50 Years Ago Today

Politics and religion
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Angelo Lano and his FBI team have also been busy.

2. Take the Bookkeeper for a Ride

The FBI investigative interviews with CREEP staff have been, frankly, a shitshow. For each one, a CREEP lawyer sits in on the conversation, interrupting frequently. And while the Committee to Re-elect’s official stand has been a promise of “full cooperation”, it’s clear that having a CREEP lawyer sitting in on those questioning sessions isn’t exactly loosening anyone’s lips.

But then one of the lower-level bookkeepers at CREEP contacts Lano and his partner Paul Magallanes. She didn’t feel like she could speak freely when she’d been interviewed a few days before…but she has things to tell the FBI agents about things she’s seen. And she wants to talk.

So sometime around the first or second week of July, Lano and Magallanes pick her up and start driving around DC and environs, having an informal talk about what this accountant has seen. It’s a stiflingly hot DC summer day in July, so after an hour or two they head to an air-conditioned coffee shop and continue their conversation for almost 10 hours, by some accounts.

After this extensive interview, Lano has a pretty good idea of what’s been going on at CREEP, and he doesn’t like it one bit. He’s heard that the Committee was absolutely drowning for a while in cash. Money just kept coming in from a variety of shady and often undisclosed sources, in the form of actual cash (usually in hundreds and twenties), or in mysterious cashier’s checks from Mexico. So much money it was overflowing CREEP’s regular safe, and was being wheel-barrowed to other safes in the CREEP offices. (“Other safes?” you can almost hear Lano asking, incredulously.)

All of that was in the spring of 1972 (I’ll cover it, it’s a super important “Why” on the Watergate coverup). She thought the accounting related to that incoming cash glut was shoddy at best, and at times nonexistent. And there were people, scary people she didn’t like, like Liddy and Hunt – who would simply come by and come up with bullshit reasons to take bundles of that cash out. They had their own group within CREEP that was very hush-hush.

Lano and Magallanes are both fascinated and frustrated by all of this new knowledge. Fascinated, because that’s a whole lot of smoke for there to be no fire underlying it. But also frustrated. They’ve been prevented from investigating Mexico connections entirely. But also, what they’re hearing certainly sounds like campaign finance law violations, probably. But those violations are also largely statutory in nature, and not really criminal. Punishable by fines and bad press, but that’s about it. They’re still struggling to connect it to Watergate explicitly.

But they’ve got a money trail. And that is going to lead to the next big thing that happens with Watergate, at the end of the month.

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Damn, this is like Raymond Chandler by way of Hunter Thompson. Good stuff.

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Is the CREEP accountant’s name not known?

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Her name is known. And sometimes I can even remember it. In this case, I couldn’t, Google failed me, and every book I own is in a box waiting to be loaded into a POD.

:)

But for posterity, her name is Peggy Gleason. And Peggy did herself one better, too. A few days after she spent hours with Lano and Magallanes, she brought another witness from CREEP to the two agents, Judy Hoback. And Hoback helped fill in even more of the details of what was going on at the campaign regarding the handling, storing, accounting for, and disbursement of funds that were too often cash drop-offs for the comfort of either of the two women who knew from their own accounting backgrounds how much of an irregularity that would be even in a normal mom & pop business.

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I also want to do a little bit of a deep dive on one of the most fascinating people in the entire Watergate saga. Talk about a moment finding the man…

Here come da Judge

Getting appointed to a US District Court judge-ship is a pretty sweet gig. It’s a stepping-stone kind of thing for most, though. Typically, good judges in the District Court system will find themselves taking one of a couple of different paths to greater personal glory or wealth or both.

The really good judges are likely to get a good look at promotion to the Circuit Court bench. Other judges will parlay their experience into a sweet offer to join a good law firm as full partner. Or they’ll take a professorship with tenure. Or they’ll seek elected office. It isn’t unheard-of, but also not particularly commonplace, for a district court judge-ship to be a career destination.

And if you are making inferences about what sort of legal minds MAKE a district judicial post a destination job…well, you maybe aren’t too far off in your possibly uncharitable assessment of those persons. Because that’s generally what people thought of career US District Court Judge in DC, John J. Sirica.

Sirica was 68 in 1972. Law was not the career he’d wanted, particularly. He had dreams of being a professional prizefighter, and had numerous amateur boxing matches and even one professional bout. (He counted former heavyweight champion Jack Dempsey as one of his better friends). If you’re imagining what a 68-year-old judge who’d had an early career as a boxer might look like, I’m pleased to say that John J. Sirica will will not disappoint.

