With the Watergate scandal gripping the nation, and President Richard Nixon on the verge of going down, a small team of federal prosecutors in Baltimore discover a bombshell that will rock a nation already on the edge. The Vice President of the United States— right at the height of Watergate—has been conducting a secret bribery and extortion operation… from inside the White House itself. And only they know it.
For a list of sources and references for this episode, see here.
MADDOW: Richard Nixon and Spiro Agnew were officially sworn-into office for a second term on January 20th, 1973.
JOHN CHANCELLOR: And welcome to the 47th Inaugural of an American President. David Brinkley and I here to cover that, something the United States has been doing since 1789...
The festivities that day were a celebration of what had just been a political annihilation.
Nixon got 520 electoral votes that year… George McGovern got 17.
The Nixon/Agnew ticket won every state in the country, except Massachusetts.
Newly re-elected Vice President Agnew celebrated that night with his wife Judy at a party that was thrown in their honor at the Smithsonian:
JUDY AGNEW: This time, I know more or less what to expect!
NBC REPORTER: What do you expect, Mrs. Agnew?
JUDY AGNEW: Oh, what do I expect!
VICE PRESIDENT AGNEW: She expects to have fun!
JUDY AGNEW: Fun! Right! I expect to be much more relaxed this time! (laughing)
Spiro Agnew was in triumphant good spirits that night... blissfully unaware of the danger that was unfurling for him just a short drive up the Baltimore Washington Parkway.
In Baltimore, Maryland, just days before that inauguration, a team of three young, federal prosecutors were preparing to unleash a blizzard of federal subpoenas, with no warning.
TIM BAKER (FMR. FEDERAL PROSECUTOR): And we put together a team of IRS agents and we had all 50 subpoenas served on a Monday morning.
That’s Tim Baker. One of the federal prosecutors who worked up these subpoenas, out of the US Attorney’s office in Maryland.
These prosecutors were hoping to bust open a political bribery scheme in local Maryland politics.
In terms of who exactly they thought they would nab though, the expectations-- at least early-on-- were relatively low:
RON LIEBMAN (FMR. FEDERAL PROSECUTOR): And I think the general thinking was maybe we'd be able to find a corrupt Congressmen, maybe a State Legislator. I think that's what, the level of expectation.
That’s Ron Liebman, he was the second prosecutor on the team. And you can hear from him there that this was a little bit of a fishing expedition.
But these prosecutors did have one particular fish in mind: they were after the head of the County government. The Baltimore County Executive at the time, who was a Democrat named Dale Anderson.
BARNEY SKOLNIK (FMR. FEDERAL PROSECUTOR): The word is, you know, the word on the street, the rumor, the Scuttlebutt is that Dale Anderson is corrupt and is taking bribes.
That’s Barney Skolnik, the lead prosecutor on the team.
What he and Tim Baker and Ron Liebman started to uncover evidence of was that corruption scheme that they’d been hearing all these rumors about: that County Executive Dale Anderson was taking cash payoffs as bribes-and-kickbacks for handing out County contracts.
NBC REPORTER: Anderson was cited on 39 counts involving more than $46,000 in contracting kickbacks.
This local official Dale Anderson was their big fish and these prosecutors were now getting the goods on him and on this big bribery scheme in that specific County government.
But here’s the thing…
The man who had Dale Anderson’s job right before he did… was just then being sworn-in for his second term as Vice President of the United States.
NBC REPORTER: Off behind out of camera range, Vice President Agnew has just gotten into his limousine with Mrs. Agnew. The Presidential motorcade is lining up here on the south lawn of the White House.
Spiro Agnew-- before he ever got to the White House-- began his political career in that County. He had been Baltimore County Executive for four years, and now the guy who had that job right after him was being busted for taking bribes, in what was starting to look like a pretty slick, well-established, smooth-running bribery kickback and corruption criminal enterprise.
Had Vice President Agnew taken part in running that same criminal scheme while he was in that job?
What prosecutors didn’t know at that moment, but what Spiro Agnew very much knew that night while he was celebrating his re-election at the Smithsonian...
Is that not-only had he taken part in that same criminal scheme back then… in fact, he had just accepted an envelope stuffed with cash.
