The Washington Post, by The Washington Post

By Carl Bernstein and Bob Woodward

A $25,000 cashier’s check, apparently earmarked for President Nixon’s re-election campaign, was deposited in April in a bank account of one of the five men arrested in the break-in at Democratic National Headquarters here June l7.

The check was made out by a Florida bank to Kenneth H. Dahlberg, the President’s campaign finance chairman for the Midwest. Dahlberg said last night that in early April he turned the check over to "the treasurer of the Committee (for the Re-election of the President) or to Maurice Stans himself."

Stans, formerly secretary of Commerce under Mr. Nixon, is now the finance chief of the President’s re-election effort.

Dahlberg said he didn’t have "the vaguest idea" how the check got into the bank account of the real estate firm owned by Bernard L. Barker, one of the break-in suspects. Stans could not be reached for comment.

Reached by telephone at his home in a Minneapolis suburb, Dahlberg explained the existence of the check this way: "In the process of fund-raising I had accumulated some cash... so I recall making a cash deposit while I was in Florida and getting a cashier’s check made out to myself. I didn’t want to carry all that cash into Washington."

A photostatic copy of the front of the check was examined by a Washington Post reporter yesterday. It was made out by the First Bank and Trust Co. of Boca Raton, Fla., to Dahlberg.

Thomas Monohan, the assistant vice president of the Boca Raton bank, who signed the check authorization, said the FBI had questioned him about it three weeks ago.

According to court testimony by government prosecutors, Barker’s bank account in which the $25,000 was deposited was the same account from which Barker later withdrew a large number of hundred-dollar bills. About 53 of these $100 bills were found on the five men after they were arrested at the Watergate.

Dahlberg has contributed $7,000 to the GOP since 1968, records show, and in 1970 he was finance chairman for Clark MacGregor when MacGregor ran unsuccessfully against Hubert H. Humphrey for a U.S. Senate seat in Minnesota.

MacGregor, who replaced John N. Mitchell as Mr. Nixon’s campaign chief on July l, could offer no explanation as to how the $25,000 got from the campaign finance committee to Barker’s account.

He told a Post reporter last night: "I know nothing about it... these events took place before I came aboard. Mitchell and Stans would presumably know."

MacGregor said he would attempt this morning to determine what happened.

Powell Moore, director of press relations for the Committee for the Re-election of the President, told a reporter that Stans was unavailable for comment last night. Mitchell also could not be reached for comment.

In a related development, records made available to The Post yesterday show that another $89,000 in four separate checks was deposited during May in Barker’s Miami bank account by a well-known Mexican lawyer.

The deposits were made in the form of checks made out to the lawyer, Manual Ogarrio Daguerre, 68, by the Banco Internacional of Mexico City.

Ogarrio could not be reached for comment and there was no immediate explanation as to why the $89,000 was transferred to Barker’s account.

This makes a total of $114,000 deposited in Barker’s account in the Republic National Bank of Miami, all on April 20.

The same amount—$114,000—was withdrawn on three separate dates, April 24, May 2 and May 8.

Since the arrest of the suspects at 2:30 a.m. inside the sixth floor suite of the Democratic headquarters in the Watergate, Democrats have tried to lay the incident at the doorstep of the White House or at least to the Nixon re-election committee.

One day after the arrests, it was learned that one of the suspects, James W. McCord Jr., a former FBI and CIA agent, was the security chief to the Nixon committee and a security consultant to the Republican National Committee. McCord, now free on bond, was fired from both posts.

The next day it was revealed that a mysterious White House consultant, E. Howard Hunt Jr., was known by at least two of the suspects. Hunt immediately dropped from sight and became involved in an extended court battle to avoid testimony before the federal grand jury investigating the case.

Ten days ago it was revealed that a Nixon re-election committee official was fired because he had refused to answer questions about the incident by the FBI. The official, G. Gordon Liddy, was serving as financial counsel to the Nixon committee when he was dismissed on June 28.

In the midst of this, former Democratic National Chairman Lawrence F. O’Brien filed a $1 million civil suit against the Nixon committee and the five suspects charging that the break-in and alleged attempted bugging violated the constitutional rights of all Democrats.

O’Brien charged that there is "a developing clear line to the White House" and emphasized what he called the "potential involvement" of special counsel to the President, Charles Colson.

Colson had recommended that the White House hire Hunt, also a former CIA agent and prolific novelist, as a consultant.

While he was Nixon campaign chief, Mitchell repeatedly and categorically denied any involvement or knowledge of the break-in incident.

When first contacted last night about the $25,000 check, Dahlberg said that he didn’t "have the vaguest idea about it ... I turn all my money over to the (Nixon) committee."

Asked if he had been contacted by the FBI and questioned about the check, Dahlberg said: "I’m a proper citizen. What I do is proper."

Dahlberg later called a reporter back and said he first denied any knowledge of the $25,000 check because he was not sure the caller was really a reporter for The Washington Post.

He said that he had just gone through an ordeal because his "dear friend and neighbor," Virginia Piper, had been kidnapped and held for two days.

Mrs. Piper’s husband reportedly paid $l million ransom last week to recover his wife in the highest payment to kidnapers in U.S. history.

Dahlberg, 54, was President Nixon’s Minnesota finance chairman in 1968. The decision to appoint him to that post was announced by then-Rep. MacGregor and Stans.

In 1970, Mr. Nixon appointed Dahlberg, who has a distinguished war record, to the board of visitors at the U.S. Air Force Academy.

A native of St. Paul, Minn., Dahlberg has apparently made his money through Dahlberg Electronics, Inc., a suburban Minneapolis firm that sells miniature hearing aids.

In 1959, the company was sold to Motorola, and Dahlberg continued to operate it. In 1964, he repurchased it.

In 1966, the company established a subsidiary to distribute hearing aids in Latin America. The subsidiary had offices in Mexico City. Three years later, Dahlberg Electronics was named the exclusive United States and Mexican distributor for an acoustical medical device manufactured in Denmark.

Active in Minneapolis affairs, Dahlberg is a director of the National City Bank & Trust Co. of Fort Lauderdale. In 1969, he was named Minneapolis’ "Swede of the Year."

(Courtesy of The Washington Post.)

Funds for the Watergate espionage operation were controlled by several principal assistants of John N. Mitchell, the former manager of President Nixon’s campaign, and were kept in a special account at the Committee for the Re-election of the President, The Washington Post has learned.

The Mitchell assistants, all of whom still hold policy-making positions on a high level in President Nixon’s re-election campaign, were among 15 persons who had access to the secret fund of more than $300,000 earmarked for sensi­tive political projects.

Included in those projects was the espionage campaign against the Democrats, for which seven persons—includ­ing two former White House aides—were indicted Friday by a federal grand jury.

It could not be learned whether the Mitchell aides, who include persons who once worked at the White House, knew that funds would specifically be expended for the purpose of illegal electronic sur­veillance. However, associates told The Post that the aides were aware that the money would be spent generally on gathering information about the Democrats.

Some of the Mitchell aides are among the persons named by a self-described participant in the Watergate operation as recipients of confidential memos based on the tapped telephone conversations of Democratic Party officials.

A spokesman for President Nixon's re-election committee, informed of The Post’s story, said late yesterday afternoon that "there have been and are cash funds in this committee used for various legitimate purposes such as reimbursement for expenditures for advances on travel. However, no one employed by this committee at this time has used any funds (for purposes) that were illegal or improper."

The Post’s information about the funds and their relationship to the Watergate case was obtained from a variety of sources, including investigators, other federal sources and officials and employees of the Committee for the Re-election of the President.

The $300,000 fund also was used for travel and entertainment that campaign officials did not want known outside the campaign organization. One source said the money was In part used for routine and legal intelligence gathering about Democrats.

The fund was kept in the safe of former Secretary of Commerce Maurice H. Stans, finance chairman of the President’s campaign. It is presumably the same money that the General Accounting Office cited in an Aug. 26 report as a violation of the new campaign disclosure law, because it had not been properly accounted for. The GAO, the investigative arm of Congress, said the fund contained $350,000.

Sources said that Stans had no previous knowledge of the Watergate bugging—a position he has taken in public on numerous occasions, though he has not answered reporters questions directly.

