'NOW LISTEN. You lied, you're paying for it. Now I want money put in my account. You're . . . For this lie you're paying Sunday in The Washington Post."
The words leap out from the transcript of a phone call tape-recorded at the home of Harry J. Smith Jr., a prominent Washington shipping broker. The call came just after 11 p.m. last Feb. 7 and was one of a series of late-night threats that was part of a bizarre scheme in which this paper played unwitting messenger in an extortion plot.
The "unknown caller" wanted money, $2 million wired to a bank account in Monte Carlo. If Smith didn't pay, the caller said, he would expose some allegedly unsavory instances of Smith's business dealings throught The Post.
Smith played along with the caller, stalling for time, while he went to the FBI and arranged for them to tape the calls and possibly have them traced. One of the last threats came late on the night of Feb. 11. "Tomorrow morning you are going to be screwed personally in The Washington Post," the caller said.
On the way home from Smith's that night, one of the FBI agents on the case picked up a copy of the morning paper. There on the front page was a picture of Smith and a story under the headline: "Agent Apparently Raised Costs of Jamaican Imports."
The story said that Smith apparently had profited by directing Jamaica's shipping business to a firm in which he held a financial interest. This was at a time when he was supposed to be making the best deal possible for the financially troubled island nation.
The story quoted Jamaican officials as saying they didn't know about Smith's role in the company or that he was directing commissions on grain shipments to another firm, which in turn was making payments to a Jamaican import official who was fired in a kickback investigation.
The Post article noted that it was based on documents made available to the paper.The caller's threat had been carried out.
The FBI agent called The Post's attorney, Christopher M. Little, to inform him of the alleged extortion plot.
So began the process in which this newspaper learned it had been used in a crime. What evolved was a strange yarn about two Gerogetown University classmates and the plot they allegedly cooked up to make a fortune. It is also a story that raises questions about two of the touchiest issues in journalism: a reporter's dealings with his sources and the extent of a newspaper's obligation to cooperate with law enforcement authorities.
At first, the newspaper's editors and lawyer and the reporters on the story found it difficult to believe they had been used in the plot. The paper had received anonymous shipments of documents. And the packages had been followed by phone calls from a man who called himself "J. Story."
But the Post declined to cooperate with the authorities because its editors had no evidence that "J. Story" was the same man who had been threatening Smith. They still do not know for sure.
Four days later, FBI agents who had traced the calls burst into an oceanfront apartment in Rye, N.H., to arrest Charles Breen Dwyer. They identified the 26-year-old would-be novelist in a Georgetown University yearbook as a classmate of Martin H. Donahoe, a former employe of Smith's who was suspected of initiating the plot.
Dwyer was holding a loaded .22 pistol and had two other revolvers nearby, but was subdued without anyone being harmed. He immediately confessed and began to spin out a strange tale of how he and Donahoe had plotted to shake down Smith.
The next day, Donahoe was questioned by FBI agents in his Lee, Mass., home. But he was not arrested. A few days later he left the country for France. He was indicted on extortion charges last month, but he remains at large.
Dwyer pleaded guilty to the same charge and was given a two-year suspended sentence in July.
What became known at The Post as the "Jamaican story" began innocently enough in mid-January when Larry Fox, deputy national editor, opened a manila envelope addressed to the paper's editor. A cover sheet was headed "immediate release," but the contents were far beyond your everyday press release.
Copies of bearer shares in a Liberian corporation, cancelled checks, Swiss bank account slips, internal commission statements form Continental Grain Co. and something called Agrocom International Ltd. were included.
The unsigned cover letter contained a helpful list of questions and answers to explain the 27 pages of documents were also mailed to the FBI, CIA, the State and Agriculture departments and The New York Times.
The senders even included a line about their motivation: "We are concerned with the dominance of the market due to all this." There was no mention of Smith, but there was an implication of payoffs to two Jamaican officials.
Fox was impressed. "You don't often get copies of internal papers and cancelled checks in the mail," he said.
He asked Chuck Babcock, who covers the Justice Department, and Jerry Knight, a business writer, to check out the material.
About 10 days later, on Jan. 22, Fox got a call at home from another editor who told him a "Mr. J. Story" wanted to talk to him. Fox took the call and was asked by a man who wouldn't identify himself, "Did you get the documents?" Fox said he had and referred the caller to Babcock.
Now there was a voice behind this mysterious package.
Actually, it was learned later, the approach to The Post was just one of several alleged attempts by Donahoe and Dwyer to make money off thousnads of pages of documents apparently taken or copied by Donahoe while he worked for Smith from 1974 to 1977.