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Sirica was appointed to the US District Court for DC in the Eisenhower administration as a political favor. As a judge, he pretty quickly revealed himself to be kind of a pain in the ass for the DoJ. His grasp of the law at times seemed tenuous. He got cases overturned on appeal more frequently than any other judge in the DC District. He’d do things like directly question witnesses himself (a no-no), and threatened defendants with maximum allowable penalties if he felt the defendant wasn’t being forthcoming about his or her crimes and potential accomplices. (He earned the nickname “Maximum John” from prosecutors and defense attorneys alike; and appellate courts were constantly hearing appeals on mismanaged sentencing and the like.)

In other words, if there were such things as Law Blogs in the 1970s, Judge Sirica would be a frequent and obvious target for ridicule.

And for those reasons, Sirica stayed stuck to that District Court Judge-ship appointment for more than 15 years. And he was far and away the senior judge in the District Court, which gave him one important privilege: he got to assign cases for other judges in the DC District. And by 1972, he typically would personally only handle a small handful of cases each year – which was perfectly fine by the DoJ. Sirica would scan the potential docket and give himself cases that looked interesting, or which might have the opportunity to land him a newspaper story or magazine article. Judge Sirica also enjoyed seeing his name in media.

And so when scanning the cases to be scheduled, he saw the Watergate defendants, being tried together, and decided that the case looked pretty interesting. And it was a chance to not only make the news in the local Washington Post and Washington Star, but also maybe some national news, depending. He thus assigned himself to hear that case.

So you’re thinking that this is going to be a terrible mis-match as the White House throws some of the best criminal defense attorneys it can find up against the prosecution in Judge Sirica’s court. And the prosecutorial team of Earl Silbert, Seymour Glanzer and Donald Campbell weren’t exactly a wrecking crew. By now their boss at the DoJ, Henry Peterson, was playing ball with the White House. And Peterson was urging the prosecution to do the case on the 5 guys and press on Hunt and Liddy…and then wrap it up. Which is what the prosecutors would do over the next 3-4 months, almost comically ignoring evidence given in court that Watergate was a much, much bigger thing than they were pretending it was.

But in some very weird ways, Judge Sirica would be the very worst nightmare for the Watergate defendants and their lawyers and the White House. Because one thing that is a common thread through all the eccentricities and irregularities of Sirica’s court is the judge’s personal, impressively accurate “I Smell Bullshit” -o-meter. And like most judges, Sirica HATED it when he suspected witnesses sworn to tell the truth instead told half-truths and outright falsehoods to protect other criminal activity.

Thus, with Sirica, we’ve got a judge who is a lifelong, proud Republican (which the news media will point out frequently) who, as much as he loves the GOP, hates even more the notion of people in his courtroom lying to him.

And so in the immediate future (Sirica is going to be part of this story throughout), the judge is going to hear a lot of stuff in evidentiary hearings as it relates to various motions to dismiss or for summary judgement. And his skepticism and frequent questioning of witnesses that goes beyond anything that Silber and his team were planning on will start to endear himself to a wider public as well as legal observers. That won’t really come to the fore for a while – in July of 1972, no one outside of hyper-political circles really seems to care about Watergate. It seems like a local story in DC. And it will seem that way even when a “point of no return” story breaks at the end of the month.

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John Sirica, Archibald Cox, Leon Jaworski. Those names are indelibly etched into my brain from living through the era, even more so than Liddy or Hunt or Colson because the names were unusual to my teenaged ear.

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So we’re coming up on a big event in the Watergate history, but to kind of lay some background on it, I think it’s going to be helpful to talk about everyone’s favorite exciting subject: campaign finance laws.

No wait! Don’t go watch paint dry! There’s a REALLY fascinating piece to all of what happened with Watergate and the coverup that feels directly related to some campaign finance stuff, and in his new book on Watergate, Garrett Graff lays it all out really clearly, in ways I’ve never seen anyone do it…and it’s pretty compelling stuff, and it sent me down a rabbit hole of the history of campaign finance regulation and fundraising and spending through the years. As you do.

I know this stuff can seem boring. I will do my best to try to de-bore it. Unbore it. Something like that.

"33 x 3,000; 1x1,000"

It’s mid-March of 1972, and the guy who runs a ship-building company is a little peeved. He’s sitting in the waiting room of the main CREEP offices in DC, and the two guys he’s there to see – CREEP finance chair Maurice Stans and deputy finance chair (and Nixon’s personal lawyer and friend) Herb Kalmbach – are making him wait.

After about 20 minutes, the wannabe transport magnate is shown to a small conference room where Stans and Kalmbach sit side by side at a table. After introductions and handshakes, they get down to business. Stans passes across the table a small sheaf of 6 or 7 papers. On it are typed, single spaced, the names of dozens and dozens of Political Action Committees with ridiculously forgettable, anodyne names: “Citizens for Freedom”, “Americans for a Fair Deal”, “Communities for Safe Streets”. That kind of thing.