Stans, according to the sources, was aware of the existence of the secret fund and knew that large amounts of money had been withdrawn in the names of Mitchell aides.

Only one accounting of the special fund—a single piece of lined ledger paper listing the names of 15 persons with access to the money and the amount each received—was maintained. It was purposely destroyed shortly before April 7, the date that the new campaign finance law requiring detailed accounting of election funds took effect, the sources told the Post.

A spokesman for the Nixon re-election committee denied late yesterday that such a list ever existed.

On the day it was destroyed the list showed that the largest individual sums of money were distributed to a handful of campaign aides closest to Mitchell, then still the President’s campaign manager.

It was from those withdrawals that Nixon committee money was used for the espionage campaign against the Democrats, according to sources.

Mitchell, formerly Attorney General, resigned as the President’s campaign manager on July 1, saying it was because his wife, Martha, insisted he leave politics.

She said at the time that "I love my husband very much, but I’m not going to stand for all those dirty things that go on." The former Attorney General has repeatedly denied any knowledge of the Watergate bugging.

The Mitchell aides who received money from the secret account include individuals who reportedly were sent confidential memos containing information obtained from a tapped telephone at Democratic headquarters.

The names of those Mitchell aides also appear in an account of the espionage operation told by Alfred Baldwin, a self-described participant in the Watergate affair who has been interviewed by both the FBI and lawyers for the Democratic Party.

Baldwin reportedly was granted immunity from prosecution in the Watergate case, in exchange for telling the federal grand jury his version of the espionage conspiracy. He has described himself ns a former FBI agent who was hired as a security guard for Martha Mitchell and subsequently was assigned to monitor conversations intercepted from the telephone of a Democratic official with offices In the Watergate.

Yesterday, the FBI said the only agent who ever worked for the Bureau with the same name is Alfred C. Baldwin III, age 37, who was an agent from 1963 to 1965. Meanwhile, a spokesman for the Nixon re-election campaign confirmed that an Alfred Baldwin "worked briefly" as a security guard for Mrs. Mitchell, though his name does not appear on the committee’s payroll.

In his account to the Democrats, Baldwin sold that one of the men indicted Friday in the Watergate case—James W. McCord Jr., the former security coordinator of the Nixon re-election committee—sent memos and transcript of the bugged conversations to a White House aide and several high officials in the Nixon campaign—including the Mitchell aides.

According to Baldwin’s account, McCord brought him into tile espionage operation as a wiretap monitor on May 10 or 11 and told him that he would be assigned the same task in Miami during the Democratic National Convention. Baldwin also said he was assigned by McCord to infiltrate Vietnam Veterans Against the War for the purpose of “embarrassing the Democrats" if the veterans demonstrated at the Republican convention.

The secret fund that supplied the money for Baldwin's Watergate activities and other aspects of the intelligence-gathering campaign was managed by the "political side" of the Nixon re-election committee—that part directly under Mitchell's control—but physically kept on the financial side, headed by former Commerce Secretary Stans.

In some cases, individual aides to Mitchell received nearly $50,000 from the secret account. Except for ex-White House aide G. Gordon Liddy, the former finance counsel of the Nixon campaign who was indicted in the Watergate Friday, no other officials of the finance operation are known to have obtained money from the account.

The actual distribution of money from the fund to the intelligence operation was described to The Washington Post as being an "extremely complex transaction." It was designed to eliminate the possibility of tracing any of the funds to their original source—thought to be campaign contributions—or to reveal the point of distribution in the Finance Committee for the Re-election of the President.

In the Interest of secrecy only one person was assigned to maintain the single-sheet list of transactions. Usually, the money was distributed by Liddy, the sources said.

Besides the Mitchell aides "very few people" knew that the funds were used for intelligence-gathering and political espionage, according to one source. However, others at the Nixon committee knew of existence of a secret fund earmarked for sensitive political projects.

On June 18, "when we read about the Watergate break-in in the papers," said another source, "we put two and two together."

(Courtesy of The Washington Post.)

By Carl Bernstein and Bob Woodward

Two of President Nixon’s top campaign officials each withdrew more than $50,000 from a secret fund that financed intelligence-gathering activities against the Democrats, according to sources close to the Watergate investigation.

The two officials, both former White House aides, are Jeb Stuart Magruder, deputy director of the Committee for the Re-election of the President, and Herbert L. Porter, scheduling director of the committee.

Until April 1, when he was succeeded by former Attorney General John N. Mitchell, Magruder was acting manager of President Nixon’s re-election campaign. Previously, he was deputy to While House communications director Herbert G. Klein. Porter is a former staff assistant to President Nixon.

In addition to the money withdrawn by Magruder and Porter, more than $50,000 was withdrawn from the same secret fund by G. Gordon Liddy, the former finance counsel of the Nixon re-election committee and former White House aide, sources said. Liddy was among seven men indicted by the federal grand jury Friday on charges of conspiring to bug the headquarters of the Democratic National Committee inside the Watergate.

There is no indication that the money allegedly withdrawn by Porter and Magruder was used directly to finance the Watergate bugging.

Magruder said yesterday it is "absolutely untrue" that he received any money from the secret fund. "I only received my salary and expense account," he said.

He acknowledged that government investigators had been told that he received $50,000 from this fund. "I was questioned about it, but it was discarded ... and agreed by all parties that it is incorrect," Magruder said in a telephone interview.

A Nixon committee spokesman, Powell Moore, said Porter could not be reached for comment on the report that he also received in excess of $50,000 from the fund.

Moore went on to say that any use of cash funds by Nixon committee officials has been and is only for legal and proper purposes.

The fund from which Liddy, Magruder and Porter withdrew the money was earmarked for especially sensitive political projects—including gathering information about the Democrats—and totaled well in excess of $350,000, according to sources.

Although there is no known direct tie to the bugging, the withdrawals indicate that top officials of the Nixon campaign were deeply involved in at least the financing of widespread intelligence-gathering operations against the Democrats.

Meanwhile, it was learned that the Nixon committee official assigned to disburse money from the secret fund—former campaign treasurer Hugh W. Sloan Jr.—resigned his post after the Watergate break-in because he "wanted no part of what he then knew was going on," in the words of a source.

The only record of the secret fund—a single sheet of lined ledger paper listing the names of about 15 people with access to the money and the amount each received—was wept by Sloan and was destroyed by Nixon committee officials about April 7, according to sources. On that date the new federal campaign finance law, which requires detailed accounting of all election funds, went into effect.

About the same time, sources reported, Nixon committee officials also destroyed between five and seven ledger books, each about. 1-½ inches thick, listing all campaign contributions received before April 7, and the names of the donors.

The updated single-sheet accounting of the secret fund—along with the money—was kept in a safe in the office of former Secretary of Commerce Maurice H. Stans, the finance chairman of the Nixon campaign, the sources said.

The job of distributing the money and keeping a record of the transactions was assigned to committee treasurer Sloan, who cited "personal reasons" when he resigned July 14.

After the Watergate break-in of June 17, the sources said, Sloan said he didn’t like what he saw going on and submitted his resignation.

Chief fund-raiser Stans "begged him to stay, but he couldn’t beg hard enough," according to one source. Stans could not be reached for comment. When Sloan resigned, Stans issued a statement saying Sloan was leaving for "personal reasons."

Sloan "left because he ... didn’t want anything to do with it," one source said. “His wife was going to leave him if he didn't stand up for what was right."

Sloan has refused to discuss the matter with reporters.

From various sources, including federal investigators and Nixon campaign officials and employees, the following picture of the secret fund has emerged:

It was established early in the Nixon campaign, probably in 1971, and immediately separated from all other accounting operations within the finance division of the Committee for the Re-election of the President. Though physically in the finance division, the fund was controlled by the political side of the re-election committee headed by former Attorney General Mitchell.

"Very few people knew about it,” said one source, identifying them as "the 15 or so people on the list (leger-sheet), John Mitchell's assistants, Hugh Sloan, Maurice Stans and one person who made the computations on an adding machine."

The names of those authorized to withdraw money from the fund included persons not on the payroll of the President’s re-election committee, sources close to one investigation said. They were unable to identify those persons or explain the presence of their names on-the list.

