In the midst of a private crab feast in 1974, Maryland Gov. Marvin Mandel closeted himself in an upstairs study with a Pallottine priest and four businessmen and received a laundered $42,000 check from the Catholic religious order to help finance his divorce agreement, according to court testimony today.
The check was a loan to Mandel to cover past due alimony for his former wife, Barbara, who he claimed was threatening to "go to the press" and expose the governor at a critical juncture in Mandel's re-election campaign, Donald E. Webster, accountant for the Pallottines, testified.
Two years later, after newspapers had reported the loan from the Pallottine religious order, Mandel assured a worried archbishop of Baltimore that the money had not been used in connection with his 1974 divorce, the archbishop has said.
"The governor was in urgent need of some funds . . . to bring up to date alimony payments," Webster said he told at the time the loan was arranged.
With Webster's testimony, the government introduced the Pallotine Fathers into the trial for the first time in the case against Mandel and five codefendants, W. Dale Hess, Harry W. Rodgers III, William A. Rodgers, Ernest N. Cory Jr. and Irvin Kovens.
Hess and Harry Rodgers were among the men who arranged the loan, according to testimony. Prosecutors have alleged that it was among over $300,000 worth of bribes Mandel received through his codefendants in exchange for his help in procuring state favors for their businesses.
Webster said that no one had discussed the possibility of Mandel's going through a bank and taking out a regular loan. On cross-examination, however, he told Arnold M. Weiner, Mandel's attorney, that he remembered someone had told him that the governor was "head over heels in debt" as a result of his divorce that year and that "the banks were not anxious to lend money to him." Mandel's salary as governor is $25,000.
Webster also provided explanations for the secrecy of all the others involved in the transaction during his cross-examination.
For Hess, Webster said, it was a matter of a friend helping out another friend "notwithstanding the fact" that Hess was under federal investigation for the Rev. J. Guido Carcich, the Pallottian chief fund-raiser, it was a question of Catholic propriety, of the priest being directly linked to a loan made to cover alimony, Webster admitted.
Carcich, who is expected to testify under a grant of immunity, was eventually banished from the Baltimore archdiocese after it was revealed in an audit that only a tiny fraction of the funds raised by the religious order for poor people in foreign lands actually was used for that purpose. A state grand jury is investigating the order.
It all started, Webster said, when Hess arranged an impromptu meeting in his office on one of the first days in September because "the governor was in urgent need of some funds . . . to bring up to date alimony payments."
"They (Hess and Harry Rodgers) had discussed various possibilities for the loan," Webster said."They said that they could not because at the present time they were under investigation."
When Hess then suggested the Pallotine Fathers with whoom he had had business deals before, Webster said he answered that "I didn't know but we could find out.
"At that point in time I picked up the telephone and called Father Carcich. He was in . . .I said 'Could you slip over for a few minutes?' and he said, 'Yes, I'll be over in a few minutes.'" When Carcich did arrive, Webster said, the arrangement was reached whereby Webster and his nephew, C. Dennis Webster, and Hess would put up the money for the initial loan to Mandel and Carcich would pay them back shortly, even though Carcich was not told during the meeting why Mandel needed $42,000.
The money would be funneled [WORD ILLEGIBLE] to William May, an obscure Baltimore automobile dealer who did not know the governor and had no business dealings with the state, Webster said, dealings that might cause controversy if news of the loan got out.
By Sept. 6, 1974, Hess and Webster had made their contributions to the Webster nephew and everything was in order for the Sunday crab feast two days later, according to testimony. "My wife and I had planned a small crab feast for a number of friends," said Webster, who later explained that the party was the reunion of the group - save Mandel - who had gone to Rome and wanted to see slides of their trip.
Coincidentally, most of these men also were part of the elaborate transaction and during the party "we went into my study into the second floor . . . and the loan was made to the governor," Webster said.
When asked by chief federal prosecutor Barnet D. Skolnik for more detail, Webster replied that "It is a very small study." All that he could tell from his vantage point in the crowded room was that Mandel received the check that had already been made out by May and signed the debt agreement, Webster said.
Within 60 days, Carcich came through with his part in the arrangement and repaid the businessmen. Mandel has yet to repay his share of the money, according to testimony.
According to an audit of the Pallottines, Mandel was given another $12,000 from the religious order some time later, bringing the total to $54,000.
It was the prosecution's contention in the first Mandel trial that the money was in fact an indirect payment from Hess to Mandel and represented the governor's alleged secret share in a Hess real estate venture.