I'm your host Rachel Maddow. And this is "Bag Man": the wild and untold story of the presidential line of succession, impeachment, indictment, and panic in the White House.
Episode 2: “Crawling In”
PRESIDENT RICHARD NIXON: As the new Attorney General, I have today named Elliot Richardson, a man of unimpeachable integrity and rigorously high principle.
Elliot Richardson had just become the new Attorney General of the United States in the Spring of 1973.
He had been Nixon’s Secretary of Defense. He was Health Secretary before that.
But from the moment that he became the Attorney General, Elliot Richardson’s life was consumed by the Watergate scandal.
ELLIOT RICHARDSON: I have decided that I will, if confirmed, appoint a special prosecutor and give him all the independence, authority, and staff support needed to carry out the tasks entrusted to him.
One of Richardson’s closest aides at the time was a young lawyer named JT Smith:
JT SMITH (EXECUTIVE ASSISTANT TO AG ELLIOT RICHARDSON): He knew that Nixon was under a cloud. He didn’t know what was in the tapes, but the White House didn’t seem eager for the tapes to see the light of day. He knew that the mood in the White House on the part of the President and his staff was quite bleak.
That Summer though, Attorney General Elliot Richardson also knew something else. He held a secret that only a handful of people in the entire government knew.
In the middle of that summer-- right in the middle of Watergate-- Elliot Richardson got a visit from his U.S. Attorney in Maryland George Beall and Beall’s team of three assistant U.S. Attorneys.
What those prosecutors brought to him that day was hard evidence that the sitting Vice President Spiro Agnew… was actively engaged in criminal activity.
These prosecutors had not set out to discover that, but they had launched an investigation into local corruption in Maryland and where that investigation ultimately led them... was inside the office of the Vice President.
SPIRO AGNEW: Ladies and gentlemen, I’m Ted Agnew.
To the extent that Spiro Agnew is remembered in history, it’s for this sort of vague sense that he went down over tax evasion or something sort of benign. What he actually did though was way worse than that, to the point of being sort of bonkers.
When he was Baltimore County Executive, Agnew had had the power to award local contracts. What prosecutors discovered… is that he was awarding those contracts almost exclusively to local businessmen who were paying him off. Who were delivering him cash bribes, literally stacks of bills stuffed into envelopes.
Here’s Barney Skolnik, one of these federal prosecutors in Baltimore who helped crack the case:
SKOLNIK: The scheme, it doesn't even deserve the, you know, the appellation “scheme”. It wasn't a scheme, it was just a payoff.
When Agnew left that County Executive job and became Governor of Maryland, prosecutors learned that he took the payoff system with him. But then, of course, it wasn’t just small-time local contracts he was controlling anymore. As Governor, of course he moved up to big state contracts.
And that required him to scale-up his criminal efforts. Here’s Ron Liebman, another one of the prosecutors on the team:
LIEBMAN: When Agnew became Governor, it was explained to him you want a “Bag Man”, you don't want to take directly, you want to insulate yourself. Because then it's just you against another person. And Agnew had at least one Bag Man, I think two, but he also took directly. He was greedy, absolutely greedy.
Agnew-- as Governor-- enlisted his State Roads Commissioner to start awarding state contracts to the firms that would pay Agnew off.
And -- as advised -- he also got himself a Bag Man: a longtime friend named Bud Hammerman. Bud’s job was to personally go collect the money from the companies that just got the contracts.
LIEBMAN: The deal was the contractor would pay Hammerman. He's holding the money and paying the money directly to Agnew because he's one of the Bag Men.
What Agnew put in place as Governor was a slick well-run extortion ring.
Agnew himself would keep 50-percent of the cash.
His Roads Commissioner, who picked the contractors, and his Bag Man who leaned on them for the cash… they would each get to keep 25-percent. So, half for the two of them, half for the Governor. Here’s Barney Skolnik:
SKOLNIK: I mean, taking large sums of cash in a succession of white envelopes-- over and over and over again-- is about as crass as it can be, you know, if you're a public official.
What prosecutors discovered that Spring was that this wasn’t just some old scheme that Agnew had been running back in Maryland, which he then stopped when he became Vice President. What they discovered was that this was a scheme Agnew was still actively carrying out as Vice President of the United States… on the grounds of the White House itself!