At the top of the first sheet of paper, written in blue ballpoint is this notation: “33 x 3000, 1 x 1000”. Kalmbach reaches across the conference room table and taps that writing. The shipping guy is confused at first, but then the clouds fade. He realizes that what it all means is that he’s supposed to contribute $3,000 to 33 of those anonymous-sounding PACs. And then $1,000 to one other.

$100,000 please and thank you, in other words.

The shipbuilder gets it. Like most in his the transportation industry at that time, he’s been able to get federal regulators to look the other way at workplace safety guidelines at manufacturing plants, and to not look too closely at things like work permits or the potential payments under the table to union reps and such.

But that all changed this year, and the federal regulators at the Department of Transportation have been really putting the screws to him. But now, NOW he gets it. Play ball with CREEP and kick over a hundred grand and those problems all go away again.

It’s not really a problem of money for the ship company president. He’s got that. It’s structuring the payoff. He’s worried if he lays out the entire $100k himself that the IRS will be up his ass in a flash. So on his plane trip back to his company headquarters in Ohio, he devises a scheme. He’ll pay out “Midwinter bonuses” to a bunch of his executives. Maybe $4,000 each. Those execs will be expected to use $3,000 of that “bonus” to contribute to a PAC, and then keep the rest for their cooperation and trouble. Yeah! That’s the ticket. That’s how he’ll do this.

See, $3,000 is the magic number. $3,000 is the maximum allowable contribution by a single entity allowed by most states and by the IRS, without triggering disclosure and a potential audit. And $3,000 in 1972 is the maximum that a political group can receive without having to disclose the origin of that gift or contribution.

By splitting up the $100,000 that the Committee to Re-elect wants from this shipbuilder from Ohio into $3,000 chunks (those PACs with the anonymously benign names are all astro-turf, sock-puppet PACs created earlier in the year by John Dean and a couple of guys from the Committee), both CREEP and the guy they’re shaking down for that money hope to keep things under the radar.

And again, lord knows this guy has the money. His business is wildly successful, enough so that a few years earlier he’d tried to buy the Cleveland Indians baseball team…and then a year after that been part of an unsuccessful bid for a Major League Baseball expansion team in Buffalo, NY. (The ill-fated Seattle Pilots got won that franchise bid.) This ship builder is determined that one day he’ll own a big league ballclub, no matter what, so $100,000 isn’t going to kill him.

And so the day after his meeting in DC with Stans and Kalmbach, George Steinbrenner gets his own finance and payroll teams into a meeting to discuss “Midwinter executive bonuses.”

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(To be continued!)

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It’s overshadowed and forgotten due to Watergate but one of the Nixon campaign’s main skills was money laundering. The scheme above was basically Tuesday for them.

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BTW, the Steinbrenner shakedown will not stay under the table once things start moving on Watergate. One Thomas P. “Tip” O’Neill is going to sniff it out and sic the feds onto Steinbrenner…because Tip O’Neill was kind of freaking great at politics.

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And before we keep on, keepin’ on with the Great Nixon Dash For Cash, allow me a short digression (ha!) into some campaign finance/fundraising history…

Where Do You Want This Suitcase Full of Money?

Most of you know, but just in case someone reading this wasn’t familiar…for a good while in this country, if you were your party’s nominee for president you did NOT campaign for the office yourself. Not really. Other members of your party campaigned for you, but that was it.

That all changed over time, obviously. There’s no real good consensus over which president was the first to actively campaign for himself. Some will say it was William Henry Harrison in 1840, who did some political speech-making from his home. But you can point to some speeches by Andrew Jackson in the 1830s if you’re looking for firsts.

And there are political scientists who call McKinley’s 1896 election as the first recognizable “election cycle” with party primaries in states for the nomination and such. (McKinley’s “campaign” involved him giving speeches from his own front porch at his Ohio home every day, and having people from around the country travel to visit him to hear him speak. Different times, different times.)

Anyway, as “modern” campaigns became a thing, fundraising for those campaigns did too. Congress took some shots at passing some campaign fundraising laws in the early 20th century, finally coming up with laws in the 1920s to ban corporate direct contributions and in the 1940s to ban unions from doing the same.

Which, ha ha ha. Sure thing, fellas. Those laws had very little teeth to them on penalties, and corporations and unions would simply find easy paths around that regulation via a new invention: the Political Action Committee. Unions and corporations kicked money into PACs, and those PACs funneled their funds right into campaigns.

Not that there was a ton to spend money on. Until 1964 or 1968 or so, the biggest campaign expenses were travel, lodging, and campaign staff overhead (wages, taxes, insurance, etc.). Advertising was handbills, signs, pins and buttons, outdoor posters…with radio ads and newspaper ads starting to get into the mix.