To insure secrecy, sources said deposits in the fund were cloaked by an extremely complicated process designed to eliminate all traces of the money’s source. For the same reason, no receipts of -withdrawal were used, the sources said.

Among those who knew of the fund, sources said, it was common knowledge that the money was to be used for sensitive political projects that Nixon campaign officials wanted to remain secret.

The secret fund is presumably the same one that the General Accounting Office cited in an Aug. 26 report as a violation of the new campaign disclosure law.

Putting the sum at $350,000, the GAO, which is the investigative arm of Congress, said the Nixon committee failed to make the required public disclosure of receipts and expenditures from the fund.

The $350,000 was deposited in a bank account May 25—more than six weeks after the new campaign disclosure took effect April 7, the GAO said.

The GAO said receipts and expenditures from the fund should have instead been publicly disclosed beginning April 7.

According to sources, the amount of money in the secret fund was changing constantly because of withdrawals and deposits and at one point probably contained more than $500,000. The $350,000 apparently is the amount of money that was left on May 25.

(Courtesy of The Washington Post.)

Following the Watergate break-in, two of President Nixon’s top campaign officials directed a massive "house-cleaning" in which financial records were destroyed and staff members were told to "close ranks" in preparing a public response to the incident, according to sources.

The two campaign officials were identified by the sources as former Assistant Attorney General Robert C. Mardian, now political coordinator of the Nixon re-election committee, and Frederick LaRue, a former White House counsel to the President and special assistant to the director of the Nixon campaign.

A spokesman for the Committee for the Re-election of the President said the committee would have no response other than to say that the sources of The Washington Post arc "a fountain of misinformation."

The sources said the "house-cleaning" resulted after Mardian and La Rue were instructed by John N. Mitchell, then campaign chairman, to take charge of developing the committee’s response to the bugging at the Watergate June 17.

The destroyed records, according to law enforcement and Nixon committee sources. included the following:

• Memos describing wiretapped telephone conversations of Democratic Party officials at the Watergate. The memos each began with the phrase “Confidential informant says,” thereby making it possible that those who read them did not necessarily realize the contents had come from wiretapping.

• A list showing that three top Nixon campaign officials withdrew about $300,000 from a secret fund earmarked for especially sensitive political projects—including intelligence gathering about the Democrats. The three officials, all ex-White House aides, are Jeb Stuart Magruder. deputy director of the Nixon re-election committee: Herbert L. Porter, scheduling director of the campaign; and G. Gordon Liddy, the former finance counsel of the Nixon committee. (Liddy was indicted with six other persons last week on charges of conspiring to bug the headquarters of the Democratic National Committee inside the Watergate.)

• As many as seven ledger books listing campaign contributors and the amount they gave before April 7, the effective date of a new federal election disclosure law requiring full public accounting of all contributions and expenditures. (Previously, it has been reported that these records were destroyed in April.)

According to sources, an integral part of the re-election committee’s response to the June 17 break-in involved forbidding employees to talk to the news media without specific clearance—even to the extent of giving their job titles, in some instances.

Some employees, particularly those who were aware that documents had been destroyed in their offices, said they were offered advice from superiors on how to respond inquiries from FBI agents and others investigating the Watergate case.

Other employees received unexpected promotions in the weeks following the break-in, according to colleagues.

Partly because of the effectiveness of the committee's destruction of records and other "house-cleaning" measures, it has taken three mouths for many details about the case to come to light.

Spokesmen for the Nixon, committee have not contested the existence of memos made from the alleged wiretapping at the Watergate, although several top campaign officials have denied receiving them. The memos, according to ex-FIB agent Alfred Baldwin, a self-described participant in the wiretapping operation, wore sent to several top officials of the Nixon campaign and at least one White House aide.

As for the secret fund, spokesmen for the Nixon campaign organization have never described its purpose, except to say that it was used for legal ends. The existence of the fund, which apparently contained as much as $700,000 at some points, was described by the General Accounting Office as an "apparent" violation of the new campaign disclosure law.

On June 10, the Monday after the Watergate break-in. several meetings were called to tell the committee staff that the Nixon campaign organization had nothing to do with the incident, according to sources.

At one such meeting, Liddy made a brief speech denying that any campaign officials had knowledge of the Watergate bugging, the sources said. He went on to describe James W. McCord, the Nixon Committee security coordinator arrested inside the Watergate, as a "bad apple" who had acted on his own authority.

Among those who participated in the destruction of committee records, according to Nixon campaign employees, was Robert Odle, the personnel director of the re-election committee.

Following the arrest of five persons inside the Watergate at 2:30 a.m. on June 17, sources reported Odle spent virtually the remainder of the weekend moving from office to office inside the headquarters of the Committee for the Re-election of the President at 1701 Pennsylvania Ave. N. W.

Some sources said Odle’s weekend activities constituted an "inventorying" of what was contained in committee files, and that no records were actually destroyed until after Mardian and LaRue returned from a West Const trip on Monday, June 19.

Other sources, however, said that Odle removed records that weekend from McCord’s office.

"Every time Rob (Odle) would go into McCord’s office he would order everybody else out of the area," said one source.

Later, when the FBI began looking at committee records in its investigation of the Watergate bugging, it was Odle who directed investigators from office to office, according to several sources.

During the week following the break-in, said one source, Mardian and LaRue went looking around for "information that might be incriminating," including memos and "records of payments to people." By the time FBI agents arrived in the company of Odle, the relevant records had been destroyed, the sources said.

People known to have information about the destroyed records were advised by Mardian, LaRue and others "to stay away from certain areas" when being questioned by investigators, said another source.

Some employers who worked in offices where records were destroyed suddenly received unexpected promotions, including aides to McCord and employees in the finance division, several sources said.

"We were never told in so many words, 'Don't talk,' said a committee employee. "It was always, 'Hold ranks,' or, ‘keep the ship together.'"

Steps were taken to insulate the Nixon campaign staff from the press. Sally Harmony, who had served as Liddy's secretary, became Odle's secretary and told a reporter: "I'm under strict instructions from the committee not to talk to anybody. You’ll have to call the press office if you want to know anything."

Another employee of an office where records were destroyed complained of being followed recently to a luncheon appointment with an old friend who happened to be a reporter. The reporter expressed skepticism but that afternoon the employee phoned back to say a superior had asked questions about the lunch conversation.

(Courtesy of The Washington Post.)

By Carl Bernstein and Bob Woodward

John N. Mitchell, while serving as U.S. Attorney General, personally controlled a secret Republican fund that was used to gather information about the Democrats, according to sources involved in the Watergate investigation.

Beginning in the spring of 1971, almost a year before he left the Justice Department to become President Nixon's campaign manager on March 1, Mitchell personally approved withdrawals from the fund, several reliable sources have told The Washington Post.

Those sources have provided almost identical, detailed accounts of Mitchell's role as comptroller of the secret intelligence fund and its fluctuating $350,000-$700,000 balance.

Four persons other than Mitchell were later authorized to approve payments from the secret fund, the sources said.

Two of them were identified as former Secretary of Commerce Maurice H. Stans, now finance chairman of the President's campaign, and Jeb Stuart Magruder, manager of the Nixon campaign before Mitchell took over and now a deputy director of the campaign. The other two, according to the sources, are a high White House official now involved in the campaign and a campaign aide outside of Washington.

The sources of The Post's information on the secret fund and its relationship to Mitchell and other campaign officials include law enforcement officers and persons on the staff of the Committee for the Re-election of the President.

Last night, Mitchell was reached by telephone in New York and read the beginning of The Post's story. He said: "All that crap, you're putting it in the paper? It's all been denied. Jesus. Katie Graham (Katharine Graham, publisher of The Washington Post) is gonna get caught in a big fat wringer if that's published. Good Christ. That's the most sickening thing I've ever heard."

Told that the Committee for the Re-election of the President had issued a statement about the story, Mitchell interjected: "Did the committee tell you to go ahead and publish that story? You fellows got a great ball game going. As soon as you're through paying Williams (Edward Bennett Williams, whose law firm represents the Democratic Party, as well as The Washington Post), we're going to do a story on all of you." Mitchell then hung up the phone.

Asked to comment on the Post report, a spokesman for President Nixon's re-election committee, Powell Moore, said, "I think your sources are bad; they're providing misinformation. We're not going to comment beyond that."

