Money Crimes with Nicole Lapin - POLITICAL: Richard Nixon & Watergate

Episode Date: October 3, 2024

When you think of Richard Nixon, the first thing that comes to mind is the Watergate Scandal. But Watergate was just the final piece in a long history of wrongdoing. From the beginning of Nixon's political career, he was willing to do whatever it took to get ahead... even if it came at the American people's expense. For more content, follow us on Instagram and TikTok @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

This is Crime House. For most of American history, there was this feeling that politicians were supposed to be trustworthy, that they were leaders the American public could look up to. But in 1971, that confidence in the government started to slip. And for many Americans, that distrust started with Richard Nixon. Remember the line, I am not a crook? Obviously, he was. But not in the way you might think. See, the Watergate scandal was just the straw that broke the camel's back. Before all that, Nixon was already committing all sorts of crimes. A lot of them had to do with finance.

And he left a pretty lengthy paper trail. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lampin. Every Thursday, I'll be telling you the story of a famous financial crime and giving you advice on how to avoid becoming a victim yourself. This episode is all about the financial crimes of former President Richard Nixon. He is remembered mostly for the Watergate scandal. You probably know the broad strokes of that. Politically motivated burglary, presidential wiretaps, threats of impeachment,

and ultimately, an unprecedented resignation. But what you might not know, and what I'll share today, is this. Nixon's misconduct wasn't just political, it was financial. From selling ambassadorships to propping up milk prices in exchange for campaign donations, the 37th president of the United States committed some of the most brazen money crimes in American history. Take back your free time with PC Express Online grocery delivery and pickup. Get in-store promos, PC Optimum points, and more free time. And still get groceries. Shop now at pcexpress.ca.

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The Coca-Cola Company. Copyright 2024. M Coca-Cola Company. Copyright 2024. Mondelez International Group. Long before Richard Milhouse Nixon became the first and only U.S. president to resign from office, he was a Duke University-educated attorney turned World War II naval officer. After the war ended, Nixon decided to try his hand at politics, running for Congress in 1946 when he was only 33 years old. Nixon won his first election with a tried and true strategy, scare tactics. He accused his

opponent of being a communist sympathizer, and it worked. He took that same energy with him to Congress, where one of his first acts was writing legislation that forced all members of the American Communist Party to register with the Attorney General. Although the bill died when it reached the Senate, it put Nixon in the spotlight. Many Americans were swept up in the Red Scare at the time. They were terrified of communism, and they trusted Nixon to fight back against the perceived threat of the Soviet Union. That trust carried Nixon to the U.S. Senate in 1950, but he was just getting started. Only two years into his first term, he was tapped to be Dwight D. Eisenhower's running mate in the 1952 presidential election. But the extra scrutiny that came along with it got Nixon

into some hot water. As the press dug more into his background, they found out that Nixon was selling political favors to his supporters in exchange for a slush fund that paid for his living expenses. The total was just $18,000, or about $211,000 in 2024 dollars. It's not a huge sum in politics, even in 1952, but people were outraged by the alleged corruption, regardless of the amount of cash involved. To get ahead of the story, Nixon commissioned an independent audit. Unsurprisingly, the audit found no evidence of wrongdoing, but it still wasn't enough to clear his name. In fact, it made people angrier, and there were calls to get Nixon off the ticket entirely. So on September 23, 1952, he addressed the nation on live TV. Nixon's defense was simple.

He wasn't corrupt. He was just middle class. His office had expenses he couldn't afford to cover, so his supporters had raised money for line items like Christmas cards and campaign travel. In the name of transparency, Nixon went on to reveal intimate personal details of his family finances, trying to prove that he wasn't an especially wealthy man. His rebuttal became known as the Checkers Speech, because there was one gift Nixon admitted to accepting from a supporter, his family's cocker spaniel, Checkers. Sixty million Americans tuned into that speech, and many were pleasantly surprised. To them, it seemed like Nixon was being genuine.

But even if this speech had totally backfired, it wouldn't have mattered much, at least in a legal sense. Prior to 1964, the House and the Senate didn't even have a formal set of rules about ethical conduct by their members. So they could do just about anything, as long as they weren't breaking the law, like accepting a bribe. But what if that happened now? Today, U.S. senators can only accept gifts valued at less than $50,

and only if the source of the gift is not a registered lobbyist, foreign agent, or private entity that employs one. There are few exceptions, including gifts from family members and gifts worth $250 or less given out of personal friendship. But the gift of a purebred puppy by a campaign supporter would almost certainly violate the Senate gift rules of 2024. If someday a friend of yours is elected to the U.S. House or Senate, you might assume you can keep them on your holiday gift list as long as you stick to the $250 limit.