What campaign fundraising in the pre-1960s era really was, was a full-on absolute grift, from almost top to bottom, done by both major parties. Corporate and union dollars poured in, as did money from individual wealthy contributors. Far more money than most presidential campaigns could ever dream of spending. And so that money flowed into bank accounts for brother-in-laws, parents, uncles, best friends, and especially fairly secret bank accounts and investments for the candidate himself.

Which…none of this was a particular secret, really. And more and more news outlets started reporting it, which meant that there was more and more public clamor for campaign finance reform. And in 1967, someone on a congressional oversight committee must have noticed that, oh hey, back around the fighting in World War I, we passed a law on campaign finance reporting. Shouldn’t we kind of actually see if we could make campaigns actually report how much money they take in, and then what they do with it?

That sounded like a jolly good idea to the congressmen, and so in 1968 for the first time – even though it had been law for like 50 years and no one seemed to notice or care – presidential campaigns actually had to issue federal campaign finance reports. (To be sure, there had still been IRS reporting, but that was so loose as to be fairly useless in determining the scope of campaign fundraising prior to 1968.)

(If you’ve read this far, it should be clear that the “Good old days” before there was money in politics (lol, as if) is a nonsensical, make-believe time. All there really was, was a “Good old days” when it was way, way easier to hide those suitcases full of cash that were handed over to candidates without any oversight or regulation or public knowledge.)

But the campaign finance reporting that started in 1968 was pretty hilariously loose in its own right. Biannual reports (one in July to cover primary season, one due no later than December 31st to cover the general election), with very loose reporting by category. Line items for “Advertising”, “Travel”, “Wages & Overhead”, “Security”, etc. And the twice-yearly reporting left plenty of time to cook the books as needed, too.

It was very quickly clear to all that existing campaign finance and fundraising laws were inadequate to the task of the age of mass media, and scathing reports of campaign finance abuse in both the New York Times and LA Times were sparking public outrage and bipartisan talks on enacting real and actual campaign finance law reform.

This was kind of a no-brainer for those in congress. Existing, shoddy campaign law (which consisted of a 1925 law on anti-corruption) regulated congressional campaign finance law FAR more strictly than it did presidential campaign fundraising and spending. A suite of new laws that would allow House and Senate members a path to raise far more money legally than they had been previously allowed, while issuing a much, much stricter set of laws to presidential candidates found easy support.

It was legislation that was popular with the electorate…and also kind of popular with sitting office holders, including the current occupant of the White House, first-termer Richard Nixon. And that was because almost any study of campaign finance law proposals in the developing legislation were likely to show an advantage to incumbents over challengers. What wasn’t there to like?

Thus in January of 1972, President Nixon signs into legislation the Federal Election Campaign Act. Or, you know FECA, which no one, and I mean no one is going to make fun of because it only needs one more letter to accurately describe the smell coming off campaign fundraising.

FECA will establish the Federal Elections Commission (FEC) to oversee campaign finance law enforcement and education. Reporting will now be monthly and quarterly both, and it won’t be loose categories either. Copies of contracts, legal agreements and receipts will be required, and campaigns will have to report names of contributors on any direct contributions of over $25. PACs will have to report any contributions over $3,000 – the IRS trigger amount. Every penny coming in needs to be accounted for as income, and every expenditure needs to be fully reported in detail as well.

And as Richard Nixon is signing that new, modern-day election law (which will be adjusted and amended greatly over the years between then and now), his lawyers are noticing something SUPER interesting about that particular law.

And that thing they’re going to notice is going to lead to one of the craziest months any political campaign has ever had, and lead indirectly into the downfall of an American presidency.

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So let’s finish off this particular thread, before news events of 50 years prior overtake us. :)

A Month-long Free-For-All

About the time that President Nixon is signing that landmark campaign finance bill into law, a couple of CREEP lawyers excitedly get the campaign’s finance heads Maurice Stans and Herb Kalmbach on the phone. Guys, have you read this legislation? Stans and Kalmbach say they sort of have, sure.

“But did you know,” says the campaign lawyer, “DID YOU KNOW…the existing laws sunset on March 10, 1972…but the new law doesn’t take effect until April 7?” It’s likely that neither Stans nor Kalmbach grasped fully what that meant. They likely pointed out that there would still be IRS reporting regulations on contributions, and that the campaign would still need to report contributions as income.

And so the excited campaign lawyer or lawyers (we’re not sure who it was that sorted this out; likely there were multiple CREEP counsels who saw this temporary loophole simultaneously) explained further: any campaign incoming money during that month did NOT have to be tracked within the campaign. Those monies simply could be reported on April 7 as “cash on hand”, and could be used for ANYTHING by the campaign, without having to specifically disclose it.

