Ken Starr's chief witness against President Clinton is now the object of a grand jury probe.

Published August 24, 1998 7:00PM (EDT)

A federal grand jury meeting in Fort Smith, Ark., has heard testimony from two people who have alleged that they have firsthand knowledge of covert payments by conservative political activists to David Hale, the central witness against President Clinton in Kenneth Starr's long-running Whitewater investigation, Salon has learned.

While frenzied media attention continues to swirl around Starr's grand jury probe of the Clinton-Monica Lewinsky sex scandal, this previously undisclosed grand jury, meeting far from the national limelight in Arkansas, may eventually pose a threat to the credibility of Starr's four-year Whitewater probe.

The federal investigators conducting the grand jury probe have questioned at least six potential witnesses to date, according to sources. The grand jury itself heard testimony on Aug. 5 from two of the witnesses, Caryn Mann, an assistant director of a funeral home in Bentonville, Ark., and her son, Joshua Rand. The pair first made allegations to Salon in March that conservative political activists had made numerous cash payments and provided other gratuities to Hale during a time when he was a cooperating witness with Starr's Whitewater investigation.

Rand testified that he had personally witnessed numerous payments of cash to Hale made by Parker Dozhier, a Hot Springs, Ark., resort and bait-shop owner, according to sources familiar with his testimony. Mann testified that she was also told by Dozhier of the alleged payments during the time that they were being made to Hale, the sources further said. Mann was then Dozhier's live-in girlfriend.

David Matthews, an attorney for both Mann and Rand, confirmed last week to Salon that his clients had given the testimony to the federal grand jury. Mann declined to comment, saying that she had been asked by federal prosecutors not to discuss her testimony.

At the time of the alleged payments, Dozhier was associated with the Arkansas Project, a four-year, $2.4 million effort funded by conservative billionaire and newspaper publisher Richard Mellon Scaife to investigate and discredit President Clinton. Scaife had funneled money to the effort through the American Spectator magazine and a tax-exempt foundation that runs the conservative periodical.

Dozhier has told several people in recent days that he also testified before the grand jury. It could not be independently confirmed from law enforcement authorities whether Dozhier indeed gave such testimony, and if he did, what he might have told the grand jury.

A woman answering the telephone at Dozhier's home said last week that he would have no comment about the federal grand jury investigation.

David Bowden, an attorney for Hale, did not return telephone calls yesterday and today. Hale has previously denied receiving payments from Dozhier or anyone else associated with the Arkansas Project.

Dozhier has in the past also denied making any such payments to Hale. The Hot Springs resort owner has admitted that he had received at least $48,000 to be the "eyes and ears" for the American Spectator in Arkansas.

But Dozhier told Salon last March that he had provided Hale with the free use of a car and a fishing cabin when Hale visited his fishing resort. Hale often stayed at Dozhier's resort during the time he was a cooperating witness in the federal Whitewater investigation.

The federal criminal inquiry into allegations of payments to Hale is being headed by a former senior Justice Department official, Michael E. Shaheen Jr.

Shaheen was named to head an investigation into the matter when Starr concluded that he himself had an "appearance of a conflict of interest" in leading a criminal inquiry into the matter.

Starr had been offered the deanships of two schools at Pepperdine University in Malibu, Calif., which had received substantial funding from Scaife. Starr has since said that he would not take the Pepperdine positions because the demands of his job as Whitewater prosecutor were too great.

Sources familiar with Shaheen's investigation also said that the federal investigators had asked for information from the American Spectator as well. Terry Eastland, the publisher of the American Spectator, did not return calls seeking comment.

In recent days, federal law enforcement officials also interviewed two private investigators who had been retained by Hale to investigate the business dealings of a former Arkansas state prosecutor who had brought criminal charges against Hale for allegedly stealing funds from an insurance company that he once owned. Hale is scheduled to stand trial on the state charges on Oct. 6.

The two private investigators confirmed last week to Salon that they had consented to interviews with a prosecutor working for Shaheen. The two men, Tommy Goodwin, a former director of the Arkansas state police, and Bill Mulleneaux, also a former Arkansas state police official, said that they did not know why they had been contacted.

Mann had told federal investigators that she had contemporaneously told Mulleneaux and Goodwin about threats that Dozhier had made to her if she and her son were to tell anyone about their knowledge of the alleged payments to Hale or other information about the Arkansas Project.

The federal investigators also on Friday questioned William W. Watt, a former Little Rock municipal court judge, who was an attorney and business associate of Hale's. Watt had told Salon that Mann told him about the alleged payments to Hale in 1997, a full year before she publicly came forward with her story.

When Starr appointed Shaheen to lead the investigation of the Arkansas Project, he also directed that the former Justice Department official investigate allegations of obstruction of justice regarding threats allegedly made by Dozhier to Mann and Rand if they came forward with their allegations.

Mann and Rand also testified to the federal grand jury about the relationship that Hale and Dozhier had with two conservative activists who ran the Arkansas Project, Stephen S. Boynton and David Henderson. Boynton is a Vienna, Va., attorney and lobbyist with long-standing ties to Scaife. Henderson was vice president of the American Spectator Educational Foundation.

Mann told the grand jury of trips that Boynton and Henderson had made to Hot Springs to meet with Hale and Dozhier, and also of a covert meeting that the men had at a resort in Biloxi, Miss. The three men had previously denied that many of the meetings described by Mann had taken place.

Mann had previously provided federal investigators with dozens of pages of contemporaneous notes made by Dozhier describing the activities of the Arkansas Project, and Hale's contacts with Boynton and Henderson.

The federal investigators are said to be interested in whether Boynton and Henderson had passed on funds from the Arkansas Project to Hale or had encouraged Dozhier to do so. Both Boynton and Henderson have previously denied knowing of any such payments to Hale.

Accounting records of the Arkansas Project show that Boynton and Henderson were paid staggering amounts of money for their work on the investigative endeavor of Clinton.

In 1994 alone, Boynton paid himself a salary of $180,000 a year, while paying Henderson $144,000, despite the fact that their work on the Arkansas Project was only part time.

A federal prosecutor who answered the telephone at Shaheen's office earlier this week said that his office would have no comment about any aspects of their investigation.

By Murray Waas

Murray Waas is a frequent contributor to Salon.

MORE FROM Murray Waas

Related Topics ------------------------------------------