In reality, proving that a gift was given purely out of friendship can be tricky. Elected officials have to consider the history of their relationship with the gift giver, including past mutual exchanges of gifts. They also need to be sure that the giver isn't expecting a political favor in return. Either way, Nixon's charming speech about his humble origins worked, and he remained on the ticket with Eisenhower, who won in a landslide. They served two terms together, and after eight years as Veep, Nixon was itching to occupy the Oval Office himself. So in 1960, he launched his first presidential campaign. He fell just short, though, narrowly losing to a charismatic

young Massachusetts senator named John F. Kennedy. But Nixon was nothing if not persistent. After losing to JFK, he went home to California, ran for governor, and lost again. This time, he decided to call it quits. He packed up his family, moved to New York, and went back to practicing law. But the White House still called to him. So in 1968, Nixon ran again. It was a pretty weird election, though. The Democratic incumbent, Lyndon B. Johnson, was falling way behind in the polls. He was dealing with a lot of headwinds. His policies on the Vietnam War were super unpopular,

the crime rate was up, and the economy was in the gutter. So, after serving just one term, Johnson stepped aside. His vice president, Hubert Humphrey, ran in his place. So Nixon faced Humphrey, and this time he won. But with Nixon's new higher office came new, bigger temptations, and he chose not to resist them. Prime Big Deal Days is coming October 8th and 9th with exclusive savings just for Prime members. Involuntary deal squeals can happen, like the deal on new running shoes squeal,

the deal on a new blender squeal, or the infamous deal on a new massager squeal. Save big on electronics, fashion, and more this Prime Big Deal Days, October 8th and 9th. Associated Milk Producers, Inc., or AMPI, might not be a household name. But back in 1969, the lobbying group was one of three powerful representatives of the dairy industry. Their objective was simple, to make as much money as possible from selling milk. So how did they do that? Well, when it comes to commodities like milk, there's something called a support price. That's the price the government pays for certain dairy products.

And that basically sets the minimum for how those products can be sold everywhere else. Even today, support prices still dictate how much the rest of us pay for things like milk and cheese. The federal government buys a ton of dairy in bulk in order to make sure it sets a baseline price for it. So if they're paying 50 cents for a block of cheese, then dairy farmers aren't going to sell to anyone else for less. But if next week the government starts paying 55 cents for the same block of cheese, everyone else's already higher cheese prices are going up too. Basically, the higher the floor, the higher the ceiling. So you can see why AMPI was willing to spend a ton of money to nudge those support prices up a notch or two. During the Johnson administration, they were able to get a 7% increase in milk support

prices. But the losing Humphrey campaign was another story. They were shelling out cash to his campaign, but it was going nowhere. When Nixon won, AMPI quickly pivoted. They reached out to the incoming administration through the president-elect's personal lawyer and chief fundraiser, Herbert Kalmbach. Kalmbach, much like Nixon himself, was a World War II vet who became a lawyer after his military service. The two had been introduced by a mutual friend shortly after Kalmbach finished law school, and they quickly became good pals. By the time Nixon moved into the Oval Office, he trusted Kalmbach to file his taxes, write his will, and arrange his bribes. AMPI and the other members of the dairy lobby had a proposal for Kalmbach. They wanted a significant increase in milk prices, access to the president, and a speech from Nixon at one of their events.

In exchange, they'd funnel $2 million into Nixon's re-election campaign fund. Kalmbach brought the proposal to Nixon's chief of staff, who agreed to the deal on the president's behalf. And to be clear, this was definitely not legal. It took a couple of years to work out all the details, and there were some roadblocks along the way. But in March of 1971, A pretty good return on the dairy lobby's investment. But they couldn't just hand the president a check in exchange for his help. A law passed in 1962 made it illegal to give anything of value to any public official with the intent to influence any official act, meaning no more free puppies in exchange for favors. Now, the dairy lobby was required to

publicize its political donations, and reporting a $2 million donation to Nixon's campaign would have made the bribe pretty obvious. So the milkmen and the political operatives agreed on 8,000 separate $2,500 donations. They funneled these into over 100 new political action committees, or PACs, that were specifically set up for the operation. The purpose of PACs is to raise money to elect certain candidates and weaken opposing politicians. Here's the crazy thing. This part of the plan wasn't illegal, and it still isn't. PACs are prohibited from coordinating directly with candidates,