Anonymous, untraceable campaign slush fund, here we come. (And to be clear, the Democrats absolutely could’ve done the same thing, and would have. Problem: they were doing a primary season from March to April of 1972, and big Democratic donors were holding onto their money, hoping against hope that McGovern wouldn’t be the nominee.) Illegal? Nope, it was all going to be perfectly legal. Unethical? For sure, and worry over public perception regarding what the Nixon campaign was about to do for a month would be another reason why the White House was too eager to cover up the break-in on June 17.

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Holy cow. This is something I did not know. Keep this history coming, please!

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Twisting Arms

So you’d think with this big campaign fundraising advantage staring them in the face, the Nixon campaign would be gearing up for a crazy month of off-the-books but legal cash-grabbing. You’d think. But you’d be wrong. John Mitchell is a disorganized mess; he doesn’t resign as AG until January, and even then he’s got Martha Mitchell distractions, and he’s just a messy, chaotic shell of the guy who ran Nixon’s '68 campaign. John Dean – as a CREEP lawyer – has done his part, though. In December and January, he set up hundreds of those little anonymously named astroturf PACs. All legal, but ethically dubious.

But it’s the second week of March of 1972, and money isn’t really coming in like a rushing river. And the White House is getting antsy and finally spurs Mitchell and his deputy Magruder into action And they spur Stans and Kalmbach to battle as well. Still, what should have been a month-long push instead will be 2-3 weeks of absolute chaos.

What the campaign should’ve done was alert big money Republican donors in January and February about the reporting “holiday” that was coming in March. That way, those donors could free up liquidity in cash to donate. Instead, many of these donors are taken off guard when they get calls from CREEP and Stans and Kalmbach in mid-March. These donors would LOVE to kick over more cash, they tell CREEP, but they need a few weeks to free up the cash to write those checks.

And they’re told “No no no. Has to be in by April 7. HAS TO.” And in order to spur donors to action, Stans and Kalmbach start twisting arms. We’ve already mentioned that George Steinbrenner had it made clear to him that his issues with labor regulations would go away if he contributed. But he was hardly alone. American Airlines was trying to acquire Western Airlines, and was worried it would get caught up in SEC red tape and regulation. Plus, Herb Kalmbach was also legal counsel for United. Get the picture fellas? American sure did, and a few hundred thousand came flowing into the Nixon campaign coffers there.

The folks who got milked the most for campaign funds in this period was AMPA – an American dairy producer’s group. They’d been lobbying the White House for months for stronger price supports and subsidies…and now they started pumping cash into the campaign coffers to the tune of millions. (And hey whaddya know, what a coincidence that about the time the last check was handed over to Stans personally, the White House announced increased price supports and subsidies for the dairy industry! Golly, that sure is an extraordinary sequence of events!)

It wasn’t just corporate entities feeling the squeeze. The Nixon White House was also selling ambassadorships to heavy contributors. One notable story is that of department store heir Ruth Farkas, who contributed $250,000 during this month, and was disappointed to only be offered the ambassadorship to Costa Rica for her troubles. “I was thinking of something in Europe”, she told Stans. Stans responded “I’m told that European ambassadorships now start at $300k.”

“Done,” said Farkas, and about a week after her check arrived, she found herself the new ambassador to Luxembourg.

The campaign was seeing so much money rolling in from mid-March to April that their own system of clearing and depositing funds was bogging down. There was so much actual cash (as in, in twenties, fifties, hundreds, and even a few thousand-dollar bills) that it was overflowing all the safes that CREEP had at their disposal. They needed some way of turning the incoming money into something that wasn’t cash, but spent the same way as cash. And as it happens, they were sitting on hundreds of thousands of dollars worth of traveler’s checks that they were worried would be very trace-able. Worse than that, they had bundlers around the country collecting funds from local contributors, and then the bundlers writing personal checks for the total amount – which is what a fundraiser from Minnesota, Ken Dahlberg, had done.

And that’s where a bank in Mexico City enters the (shady) picture. A well-connected, wealthy Mexico City corporate lawyer was enlisted to convert those traveler’s and personal checks into cashier’s checks drawn on a Mexico City bank. The cashier’s checks were then sent back to CREEP to be deposited as they liked into any campaign-related account they wanted to deposit them into. Much easier to handle than pure cash, these cashier’s checks in $10,000 and $25,000 denominations could be held for special projects until needed. All legally.

But there was so much money going south to Mexico City and back up north to the campaign that things got messy. Really messy. One check for $25,000 that had been hand-delivered to Maurice Stans, for instance, never got converted to a cashier’s check. It just went into a campaign safe. And that guy I mentioned a few paragraphs ago, Kenneth Dahlberg, wouldn’t find out until sometime around July 31st or so that this was the case with the check he’d handed over.

