Rep. James R. Mann (D-S.C.) has used his congressional office staff in an unsuccessful attempt to rescue a failing Greenville, S.C., mail-order coin leadership in which Mann was a principal financial backer.
The president of the coin business Mann helped start with a $38,000 loan, Ben Gause of U.S. Coin Co., was found guilty of mail fraud recently for failing to fill nearly $250,000 in customer orders.
As favors to Gause and his several closely related coin companies, Mann and his staff have in the last 2 1/2 years:
Affixed nearly 15,000 postage stamps to $30,000 worth of $2 bills during office hours for eventual resale. The stamped bill were post-marked "First Day of Issue," making them of possible interest to collectors.
Ordered thousands of dollars worth of coins and bills from the office of the House sergeant-at-arms when Gause's companies experienced difficulty purchasing them elsewhere.
Use the House folding room to package coin display boxes and Bicentennial medals for shipping to South Carolina.
Carried nearly $6,800 in mint coins, $30,000 in $2 bills, and other numismatic articles from Washington to Greenville, including $2,000 in pennies during the 1974 national penny shortage.
Helped Gause arrange a mailing address in Washington and subsequently delivered to him mailbags of checks in response to national advertisements. The ads offered 1976 pennies at $1 each and were eventually judged to contain "false representations" by postal authorities.
Witnessed the transfer of a real estate title between two of Gause's companies.
In an interview with The Washington Post shortly before his re-election last November, Mann repeatedly denied that he had any financial interest in Gause's companies. He said he and his congressional staff in both Washington and Greenville had performed numerous errands for Gause "because he was a constituent" and because "I have tried to help [him] overcome some of his problems by cooperating anyway I can."
However, in an interview last month after court testimony linked him financially to Gause, Mann admitted he had loaned Gause $38,000 in 1974 to begin u.S. Coin Co. Except for a $3,000 interest payment, Mann said he has not been repaid by Gause.
Although he acknowledged experiencing several personal financial problems in the past several years, Mann denied that recouping the money he was owed by the company influenced his decision to assist Gause in his coin promotion schemes.
"I had no more concern about my money than the man on the moon," Mann said.
The South Carolina Democrat, an eight-term congressman who serves on the House Judiciary Committee, traced his business relationship with Gause to the purchase of several acres of land in South Carolina in 1963.
Since then, Mann has been involved in an array of speculative real estate purchases in other business ventures as diverse as an interest in a leather company in Africa. But it has been Mann's real estate investments, he said, that have caused him "terrible cash flow problems" in recent years.
Mann routinely received salary advances from the House and, until Congress changed its rules last year, he took advantage of the congressional fringe benefit that permitted a representative to withdraw his annual $6,500 stationery allowance in cash.
An officer at the Greenville bank in which Mann maintains a personal congressman's account was "tagged" because of a history of overdrawn checks.
While one of Mann's staffers told The Post that fellow employees sometimes had to hurry to banks with personal checks from Mann - apparently to make loan payment deadlines - it was Mann's extraordinary involvement in the coin business that demanded so much of some staffers' workdays that one attorney in Manns office refused to make further currency-collecting errands.
House rule forbid anyone from engaging in "commercial ventures and other non-governmental activities" in House buildings, and the House Standards of Official Conduct require that a member "retain no one from his clerk hire allowance who does not perform duties commensurate with the compensation he receives."
In a second interview with The Post last month, Mann admitted that between April and September, 1974, he supplied the $38,000 loan with the understanding it would be payable on demand, but, Mann said, "that I could probably let them have it for a year or unitl I arranged permanent financing."
Apparently Mann's first favor for Gause was the acquisition in Washington of 40 sacks of pennies during the nationwide penny shortage in the summer of 1974. Despite newspaper reports at the time describing the severe shortage of pennies, Mann said he had no difficulty obtaining about $2,000 worth of coins at Washington area banks for delivery to Gause.
One year later, in late summer of 1975, Gause called Mann to report he was having trouble obtaining just-issued Bicentennial coins he intended to plate with gold and sell to collectors. Mann purchased about $3,500 worth of coins from the office of the House sergeant-at-arms and delivered them to Gause, who placed ads in national magazines offering a half-dozen gold plated coins for $22.
Mann said he was not aware at the time that Gause's company had been diverting customers' money for the purpose of investing in the volatile gold futures market.
Several months later, in December of 1975 or January of 1976, Mann said Gause informed him that he and U.S. Coin Co. had lost heavily in the futures market and were unable to fill $250,000 worth of prepaid customers' orders.
"Then they told me of this plan whereby they could come out of it if people could buy another set," Mann said. "I said great. Over the weeks I became impressed that they were trying to do right - they could have folded their tent and gone bankrupt."
If U.S. Coin Co. had filed for bankruptcy, the company's debt to Mann could have been erased, though Mann said he had a "gentleman's recourse" for recouping his investment because Gause could have transferred his interests in their jointly held real estate properties to Mann. Gause was unavailable for comment.
In 1976, as federal authorities began investigating Gause's coin companies, Mann and his staff redoubled their efforts on Gause's behalf.
In the spring of last year Mann purchased "two or three" sacks of Bicentennial quarters from the office of the House sergeant-at-arms, at $1,000 a bag, and carried them in a black shoulder bag to South Carolina. In April he went to area banks on two different occasions to purchase, each time, $5,000 in newly issued $2 bills. The money for the purchases was customarily, wired to Mann's office by Gause.