An affidavit filed in the case by an FBI agent said that the pair also used the material to threaten one of the Jamaican officials, an American shipping company executive an a New Jersey rice merchant. They also allegedly tried to sell the information to a Greek shipper and a competitor of Smith. All the schemes failed.
Dwyer told the FBI that Donahoe also planned to use these documents in future years to force a dozen other persons to pay him a yearly fee to ensure his silence.
Meanwhile, Babcock and Knight began receiving a series of strange phone calls from a man who spoke with what sounded like a slight British accent.
On one of his first calls, in late January, this anonymous caller told the two reporters that the information he had to discuss was "so heavy" he wanted to talk about it over a pay phone. With a great sense of drama, he suggested that the reporters find a safe pay phone and let him know the number by putting it in an ad for "lost earrings" in the Boston Globe the next day.
He later cancelled the arrangement.
By the time the first phone call came, Babcock and Knight had independently determined that the documents were authentic. The two reporters interviewed officials at the Jamaican embassy (who also had received the material), inspected records of grain sales to Jamaica on file at the Department of Agriculture and interviewed a Continental Grain Co. executive.
The reporters soon were prepared to write a story saying that two Jamaican officials, Dexter Rose and Sedley Pyne, were being investigated in a possible kickback scheme for taking unauthorized "commissions" from Continental Grain sales to Jamaica.
It was decided to run the story that weekend. Late Friday night, Feb. 2, while he was working on another story, Babcock received another call -- the first in a week -- from the man who referred to himself as "J. Story."
"J. Story" mentioned that he had a lot more documents and Babcock, who was uncomfortable dealing with an anonymous source, pressed him for a face-to-face meeting to deliver them. The caller agreed to do so the following Wednesday in a motel near the airport in Albany, N.Y. This, too, was cancelled.
Documents filed in the case show that Dwyer called Donahoe later that same night and then placed a threatening call to Smith.
In that call, he predicted that there would be a story in The Post within 48 hours implicating the two Jamaican officials, Rose and Pyne. This was a sample of what would happen to Smith if he didn't pay, the caller said. And if he didn't believe the threat, he could check with Babcock and Knight at the Post, the caller added.
"J. Story" called Babcock of The Post again the next night, to check on the story about Rose and Pyne. He was told the story, headlined "Payoffs Alleged in Grain Deals with Jamaica," was on page one of the next morning's paper, Sunday, Feb. 4.
The story said that the Jamaican government had fired Rose and was investigating an alleged scheme in which he and Pyne collected kickbacks from Continental Grain laundered through the Swiss bank account of a Brussels firm called Agrocom Ltd.
There was no mention of Smith in the story.
The same night, an FBI affidavit shows, the unknown caller checked with Smith, who said he was "impressed." Smith was threatened again with similar treatment.
The next day, Feb. 5, the 60-year-old Smith and his attorney, Seymour Glanzer, went to the FBI with recordings of the threatening calls, taped by Smith on a dictaphone.
The bureau opened its extortion investigation. And though the first story seemed to be clear evidence. The Post was being fed information, the authorities decided not to tell the paper about the plot. Investigators said they throught someone at the paper might be a willing accomplice in the scheme. t
The same afternoon that Smith went to the FBI, the anonymous caller again reached Babcock at The Post, claiming to have access to scandalous information about Smith, notorious South Korean lobbyist Tongsun Park, New Jersey rice dealer Grover Connell and a prominent member of Congress.
The reporter said he'd be glad to see any such documents.
After midnight that night, Babcock was awakened at home by what seemed to be a different caller. The voice said that if there wasn't a story in the paper by Friday, his "client" would take his material to the National Enquirer.
The Post reporters didn't hear from their mysterious caller again until Friday, Feb. 9. But papers filed in the case show that Dwyer called Smith and threatened to expose him twice on both Feb. 6 and 7.
In one call, at 11 p.m. on the 6th, the caller said his name was "Dyer" and gave Smith the number of a bank account in Monaco. He told the shipping broker that "all the original documents" would be delivered to him as soon as he paid up.
Smith expressed concern that the caller might have copies of the documents that he could try to sell again after collecting once, and asked for a sample of what he'd get. The caller then rattled off a string of schemes in several different countries where he claimed Smith could be hurt by public exposure.
With the FBI taping the call, Smith said "a lot of this stuff is pure garbage," but that some "is damaging for me and makes me very nervous." Authorities said later that they had instructed Smith to lead the plotters along.