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BTW, Garrett Graff estimates that in this one-month period, the Nixon campaign collected $11 million in campaign contributions, including $5 million in the final 48 hours before the April 7 deadline. Considering that CREEP began with about $5 million in cash on hand from 1968, and had collected another $5 - 7 million in kickoff campaign donations in the previous 6 months…that means that in that one month the Nixon campaign raised about 20% of it’s remaining total 1972 expenditures in that crazy month.

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OK, so over the next two days, two related stories are going to break. Those two stories are going to be super-important. But paradoxically, no one is going to care very much for about them for about 7 months. But then, they’re going to care a lot, and these two stories are going to essentially be the complete closure of a potential Nixon Administration escape route. And so before I go there, it’s important to understand the lay of the land as folks in America went to sleep on the evening of July 30th, 1972.

First: Watergate kind of sort of seems like a dead or dying story. As mentioned, Bob Woodward has been on a vacation. Carl Bernstein has been assigned back to the Northern Virginia beat at the Washington Post. June 17 seems like eons ago, and Watergate kind of still seems like a local news story to most of the country.

The FBI investigation is stymied. Angelo Lano and his team are being stonewalled by CREEP witnesses, and are being held on a leash that prevents them from investigating money trails. A grand jury is set to get underway. Juge Sirica is getting ready to hear some opening arguments in the case against the 5 burglars.

And while there’s been a ton of smoke, on the evening of July 30th, 1972 it sure seems like the White House/CREEP strategy of limiting the Watergate damage to the 5 burglars and Liddy and Hunt is going to work, probably. They’re going to maintain the fiction that these 7 were a “rogue element” of the campaign who were only able to do what they did because John Mitchell was asleep at the switch. There was nothing (despite lots and lots of frustrating hints to the contrary) to suggest any wider White House involvement in the break-in.

And it all would’ve worked out that way…except for those meddling reporters…

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The First of Many Smoking Guns

The nature of fame and renown is fickle. If you think of media and reporters regarding Watergate, you’re going to think of Woodward and Bernstein – this story made their careers, and made them arguably the most famous reporters in American history. And in terms of media outlets, it took the Washington Post from a local paper with big designs into the national spotlight as one of the most important news sources in the country.

And yet. If not for a crucial decision and plane trip, it might not have played out that way.

Meet Walter Rugaber, a White House reporter for the New York Times. Rugaber was young but well-respected, a guy who clearly seemed like he was going places. And in early July, Rugaber’s reporter spidey senses were tingling a LOT about Miami and Dade county, the place where Bernard Barker’s bank was located.

Rugaber got to Miami, and over the course of a background interview with the US Attorney for that region – a lifelong Democrat named Richard Gerstein – both the reporter and his interview subject got pretty excited about what the other guy seemed to know.

Gerstein used his subpoena power to get Bernard Barker’s phone records, and on July 25 of 1972, the first mini-boomlet story ran in the Times detailing that Watergate burglar Barker had called CREEP headquarters more than a dozen times in April and May before the burglary. That story was, in the grand scheme, kind of a nothing-burger on its own; the White House and G. Gordon himself knew that Liddy was going to be offered up as a scapegoat and patsy in all this, and Barker’s calls all were to a phone in Liddy’s office. Still no wider connection. Still a “rogue group” within CREEP…

…but the story’s most seismic impact was at the Washington Post. Editor in chief Ben Bradlee was furious when he read that July 25 story. His paper – which had kind of “owned” the Watergate story since it happened had been scooped, and scooped by a damn fine reporter at the biggest paper in the country.

And so after dressing down both of his own young reporters who’d been on the Watergate beat for missing this crucial link, he had Carl Bernstein on a plane, headed to Miami to see what he could find.

Bernstein arrived in Miami on July 31st. As he arrived, he picked up a copy of the morning New York Times, and saw Walter Rugaber’s biggest bombshell report on the front page.

Rugaber’s story in the Times detailed how the sequential $100 bills found with the Watergate burglars had come from withdrawals from Barker’s bank account in the amount of $89,000, from early May. That amount – $89,000 – matched exactly the amount of four cashiers check drafts from Banco Internacional in Mexico City that had been deposited in Barker’s account just a few weeks earlier.

That story was pretty big, and got national play. Every reporter with a connection to the White House recognized instantly that the Mexico City connection fit with what was already known at the time about the Nixon Campaign fundraising sprint during the “dark” fundraising reporting month in March/April. It was still frustratingly short of being the big smoking gun that incontrovertibly tied the White House to the burglars…but it was close. (It’s likely most reporters also recognized that the complexity of a story dealing with the ins and outs of campaign finance and funding was probably going to zoom over the heads of most who’d read it.)

