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Criminal charges linked to Whitewater tossed out


WASHINGTON -- In a sharp rebuke of the Whitewater special prosecutor, a federal judge yesterday threw out some of the major criminal charges to emerge so far and ordered the investigation to stay within narrow limits.

The special prosecutor, Kenneth W. Starr, promised to appeal the ruling by Judge Henry Woods of Little Rock, Ark., a 78-year-old, 15-year veteran on the federal bench. Judge Woods invited such a challenge, and said he would help hurry it along to the 8th U.S. Circuit Court of Appeals and later to the Supreme Court.

It was not clear whether the ruling would benefit President Clinton or Hillary Rodham Clinton by narrowing Mr. Starr's chances of drawing them into his widening legal maze.

For 13 months, Mr. Starr has been conducting a sweeping investigation that started with suspicions about Arkansas land deals involving the Clintons when Mr. Clinton was governor. Whitewater allegations have hung over the Clinton administration for more than two years.

One of the most politically potent indictments to come out of the Starr probe -- a three-count set of charges leveled in June against Gov. Jim Guy Tucker of Arkansas -- was nullified by Judge Woods yesterday. Mr. Starr, the judge said, had no power to look into business affairs of Mr. Tucker that had no connection to the Clintons.

As a result of yesterday's decision, Mr. Tucker is free -- at least temporarily -- of the June indictment. But he still faces 11 counts leveled at him in August in a separate indictment that is not before Judge Woods.

The judge said that Mr. Starr had been looking into some matters that, at least on the surface, "would seem to have dubious connection" to the Clintons or their Arkansas business partners. Only such a connection, he said, justifies a probe by Mr. Starr.

"During the Clinton administration, citizens of the state of Arkansas have undergone wide-ranging investigations by two independent counsels" -- Mr. Starr and a Justice Department-appointed prosecutor before him.

In a 21-page opinion filled with the judge's foreboding about independent prosecutors who risk the abuse of their powers, Judge Woods gave Mr. Starr what appeared to be a stern warning: "The prosecutorial jurisdiction of the independent counsel must be strictly contained" within the bounds set by the 1978 law that authorizes such prosecutors to function outside the Justice Department.

Mr. Starr said in a statement that he disagreed with the ruling, and would "immediately appeal . . . and seek expedited review." His spokeswoman, Debbie Gershman, said the judge's ruling applied only to the June charges against Governor Tucker and two other people and did not affect any other cases Mr. Starr has been pursuing or any convictions obtained so far.

Judge Woods said he would do "everything in my power to have an expeditious appeal."

The decision not only rebuked Mr. Starr. It was also a defeat for the Justice Department, which had supported at least some expansion of Mr. Starr's powers.

The scope of what the prosecutor may investigate is defined by a special three-judge Court of Appeals here, and Judge Woods ruled that Mr. Starr had exceeded his mandate from that court.

The charges thrown out by the judge stemmed from a June indictment in which Mr. Tucker was accused of obtaining a federally backed $300,000 loan under false pretenses and conspiring to defraud the Internal Revenue Service by trying to avoid taxes on the sale of a cable-TV business. The cable business had been secured by the loan.

But Mr. Tucker still faces more serious charges. In a second indictment issued last month by the Whitewater grand jury in Little Rock, Mr. Tucker was accused, along with his business partners James and Susan McDougal, of fraud and conspiracy relating to other loans.

The McDougals also were Whitewater partners of the Clintons, but Mr. Starr said he was not charging the president and his wife with a crime as part of the August indictment. The Clintons have not been charged in any of Mr. Starr's cases.

The August charges against Mr. Tucker alleged that in 1985 and 1986, he and the McDougals received fraudulent loans from a government-backed investment company that was set up to help the socially and financially disadvantaged.

The 21-count indictment also alleges that Mr. Tucker -- who at the time did legal work for and borrowed money from Mr. McDougal's savings and loan, Madison Guaranty -- conspired with the McDougals to engineer the financing for millions of dollars of phony real estate deals through Madison.

Mr. Tucker's lawyer, William H. Sutton, said the governor was "delighted" by yesterday's court action against the June indictment. He said that defense lawyers also expected to challenge the second set of indictments.

Mr. Sutton said the decision shows that "there are people outside [the independent counsel's] authority. This constitutes a line the court has drawn that should be meaningful."

Although Judge Woods' decision spares Mr. Tucker and two business associates from the June charges, that could be only temporary: The judge made clear that the same charges could be revived by the regular U.S. attorney in Little Rock, within the Justice Department.

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