It Started with $200,000 in a Worn Briefcase

THE accusations raised in the grand jury indictments of John Mitchell and Maurice Stans--along with a notorious financial freebooter and a leading New Jersey Republican--form a sleazy story that might well give pause to even the most hardened ward heeler.

At the heart of the matter is the secret Nixon campaign contribution of $200,000 in cash that was paid to Stans by Financier Robert L. Vesco. The indictments assert that Mitchell and Stans reciprocated by aiding Vesco in his unsuccessful efforts to quash a Securities and Exchange Commission probe into his "looting" of a huge mutual-fund complex. The go-between was Harry L. Sears, head of Nixon's re-election drive in New Jersey, onetime Republican majority leader in the state's senate and a director of International Controls Corp., which Vesco dominated.

Vesco early in 1971 also gained control of International Overseas Services, the mutual-fund complex founded by Bernard Cornfeld that marketed its shares mostly to middle-income Europeans. In one of the largest security-fraud suits ever brought by the SEC, Vesco and his associates were charged last Nov. 27 with selling off $224 million worth of I.O.S.-held stocks--causing grave losses to investors--and salting the money away in banks and dummy companies that the accused controlled. Last week's indictments specify the following:

In mid-1971 Harry Sears first went to Mitchell for help in impeding the SEC investigation. Sears approached Mitchell again in January 1972 to ask the Attorney General to arrange a meeting for him with SEC Chairman William Casey to discuss the case. On March 8, 1972 Vesco met with Stans and offered to donate as much as $500,000 to the Committee for the Re-Election of the President if Stans and Mitchell would help in restraining the SEC. Stans requested that Vesco make a $250,000 contribution--in cash.

Vesco drew the money out of a bank in the Bahamas (probably some of the cash he had stashed there after selling I.O.S. stocks belonging to trusting investors). He did not get around to handing it over until three days after a new and much tougher campaign-contribution law went into effect, requiring the public reporting of any donation larger than $100.

On the morning of April 10 Sears flew from New York City to Washington, carrying a worn brown briefcase loosely packed with $200,000 in $100 bills. The cash was turned over to Stans in his office at the Nixon committee, and he placed it in his safe (the same safe from which $235,000 was later disbursed to G. Gordon Liddy, a convicted Watergate wiretapper). Vesco also gave $50,000 by check, which was publicly reported. Later that very day, Mitchell arranged a meeting for Sears with Casey and G. Bradford Cook, who was then SEC general counsel and recently succeeded Casey as the commission's chairman. The express purpose was to discuss the commission's investigation of Vesco's company. Stans never reported the $200,000 donation to the General Accounting Office as he was required to do under the law.

Indeed the indictments charge that Stans took great pains to cover up the contribution. In the course of its investigations of Vesco the SEC began looking into why he had made the big withdrawal from the Bahamian bank. Stans went to Cook and persuaded him to delete from the draft of the SEC complaint against Vesco any reference to the money--and how it was used to help the Republican election campaign.

Then, according to the indictments, Mitchell got Presidential Counsel John W. Dean III to ask Casey to postpone subpoenaing employees of International Controls Corp. "to prevent or delay disclosure by them of facts relating to the secret Vesco contribution." Despite denials of wrongdoing by Cook and Casey, who is now Under Secretary of State for Economic Affairs, there is a chance that they too will face legal charges for the cozy manner in which they handled the case.

The indictments say that by October, as the presidential election neared, Vesco was threatening that he would disclose the secret payment unless stiffer action was taken to delay or halt the SEC inquiry. Sears phoned Mitchell to pass on the threat. In November, presumably just before the election, Vesco sent a memorandum to Donald Nixon, the President's brother.* In the memo, Vesco again warned that he would reveal the details of the contribution unless all the SEC charges were dropped.

Finally, on Jan. 31, almost three months after Nixon's victory and two months after the SEC issued its fraud charges against Vesco, the re-election committee returned the money. Perhaps by coincidence, the Washington Star-News reported five days before that the Government had begun an investigation into the donation. The probe began when an unidentified witness came forward in Manhattan earlier in January and volunteered to U.S. Attorney Whitney North Seymour Jr. that he would tell about the transaction.

In their testimony before the grand jury, charge the indictments, Mitchell and Stans perjured themselves repeatedly. Mitchell, for example, denied that he got a memo from Sears asking to see Casey in January 1972, that he received a phone call from Sears warning that Vesco was threatening to talk, or that he asked Dean to see Casey about postponing subpoenas. Stans denied to the grand jury that he discussed with Vesco securing Mitchell's help, that he asked Vesco specifically for a cash donation, or that he discussed Vesco's case with him when the money was delivered. Last week both Mitchell and Stans insisted that they were innocent.

As for Vesco, he has defied an order to appear before the grand jury, and a bench warrant was issued for his arrest. The SEC fraud suit is now before the courts; it seeks to halt further plundering from Investors Overseas Services. If this civil action is successful, the decision could well become the basis for a criminal suit against Vesco. Meanwhile, he is believed to be living in comfort in Costa Rica (see BUSINESS) and planning to become a citizen of that country.

* Vesco had a penchant for attracting people close to President Nixon. Donald F. Nixon, the President's nephew, has been Vesco's administrative assistant since 197 1.

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