but campaign finance reform advocates say a lack of enforcement has led to widespread violations of that rule. Even in seemingly obvious cases, it's tough to prove coordination between politicians and PACs. For the Nixon administration, the biggest problem with the milk fund deal was logistical, not legal. Even with the PR firm running point, it took a long time to organize all of those new packs and to take in all of the funds. So the money trickled in bit by bit as Nixon's team geared up for his re-election campaign. If Richard Nixon's financial crimes had stopped there, we might not even know about the milk fund scandal today. Nobody from his administration was ever convicted in this scheme, and when it was uncovered down the road, AMPI only had to pay a modest fine, although two leaders of the dairy co-ops were sentenced to some time in prison. In a year where the Vietnam War was dominating the headlines,

the increase in milk prices hardly made a ripple in the news. But milk money seemed to have acted as a gateway drug for the Nixon campaign. It had been surprisingly easy to get away with taking $2 million. So why not take more? After all, they had a president to re-elect. The fundraising arm of Nixon's 1972 campaign was called the Committee to Re-elect the President. Officially, they abbreviated their name as CRP. Political opponents preferred to refer to the group as CREEP. Pretty funny, but for the purposes

of this podcast, we'll use the official version. Herbert Kalmack, Nixon's personal lawyer who helped negotiate the milk bribe, was the CRP's deputy finance chairman. And he had another brilliant idea for filling the war chest, selling ambassadorships. Kalmak put the word out. Anybody who wanted to become an ambassador needed to give at least $250,000 to the CRP. That's almost $2 million in 2024 dollars, and six times the maximum salary for an ambassador at the time. But the kind of people who would buy an ambassadorship weren't after a paycheck. They were already wealthy.

Some of them were businessmen like Walter Annenberg, who met the CRP's asking price and was appointed as the ambassador to Britain. There was also sociologist and human rights activist Dr. Ruth Farkas, who was initially offered an ambassadorship in Costa Rica, but she felt like $250,000 was awfully expensive for relatively small potatoes. So Dr. Farkas upped her contribution. She ended up becoming ambassador to Luxembourg, and $300,000 of her family's money went to the CRP. In total, an analysis found the CRP collected $1.3 million from past and newly appointed

ambassadorships. That's the equivalent of $10 million in 2024 dollars. A tidy sum of money, but not nearly enough to win a presidential election. Or so the CRP thought. Nixon was battling a surge in anti-war protests. His 1972 opponent, George McGovern, was outspoken against the Vietnam War and beloved by the left for his work as the first director of the Food for Peace program. Nixon was worried that McGovern would beat him, especially if he couldn't spend enough money on ads to counterbalance negative media coverage of the war. Luckily for the campaign, there was another source of money

for them to pursue. Corporations. At the time, corporate donations to federal candidates were illegal, but that didn't stop the CRP from running a sophisticated shakedown operation. In the words of American Airlines' George Spader, who later testified before a grand jury, there were two aspects. Would you get something if you gave it, or would you be prevented from getting something if you didn't give it? So basically, the CRP was demanding protection money. Pony up to re-elect Nixon, or your company would run into trouble with the federal government. Worried about their futures, companies with issues pending before the federal government whipped out their checkbooks. Alongside American Airlines, CRP donors later found to have violated campaign finance laws,

included Goodyear Tire, Hertz, 3M, the Greyhound Bus Company, Ashland Oil, the manufacturing conglomerate ITT, and more. These illegal contributions totaled at least $968,000, or at least that's the amount a special prosecutor was later able to prove the CRP took in from corporations. The equivalent of another $7.2 million in 2024 dollars. Much of the money was handed over to campaign representatives in person. equivalent of another $7.2 million in 2024 dollars. Much of the money was handed over to campaign representatives in person, in cash, to avoid a paper trail. This kind of stuff is still happening today, totally out in the open.

Ironically, if Nixon was running for re-election right now, he wouldn't have to do all of this cloak and dagger stuff to get corporate dollars. Corporations still can't give directly to candidates. But today's biggest campaign spenders are super PACs, which are allowed to raise unlimited money, including from corporations, to encourage people to vote for certain candidates. In the Nixon era, corporations weren't allowed to spend money on electioneering at all. But that all changed in 2010 with the Supreme Court decision,

popularly known as Citizens United. Corporations can now give as much money to super PACs as they want. That's how a pro-cryptocurrency group became the largest super PAC of the 2024 election cycle. Earlier, I mentioned that PACs aren't supposed to coordinate with campaigns, but the rules are hard to enforce. If Nixon lived today, he could just tell his corporate backers to funnel their money into a super PAC. No more cash-stuffed envelopes in parking garages. And in all likelihood, no consequences. But back in 1972, what Nixon was doing was straight-up criminal on a number of levels. It was not, however, terribly unusual. In the aftermath