There was one other important thing in that New York Times story that only a competing newspaper like the Washington Post would notice: it was datelined from Mexico City.

About the time Rugaber’s first report hit the Times on July 25th, Gerstein had gotten Barker’s bank records. (Side note: it pays to have subpoena power on your side. If you’re wondering if someone in the Trump White House knew about what Richard Gerstein did, and how it would eventually help bring down Nixon…and thus that’s why a whole bunch of qualified, Democratic-president appointed US Atttorneys were fired in 2017…well, I’m wondering that, too.) In those bank records, Gerstein and Rugaber found the four deposits drawn on the Mexico City bank as cashier’s drafts. They also found a fifth big deposit into Barker’s bank account that had been a personal check written over to him. The name on that $25,000 check was “Kenneth Dahlberg”.

Gerstein and reporter Walter Rugaber spent the next few days trying to find out who “Kenneth Dahlberg” was, but had no luck. (It apparently didn’t occur to Rugaber to phone that into the Times research department for them to look – he trusted Gerstein’s office on that research, and Gerstein’s office was, well, let’s just say far from efficient.)

On July 30th, Rugaber made a fateful decision: he’d follow the Mexico City money trail first. He’d stay in touch with Gerstein’s office and let them know what he found.

This would be one of the most fateful early decisions in the entire history of Watergate reporting. Maybe the MOST fateful one would happen as Carl Bernstein read Rugaber’s New York Times story as he sat in the Miami airport that morning of July 31st.

Bernstein went to a newstand in the airport and got a bunch of change and found a payphone to call the Washington Post offices. Thankfully for him, he got Post City editor Barry Sussman on the phone. (Sussman – to whom both Bernstein and Woodward would directly report to – plays a huge role in the the actual Watergate reporting, as well as in the book All The President’s Men. For whatever reason, his character was completely written out of the movie, apparently to avoid confusing viewers and a lot of what Sussman did was given to the characters of Ben Bradlee (Jason Robards) and Howard Simon (Martin Balsam) in the film. Sussman was displeased by this, to say the least, and even considered legal action.)

Sussman let Bernstein know that the latest Times scoop on the money trail that had hit front pages that morning had Bradlee in an even worse disposition than when Bernstein had left for Miami. Bernstein told him he understood, but he was there in Miami now. But where was the story? Should he (Bernstein) stay in Miami or follow Rugaber to Mexico City?

And Barry Sussman, City Editor at the Washington Post, makes what might be the single most important decision in the Watergate saga – at least as far as the Post is concerned. He tells Bernstein to stay in Miami to see what he can dig up.

Bernstein hails a cab and heads over to Richard Gerstein’s office. If Walter Rugaber had found a bombshell in reporting the Mexico City money in Bernard Barker’s bank account, Carl Bernstein is about to find another bombshell that will eventually feel nuclear in nature.

117

The Check From the World War II Flying Ace

It’s still mid-morning on July 31. Carl Bernstein has just called the Post offices, and Barry Sussman has told him to stay in Miami to see what he can dig up. Bernstein calls Gerstein’s office, and the US Attorney tells the reporter that he’s happy to share what he has already shared with Walter Rugaber at the NYT. Bernstein can come down to his office and meet with Gerstein’s chief investigator, a guy named Martin Dardis.

If you’ve seen All The President’s Men, you know what happens next; it’s one of the signature scenes in the film. Dardis (for whatever reason) keeps Bernstein waiting for hours. Morning turns to noon, and noon becomes mid-afternoon before he finally sneaks in to interrupt Dardis and demand some acknowledgment.

Dardis finally relents, but as far as he’s concerned, this is all spent powder. He goes over the bank drafts from Mexico City, and the withdrawal records from Barker showing a 1:1 match. Yeah, old news. It was all in the Times that morning.

“And that’s about it,” says Dardis, “Except for that Dahlberg check.”

Bernstein asks to see it, and Dardis is reluctant. Bernstein explains: he just wants to get the spelling of the name right. There’s no address printed on the check anyway.

Then Bernstein, rather than rely on Martin Dardis’s crack investigatory skills, instead calls the Washington Post to talk to Bob Woodward.

It should be noted here that “Woodward and Bernstein” aren’t yet a thing. While their names have appeared on a couple of Watergate stories to date, those have been stories with multiple other Post reporters listed as well. If anything, to this stage, Woodward and Bernstein had been in competition with one another, each trying to stay on the Watergate beat and hoping that if the Post has just one reporter covering the story, that they’ll be The One.

But Bernstein has a hunch that whomever “Kenneth Dahlberg” is, he’s probably a hoop-de-do in the Republican Party, and Bob Woodward is a Republican. Maybe he’ll recognize the name.