Asked if the committee was therefore denying the contents of the story, Moore responded: "We're just not going to comment."

Later, Moore issued a formal statement that read: "There is absolutely no truth to the charges in the Post story. Neither Mr. Mitchell nor Mr. Stans has any knowledge of any disbursement from an alleged fund as described by the Post and neither of them controlled any committee expenditures while serving as government officials."

Asked to discuss specific allegations in the story, Moore declined, saying: "The statement speaks for itself."

According to The Post's sources, the federal grand jury that investigated the alleged bugging of the Democrats' Watergate headquarters did not establish that the intelligence-gathering fund directly financed the illegal eavesdropping.

Investigators have been told that the only record of the secret fund—a single sheet of lined ledger paper, listing the names of about 15 persons who received payments and how much each received—was destroyed by Nixon campaign officials after the June 17 break-in at the Watergate.

It has been established, however, that G. Gordon Liddy, the former Nixon finance committee counsel who was one of the seven men indicted in the Watergate case, withdrew well in excess of $50,000 in cash from the fund, the sources said.

Some of the still-unrevealed intelligence activities for which the secret fund was used were described by one federal source as potentially "very embarrassing" to the Nixon campaign if publicly disclosed. Other sources said they expect these activities to be revealed during the trial of the seven men indicted in the Watergate case.

Mitchell served as the President's campaign manager for three months and resigned on July 1, citing an ultimatum from his wife that he leave politics.

The former attorney general has repeatedly denied that his resignation was related in any way to the Watergate bugging or that he had any knowledge of it.

When asked whether it would be illegal for an incumbent attorney general to control disbursements from a political campaign fund, one federal attorney involved in the Watergate case said yesterday: "I don't know. There's a question."

A spokesman for the Justice Department said there is no law prohibiting the political activity of a member of the President's cabinet.

Last month, the existence of the secret fund was cited as a "possible and apparent" violation of a new, stricter campaign finance disclosure law in a report by the General Accounting Office, the investigative arm of Congress.

The GAO said the fund contained $350,000 as of May 25 and was possibly illegal, because receipts and expenditures were not publicly reported for a six-week period after the new disclosure law took effect on April 7.

The fund, which was kept in a safe in Stans' office, primarily consisted of cash contributions made to the Nixon campaign over an 18-month period, according to sources.

Although the only record of the fund was destroyed, it is known that investigators were able to reconstruct at least a partial list of recipients.

In addition to Liddy, those who received payments included Magruder, who withdrew about $25,000 from the fund; Herbert L. Porter, scheduling director of the Nixon committee, who received at least $50,000; several White House officials and thus-far unidentified persons who were not on the regular Nixon campaign or White House payroll.

Magruder has denied he received any money from the fund, and Porter has not commented.

At its inception, the secret intelligence fund was wholly controlled by Mitchell, the sources said, with the other four officials gaining authority to approve disbursements later on.

According to The Post's sources, the primary purpose of the secret fund was to finance widespread intelligence-gathering operations against the Democrats. It could not be determined yesterday exactly what individual projects were funded by the secret account.

(Courtesy of The Washington Post.)

By Carl Bernstein and Bob Woodward

President Nixon's assistant for congressional relations and two officials of the President’s re-election committee were among the persons sent memos describing wire-upped conversations of Democratic Party officials, according to Alfred C. Baldwin III.

Baldwin, the ex-FBI agent who says he transcribed the wiretapped conversations of Democratic officials in the Watergate, is known to have told the FBI that memos summarizing some of the conversations were addressed to the following persons, among others:

• William E. Timmons, assistant to the President for congressional relations and the principal White House liaison to the re-election committee for matters concerning the Republican National Convention.

• Robert C. Odle Jr., a former White House aide who is director of administration for the Committee for the Re-election of the President

• J. Glenn Sedam Jr., general counsel of the President’s re-election committee.

Timmons has declined to discuss whether he received any memos of wiretapped conversations since The Washington Post first asked him about the matter more than two weeks ago.

A White House spokesman said Timmons denies that he ever received any such memos as asserted by Baldwin, who is expected to be a key government witness in the Watergate bugging trial.

A spokesman for the President’s re-election committee also denied that either Odle or Sedam received any memos based on wiretapped conversations. Sedam, who personally denied Baldwin’s assertion, said that he had been questioned about the matter by FBI agents investigating the Watergate bugging.

In a tape-recorded interview with the Los Angeles Times, Baldwin describes how he monitored wiretapped conversations and typed them into memorandum form under orders from James W. McCord, then security coordinator of President Nixon’s re-election committee. However, Baldwin never says in the interview whom the memos were addressed to.

Baldwin, according to other sources, told the FBI he was, able to learn the names of persons sent such memos on only three occasions, although—by his account—many more memoranda based on wiretapped conversations were written and then stuffed into a briefcase by McCord for eventual distribution.

In his interview with the Los Angeles Times, Baldwin says he once placed logs of monitored conversations in an envelope, wrote the name of an official of the President’s re-election committee on the outside and then delivered it to a guard at committee headquarters.

According to sources close to the Watergate investigation, Baldwin, when interviewed by the FBI, picked out Sedam’s name from a list of committee employees and said he was the official to whom the logs were addressed.

In identifying Timmons and Odle as persons to whom memos were sent, Baldwin named the two from memory, without the assistance of a list or other aid, the sources said.

The names of Sedam and Odle have figured in other aspects of the Watergate investigation.

Until March 27, Sedam shared an office at the re-election committee with G. Gordon Liddy, one of seven men indicted on charges of conspiring to bug the Democrats’ Watergate headquarters. Bernard L. Barker, of Miami, one of the other men indicted in the case, made at least seven long-distance telephone calls to an unlisted number shared by Sedam and Liddy until March 27.

Three of the phone calls—on April 10, April 27 and May 1—were made after Sedam succeeded Liddy as general counsel of the Nixon committee and Liddy moved to another office as finance counsel. Sedam has denied that he received the post-March 27 phone calls, commenting, “He (Barker) sure wasn’t calling me.”

Odle, according to the Nixon re-election committee, is the man who hired McCord as security coordinator, although other persons participated in the decision, according to sources close to the Watergate investigation.

Odle, a former assistant to White House communications director Herb Klein, reportedly participated in the destruction of Nixon committee records in the days following the arrest of five men inside the Democrats’ Washington headquarters on June 17.

According to law enforcement and Nixon committee sources, the destruction of records was part of a "house-cleaning" directed by former Assistant Attorney General C. Mardian, now political coordinator of the President’s campaign, and Frederick C. LaRue, a former White House aide who is staff assistant to the director of the Nixon campaign.

LaRue is identified in Baldwin’s Los Angeles Times interview as the man who approved his employment.

(Courtesy of The Washington Post.)

By Bob Woodward and Carl Bernstein

The FBI has established that $100,000 given to President Nixon’s campaign—a donation that surfaced during the Watergate investigation—originally came from a corporate bank account in Houston.

Campaign contributions by corporations are illegal. FBI sources said this week that this contribution was so well disguised that it is virtually impossible to prove wrongdoing.

The $100,000 came from the First City National Bank account of the Gulf Resources and Chemical Corp. on April 3.

At the time, Gulf Resources' major subsidiary, an Idaho raining operation, was under pressure by the Federal Environmental Protection Agency to correct extensive water and air pollution problem. Since then the pressure has diminished.

The $100,000 contribution came to light when it was learned that $89,000 of it, in the form of four Mexican cashier’s checks, was deposited in the bank account of Bernard L. Barker, one of the five men seized in the Watergate raid on the Democrats' headquarters June 17.

The money has been traced from Gulf Resources to the Nixon re-election committee in a series of four complicated steps. Government low enforcement sources, in describing the procedure, said it is similar to that used by organized crime leaders to conceal secret payments.

Maurice H. Stans, the finance chairman of the Nixon re-election campaign, personally approved the secret transfer of the fund through Mexico, according to a confidential report prepared by the House Banking and Currency Committee staff last month.

"The entire transaction involves the payment of an apparently inflated fee to a Mexican lawyer through the company’s subsidiary—which has been out of business for two years. We’ll never figure it out and it’s the hardest kind of case to prove," one law enforcement official said.