of Nixon's exposure, it came out that many of the companies giving in secret to his campaign had been illegally donating to candidates from both parties for years. Which makes perfect sense. Think about AMPI, the dairy farming group. They seem to have spent $2 million to get hundreds of millions of dollars in results. That was well worth risking some public embarrassment, modest fines, and even a few minor criminal convictions. Even after the milk fund scandal became public, milk prices didn't come back down. But as I'm sure you know, Nixon's crimes extended far beyond bribery. Yep, Watergate. Here's how it all started. On June 13th, 1971, the New York Times published the first in a series

of shocking stories based on leaked classified documents which became known as the Pentagon Papers. They revealed that, long before the Vietnam War, multiple U.S. presidents had secretly taken sides between communist North Vietnam and capitalist South Vietnam. During John F. Kennedy's tenure as president, the U.S. even participated in a coup that assassinated the South Vietnamese president at the time. The leak unsettled Nixon enough that his administration created a new intelligence unit nicknamed the White House Plumbers. That's because they were supposed to plug leaks, in theory anyway. In practice, their priority was getting Nixon

re-elected by any means necessary. On May 28, 1972, Gordon Liddy, general counsel to the CRP, ordered the plumbers to steal information from the Democratic National Committee's headquarters in the Watergate office building. To do the job, they hired a group of Cuban nationals connected to the CIA. Their first attempt went off without a hitch, but when they decided to try it again, it didn't go so well. An alert night watchman at the Watergate noticed evidence of a break-in and called the D.C. police. The cops responded just in time to arrest Nixon's burglars. The president had finally gone too far, but he didn't know it yet. As his hired thieves were led away in handcuffs, Richard Nixon still trusted the same strategy that had carried him to the vice

presidency. If his story was convincing enough, he believed the American people would forgive him. But not this time. What's the feeling of fall? It's finally catching the sunrise. And not because you woke up early. No, you woke up nice and late. And you know what? The sun waited.

Then you went and got what you loved from Starbucks. The new pecan crunch oat latte and new baked apple croissant. And enjoyed that warm apple filling and those nutty flavors with rich brown buttery notes. While the sun rose, just for you. That's the feeling of fall. And it's only at Starbucks. After the Watergate break-in went south, Richard Nixon's lawyer, Herbert Kalmbach, once again came to his boss's rescue. Starting on June 29, 1972, Kalmbach and other Nixon associates funneled more than $450,000 in hush money to the arrested burglars. The president would later claim that the money was meant as a gift to cover the burglars' legal fees

and help them support their families while they awaited trial, not to keep them from talking. But one of the burglars, E. Howard Hunt Jr., later testified that he'd threatened to implicate the Nixon administration if he wasn't paid off. Ironically, as it turned out, Nixon probably didn't need to do any of it. Not the frantic grasping for campaign cash, and not the burglaries either. In between all of his financial crimes, Nixon made some decisions that were quite popular with voters. And his 1972 opponent, George McGovern, made a lot of mistakes. Nixon was re-elected by a landslide in November of 1972. If Nixon had just run a clean campaign, he might have been remembered as one of the most

successful politicians in American history. But once he commissioned the Watergate burglary, there was no going back. He felt like the only option was to cover it up as best he could. That would not be easy to do. The burglars' trial began on January 8, 1973. Most of the defendants pleaded guilty. Only two chose to stand trial, James McCord, a former CIA agent

who was present at the burglary, and Gordon Liddy, who was in charge of intelligence strategy for Nixon's reelection campaign. Both declined to testify in their own defense. Both were convicted on all counts. After his conviction, McCord wrote a letter to the judge claiming that he and his family's lives had been threatened in order to keep him silent. In his letter, McCord also alleged that witnesses

in this trial had lied on the stand to protect powerful individuals involved in the Watergate burglary. The implication was clear. He meant Richard Nixon had been personally involved. Without McCord's letter, the country might have moved on after the trial. But once the judge made his letter public, both the media and the U.S. Senate were determined to keep digging. On February 7, 1973, the Senate voted 77-0 to create a special committee to investigate Watergate. They held 37 days of nationally televised hearings. On June 25th, 1973, White House legal counsel John Dean testified before the committee in exchange for partial immunity. He was the only Senate witness to directly implicate the president. To back up his story, he produced 50 supporting documents. Dean also admitted to personally obstructing justice, laundering money

as part of the cover-up, and encouraging perjury. Things went from bad to worse for Nixon when the committee learned he'd been secretly recording his meetings. The administration fought to keep those tapes secret, but the Supreme Court ruled unanimously to turn them over to investigators. On August 5th, 1974, a recording now known as the Smoking Gun Tape was made public for the first time. The tape, recorded shortly after the Watergate break-in, captured Nixon participating in a conversation about how to halt the FBI's investigation of the burglary. In other words, it confirmed both the cover-up and the president's participation in it. By August 7th, it was clear that Nixon would not survive an impeachment vote.

