Baltimore businessman Irvin Kovens provided $155,000 in tax free bonds to the first wife of Maryland Gov. Marvin Mandel as part of Mandel's 1974 divorce agreement, federal prosecutors said today.
Including today's disclosure at the opening of the governor's second trial on corruption charges, prosecutors have now alleged that Mandel's codefendants helped proved about $300,000 worth of money, bonds and insurance to Barbara Mandel as part of the previously secret divorce settlement.
Combined with most of a $78,000 savings account and a $25,000 business interest Mandel has previously acknowledged giving up in the divorce, the new disclosure brought to about $400,000 the value of the settlement won by Barbara Mandel. After those arrangements were made she agreed in 1974 to vacate the Governor's Mansion she was occupying alone in Annapolis and allow th governor to marry 36-year-old Jenne Blackstone Dorsey.
Federal prosecutors have also alleged that Kovens, a millionaire who is Mandel's oldest and closest friend, and four other codefendants-W. Dale Hess, Harry W. Rodgers III, William A. Rodgers and Ernest N. Cory Jr. - held business interest that benefited from Mandel's actions as governor. Those men, according to prosecutors, gave Mandel and his family about $55,000 worth of bribes, including real estate, clothing, jewelry and luxurious vacations.
Defense lawyers argued yesterday that any gifts were acts of long friendship, not bribes. "We're not talking about a short period of time," said Mandel's lawyer, Arnold M. Weiner. ". . . When you have friends in good times and bad times," he told a jury impaneled today.
Today's opening statements followed months of uncertainty about whether the Mandel retrial would ever get under way. The governor, who last week relinquished his authority temporarily to Lt. Gov. Blair Lee Ill, had spent 22 days in hospitals since April after suffering what his doctors described as a small stroke.
The government's first trial ended in a mistrial on Dec. 7 after jurors were exposed to news reports of jury tampering Kovens had been-exclused from the first trial because of a heart ailment and today's testimony about his alleged contribution to the divorce settlement did not come up then.
Chief U.S. prosecutor Barnet D. Skolnik described the tax-free bonds in his 80 minute opening statement today. He did not elaborate on what kind of bonds they were or in what form Barbara Mandel received them.
Most tax-free bonds are issued by government authorities - such as cities and states - and pay the holdes anywhere from 4 to 7 per cent interest annually.
Although the broad details of the governemnt's case varied little today form the first trial, the inclusion of Kovens added greatly to the "glue," as Skolnik said, that holds together years of alleged favors that led to a "scheme to defraud the citizens of Maryland of the right to the honest, unbiased and unimpaired services of the governor of Maryland."
As before, Skolnik opened his statement with a slow recital of the characters in the case and a history of Maryland state legislation affecting racetracks. "What is this case all about?-a racetrack," he said, "a rinky-dink half-mile racetrack in Prince George's County that doesn't even exist anymore."
Then he described the alleged intricate deceptions manufactured by Mandel's friends and co-dependents to keep their interest in the Malboro Race Track a secret until Mandel's aid that would vastly increase the value of the holding.
"One of the very few people who knew the two owners of the Malboro Race Track was Marvin Mandel" Skolnik said, a man who in his position was governor was able to lobby for legislation which brough a profit to the track owners.
Why Mandel allegedly helped out his friends was suggested by Skolnik with a rapid litany of gifts: $2,000 in life insurance premiums; $1,500 in clothing from Florida and Maryland shops, including suits bought by Kovens for Mandel and charged as guard uniforms; $3,400 for Florida vacations, and $7,500 worth of diamond jewelry.All of these gifts were paid for by one or more of the codefendants, according to the prosecutor.
Absent from Skolnik's statement, however, was his sensational claim of the last trial that Mandel was quite literally "bought" by his friends. It was a softer, and by U.S. District Judge Robert L. Taylor's order, shorter statement than before. The nervous prosecutor did pace briefly around the corridors before delivering his statement, hold hands with his wife.
The defense, however, took a number of new turns, breaking up their presentation into six separate opening arguments.
"This may look like a contest with the prosecution team here and the defense team over here . . . " said Weiner, "but I represent only Marvin Mandel and I am speaking to you only for Marvin Mandel on his behalf."
Weiner generally dismissed the gifts as a matter of friendship between men whose business dealings as well as their camaraderie date back long before Mandel became governor.
Then Mandel's attorney attacked the government's estimate of the worth of some of those gifts, particularly Mandel's interest in two real estate ventures, Ray's Point, Inc., and Security Investment Co. Skolnik valued Mandel's interest in Ray's Point at $45,000 while Weiner claimed that the governor actually took a loss on that property.
Weiner disputed the government's claim that Mandel received a four-ninths interest from Hess in Security Investment Co. Weiner claimed that money was only payment of legal fees Hess owned Mandel.
Weiner argued that the second part of the government's case-that mandel aided legislation for the Marlboro Race Track to help his friends-was without foundation. He said Mandel's action towards the racing industy was "no different from what the had done before the Marlboro Race Track changed hands."
"The question is whether things were done by Marvin Mandel for the racing industry and for the benefit of the state or because of some corrupt bargain," Weiner said. "Gov. Mandel's policy was for the good of the state and has paid off for the people."
After Weiner characterized all of Mandel's government positions as sound policy, he said he couldn't explain why his friends had kept their ownership of Marlboro Race Track a secret. "How good are friends who don't tell you these things?" he asked. "What reasons do they have for not telling him after all? You'll hear that from other counsel."
The explanation from Hess's attorney William G. Hundley was that Dale Hess "just didn't want to put Mandel on the spot."
Hundley portrayed Hess as a businessman who has made errors in judgement, because of friendship but has not committed a crime.
The concealment of Hess ownership in the racetrack, according to Hundley, was common practice at the time. Hess felt he would cause the governor political embarrassment if the ownership was disclosed.
On the issue of Hess' role in obtaining a loan for Mandel's divorce from the Catholic charity, the Pallottine fathers, Hundley said that Hess would have lent Mandel the money directly. "That's the kind of friend he is." But since Hess was under investigation at the time, he went to the Pallottines.
"There were not white envelopes as in the Agnew case) . . . no cover-ups because there was no crime to cover up," Hundley said.
Because of Hess' former position as majority leader in the House of Delegates, Hundley said, his client was politically aware enough to know that the publicly stated position of the state government was to promote legislation that would benefit the Marlboro Race Track. "All he had to do was count political noses," Hundley said.