The prosecutors discovered a local Baltimore businessman named Lester Matz. Matz told them that he’d been making regular trips to the White House to secretly deliver cash to Agnew since Agnew had been in office as Vice President… in fact, starting pretty much immediately after Agnew was elected Vice President. Here’s Ron Liebman explaining how it worked:
LIEBMAN: After the election, the Vice President's office, temporary office was in the, in the basement I think of the Old Executive Office Building. And Lester Matz went to see the Vice President-elect with an envelope stuffed with cash in his suit jacket pocket. And he walked in to see Agnew-- as he told us the story and as I recall it-- and one of them, I think maybe Agnew, pointed to the ceiling like, “Don't say anything because we could be overheard or taped or something.” And Lester Matz took out this envelope with $10,000 in cash, as I recall, stuffed envelope, and handed it to Agnew. Agnew took it, put it in the center drawer of his desk and closed his desk. And (laughs) when we heard that, we were just, couldn't believe it! I mean, I believed it, but I was just shocked, just shocked. And we all were, that kind of crass bribery.
These young prosecutors had discovered-- at the height of the Watergate scandal-- that the Vice President of the United States was committing his own crimes, on an ongoing basis, inside the White House.
SKOLNIK: I mean cash in white envelopes, I mean, that’s crazy, to a Vice President.
LIEBMAN: I think we realized at that moment that we had a tiger by the tail.
It turned out that Agnew was also getting paid off by a Maryland engineering executive named Allen Green.
Green would make regular trips to the Executive Office Building right next to the White House. He would go into Agnew’s office and hand Agnew plain envelopes stuffed with $2,000 in cash.
Allen Green told prosecutors he went to the White House three or four times a year, during the whole first term of the Nixon Administration! On each trip, he delivered Agnew thousands of dollars. Always in envelopes. Always in cash.
And prosecutors soon discovered that Agnew was secretly accepting illegal deliveries of cash inside his Vice Presidential residence, as well as in the White House.
And if you’re wondering what all these businessmen were paying for when they were paying off Agnew, these prosecutors soon figured out that-- where he could-- Agnew was actually steering federal contracts to the businessmen who were now streaming into his office-- and his apartment-- with big wads of cash for him.
So it wasn’t just a one-sided shakedown operation, it was a true quid-pro-quo, it was government-- federal government-- for sale.
These young guys from Baltimore had not set out to find this, but what they soon realized they had rock-solid evidence of was that the Vice President was running an ongoing bribery-and-extortion scheme from inside the White House:
LIEBMAN: It was shocking. I mean, all of a sudden, you know, this case involving perhaps payoffs in Baltimore County, Maryland, or maybe in Annapolis was going to become not only more significant, keep in mind Watergate's going on! So the President of United States, to put it mildly, is under a cloud. And here we three Baltimore federal prosecutors are being told that the next guy in line, the guy a heartbeat away, he's also under a cloud! So, it was shocking.
It was shocking and it was now time for them to do something about it. They realized they needed to tell the Attorney General about what they’d uncovered.
Here’s Barney Skolnik again, with producer with Mike Yarvitz.
SKOLNIK: I had in fact no doubt at all that we had a prosecutable case. The issue was: who the defendant was. If the defendant was “John Smith”, I had no doubt. I mean, I was a good enough prosecutor and an experienced enough prosecutor to know that when you have what we had, that's a case
MIKE YARVITZ: If it's “John Smith”, you've got it locked up--
SKOLNIK: You just indict.
YARVITZ: In this case, it was not “John Smith.”
SKOLNIK: In this case, you say to the Attorney General, “what do you want us to do?”
This wasn’t just posing that question to any Attorney General. This was going to see Richard Nixon’s Attorney General.
Which meant giving a Presidential administration that was famous for covering-up political scandals… the chance to cover-up one more. That’s next.
Richard Nixon didn’t exactly have a stellar track record when it came to the job of Attorney General.
By the Summer of 1973, Nixon had already lost two different Attorneys General in connection with Watergate.
JOHN CHANCELLOR: A witness at the Senate Watergate hearings today directly implicated former Attorney General John Mitchell in the Watergate bugging and cover-up...