Both the House and the Senate were against him. He could leave office under his own power, or he could be removed. On August 8th, Richard Nixon once again addressed the nation on live television. This time, he didn't mention his Cocker Spaniel or his life insurance policy. He simply resigned from office, handing the reins over to Vice President Gerald Ford. One month later, on September 8, 1974, President Ford pardoned his former boss for any and all crimes committed in office. So instead of an indictment, Congress turned their attention to legal reforms. In 1974, the House and the Senate reformed a bill called the Federal Election Campaign Act, or FICA. This sweeping campaign finance reform bill sets limits on campaign contributions and forced candidates to disclose key information about their income and assets. It also created a voluntary public financing option

for presidential campaigns intended to allow candidates to compete without taking donations from special interests. This legislation did a lot to make political spending more transparent. But when it came to political ads, the Supreme Court did rule that the law couldn't regulate what are called issue ads.

So what does that mean exactly? Well, it's a major reason why a lot of political ads you see are run by groups with names like middle class Americans for fair tax policy. I made that up, but I wouldn't be surprised if someone uses that eventually. Their ads might not say, vote for John Smith because he'll cut your taxes, but they might say something like, middle-class taxpayers are overburdened and desperate for relief. A tax cut would put more money in your pockets. If voters know John Smith is proposing a tax cut,

they can put two and two together. Subsequent laws and the Federal Election Commission rulings have clarified some of these limits on issue ads. But as you know, if you ever watch TV during a presidential election, there are still a lot of ad buys that clearly support one candidate or the other without explicitly saying who the viewer is supposed to vote for. But even though we still have a lot of political lobbying today, not all the post-Nixon news was unsatisfying. Investigations of illegal corporate donations to the Nixon campaign led to another shocking revelation. U.S. corporations

weren't just bribing the president, they were bribing foreign leaders too. This bombshell led to the resignations of at least two foreign leaders, the Prince of the Netherlands and the President of Italy. In 1977, the U.S. Congress and Senate passed the Foreign Corrupt Practices Act, making it illegal for U.S. corporations to bribe foreign officials. The law also requires recording and disclosure of certain expenditures to prevent companies from hiding bribes through creative accounting. Since the Nixon era, violators of the FCPA have been fined as much as $1.6 billion. So what can we learn from Nixon's failures? The big takeaway is that there is a lot of money in politics. According to the Federal Election Commission's filings,

there was 14.4 billion dollars in political spending in the 2020 election, including for President, the Senate, and the House of Representatives. Thankfully, after the Nixon administration, a lot of work has been done to make it easy to see how that money is spent. Whether it's the White House, Wall Street, or even your local bank, transparency is everything. And when it comes to your money,

it's important to know where it's going. Thank you so much for listening. I'm your host, Nicole Lapin. Come back next time as I take you through another wild story and offer you some advice along the way. Money Crimes is a Crime House original. Join me every Thursday for a new episode. Here at Crime House, we want to thank each and every one of you for your support. If you like what you heard today, reach out on social media, at Crime House on Instagram, at Crime House Studios on TikTok and at Crime House Media on X. Don't forget to rate and review and follow Money Crimes wherever you get your favorite podcasts. Your feedback truly makes all the difference. Money Crimes is hosted by me, Nicole Lappin, and is a Crime House original powered by Pave Studios. It is executive produced by Max Cutler.

This episode of Money Crimes was produced and directed by Ron Shapiro, written by Yelena War, edited by Natalie Prasovsky, fact-checked by Sheila Patterson, and included production assistance from Sarah Carroll. Are you a professional pillow fighter or a nine to five low cost time travel agent, or maybe real estate sales on Mars is your profession. It doesn't matter whatever it is you do, however complex or intricate monday.com can help you organize, orchestrate and make it more efficient. Monday.com is the one centralized platform for everything work-related. And with Monday.com, work is just easier. Monday.com, for whatever you run. Go to Monday.com to learn more.