The Clam & the Surgeon

Elegantly outfitted and wearing a vacant smile, Influence Peddler Henry Grunewald stepped back into the spotlight on Capitol Hill last week. It had been 16 months since the mysterious Grunewald first appeared before the House subcommittee investigating the Bureau of Internal Revenue. At that time, he went clam-quiet after revealing no more than his name and age. Last week, having pleaded guilty to contempt of Congress, Grunewald was trying to talk his way into a light sentence. But he was still part clam, opening his shell only when it suited his convenience, clamming up again on questions he deemed "not pertinent."

"Busy, Charlie?" Grunewald did tell enough to show that he knew just the right tax people. When Brooklyn's Dan Bolich (now charged with evading his own income taxes) arrived in Washington in 1948 to become assistant commissioner of Internal Revenue, Grunewald invited him to share an apartment. Said Grunewald: "I says, 'Dan, why don't you stay here? I got three rooms and you can have one.' " Dan stayed for a year, but, insisted Grunewald, "At no time did Bolich ever discuss tax cases with me in any way, shape or form."

On second thought, he remembered that when his own tax returns were being investigated he told Bolich, and "I didn't hear any more after that."

Another Grunewald pal was George Schoeneman, then commissioner of Internal Revenue. Schoeneman introduced Grunewald to Charles Oliphant, then the Revenue Bureau's chief counsel. They became fast friends; Grunewald gave Oliphant a $600 television set, two $200 room air-conditioning units for his house, an electric train for his children. Said Grunewald: "I'd call him up and say, 'Charlie, you happen to be busy right now?' And he would say he wasn't, so I'd go over and we'd have a talk." About what? "Anything," said Grunewald, "except we never talked about tax cases."

"A Favor for Me." Grunewald's stable of clients was as impressive as his list of contacts. Before World War II, the Chinese Nationalist government paid him $75,000 for getting it 100 fighter planes from North American Aviation Inc. It was simple, said Grunewald. He just called James H. ("Dutch") Kindelberger, chairman of the board of North American, and asked him to sell the Chinese the hard-to-get planes as "a favor for me." (A spokesman for North American said the company had no record of such a deal, although it did sell 100 trainers to China in 1938). In 1946 the United Mine Workers paid him a big fee (at one point Grunewald thought it was $15,000-$16,000, later had it down to $5,250) to investigate Federal Judge T. Alan Goldsborough, who was soon to preside over a contempt of court case against U.M.W. Grunewald said his friend from New Hampshire, Senator Styles Bridges, steered him into the Goldsborough job. (Bridges denied it.)

The committee's chief interest centered on reports that Witness Grunewald had collected big sums for fixing tax cases. He admitted that he got $7,500 from Jules Lippmann, Toledo textile man, but insisted that all he did was introduce Lippmann to a good tax lawyer. He also recalled that a man named J. R. Jordan paid him $5,000 for an introduction to a tax lawyer. Jordan was charged with tax fraud at the time; then, opportunely, Grunewald's friend Charlie Oliphant declined to prosecute on the grounds that Jordan was ill. Later it turned out that Jordan was feeling just fine, said Committee Counsel John E. Tobin, but the case could not be reopened.

In the Bag? The hottest report was that Grunewald was handed $100,000 for one tax fix and $60,000 for another. The $60,000 story, as the subcommittee pieced it together: New York Lawyer Max Halperin delivered $60,000 to Grunewald in 1948 to fix a $213,000 tax fraud case against New York Meat Packers Philip and Louis Berman; the money was turned over at Washington's Union Station in a bag. The Berman case was later dropped.

Did all that happen? "Never," said Grunewald. He did meet Halperin in Union Station one time and got a package from him, but it did not contain money. The contents, according to Grunewald: "Some sturgeon." Halperin brought it down from a famous fish house in New York. Within a few hours Lawyer Halperin was on the stand flatly denying the fish story. But he refused to say whether he did or did not give Henry $60,000, pleading that he could not be forced to testify against himself.

Washington had not heard the last of the clam and the sturgeon. Said Subcommittee Chairman Robert W. Kean: "The fish is important. Somebody is subject to perjury."

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