LITTLE ROCK, Ark. -- A federal jury yesterday handed a major setback to the Whitewater independent counsel's office when it acquitted two Arkansas bankers of four felony counts, including charges that they conspired to conceal large cash withdrawals by Bill Clinton's 1990 campaign for governor of Arkansas.
The jury deadlocked on seven other counts of conspiracy and misapplication of bank money in the trial against Herby Branscum Jr. and Robert M. Hill, the two owners of the Perry County Bank, prompting a federal judge to declare a mistrial on those charges.
The jury was unable to decide whether the two men had improperly reimbursed themselves from their bank for contributions to the 1990 campaign.
One juror said last night that a majority of the panel had leaned toward acquittal on all counts, but had deadlocked after highly antagonistic deliberations.
Yesterday's verdicts represented the first defeat for the Whitewater independent counsel's office, which had begun its investigation of the bankers two years ago.
The verdict was a political victory for the White House, particularly because one of the charges on which the bankers were acquitted involved Bruce Lindsey, a deputy White House counsel who had been named an unindicted co-conspirator in the case.
Prosecutors charged that Lindsey, the treasurer of the 1990 gubernatorial campaign, had directed the bankers to conceal the cash withdrawals by failing to file a currency transaction report (CTR) required by the federal government as an anti-money laundering measure.
"The president is happy to learn the news that a jury has acquitted Herby Branscum Jr. and Robert Hill of significant portions of the independent counsel's case against them," the White House said in a statement last night.
"Today's not-guilty verdicts on all of the so-called 'CTR counts' confirm what we already knew: Bruce Lindsey acted properly."
Before the verdict, presidential aides had tried to distance any outcome from Clinton by handing out a briefing book to reporters that quoted excerpts from news articles and court transcripts in which others had said the president had done nothing improper.
Still, the prosecution had argued that Branscum and Hill broke the law to curry favor with Clinton and win state patronage jobs.
While prosecutors in this case, as in the McDougal-Tucker trial, had emphasized that Clinton had not been charged with any wrongdoing, the president was drawn into both cases as a witness for the defense.
The jury's decision yesterday that there was no conspiracy to conceal the cash payments appeared to signal that Lindsey would wind up not being charged with any wrongdoing.
During the case, after the prosecution rested, Judge Susan Webber Wright ruled in a sealed finding that a preponderance of evidence indicated Lindsey's deep involvement in the scheme.
Asked yesterday about what happens to Lindsey, both the independent counsel, Kenneth W. Starr, and E. Hickman Ewing Jr., the lead prosecutor in the case, declined to comment.
But then Ewing added: "The judge's finding on Mr. Lindsey was by a preponderance of the evidence. In this court, the standard for finding guilt is beyond a reasonable doubt. That is a much tougher standard."
The defendants expressed relief at the partial acquittal.
"It's been two years of what I felt like was a persecution of me and my family for political reasons, because I was a friend of Bill Clinton's," Branscum said, moments after the eight men and four women on the jury were escorted from the courtroom by federal marshals. "I always felt like if we got this before a jury, we would be exonerated."
Officials from the independent counsel's office said they had not decided whether to retry the two men on the seven counts on which the jurors could not reach agreement.
"Obviously we're disappointed but we must respect the decision of the jury and the fact that they worked hard," said Ewing, a deputy Whitewater counsel.
Ewing also said the jury's decision would have no effect on those other areas of inquiry.
The prosecutors continue to examine not only the Clintons' finances, but also the dismissal of the White House travel office staff in 1993; the circumstances surrounding the death of White House deputy counsel Vincent W. Foster Jr., and the possibly improper handling by White House officials of hundreds of sensitive FBI files.
The prosecutors had already won a major victory May 28, when a jury in the first Whitewater-related case found James B. McDougal and Susan H. McDougal, the Clintons' former business partners, and Gov. Jim Guy Tucker of Arkansas, guilty of 24 felony counts.
The 22-day trial of Branscum and Hill offered a rare window into the gritty world of politics in a small Southern state that was dominated by one political party, a governor with presidential aspirations and a handful of powerful business interests.
The trial also illuminated part of a pattern that has drawn the attention of Whitewater prosecutors: Clinton's reliance on obscure Arkansas banks to help finance his political and personal interests.
Prosecutors had accused Hill and Branscum of conspiring with the 1990 Clinton campaign to conceal large cash payments that they suggested were used to make improper payoffs on the weekends before the primary and the general election.
The bankers were also charged with improperly reimbursing themselves from the bank for political contributions, and using friends and relatives to circumvent the limits on such donations.
The prosecutors had said the two had broken the law to curry favor with the campaign and win plum patronage positions.
Pub Date: 8/02/96