appointed Branscum to the unsalaried but influential state highway commission and reappointed Hill to the state banking board.

But Clinton, in his videotaped testimony played for the jury, insisted that the contributions and appointments were not linked. He testified, for example, that he first met Branscum in 1974, when Clinton unsuccessfully sought election to Congress.

The defendants showed no emotion when the verdicts were read by court clerk Marge Higginbotham. But after jurors filed out, the two wrapped themselves in tearful embraces with their wives and family members.

“I’d like to know how much the government spent to prosecute me,� Branscum said.

Said Hill: “I’m going fishing.�

In other developments Thursday, a federal judge denied requests by Tucker and the McDougals for a new trial.

Tucker, who resigned as Arkansas’ governor July 15, claimed that he did not get a fair trial because 10 days into the testimony a juror married a man who had been denied clemency by Tucker in 1992.

Tucker and the McDougals are to be sentenced Aug. 19. Their lawyers said that they would appeal to the U.S. 8th Circuit Court of Appeals in St. Louis.