In a call late the next night, Wednesday, the would-be extortionist was much more abusive in tone, according to transcripts of the tapes. He called Smith a liar, mentioned the Post and said, "I'm not going to destroy you but you're going to have s--- up to your ankles."
Thursday afternoon the Post reporters received a second batch of documents, mailed from Lenox, Mass. Again there was a cover letter, explaining how Smith and two other men had formed a company named agrobulk, which had an exclusive contract to carry goods imported by Jamaica.
Included were another 27 pages of material: statements for Jamaica shipping programs on the letterhead of Smith's firm, St. John International Inc., check stubs of Agrobulk payments to Jamaican official Rose, a 1975 Agrobulk income statement that showed nearly a $1 million profit, and a copy of an Internal Revenue Service letter to Smith about Agrobulk.
At the bottom of the cover letter was a cryptic reference that a story based on the material must be published before Feb. 12 to protect one of the sources.
The night of Feb. 9, "J. Story" called Babcock at the office and opened with a nonchant, "Get a package from a friend of mine?"
That began a hectic weekend in which Babcock and Knight worked to corroborate the details in the new batch of documents. On Saturday, Babcock told Managing Editor Howard Simons and Executive Editor Ben Bradlee about the alleged need to protect a source by running the story by Monday. They said: Do the reportng first.
By Sunday afternoon the two reporters had been able to corroborate the documents enough to do a story about Smith's connections with Jamaica. But there was one gaping hole: They hadn't been able to find Smith, despite numerous calls and visits to his home.
Confident the story was solid and mindful of "J. Story's" deadline for "protecting" a source, attorney Little and the Post editors approved publication without comment from Smith.
Why hadn't Smith or the FBI contacted the Post in the week between the two stories to warn them of the plot? The investigators' response is that the Post would have gotten plenty of warning if its reports had contacted Smith for comment, as would be expected.
On the morning the second story appeared, FBI agents met with Post attorney Little and asked for the documents used in the article. Little refused, saying the Post had no way of knowing the alleged extortionist was connected to the person who sent the documents to the paper.
Newspapers are generally sensitive about their relationship with official law-enforcement investigations because of the risk that a newspaper's reporting efforts might be construed as an arm of the government. Confidential sources, in particular, often fear that their names and information might be turned over to government investigators.
At The Post, reporters discussed whether and how to continue to deal with "J. Story."
The anonymous caller had wanted to be treated as a confidential source who would be protected by the paper. Babcock had replied that he always protected his confidential sources but he didn't even know who the caller was.
Wondering if the documents were stolen, Babcock also asked if the caller had any criminal liability in the case. He was told no. The possibility of an extortion plot never entered the reporter's mind.
During the week that followed the story on Smith, the FBI agents worked to track down the unknown caller. A photo from a Boston bank where Dwyer tried to open an account matched the picture of a Georgetown yearbook shot of a Donahoe classmate. Then the calls were finally traced to a phone in Rye, N.H., registered to Dwyer's brother. Local police confirmed that Charles Dwyer was staying there, and the authorities prepared to move in for the arrest.
Babcock meanwhile had gone to Florida for a brief visit, having left his number with Knight, his editors and "J. Story." On Wednesday, Feb. 14, the source, who was now suspected in an extortion plot, called Babcock to chat. He talked freely about setting up a meeting to give The Post the rest of the documents he claimed to have. The reporter was careful to say nothing that would indicate the FBI was in the case.
Dwyer was arrested late the following night, Feb. 15. He confessed immediately, and talked all night to FBI agents, describing the plot.
The next day, Feb. 16, an FBI agent from Boston interviewed Donahoe in Lee, Mass., but there wasn't enough evidence to arrest him at the time.
Later that night a panicked "J. Story" called Babcock again in Florida. The reporter mentioned the arrest and asked if he was talking to a Charles Dwyer who was stupid enough to try to shake Smith down. The caller said no, but didn't sound entirely convincing. He said he'd call back the next day at 5 p.m.
The call never came.
In the days and weeks that followed, Dwyer was formally charged and entered a guilty plea. Smith was replaced as Jamaica's shipping agent, and Donahoe is still at large, apparently in Europe.
One day in the spring, the Post correspondent in Paris got a call from a man in Geneva who called himself "J. Story" and said he wanted to reach Babcock. It seems he wanted to swap a lot of documents for $50,000.
Was it Donahoe making one last stab at profiting on his now mangled scheme? The newspaper, which never pays for information, wired back: No thanks.