Richard Haynes, attorney for Gulf Resources, said all the transactions involving the' $100,000 were perfectly proper and include no illegal activity,

Haynes confirmed the findings of the FBI, in which the money reportedly moved in these steps:

1. Gulf Resources, whose president, Robert H. Allen, is the chief Nixon fundraiser in Texas, transferred $100,000 on April 3 from its corporate account to its subsidiary in Mexico called Compania de Azufre Veracruz, S.A. (CAVSA), a sulfur company.

(CAVSA discontinued operations in December 1969, and Gulf Resources took a $12,688,000 tax write off that year because the business became inactive according to records at the Securities and Exchange Commission. The subsidiary, however, maintains administrative personnel in Mexico City for financial transactions.)

2. GAYSA then turned the $100,000 over to Manuel Ogarrio Daguerre, a Mexico City-attorney, saying it was payment for legal services.

FBI sources said they strongly suspect the legal fee was inflated, Haynes, the Gulf Resources attorney, did not deny this, but noted that it would be "nearly impossible to penetrate" because the reason for such fees is protected by the confidentiality of the attorney-client relationship.

3. Ogarrio, or a representative, then converted $89,000 of this money to four cashier’s checks and $11,000 to cash. The $100,000 was then sent back to Texas and became part of $700,000 in Nixon contributions that were rushed to Washington in an oil executive’s suitcase on April 5, just two days before a stricter campaign contribution disclosure law took effect.

4. Donations by foreign nationals are illegal. Ogarrio—at least on paper—made loans amounting to $100,000 to several Texans. These persons, the names of whom have not been publicly revealed, then became the contributors to the Nixon committee.

Haynes, the Gulf Resources lawyer, said the money was not a campaign contribution when it reached Osarrio. “Then if it is his dough, he can do anything with it,” Haynes said.

Government sources said the four Mexican cashier’s checks were later deposited in the bank account of Barker, one of the Watergate suspects, to avoid the federal gift tax.

"It had nothing to do with the financing of the Watergate," one knowledgeable Republican source said. He said the checks were converted to cash so the $89,000 could be divided into separate contributions of $3,000 or less, the maximum that can be given free of gift tax.

In the weeks before the $100,000 transfer of funds from Gulf Resources, environmental problems over air and water pollution were mounting for the company's chief subsidiary, the Bunker Hill Co.

On March 29, five days before the transfer began, EPA informed Bunker Hill that it would impose stiffer air pollution control standards on the company’s lead and zinc mining operation in Kellogg, Idaho.

Bunker Hill had $88 million in sales last year. Ray Chapman, director of public relations for the firm, said last week that "the survival of the company could be determined by the decision on air pollution standards."

Bunker Hill’s position with the EPA has improved considerably since the transfer of funds from Gulf Resources in Mexico.

First, no stiffer air pollution standards have yet been imposed.

Second, the EPA has recently reversed an earlier decision and will not sue Bunker Hill on water pollution, according to the EPA regional general counsel.

On April 18, when a suit was still threatened, Bunker Hill signed a consent agreement with Idaho, adopting the state’s water pollution control standards.

At least one EPA official, Leonard A. Miller, director of enforcement in the Northwestern states region, criticized the Idaho standards, calling them insufficient.

Ted Rogowski, general counsel for EPA in the region, said EPA officials were unaware of the Bunker Hill-Idaho agreement when it was made.

Asked why EPA seemed satisfied with the relaxed standards, Rogowski said: "They are a good company. They are spending more money, millions of dollars to correct the problems."

Miller, head or the enforcement division of EPA said that Bunker Hill "is one of the most significant water polluters in the area," discharging an average of 93 percent of all zinc and lead found in the Coeur d’Alene River.

This makes the river "very, very, very toxic," killing all the fish in it and bringing the levels of zinc in the river to the point where the water becomes unsafe to drink, according to Miller. He said Bunker Hill discharges 12,000 pounds of zinc in the river each day.

The U.S. Attorney for Idaho, Sidney E. Smith, was contacted last week by telephone to inquire why the proposed water pollution suit against Bunker Hill was dropped. Smith said he would check his file and call back. He never did, and four separate attempts to reach him again were unsuccessful.

The stiffer air pollution control standards proposed on March 29 have not been imposed on Bunker Hill. One high EPA official, who declined to be named, said last week it is virtually certain that the federal government will back down and adopt the state standards.

The state had asked that the federal EPA require Bunker Hill to remove 85 percent of all sulfur dioxide pollutants by mid 1975.

EPA’s proposed standards, in turn, require the removal of 96 percent by mid-1977.

Frank G. Woodruff, president of Bunker Hill said in a public hearing on Sept. 14 that: "The EPA (air) regulation is ill-conceived, currently unattainable and unnecessarily restrictive."

Rogowski, the general counsel for the EPA region, noted that the delay in actually imposing the air standards is not unusual, and that other companies received the same treatment.

"Everything that we’ve done with this company," he said, "is the same that has been done with the Scott Paper Co. and ITT."

(Courtesy of The Washington Post.)

By Carl Bernstein and Bob Woodward

FBI agents have established that the Watergate bugging incident stemmed from a massive campaign of political spying and sabotage conducted on behalf of President Nixon's re-election and directed by officials of the White House and the Committee for the Re-election of the President.

The activities, according to information in FBI and Department of Justice files, were aimed at all the major Democratic presidential contenders and—since 1971—represented a basic strategy of the Nixon re-election effort.

During their Watergate investigation, federal agents established that hundreds of thousands of dollars in Nixon campaign contributions had been set aside to pay for an extensive undercover campaign aimed at discrediting individual Democratic presidential candidates and disrupting their campaigns.

"Intelligence work" is normal during a campaign and is said to be carried out by both political parties. But federal investigators said what they uncovered being done by the Nixon forces is unprecedented in scope and intensity.

They said it included:

Following members of Democratic candidates' families and assembling dossiers on their personal lives; forging letters and distributing them under the candidates' letterheads; leaking false and manufactured items to the press; throwing campaign schedules into disarray; seizing confidential campaign files; and investigating the lives of dozens of Democratic campaign workers.

In addition, investigators said the activities included planting provocateurs in the ranks of organizations expected to demonstrate at the Republican and Democratic conventions; and investigating potential donors to the Nixon campaign before their contributions were solicited.

Informed of the general contents of this article, The White House referred all comment to The Committee for the Re-election of the President. A spokesman there said, "The Post story is not only fiction but a collection of absurdities." Asked to discuss the specific points raised in the story, the spokesman, DeVan L. Shumway, refused on grounds that "the entire matter is in the hands of the authorities."

Law enforcement sources said that probably the best example of the sabotage was the fabrication by a White House aide—of a celebrated letter to the editor alleging that Sen. Edmund S. Muskie (D-Maine) condoned a racial slur on Americans of French-Canadian descent as "Canucks."

The letter was published in the Manchester Union Leader Feb. 24, less than two weeks before the New Hampshire primary. It in part triggered Muskie's politically damaging "crying speech" in front of the newspaper's office.

Washington Post staff writer Marilyn Berger reported that Ken W. Clawson, deputy director of White House communications, told her in a conversation on September 25th that, "I wrote the letter."

Interviewed again yesterday, Clawson denied that he had claimed authorship of the "Canuck" letter, saying the reporter must have misunderstood him. "I know nothing about it," Clawson said.

William Loeb, publisher of the Manchester paper, said yesterday that although the person who signed the letter—a Paul Morrison of Deerfield Beach, Fla.—has never been located, "I am convinced that it is authentic."

However, Loeb said he is investigating the possibility that the letter is a fabrication because of another letter he received about two weeks ago. The recent letter, Loeb said, maintains that another person was paid $1,000 to assist with the "Canuck" hoax.

B. J. McQuaid, Editor-in-Chief of the Union-Leader, said earlier this year that Clawson had been "useful" to the paper in connection with the "Canuck" letter.

Though McQuaid did not elaborate, he too said that he believed the original letter was authentic.

Clawson, a former Washington Post reporter, said yesterday that he met McQuaid only briefly during the New Hampshire primary while lunching in the state with editors of the newspaper.

He denied that he provided any assistance with the letter. Clawson said the first time he heard of the "Canuck" letter was when "I saw it on television" following the Muskie speech.