That Summer of ‘73, as Watergate was full-on boiling, a little team of federal prosecutors in Baltimore was facing the prospect of going to Washington to tell Richard Nixon’s newest Attorney General Elliot Richardson some news that they knew would be an absolute disaster for the Nixon White House.
They were coming to Washington to tell him that-- at the height of Watergate-- the Vice President Spiro Agnew was conducting an active criminal scheme of his own from inside the White House.
These prosecutors were going to take that news to Nixon’s Attorney General, knowing full well that he could do whatever he wanted with it. Here’s prosecutor Barney Skolnik:
SKOLNIK: I had a very conscious, not just realization that it was possible, but that under all the circumstances, it was highly likely that he was going to say-- perhaps for the most honorable of reasons-- I mean, he probably wouldn't say “Shut it down”, but he could say words that would amount to “shut it down.”
These three young Baltimore prosecutors and their boss, the U.S. Attorney George Beall... they all drove to DC and they went to go see the new Attorney General Elliot Richardson.
Not sure what to expect. Fearing the worst.
But they knew they could no longer keep to themselves this criminal secret about the Vice President.
LIEBMAN: We all drove in one car up the Baltimore Washington Parkway, July 3, 1973 game-planning how we're going to do this. “George is going to introduce us and then we’re going to do this, and when we do this, we're going to do that. And when we do that, we're going to do this.” So we get there, we’re ushered up to the Attorney General's office, which to say “impressive” is to understate it. And we wait and we wait.
BAKER: And then Richardson comes in and he's annoyed. You know, “What's so important that I have to, you're interrupting my day and you won't even tell my secretary what it's about. What's so important?” He's sitting there starting to take notes, but then more doodling and more and more impatient and just at the point where we're sure he’s-- the secretary comes in and gives him a note! He just up and leaves, no explanation, just gets up and leaves and he's gone for it seems like hours, probably 20 minutes.
LIEBMAN: The minute he leaves, of course we’re saying, “George say this, say that!” Then Richardson would come back in and George would begin. “Well, we started in Baltimore County. We're thinking about corruption, none of this, the Attorney General needs or wants to hear! And when George gets a little closer to the Vice President, another note comes in, Elliot Richardson gets up and he leaves, doesn't say “excuse me”, comes back. Richardson is clearly under pressure. And George says, “Okay, now we're going to tell you why we're here.”
BAKER: “We have evidence that Vice President Agnew took bribes as County Executive, Governor and even as Vice President.” Now we have Richardson's attention (laughs)! And my job at that point, it was my job now to layout the evidence that we had. And he's very interested in the evidence. What he, of course, wants to know is: how good a case is this? And it's a good case. I mean, we've got good stuff and we know it. I just start banging away on the “so and so will testify and he's got documents and he’s backed up by his vice presidents.” Nail after nail after nail after nail.
LIEBMAN: I read his expression as saying, “I need this right now, like I need another hole in the head.” That was his expression like, “Jesus”, you know, “Jesus, sweet Jesus.”
Put yourself in Elliot Richardson’s shoes for a minute. He had just become Attorney General weeks earlier. He was overseeing the most sensitive investigation maybe in the history of the Justice Department, an ongoing, serious criminal probe of the President.
And here were these barely-out-of-law-school Baltimore prosecutors-- who he’s never met-- telling him “we know you’re investigating the President of the United States, but we need you to investigate the Vice President, as well.”
If you were the Attorney General, would you take on that burden?
Here’s JT Smith, Elliot Richardson’s top aide:
SMITH: I remember Richardson after that meeting saying to me, you know, “oh my God.”
SKOLNIK: You really were talking about a ship that's in bad shape and, you know, the captain’s having a heart attack. And now the first mate, you're going to throw the first mate overboard. I mean, what's going to happen to the ship? It made the whole thing very heavy. You know, “what's the right thing to do?”
