A top assistant to Maryland Gov. Marvin Mandel funneled $10,000 from a Cecil County real estate speculator to the governor to help finance a 1974 European honeymoon for Mandel and his new bride, Jeanne Mandel.
The money was said in legal papers to be a loan from the real estate broker, Harold Montgomery, to the governor's aside, Frank H. Harris. Both Harris and the governor acknowledged yesterday that the $10,000 actually went to Mandel.
It has never been repaid, however, and two weeks ago, Montgomery sued Harris in Cecil County Court to recover the funds.
The $10,000 loan revealed in the court papers does not show up in any of the three subsequent financial disclosure statements issued by the governor.It becomes the latest in a series of roundabout financial transactions from which the governor allegedly benefited and that were not revealed to the general public.
Through a spokesman, Mandel confirmed yesterday that he had asked Harris - who makes between $30,000 and $35,000 as the governor's legislative liaison - for $10,000 to pay for a honeymoon trip to Europe with his second wife, Jeanne.
Harris confirmed yesterday that he borrowed the money from Montgomery and turned it over to the governor on the same day.
Montgomery, a 58-year-old Cecil County native who has become wealthy buying and selling real estate over the past 40 years, said yesterday that he did not know his loan to Harris was intended for Mandel.
"I don't know what he done with the money and I didn't give a damn . . . I'm first a businessman. If you owe me money I want to collect it. He (Harris) owned me money and he didn't pay it . . .
"The governor owes me nothing," Montgomery added. "Frank Harris owes me $10,000, plus interest and costs."
Montgomery's action in taking Harris to court apparently marks the first time that a creditor has taken public, legal steps to recover any of the loans or gifts that reportedly went to Mandel during his term as governor.
Earlier in 1974, Mandel had received a $54,000 loan from the Pallotine Fathers missionary order, a loan that was also funneled through a third party. That money went toward the cost of his August, 1974, divorce from his first wife.
In early 1975, a furor exploded over the governor's free plane ride to Jamaica on the corporate jet of the state-regulated Steuart Petroleum Co.
Over a four-year period between 1971 and 1975, Mandel has acknowledged accepting at least 10 similar free airplane rides, some for vacations in such far-distant spots as Wyoming and Alaska.
Prosecutors in the ongoing political corruption retrial of Mandel have charged that the governor's close friend, political ally and codefendant, Irvin Kovens, gave $155,000 worth of tax-free bonds to the governor's first wife, Barbara, as part of the governor's 1974 divorce settlement.
While the governor confirmed yesterday through a spokesman that he had borrowed the money from Harris and that he had not paid it back, he refused to comment on why he had solicited the loan from an aide whose state salary is not much higher than Mandel's own salary of $25,000.
Harris, when asked why he had not introduced Mandel to Montgomery and allowed the governor to borrow the money directly, replied: "We weren't hiding anything. All of this is in the record."
Asked what record he was referring to, Harris said, "It's in the federal grand jury." Federal grand jury records, by law, are confidential and not released to the public.
Both Harris and Montgomery, who lives in Rising Sun, appeared before the grand jury that eventually indicated Mandel in 1975 on charges of mail fraud and racketeering.
The prosecutors, who are trying that cases for the second time, charge that Mandel received a flow of valuable gifts and vacations from wealthy businessmen friends in return for influencing state legislation to their financial benefit.
Montgomery, 58, is a gubernatorial appointee to the state tax assessment appeals board in Cecil County. It could not be determined yesterday if he did any business with the state. He is a politically influential figure in the Democratic circles of this country, located at the head of the Chesapeake Bay.
Montgomery, a short, spry man who sports a western-style string tie, emphasized repeatedly during a 15-minute conversation yesterday that he was treating this loan as just another business transaction, like any he makes from his office in this small town near the Pennsylvania state line.
"Lady, this is a personal matter - the man (Harris) owed me money and he hasn't paid me," Montgomery told a reporter. What Harris wanted the money for, he added, "wasn't any of my business . . . as long as he signed the note, it didn't make any difference what the money was for."
Montgomery added, however, that he feels Gov. Mandel is underpaid, overworked, unfaily persecuted and innocent of any legal wrongdoing.
"Just because Mandel took a plane ride to Florida, that's a terrible thing," Montgomery said sarcastically, leaning forward in his chair. "Look him up.
"Well, I don't agree. I don't think he broke any laws that mean a lot to you and I."
Montgomery said he has known Harris, who is also a native of Cecil County, since Harris was in high school.
Harris, a jovial, back-slapping fixture around the statehouse in Annapolis, has also been known to forcefully twist legislators' arms to push the governor's programs through the General Assembly.
Harris said yesterday he told the governor that Montgomery has taken him to court. "I told him this guy was pressing me for money," Harris added, saying that Mandel has not been able to pay him back.
"He's got a hell of a lot more problems than I do," Harris said.
At the time he lent Mandel the money, Harris said, the governor didn't have all the problems he has now. I expected to get it back." Now, Harris said, he may have to to take out a bank loan to repay Montgomery.