Immediately following his "crying speech," Muskie's standing in the New Hampshire primary polls began to slip and he finished with only 48 percent of the Democratic primary vote—far short of his expectations.

Three attorneys have told The Washington Post that, as early as mid-1971, they were asked to work as agents provocateurs on behalf of the Nixon campaign. They said they were asked to undermine the primary campaigns of Democratic candidates by a man who has been identified in FBI reports as an operative of the Nixon re-election organization.

All three lawyers, including one who is an assistant attorney general of Tennessee, said they turned down the offers, which purportedly included the promise of "big jobs" in Washington after President Nixon's re-election. They said the overtures were made by Donald H. Segretti, 31, a former Treasury Department lawyer who lives in Marina Del Ray, Calif.

Segretti denied making the offers and refused to answer a reporter's questions.

One federal investigative official said that Segretti played the role of "just a small fish in a big pond." According to FBI reports, at least 50 undercover Nixon operatives traveled throughout the country trying to disrupt and spy on Democratic campaigns.

Both at the White House and within the President's re-election committee, the intelligence-sabotage operation was commonly called the "offensive security" program of the Nixon forces, according to investigators.

Perhaps the most significant finding of the whole Watergate investigation, the investigators say, was that numerous specific acts of political sabotage and spying were all traced to this "offensive security," which was conceived and directed in the White House and by President Nixon's re-election committee.

The investigators said that a major purpose of the sub rosa activities was to create so much confusion, suspicion and dissension that the Democrats would be incapable of uniting after choosing a presidential nominee.

The FBI's investigation of the Watergate established that virtually all the acts against the Democrats were financed by a secret, fluctuating $350,000-$700,000 campaign fund that was controlled by former Attorney General John N. Mitchell while he headed the Justice Department. Later, when he served as President Nixon's campaign manager, Mitchell shared control of the fund with others. The money was kept in a safe in the office of the President's chief fundraiser, former Secretary of Commerce Maurice Stans.

According to sources close to the Watergate investigation, much of the FBI's information is expected to be revealed at the trial of the seven men indicted on charges of conspiring to eavesdrop on Democratic headquarters at the Watergate.

"There is some very powerful information," said one federal official, "especially if it becomes known before Nov. 7."

A glimpse of the Nixon campaign's spying and disruptions are to be found in the activities of Segretti. According to investigators, Segretti's work was financed through middlemen by the $350,000-$700,000 fund.

Asked by The Washington Post to discuss Segretti, three FBI and Justice Department officials involved in the Watergate probe refused. At the mention of Segretti's name, each said—in the words of one—"That's part of the Watergate investigation." One of the officials, however, became angry at the mention of Segretti's name and characterized his activities as "indescribable."

Segretti, visited in his West Coast apartment last week by Washington Post special correspondent Robert Meyers, repeatedly answered questions by saying, "I don't know." "I don't have to answer that." And "No comment." After 15 minutes, he said: "This is material for a good novel, it's ridiculous," and chased the reporter outside when he attempted to take a picture.

According to the three attorneys interviewed by The Post, Segretti attempted to hire them in 1971 as undercover agents working on behalf of President Nixon's re-election. All three said they first met Segretti in 1968, when they served together in Vietnam as captains in the Army Judge Advocate General Corps.

One of the lawyers, Alex B. Shipley, a Democrat who is now assistant attorney general of Tennessee, said Segretti told him, "Money would be no problem, but the people we would be working for wanted results for the cash that would be spent."

Shipley, 30 added: "He (Segretti) also told me that we would be taken care of after Nixon's re-election, that I would get a good job in the government."

According to Shipley, Segretti said that the undercover work would require false identification papers under an assumed name; that Shipley recruit five more persons, preferably lawyers, for the job; that they would attempt to disrupt the schedules of Democratic candidates and obtain information from their campaign organizations; that Shipley would not reveal to Segretti the names of the men he would hire; and that Segretti could never reveal to Shipley specifically who was supplying the money for the operation.

Shipley recalled in a telephone interview: "I said, 'How in hell are we going to be taken care of if no one knows what we're doing?' and Segretti said: 'Nixon knows that something is being done. It's a typical deal.' Segretti said, 'Don't-tell-me-anything-and-I-won't-know.'"

Segretti's first approach, said Shipley, came on June 27, 1971. "He called me before then and told me he would be in Washington and he came to a dinner party at my apartment at South Four Towers (4600 S. Four Mile Run Drive, Arlington) the night before," said Shipley. "Nothing was said about it then. The next morning I met him for breakfast and drove him to the airport—Dulles."

According to Shipley, he picked Segretti up that morning, a Sunday, at the Georgetown Inn, where—hotel records show—a Donald H. Segretti stayed in room 402 on June 25, and June 26,1971 (total bill $54.75, including $2.25 in telephone calls). In addition, travel records obtained by The Washington Post show that Segretti bought a Washington-San Francisco-Monterey (Calif.) airline ticket on June 27 (departure Dulles).

On the way to Dulles, said Shipley, Segretti "first mentioned the deal. He asked would I be interested because I was getting out of the Army. We were both setting out shortly... and didn't have anything lined up. He mentioned on the way to Dulles that we would do a little political espionage."

Shipley continued: "I said, 'What are you talking about?' He (Segretti) said: 'For instance, we'll go to a Kennedy rally and find an ardent Kennedy worker. Then you say that you're a Kennedy man too but you're working behind the scenes; you get them to help you. You send them to work for Muskie, stuffing envelopes or whatever, and you get them to pass you the information. They'll think that they are helping Kennedy against Muskie. But actually you're using the information for something else.

"It was very strange," Shipley recalled. "Three quarters of the way to the airport I said, 'Well, who will we be working for?' He said, 'Nixon' and I was really taken aback, because all the actions he had talked about would have taken place in the Democratic primaries. He (Segretti) said the main purpose was that the Democrats have an ability to get back together after a knockdown, drag-out campaign. What we want to do is wreak enough havoc so they can't."

Shipley said he told Segretti, "Well, it sounds interesting; let me think about it."

In addition to Shipley, Roger Lee Nixt of Dennison, Iowa, and Kenneth Griffiths of Atlanta, Ga., said they turned down similar offers from Segretti, with whom they served in Vietnam. Both declined to discuss the offers in detail, but they acknowledged that Segretti had told them they would be engaged in sub rosa activities—similar to those described by Shipley—to aid President Nixon's re-election.

Still another lawyer who served with Segretti in Vietnam, Peter Dixon of San Francisco, also said Segretti made him an offer. However, Dixon said he told Segretti, "No thanks," before any details of the job were revealed. I said, "Gee, I'm not interested in political matters, and I'm not a Republican anyway," said Dixon.

The most detailed account of Segretti's activities was given by Shipley, who said he wrote a memorandum to himself about the episode, "because it all seemed so strange."

At one point during the four-month period when Segretti was trying to recruit him, said Shipley, he approached a friend who worked for Sen. Albert Gore (D-Tenn.) and was advised to try and "string him (Segretti) out to see what he's up to." Although "I don't like these type of shenanigans," Shipley said, he never subsequently contacted anyone else about the matter and said he has not been questioned by the FBI about Segretti.

During a meeting on July 25, said Shipley, Segretti "didn't go into much detail because it was mostly 'Are you with me or not?'" When he asked Segretti exactly what would be expected of him, in participating in clandestine activities, Shipley said he was told: "Enlist people, be imaginative." One thing he stressed was asking lawyers because he didn't want to do anything illegal. It wasn't represented as a strictly strong-arm operation. He stressed what fun we could have. As an example, he gave this situation:

"'When a rally is scheduled at 7 p.m. at a local coliseum by a particular candidate, you call up and represent to the manager that you're the field manager for this candidate and you have some information that some rowdies, some hippies or what-have-you are going to cause trouble. So you ask him to move the rally up to 9 o'clock—thereby insuring that the place would be padlocked when the candidate showed up at 7.'"

Shipley said he was asked by Segretti to fly to Atlanta to enlist their Army colleague, Kenneth Griffiths, in the project, but that he never made the trip. However, when visiting Griffiths last Christmas, said Shipley, "Griffiths mentioned to me that Segretti had been in contact with him and that Griffith had expressed absolutely no interest at all."