One of Mann's legislative assistants, attorney Ashley Thrift, told The Post that soon after Mann's trips to area banks in May, the congressman asked him to make two separate trips to purchase, each time, about $10,000 worth of $2 bills.
Thrift collected breifcases from other workers in his office in order to carry the bills back to Mann's office, where they were stored in the congressman's office safe.
Along with at least three other members of Mann's staff, Thrift, who at the time earned $12,800 a year, affixed 13-cent postage stamps to the $30,000 worth of bills he and the congressman had purchased.
Thrift then took the bills to the House post office, where they were postmarked "First Day of Issue," a common practice for currency collectors who want to prove they obtained the bills at the first date of issue.
On batch of bills was mailed to Gause; two other shipments were carried by Mann to South Carolina. Mann said all the trips during which he carried coins and currency were routine visits to his home district.
In the early part of 196, Mann put Gause in tourch with a Washington attorney who helped Gause locate a mailing address in downtown Washington for a company called Federal Currency Corp. Until it was closed down by postal authorities in mid-1976, the company placed national ads offering one 1976 penny for one dollar with a Connecticut Avenue return address.
In its complaint, postal investigators alleged the ads misled the public by claiming the penny was "a special Bicentennial issue of the U.S. Mint" that could "be obtained only through a specific offering."
On at least two occasions, an intern who later joined Mann's staff briefly, David Kimpel, took the congressman's personal car to the downtown mailing address to retrieve mail that had arrived in response to Federal Currency's advertisement. Mann then carried the mail to South Carolina. In July of 1976 postal authorities closed down the penny-selling operation on the grounds that the firm's ads were misleading.
Kimpel told The Post that Mann instructed him to say, if asked, that he was simply doing a favor for a friend and that his connection with Mann was simply a coincidence. Mann said he could not recall making such a request. Mann did acknowledge giving Kimpel about $800 to buy small plastic coin display cases and some Bicentennial medals at the Treasury Department because Gause was having trouble ordering them elsewhere.
Two of Mann's saffers said, and Mann confirmed, that some of the coins and numismatic articles he and his staff purchased were packed in the House folding room exists to package official congressional mail.
Mann said some of the favors for Gause particularly putting stamps on about 15,000 $2 bills, were accomplished on weekends with the help of his wife and niece.
"It goes a lot faster than you think," Mann said. Asked about Thrift's refusal to buy more bills, Mann said, "It was getting to be a nuisance and I probably didn't use the best judgment in the world about those damn $2 bills."
Thrift, Kimpel, and two other staffers, Nikki McNamee, a $19,000-a-year legislative assistant, and Dale Wagers, a former secretary to Mann, acknowledged spending working hours on behalf of Gause's coin business.
A former $27,000-a-year special assistant to Mann who died last year reportedly told a close friend he finally refused to run any more coin errands for Mann. "He always had someone else do those things," the friend said Mann's former staffer told him. Another former staffer, who preferred to remain unidentified, said that, when he worked in Mann's office, helping the congressman with his complicated personal financial affairs was "just considered a routine day's work."
Mann estimated his staffers spent no more time aiding Gause's coin business then they spent helping "alcoholic constituents." He said he was most irritate when he learned that the two secretaries in his district office witnessed the transfer of a real estate title between U.S. Coin Co. and a sister company, Roosevelt Mint, on Dec. 31, 1974.
"That was bad," Mann said. "I don't like it worth a damn. That was just taking advantage of me."
Shortly before Christmas, 1976, Gause and another officer of U.S. Coin Co. were convicted of 18 counts of mail fraud for failing to deliver coin sets to 30,000 customers who had paid for the items. They are awaiting sentencing pending appeal of their convictions.
It was during Gause's nine-day trial in December that Mann's name surfaced briefly for having received a $10,000 check from U.S. Coin Co. In mid-1975, Mann told The Post, Gause had convicted him to enter another real estate deal. Both men were to put up $10,000 as down payment.
Mann said he told Gause he would buy the property with him if he, Gause, could pay him back $10,000. In September Gause went to Mann's congressional office and handed Mann's secretary a $10,000 U.S. Coin Co. check.
Mann's secretary, using one of the pre-signed checks Mann said he leaves in his district office, gave Gause a $10,000 check to use as a down payment in the real estate transaction. The assistant U.S. attorney who prosecuted Gause in December claimed Gause had "used" Mann to "wash" his corporate money, a charge Mann denied.
The prosecutor also argued that when U.S. Coin Co. began to degault on orders, funds were diverted to other corpotations, including one firm, Reedy Shoals Properties, in which Mann is a participant.
Mann told The Post his personal finances were in disarray because his congressional work took up so much of his time and because he was a "soft touch" to friends. He returned to both of those themes with The Post.
"I'm a sucker to buy real estate, I'm sorry to say. I've been able to hold my head above water, but it hasn't been easy," Mann said. "I neglect my personal affairs because I don't take the time to manage them and the first thing you know I've signed my name for somebody or done something of that sort and not supervised them or followed up on it."
Mann added that he found it difficult "to exclude my friends or people that I might owe money, or that might owe me money, from giving the kind of response we'd give anybody.And I say that we would have given this [help] to anybody who identified it as a Washington-related matter that we could help them with."
"You'd be surprised what I do for people," Mann said. "I've even picked up Chinese sausage. There's a line beyond which constituency service may or may not go. We just don't like to say no."