The Baltimore prosecutors raced to DC, they dropped that bombshell on Elliot Richardson during that meeting. And then they waited... and watched... to see how he would respond:
LIEBMAN: I remember watching Mr. Richardson-- Elliot-- very, very closely thinking, “Alright, is this where he's going to say good work guys? Really, really good work. Thanks for coming in. Leave the files here. We'll see you later”? And what he did was, he started crawling into the case. He just crawled into the case, “So, what about this? What are you going to do about that? Like he was a collaborator with us, which he was. He immediately crawled into the case with us. It was extraordinary.
In that meeting, without flinching, Elliot Richardson took on the unimaginable burden-- think of this!-- of overseeing an active criminal investigation of the President... and the Vice President... at the same time. Two different cases.
There is no telling what any other Attorney General might have done in that situation.
You could almost understand an Attorney General saying, “I’ve got this investigation that might bring down the President, I can’t wipe out the Vice President, too. The country can’t survive that.”
But Elliot Richardson’s response to these young prosecutors who cracked this case was… keep going… keep digging… he told them that he would now directly oversee their investigation. It would be conducted in-secret with the knowledge of only the people in that room.
The stakes were potentially taking out the President and the Vice President, which would effectively overturn an entire national election, which had been a landslide win for Nixon and Agnew. But Elliot Richardson-- who had just gotten on the job-- decided that he had to take on that burden. He had to.
Here’s how Barney Skolnik, one of the prosecutors remembers that meeting with Elliot Richardson even today... 45 years later. The first voice you’ll hear is producer Mike Yarvitz:
MIKE YARVITZ: What are your memories from that meeting, that first meeting with Richardson? What are you feeling going into that meeting?
SKOLNIK: This is something about which I can get very emotional. I went to that meeting as I think most people in my position would have. Um, we don't know him. I mean, I've heard good things about him, but we don't know him and it's like very much with a, with a great sense of anxiety that we are going to say to him, “Here, what do you want us to do?” And then, you know, figuratively speaking, hold our breath until he tells us what he's going to tell us. Within um, the first few minutes of being with him, I knew, I think we all knew that we were in the presence of a very special human being. To me it is the single most, it's the key to this whole saga: If Elliot Richardson had not been the Attorney General at that particular time, Spiro Agnew would have become President in August of ‘74. I mean, I'm certain of that.
These Baltimore prosecutors happened to draw as an Attorney General a figure in American political life who was equal to the moment. When how could you expect that of anyone?
Elliot Richardson was a Republican, decorated military veteran -- he went ashore on D-Day -- he was an ex-federal prosecutor himself. Unimpeachable integrity.
What began at that moment, in that meeting, with Elliot Richardson’s decision... was an unprecedented emergency mission inside the Justice Department to oust the Vice President of the United States before it was too late. Before he ascended to the Presidency himself.
SKOLNIK: You know, we're talking about the Summer of ‘73, I mean Watergate hearings are going on. Everybody was conscious that Nixon-- aside from being, you know, a “crook” in his memorable word-- might not last.
Watergate was beginning to reach a boil. The President might go down at any moment, either by resignation, or removal from office. And on top of that teetering drama, it was now on the Attorney General and this small team of federal prosecutors to somehow make sure that an active criminal wasn’t next in line to replace him.
They had the criminal scheme in their sites. They had the evidence, by then pouring in. They had leadership that -- almost unbelievably -- proved to be unafraid of the stakes, and willing to see this through.
The only problem was: the man that they were about to take on... was not going to take any of it lying down.
VICE PRESIDENT AGNEW: I want to say at this point, clearly and unequivocally: I am innocent of the charges against me! (cheers/applause)
Spiro Agnew was gearing up to wage war on this band of prosecutors.
And he knew that his real power base was the legion of supporters he had both in the public and in Congress, who loved what a hard-liner he was, who loved what a bomb-thrower he was, and who were willing to angrily support him basically through anything. No matter what Agnew got charged with.
They were ready to go to war with him.
SEN. CARL CURTIS (R-NE): Will you inform me what he’s done? No one has! Now, that’s not American justice ... I don’t think he should resign or he will resign!
That part of the story is next time.
“Bag Man” is a production of MSNBC and NBC Universal. This series is executive produced by Mike Yarvitz. It was written by myself and Mike Yarvitz. Editorial and production support from Jonathan Hirsch and Marissa Schneiderman for Neon Hum Media. And you can find much more about this story on our website: msnbc.com/bagman