The last time he heard from Segretti, said Shipley, was on Oct. 23, 1971, when "he called from California and asked me to check into Muskie's operation in Tennessee... I just never did anything about it."

"At one time during these conjectural discussions," Shipley continued, "Segretti said it might be good to get a false ID to travel under, that it would be harder for anyone to catch up with us. He mentioned he might use the pseudonym Bill Mooney for himself..."

"Segretti said he wanted to cover the country," Shipley continued, "that he would be more or less the head coordinator for the country. But some of the things he proposed to do didn't seem that damaging, like getting a post office box in the name of the Massachusetts Safe Driving Committee and awarding a medal to Teddy Kennedy—with announcements sent to the press."

"The one important thing that struck me was that he seemed to be well-financed," Shipley said. "He was always flying across the country. When he came to Washington in June he said he had an appointment at the Treasury Department and that the Treasury Department was picking up the tab on this—his plane and hotel bill."

Segretti later told him, Shipley said that "it wasn't the Treasury Department that had paid the bill, it was the Nixon people. He said, 'Don't ask me any names.'"

(According to travel records, Segretti crisscrossed the country at least half of 1971. Stops included Miami, Houston, Manchester, N.H., Knoxville, Los Angeles, New York, Washington, Salt Lake City, Chicago, Portland, Ore., Albuquerque, Tucson, San Francisco, Monterey and several other California cities.)

(Federal investigators identified the following jurisdictions as the locations of the most concentrated Nixon undercover activity: Illinois, New York, New Hampshire, Massachusetts, California, Texas, Florida, and Washington, D.C.)

Segretti told him one other major element about his covert work, said Shipley: "He intended to go into a law firm near Los Angeles by the name of Young and Segretti—he said it was a cover, that he would be doing only political work."

According to the California Bar Association, Segretti's law office is at 14013 West Captain's Row, Marina Del Rey, California.

There in an apartment surrounded by comfortable furniture, piles of photograph records, tomato plants, a stereo receiver, a tape deck and a 10-speed bike, Segretti was found last week by Post special correspondent Myers.

Questioned whether he knew Alex Shipley, Roger Lee Nixt, Kenneth Griffiths, or Peter Dixon, Segretti asked, "Why?" Informed that they had said Segretti attempted to recruit them for undercover political work, he replied "I don't believe it." Then he declined to answer a series of questions except to say either, "I don't know," "No comment," or some similar response.

At one point, Segretti said: "This is all ridiculous and I don't know anything about this." At another point he said: "The Treasury Department never paid my way to Washington or anywhere else." Biographical details about Segretti, who stands about 5 feet 8 and weighs about 150 pounds, are minimal.

From Army colleagues and classmates at the Boalt Hall School of Law at the University of California in Berkeley, it is known that he was raised on the West Coast.

After receiving his law degree, he served as a Treasury Department attorney in Washington for less than a year, according to friends, and then entered the Army as an officer in the Army Judge Advocate General Corps.

A Treasury Department spokesman confirmed that Segretti, in 1966 and 1967, worked as an attorney in the office of the Comptroller of the Currency here.

About a year of Segretti's Army service, friends said, was spent in Vietnam, with American Division headquarters in Chulai and U.S. Army Vietnam headquarters at Longbinh.

(Courtesy of The Washington Post.)

By Carl Bernstein and Bob Woodward

President Nixon’s appointments secretary and an ex-White House aide indicted in the Watergate bugging case both served as "contacts" in a spying and sabotage operation against the Democrats, The Washington Post has been told.

The appointments secretary, Dwight L. Chapin, 31, meets almost daily with the President. As the person in charge of Mr. Nixon’s schedule and appointments. including overall coordination of trips, Chapin is one of a handful of White House staff members with easy access to the President.

In a sworn statement, Lawrence Young. 32, a California attorney, said he had been told by Donald H. Segretti that "Dwight Chapin was a person I reported to in Washington."

Segretti, 31, a lawyer and a dose friend of Young, has been identified by federal Investigators as one of the 50 undercover operatives engaged since 1971 in an apparently unprecedented spying and sabotage effort staged by Nixon aides against Democratic presidential candidates.

Federal law enforcement officials have said that much of this spying and sabotage is probably illegal but that any unlawful activities connected to the undercover campaign would be difficult or impossible to prove in court. However, the same officials regularly used words like "despicable" and "vicious" when describing the activities.

In a statement issued through the White House press office Friday night, Chapin acknowledged knowing Segretti "since college days." While declining to discuss the allegation that he was one of Segretti’s "contacts," Chapin said:

"As The Washington Post reporter has described it, the story is based on hearsay and is fundamentally inaccurate."

In three separate interviews. Young, who attended the University of Southern California with both Chapin and Segretti, said that Segretti told him—among other things—that:

• On Aug. 19, two days before the Republican National Convention, Segretti went to Miami Beach, where presidential aides showed him copies of two interviews he had with the FBI, including one that was not yet 24 hours old.

• The aides briefed him on what to say when testifying the following Tuesday before a federal grand jury investigating the Watergate bugging here In Washington.

• The money for Segretti’s activities, including a $20.000 annual salary, was paid from a “trust account in a lawyer’s name ... a high-placed friend of the President, and he was instructed to guard that name zealously."

Federal law enforcement sources, apprised of what Young told The Post, said Segretti had told essentially the same story to investigators.

According to Young, Segretti also told him that he received political sabotage and spying assignments from E. Howard Hunt Jr., the ex-CIA agent and White House aide who was among seven men indicted on charges of conspiring to eavesdrop on the Democrats’ headquarters in the Watergate.

Young, who describes himself as a liberal Democrat, made his statements in separate interviews with two Washington Post reporters and a special correspondent of the newspaper. Robert Meyers. Young has signed a sworn affidavit to the accuracy of his accounts of conversations with Segretti.

In five or six conversations with him. Young said, Scgretti detailed widespread undercover activities undertaken on behalf of President Nixon’s re-election and mentioned Chapin’s name in connection with them many times.

Segretti was first linked by investigators to the sabotage and spying activities on the basis of records of long-distance telephone calls from Hunt while Hunt was still serving in the White House, according to law enforcement sources and Young's account.

According to Young. Segretti said that he reported frequently to Chapin on the progress of his sabotage activities.

Young said that when the FBI first interviewed Segretti about his undercover activities, Segretti immediately sought—and received—assurances from Chapin that he would not be abandoned as a "sacrificial lamb" by the Nixon forces.

Ten days before the Republican National Convention, Segretti telephoned Young in "an absolute panic" because FBI agents had come to question him about telephone calls from Hunt.

“He was worried because there was no prior warning that he would be contacted by  the FBI," said Young. "He felt he would be given prior warning, that he would be briefed as to what to say by the people he was working for. He was afraid of being left out on a limb, sacrificed without any protection or coverage. He wanted some advice as to what he should do."

On that occasion, Young said, Segretti told him that he had met with Hunt in Miami several months earlier and had been asked by Hunt to organize "an attack" by demonstrators on the Doral Beach Hotel GOP Headquarters, during the Republican convention in the name of supporters of the Democratic nominee for President. Segretti refused, Young said.

According to Young, Segretti was upset by the possibility of testifying before the Watergate grand jury and told him he knew nothing about the bugging of Democratic headquarters. Segretti’s dealings with Hunt concerned only "legal" sabotage and spying activities against the Democrats, Young said he was told.

"Don said he knew Hunt by a different name, an assumed name," said Young, "but that he knew he was Hunt. Hunt would always talk in a very whispery, conspiratorial voice," he said, "…and seemed to add even more intrigue than was already there."

A week after that first visit from the FBI, Young said, Segretti was questioned again by federal agents, who at the same time subpoenaed him to appear before the Watergate grand jury.

"He was extremely worried," Young recalled, "and I suggested he put in an immediate call to the people he had been working for; but he said all of his contacts were already in Miami Beach for the convention. So he made further calls. He was trying to call Chapin," Young added:.

"Then I got a call from Don around midnight saying he was on his way to Miami, that he had made contact—he wouldn’t say with whom—and they had told him to come to Miami… When he informed me he was going to Miami, wasn't in a panic any more because he had been told not to worry about it."

