McDougal Pleads Not Guilty in S&L; Loan Case

LITTLE ROCK, Ark. —  The Whitewater figure with the closest financial ties to President Clinton pleaded innocent Tuesday to federal fraud and conspiracy charges unrelated to their partnership in a land deal.

James B. McDougal pleaded innocent to 19 counts naming him in an indictment that also charged his former wife, Susan McDougal, and Gov. Jim Guy Tucker. He is free on his own recognizance.

McDougal is charged with wire, mail and bank fraud, and with lying to regulators about loans from Madison Guaranty Savings & Loan. He and his wife owned the thrift until it was taken over by federal regulators in 1986, three years before it failed at a cost of at least $65 million to taxpayers.

Tucker, who held interests in businesses that got loans from Madison, pleaded innocent Monday. Susan McDougal’s arraignment is Thursday. If convicted, each could receive up to five years in prison and a fine of up to $250,000 for each count.

The Clintons and the McDougals were partners from 1978 to 1992 in Whitewater, a real estate development in north Arkansas. Their partnership is at the heart of independent counsel Kenneth W. Starr’s investigation into the financial dealings of prominent Arkansans.

McDougal said after the arraignment that the trial will show he and the Clintons are innocent and that the charges are politically motivated. The Clintons have not been charged.