Through a haphazard filing mistake by an accountant for millionaire W. Dale Hess, U.S. prosecutors obtained records showing that Hess paid thousands of dollars to Maryland Gov. Marvin Mandel as a secret share of one of Hess' companies, the accountant testified today.
Prosecutors have charged that this money - $15,000 all told - was one of several bribes given Mandel by Hess and four codefendants in exchange for state decisions favorable to their businesses.
The records were "check spreads," an accounting of all the checks Hess wrote in 1972. Normally, accountant Alfred Norman Sachs testified at the corruption trial of Mandel and his friends, the records would have been sent to hess.
"Inadvertently, it was put in "Sachs' file, the accountant testified, and prosecutors obtained the records when they subpoenaed the accountants' files.
According to the records six checks for $520 each, one for $2,600 and another for $345 were listed as being sent to the initials "M.M." for 4/9 share of Security Investment, INC., the Hess company.
Sachs testified that Hess told him "M.M." was shorthand for Mandel.
A letter prosecutors said was an attempt to change the appearance of these payments and make them look like the repayment of an old debt that Hess owed to Mandel was mailed through the U.S. postal system, Hess' lawyer, William G. Hundley, acknowledged today.
It was an important concession by Hundley since one of the 20 counts of mail fraud against Mandel and his codefendants alleges that the mails were used in a scheme to defraud the citizens of Maryland.
During the past two days the government has opened up the Security Investment phase of their case agaisnt Mandel, Hess, Harry W. Rodgers III, William A. Rodgers, Irvin Kovens and Ernest M. Cory Jr. Mandel is charged with accepting about $350,000 worth of bribes from his codefendants for which he allegedly influenced state legislation to the benefit of the others' businesses.
In the first days of the trial the government tried to establish that Mandale was given a secret $45,000 interest in a Eastern Shore farm for only $150. Now the government is attempting to prove the Mandel received about $15,000 in payments for a secret share worth $140,000 in Security Investment, a firm that leases buildings in Woodlawn to the Social Security Administration.
Edward H. Dickinson, senior partner of Security Investment Inc., recited on the witness stand Wednesday how he came to win government leases for two office buildings, which he then constructed and rented out to the Social Security Administration for about $2.5 million each year or $250,000 after taxes.
In 1971, after the first building was elected in suburban Woodlawn, Md., the multimillionaire Dickinson invited Hess to become a partner with a 9 per cent interest in the rental income of the property and in the second building itself.
Dickinson's testimony, and later testimony by the firms's accountant, established that Hess began receiving payments from his partnership in May, 1972.
Today, Sachs testified, and the journal sheets showed, that payments to Mandel also began in May and they were exactly 4/9 of Hess' Security Investment payments.
THe next year, Sachs said he called Hess to ask about three or four checks issued to Mandel in 1973 but listed as payment of legal fees.
"Since they (the checks) were similar to the checks written in 1972 I was curious whether they were for legal fees or if they represented Security Investment payments," Sachs testified.
It was then that Hess made the claim that he owed Mandel about $15,000 for unpaid legal services done several years ago.
Then Skolnik introduced Hess' net worth statement from 1972, which showed Hess had only $1,800 in debts. Sachs testified that when he made up Hess statement he knew nothing about any old debts to Manel and did not list any.