Newsreal: Justice Department considers investigating key Starr witness

Salon reports that the Justice Department is considering a probe of key Whitewater witness David Hale

By Jonathan Broder - Murray Waas

Published March 27, 1998 8:00PM (EST)

The Justice Department is considering a recommendation by the FBI that a formal inquiry be launched into allegations that David Hale, the key witness against President Clinton in Kenneth Starr's Whitewater investigation, received numerous cash payments from an Arkansas man who was working with a clandestine campaign funded by conservative multimillionaire Richard Mellon Scaife.

Salon first reported the allegations about Hale on March 17.

It is not known exactly how much money Hale may have received, but two eyewitnesses, Caryn Mann and her son Joshua Rand, said the payments occurred regularly over a two-year period, from 1994 to 1996, after Hale became a federal witness in Starr's Whitewater investigation. The payments ranged from as little as $40 to as much as $500, according to Mann and Rand.

Two other sources familiar with Scaife's campaign independently confirmed the effort to funnel money to Hale. These sources spoke to Salon on the condition of anonymity.

Hale is considered crucial to the Whitewater investigation because he has alleged that Clinton, while governor of Arkansas, pressured him to provide an illegal $300,000 loan to Susan McDougal, a partner of the Clintons in the Whitewater land deal.

Justice Department sources said that among those involved in the decision to initiate a formal investigation are Deputy Attorney General Eric Holder Jr.; Lee Radek, chief of the department's public integrity section; and P.K. Holmes III, the U.S. attorney for the western district of Arkansas.

Sources said the FBI had recommended to the Justice Department that several witnesses be interviewed in coming days, and that a financial analyst be assigned to review complicated financial data to determine the trail of funds that might have been provided to Hale.

"There are some jurisdictional questions to work out," said a senior Justice Department official. "And then we are going to decide how to proceed."

The senior official also said, "This one is going to be a political hot potato, so we're going to make sure that all the i's are dotted and all the t's are crossed. But there is a real desire to get to the bottom of this.

"There is a long, institutional memory in this building when it comes to Whitewater, or anything related to it," said the official, "but that will not stop us from doing our duty at the end of the day."

The official said that he was referring to criticism of the Justice Department by Republican members of Sen. Alphonse D'Amato's Whitewater Committee, who alleged in the committee's 1995-96 hearings that two U.S. attorneys from Little Rock, Ark., had delayed acting on information relating to Whitewater before commencing an investigation. Justice officials have privately said that the criticism by Senate Republicans was unjustified and politically motivated.

The alleged payments to Hale were said to have come from a representative of the so-called Arkansas Project, a $2.4 million campaign to investigate Clinton and his associates between 1993 and 1997, according to sources familiar with the agreement. Scaife underwrote the findings of the Arkansas Project through several tax-exempt foundations he controls.

Under the scheme, two of Scaife's charitable foundations transferred as much as $600,000 a year to a third charitable foundation, which owns the conservative American Spectator magazine, according to documents. The American Spectator then transferred most of the funds to Stephen S. Boynton, an attorney and conservative political activist with long-standing ties to Scaife. Boynton has repeatedly declined comment.

A portion of the funds then went from Boynton to Parker Dozhier, a 56-year-old sportsman and fur trapper who then made cash payments to Hale, according to Caryn Mann, Dozhier's former live-in girlfriend, and her 17-year-old son, Joshua Rand. Mann and Rand told Salon they witnessed the payments while Hale, then cooperating with Starr's prosecutors, was staying at Dozhier's fishing cabin complex in Hot Springs, Ark., between 1994 and 1996.

"Parker would receive money from Boynton," Rand told Salon. "He would essentially put that in his right pocket, and then he'd pull money out of his left pocket and give it to David Hale." Rand said that on several occasions Dozhier instructed him to take money out of the bait shop cash register for Hale.

Contacted by telephone, Dozhier called the allegations that he had given money to Hale "bullshit," adding, "I never made any payments to David Hale in my life ... Not a dime."

Rand, however provided eyewitness details of the payments. "I saw him give money to David Hale," Rand said. "A couple of times, Parker asked me to go out to the bait shop and get $120 in 20s, 10s, usually small bills. I'd bring it in to the house, and Parker and David Hale would be sitting there, and I'd see Parker give it to David Hale.

"Sometimes it was only $40, $60 or $80 at a time, but other times it was $120 or $240 or $500," Rand said. "If Hale needed to pay a $200 bill, Parker would give him the money, plus an extra $100 or $120 for his pocket."

Informed of Rand's allegations, Dozhier said Rand was "destined to be a chalk outline somewhere."

Mann said that Dozhier also threatened her, saying if she "ever talked about what he was doing against Clinton, I would get into my car one morning and my car would blow up."

Hale and his Little Rock attorney, David Bowden, did not return several telephone calls.

Mann said that Dozhier was well compensated for his role in the scheme. She said she kept Dozhier's books and kept track of regular incoming checks from Boynton and his associate, David Henderson, the vice president of the American Spectator Educational Foundation and a longtime associate of Scaife. Henderson has declined to comment.

Two other sources familiar with the Arkansas Project told Salon that Henderson informed them funds from the project went to Hale. One of them said Henderson had told him that he was trying to assist Hale in 1995 -- the same time period that Mann and her son said they had seen Dozhier make cash payments to Hale.

"Henderson told me that David Hale's family needed to be taken care of, and they had a way of doing that," said the source. "There was a mechanism."

Jonathan Broder

Jonathan Broder is Salon's Washington correspondent.

MORE FROM Jonathan Broder

Murray Waas

Murray Waas is a frequent contributor to Salon.

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