In Miami Bench, according to Young's account, presidential aides beefed Segretti on what to toll the grand jury. They assured Segretti that prosecutors would ask "easy questions" in front of the grand Jury, and rehearsed Segretti on his testimony.

The Nixon aides in Miami Bench assured Segretti he would not be asked about specific sabotage activities by the grand Jury, or about his contacts with Chapin, Young said.

That relieved Segretti, especially because of his long-term friendship with Chapin, Young said. "He was concerned with Dwight’s name. Quite often he would say, ‘I talked to our friend—meaning Chapin—or he would use the initials 'D.C.,'" when discussing covert activities.

The presidential aides, according to Young's account, instructed Segretti to tell the grand jury "just what he had told the FBI, which was not any damaging material; it was just about the phone calls from Hunt and some small activities he (Segretti) was doing, some innocuous thing about being involved in some campaign activities."

Young added: "He was told to tell the truth, not to perjure himself and not to worry about it. He was to stick to just what he said to the FBI."

Three days after the Miami Beach meeting, Young sold, Segretti flew to Washington for his appearance before the grand jury. Upon arrival, said Young, "the U S. attorney interrogated him ahead of time in an office and thoroughly went into everything"—including Chapin's alleged role in the sabotage campaign; where Segretti was getting his money from, and the names of such other persons involved in activity against the Democrats. Such an interrogation is customary.

However, the prosecutor told Segretti "not to worry, that those weren't the questions that would he asked," according to Young's account.

Assistant U.S. Attorney Earl J. Silbert was in charge of the grand jury investigation. He has repeatedly refused to comment on the Watergate case and related matters. Reliable federal low enforcement sources have praised the thoroughness of investigation at Silbert’s level, while emphasizing that the U.S. Attorney’s office focused almost exclusively on the Watergate bugging and a related attempt to eavesdrop on the campaign headquarters of Sen. George McGovern. One highly placed source observed that the grand jury's investigation had to be narrow. Had the inquiry gone into more than the Watergate incident and other electronic eavesdropping attempts it "never would have finished, believe me," the source said.

Inside the grand jury room, "the questions went along on a very easy scale," Young said he was told by Segretti. The inquiries were made by a prosecutor whose name Segretti did not mention, Young said, adding: "It was just innocent stuff and nothing about … whom he was working for."

A woman on the grand jury, however, began asking lending questions on her own accord, said Young, "including who paid Don" and questions about whom he worked with "on the White House staff."

"Then he (Segretti) said the names came out." Young recalled, "especially Dwight Chapin's ... and the name of the lawyer who paid him." Young said Segretti had not told him the other names—except Hunt’s—that were mentioned in the grand jury proceedings.

According to Young, Segretti told him that "I’m just a small fish; there are many others" in the sabotage campaign that federal investigators say was conducted on behalf of President Nixon’s re-election and directed by White House aides and officials at the Committee for the Re-election of the President.

Young emphasized that Segretti repeatedly maintained that he was recruited for the work by the Nixon forces and he did no[t] volunteer.

Segretti could not be reached for direct comment, and is reported by associates to be in hiding.

The money that Segretti received for his undercover activities, It was reported last week, come from a fluctuating, secret cash fund of $350,000 to $700,000, which was kept in the office safe of former Secretary of Commerce Maurice Stans, finance chairman of the Nixon campaign.

The fund was allegedly controlled in 1971 by John N. Mitchell while he was still Attorney General of the United States. By the time Mitchell had left the Justice Department to become President Nixon's campaign manager last April 1, several White House and campaign aides to the President were also authorized to make disbursements from the fund, according to sources close to the Watergate investigation.

Federal investigators said that Segretti, and many other operatives Involved in sabotage activities by the Nixon forces, were paid from the fund indirectly, through middlemen.

The purposes of the undercover effort, according to federal investigators and persons whom Segretti attempted to recruit as agents provocateurs, were to discredit individual Democratic presidential candidates; create confusion in their campaigns, and disrupt the Democratic primaries to the extent that the Democratic Party could not reunite after choosing its presidential nominee.

The covert activities, according to information in FBI and Justice Department files, represented a basic strategy of the Nixon re-election effort and included:

Following members of Democratic candidates' families and assembling dossiers on personal details of their lives; forging letters and distributing them under the candidates' letterheads, Investigating potential donors to the Nixon campaign before there contributions were solicited; leading false and manufactured items to the press about the candidates: throwing their campaign schedules into disarray; investigating the lives of dozens of Democratic campaign workers, and planting provocateurs in the ranks of organizations expected to demonstrate at the Republican and Democratic national conventions.

Segretti, according to Young, told him that his sabotage and spying activities were conducted across the country, particularly in the states with Important Democratic primaries, and included the following examples:

• In the Midwest, said Young, Segretti went to work at local Republican headquarters, training Nixon workers to infiltrate Democratic campaign organizations. Inside the camp of a Democratic candidate, according to Young’s account, the Nixon workers were to urge the Democrats’ followers to conduct sabotage against their Democratic presidential opponents. Among the tactics recommended was planting stink bombs in the opponents’ headquarters to keep volunteers and information seekers away. If anyone was caught in the act, the plan insured that blame would be placed on followers of the Democratic candidate—not the Nixon forces.

• In Florida, said Young, Segretti organized Democratic clubs to work against Sen. Edmund S. Muskie, who federal investigators have said was the victim of extensive sabotage by the Nixon forces.

• Frequently, said Young. Segretti distributed fabricated campaign literature under the letterhead of individual Democratic candidates. These were intended to embarrass both the purported sender's campaign and—through scurrilous or false attacks on other Democratic presidential candidates—weaken his opponents as well.

According to Young, Segretti said that Nixon campaign leaders in some states complained to Segretti about his activities, but were told "to call Washington to chock him out. After an interval of time, word came back that he was ok."

Three attorneys who served in the Army with Segretti have told The Washington Post that Segretti asked them to disrupt the campaign schedules of Democratic candidates, plant spies inside the various Democratic presidential camps and "be imaginative" in devising their own schemes to confuse and divide the Democrats.

The three lawyers, including an assistant attorney general of the slate of Tennessee, all refused Segretti’s recruitment offers, in which he purportedly promised them "big jobs" in Washington after President Nixon’s re-election.

At the University of Southern California, where Young, Segretti and Chapin all graduated in 1963, Segretti and Chapin lived in fraternity houses that were next door to each other, and both were involved in an organization called Trojans for Representative Government, Young said.

The group, organized to reform USC campus politics, included other members who later went on to the White House staff, according to Young and others. They reportedly Included Ronald Ziegler (Class of ‘61), President Nixon's press secretary; Tim Elbourne (‘62), a presidential assistant; Mike Guhin ('61), a member of Dr. Henry Kissinger’s staff; and Herbert L. Porter (‘60), a White House advance man now working at the Committee for the Re-election of the President. Porter, according to sources close to the Watergate Investigation, was among the persons who directly received large amounts of money from the secret fund that financed the Nixon forces' undercover activities.

Chapin has been associated with the President since 1964, when he worked for Mr. Nixon at the Republican convention against Sen. Barry Goldwater, the GOP's nominee for president that year. In 1968, when Mr. Nixon campaigned across the country on behalf of GOP congressional candidates, Chapin was often seen at his side.

Chapin did advance work for these trips and, upon Mr. Nixon’s election as President in 1968, was named appointments secretary at the White House with the title “deputy assistant to the President."           

Chapin is known as Mr. Nixon’s premier advance man, the person in charge of making sure the schedules are perfectly timed and executed.

Chapin was one of four White House staff members—with Ziegler, presidential domestic counsel John Ehrlichman and assistant to the president H. R. Haldeman—to leave the J. Walter Thompson advertising agency to work In the White House.

Chapin issued the following statement Friday night through the White House press office:

"As The Washington Post reporter has described it, the story is based entirely on hearsay and is fundamentally inaccurate.

"For example, I do not know, have never met, seen or talked to E. Howard Hunt. I have known Donald Segretti since college days, but I did not meet with him in Florida as the story suggests, and I certainly have never discussed with him any phase of the grand jury proceedings in the Watergate case.

"Beyond that. I don’t propose to have any further comment."

(Courtesy of The Washington Post.)