i'm so sorry. >> that was the last time susan and jim mcdougal would ever speak. ugust 19, 1996, susan was sentenced to two years in a federal penitentiary. and after sentencing hearing, she was slapped with a subpoena to appear before the grand jury. >> one of the prosecutors came over and threw a subpoena on the desk and said, "we've got you now." >> good morning. >> in early september 1996, president clinton ordered air strikes, after iraqi forces overran the kurdish city of erbil in northern iraq. >> our missiles sent the following message to saddam hussein -- "when you abuse your own people or threaten your neighbors, you must pay a price." >> as the missiles rained down half a world away, susan mcdougal was in little rock, arkansas, preparing to appear before a grand jury. on the morning of september 4th, ken starr's prosecutors had three questions for her. >> "did you discuss your loan from david hale with william jefferson clinton?" >> each of the three questions mentioned bill clinton. >> "to your knowledge, did william jefferson clinton testify truthfully

♪ >> previously on "scandalous"... >> jim and susan mcdougal were straight out of central casting. >>tes. >> whitewater failed. >> jim mcdougal bought madison guaranty savings and loan. >> savings and loans began to drop like flies. >> here was this young upstart governor from arkansas. came out of nowhere. >> i still believe in a place called hope. >> president clinton canceled his public schedule after the tragic death of his white house lawyer vincent foster. >> there were all kinds of crazy theories. >> whitewater was complicated. >> the politically smart thing to do became the appointment of an independent counsel. >> the president, today, has directed the attorney general to appoint a special counsel. >> she basically said, "i won't be talking to you again until this is over." >> there wal

susan mcdougal was found guilty on four counts. >> the former whitewater business partners were in solitarynement in separate prisons in two different states. jim mcdougal had cut a deal with ken starr, a shortened prison sentence on bank fraud charges in exchange for cooperating and implicating the clintons. susan mcdougal had refused to cooperate and was being held in criminal contempt. >> susan has got to get the all-time award for loyalty. >> still refusing to talk, susan was constantly shuttled between prisons. >> one of the things they do to weaken the resolve of people who are in for contempt is to move them to different prisons. >> they call it the diesel therapy. they put you on this diesel van, and they move you around, and you're in shackles and handcuffs and waist chains. it's meant to be a torture. >> it's amazing that she didn't crack under that. >> jim's time was supposed to be easier. after all, he had cooperated with prosecutors. >> sure. i'm going to go -- go through that gate and try my best to do exactly what these folks tell me to, and i'm going try to get along with ev

. >> among those pardoned was susan mcdougal, his former whitewater business partner. >> it was a greata key role in some of the whitewater fraud cases and then famously kept her mouth shut, went to jail, never talked. >> while, on the one hand, you condemn her for not being honest, you have to just recognize the incredible loyalty that was involved. >> missing from the pardon list were her former co-defendants, ex-arkansas governor jim guy tucker and susan's husband jim, who had died in prison. former deputy attorney general webster hubbell was also snubbed. >> president clinton later says, in his book, "i wish i had pardoned jim guy and webb, but i didn't." >> you know, i hadn't petitioned for a pardon, but it meant a lot for bill clinton to acknowledge that he knew that i had not done anything wrong. >> she now works as a chaplain, advocating for better treatment of female prisoners. >> i was older than most of the women there, for one thing, and better educated. and these were kids who had been molested, raped, beaten, starved, eating out of trash cans. >> the president also exonera

. >> one was susan mcdougall, his former whitewater business partner. >> he played a key role in someater fraud cases and kept her mouth shut, went to jail, never talked. >> you condemn her for not being honest, you have to just recognize the incredible loyalty involved. >> missing from the partner list where her former codefendants, jim tucker and susan's husband jim who had died in prison. former deputy attorney general webster hubbell was also snubbed. >> president clinton leaders says in his book i wish i had pardoned him but i didn't. >> i have petitioned for a pardon. it would mean a lot for bill clinton to acknowledge that he no i have not done anything wrong. >> he works as a chaplain advocating for better treatment of female prisoners. >> better educated, these were kids who had been molested, beaten, starved, enough out of trash cans. >> the president exonerated his half-brother roger who in 1985 pleaded guilty to distributing cocaine and john deutsch who pleaded guilty to mishandling classified materials, patty hearst and financier marc rich. >> mark rich thing should have

two are in jail -- webb hubbell and susan mcdougal. in the white house. >> the creation of a draft indictment is not only ordinary, it's necessary. not to have a draft indictment would have been irresponsible. >> but we were obligated to follow justice department policy, and one of those policies is before you go to the grand jury federal prosecutor and present a proposed indictment, you have to be able to look the grand jurors in the eye and say, "we are satisfied that we have admissible evidence that can prove each element of this crime beyond a reasonable doubt." >> the investigation into whitewater and madison guaranty was out of steam. >> at this point, within the independent counsel, you have two arguments shaping up that are saying, basically, "hey, we have a live perjury-trap case on the president based on his statements regarding paula jones and monica lewinsky, or we have a decades-old, very complicated financial-fraud case which we're not sure we can win because mrs. clinton is a rather sympathetic character, so what do we d

when he interviewed susan mcdougal recently at the time, convicted of serious felonies in connection with her fraud, committed against we the people and her stewardship, along with her spouse, her former spouse, of madison guaranteed savings and loan, the soft calls from larry king just came castigating out and susan was engaged in her ruminations and jeremiah and oh i am just the poor joan of arc, just being persecuted by this evil person. speaking to you. that was the narrative. i am waiting for larry to do just a little bit of cross examination. weren't you convicted by a jury after three months trial with serious felonies beyond reasonable doubt? not a word. does anyone remember the name conrad black? a canadian having his own issues. the owner ofhe was the daily telegraph in the u.k.. this gathering in london that the united states studies and the final myself sitting next to conrad black. long before he came into any legal peril. he just said how is it going, that sort of thing. making small talk. let me tell you about larry king. i go into my history about larry king just fail