Woodward is stumped…but intrigued. He tells Bernstein he’ll work on it. The archivists and researchers at the Washington Post after about an hour turn up the name “Kenneth Dahlberg” in a photo caption. It’s with some local Republicans in Minneapolis.

And then it clicks for Woodward. He’s heard the name before. Something with Nixon’s campaign in '68. He calls a friend who is connected with the GOP in in Chicago, and finds out that Ken Dahlberg was a midwest campaign chair for Nixon in 1968. He’s a war hero – a genuine fighter ace from World War II. (I think he had something like a dozen confirmed kills, just in case you were curious.) As far as the friend knows, Dahlberg lives around Minneapolis somewhere.

Bingo.

It takes a while, but by late afternoon Woodward thinks he’s got the home phone number for Dahlberg, who lives in the toney suburb of Orono, Minnesota. He calls and a fairly frantic-sounding guy picks up. Yes, he’s Kenneth Dahlberg. Woodward identifies himself as a Washington Post reporter, and could he ask Dahlberg some questions.

Dahlberg splutters something about timing and hangs up abruptly.

While Woodward is wondering what the hell that was all about, he gets a call back. It’s Dahlberg. He’s contrite, because he didn’t believe the voice on the phone earlier was really a reporter. He’s still pretty shaken, and explains that earlier that day his neighbor was kidnapped from her front yard.

(Yes, that really happened, too. If you’re familiar with the financial firm Piper Jaffray, the kidnapped woman was Virginia Piper, wife of THAT Piper. Thankfully she was found alive two days later.)

Woodward is apologetic and adjusts his tone. Could he just ask a few questions? Yeah? So, uh, does Ken Dahlberg know how a check he’d written ended up in the bank account of a Watergate burglar?

Dahlberg does not, and he’s adamant about that in a tone of voice that feels genuine to Woodward. Of course Dahlberg remembers the check. He’d personally handed it over, in DC, to Maurice Stans himself in first week of April. That check was from bundled contributions throughout the northern midwest area, and what happened to the check after he handed it over is nothing Dahlberg knows anything about.

And in the next morning’s Washington Post, a story detailing that a campaign check from a midwestern fundraiser that was handed to Stans and Magruder (when called for comment, Stans immediately threw Magruder under the bus and said he’d passed the check to the Deputy Campaign Chair) had been deposited into the account of Watergate burglar Bernard Barker. Woodward wrote most of the story, but insisted on giving a shared byline to Bernstein, who’d turned up the clue. From this point forward, for the next two years any Watergate story with one guy’s name on it also had the other reporter’s as well.

But the Dahlberg check story is important for other reasons as well. To this point, the White House believed the damage from Watergate would be contained to the 5 burglars, plus Liddy and Hunt. That becomes impossible with the Dahlberg check. Now Stans and Magruder are probably up for investigation. So to is the recently-resigned Mitchell. And who knew how far it’d go from there?

From the publishing of this August 1st story and going forward, Watergate is going to be an uncontrollable political brushfire that has broken containment and isn’t going to burn out until it takes a White House down.

118

Talk about biting the hand. Take a genuine war hero Republican booster and crap all over him through mendacity and incompetence. Yay team GOP!

119

In an ideal setting, Dahlberg’s check would’ve been converted to cash or to a bank draft through Mexico City. But he didn’t hand it over to Stans and Magruder until something like a day before the April 7 deadline when the new campaign finance law went into effect. And so the Campaign Committee got reaaaaaally sloppy and just kept the check and included it in the money that Liddy requisitioned for his “ops”. (It was likely campaign treasurer Hugh Sloan who included the Dahlberg check “as is” in that money. Sloan was an innocent – a total boy scout – and was thus kept out of the loop on the crazy shit Liddy and Hunt were planning, and thus Sloan didn’t think there would be any issue approving the signing over of Dahlberg’s very trace-able check to a campaign group.)

120

One other knock-on effect of the first Woodward and Bernstein bylined story that inextricably tied the campaign at large to Watergate via the Dahlberg check: it also ended (at least for a number of months) any interest the NY Times had in covering Watergate.

Down in Mexico City, Walter Rugaber realized that he’d chosen…poorly…by going to Mexico and not staying in Miami to try to track down who Dahlberg was on his own. And he was likely kicking himself (and he should’ve been) for not putting the NYT researchers onto Dahlberg’s name. (They’d have likely found the same AP photo/caption with Dahlberg that the Post researchers found.)

The Dahlberg story in the Post thoroughly scooped the Times. And it was the first time either paper had actually used investigative journalism to break a Watergate story on their own, without just repeating something leaked to them. Rugaber and the NYT – who on July 31st looked like they were about to own the Watergate story going forward – decided by sundown on August 1st that they were kind of done with Watergate for the time being.