Maryland Gov. Marvin Mandel was convicted today of corrupting his office for personal profit in a criminal scheme with five other men.
Mandel must resign at the time of his sentencing - Oct. 7 - when he and his five convicted codefendants face possible prison terms and heavy fines. The jury deliberated 13 days before finding Mandel guilty of accepting $350,000 in gifts from the men while using the governorship to enrich their businesses.
He and his codefendants, Irvin Kovens, Harry W. Rodgers III, William A. Rodgers, W. Dale Hess and Ernest N. Cory Jr., also face confiscation of the rental properties and racetrack stock they owned that were central to the scheme.
The six men, with the exception of Cory, are intimate friends and political powers in Maryland. Together, they were convicted of 111 of the 129 criminal counts in the complicated federal indictment brought in November, 1975. Specifically, they were found guilty of violating mail-fraud statutes and antiracketeering laws by deceiving the public and manipulating the state government for their own purposes.
Mandel was convicted of one racketeering count and 17 mail-fraud counts.
The verdict was read shortly after 11 a.m. to an ashen-faced Mandel and the other stunned defendants. Most said they had expected a hung - or deadlocked - jury because of the length of the deliberations and earlier messages to the judge from the jury foreman.
Their families were silent, except for Harry Rodgers' two teen-aged daughters, who wept softly. Mandel's wife, Jeanne, clutched the hand of her stepson, Gary Mandel, throughout the 10-minute reading of the verdict. Then she and the governor walked out of the courtroom, heads bowed, her arm around his waist.
"I have never during the tenure of my office ever defrauded the people or the public of the state of Maryland of anything," a subdued governor said at a press conference after the verdict . . . "I'm not walking out feeling that I have done anything to hurt the people of this state . . . I love it too much to have done anything to hurt it."
Some of his friends, including codefendant Hess, said Mandel told them he would resign before his sentencing. At his press conference, however, Mandel indicated he needed some time to contemplate the manner in which he will end the administration begun in 1979, when he succeeded Spiro T. Agnew as governor.
The governor's attorney, Arnold M. Weiner, said he would appeal the verdict, as will most of the other defendants. A reversal of the conviction for Mandel would allow him to return to office.
Acting Gov. Blair Lee III will become governor at the time Mandel leaves office. Lee has served as acting governor since June when the trial and a small stroke forced the governor to take a leave of absence.
Today's conviction makes Mandel the first American governor in 43 years to be convicted while in office. He also became the latest in a long series of Maryland politicians whose careers have been shattered by political corruption prosecutions over the past 13 years.
Agnew, the man who preceded Mandel in the Maryland governor's mansion, resigned in disgrace from the vice presidency of the United States four years ago, minutes before he stepped into a Baltimore federal courtroom and pleaded no contest to a single count of tax evasion in connection with kickbacks he accepted while governor.
Two of the same prosecutors who assembled the case that forced Agnew into court that day - Assistant U.S. Attorneys Barnet D. Skolnik and Ronald S. Liebman, - also spearheaded the effort to bring Mandel to trial.
The prosecutors had to present the long, complicated case against Mandel twice. The first trial ended Dec. 7, 1976, after 13 weeks when jurors heard television news reports about two jury tampering efforts. Two men were convicted of obstruction of justice in connection with that incident but the instigator of the tampering has never been caught.
Then it took the jurors in the second trial 13 long days to sort through the case's complexities and arrive at today's verdict. Some jurors said later that most of the 114 hours they spent locked in the jury room was wasted as they floundered through the confusing mass of evidence.
"We didn't know how to be jurors. We didn't know what to do," said juror Thomas Franz III. During the first week of deliberations, he said, the jury felt "lost" and desperately in need of additional instructions from the judge - instructions which Franz said they were "shy" about asking for.
The jurors finally asked four technical questions on Aug. 15, and received answers the next day from Judge Robert Love Taylor. Then, a day later, the jury foreman passed the judge a brief note announcing that the jury could not agree on the existence of a scheme.
Taylor responded to this note by bringing the jurors back in the coutroom and forcefully admonishing them that it was their duty to reach a verdict. That lecture, juror Franz said, galvanized the jury into action. "We realized our responsibility as jurors was to bring back a verdict, and not just to have personal opinions," he said.
"It is my personal and official pleasure to express to you and each of you the sincere thanks of your community, your state and your nation." Judge Taylor told them.
The governor showed few signs of any emotion. He was even calm when he waded through a crowd of 500 people outside the courtroom to reach his limousine.
That car, the bodyguards, his mansion in Annapolis and the status of his office will all be stripped away from him soon, leaving Mandel's career shattered.
Once the state's most powerful politician, a man who described himself as "a governor's governor," Mandel is now a convicted felon. He faces disbarment and a staggering personal debt of nearly $500,000 in legal fees and loans.
In a few days,Mandel said, he will be able to contemplate the future but today was "too soon" to announce Plans. All he had to say, besides his claim of innocence, was thanks to all of the people . . . for sending me notes and wishes of encouragement."
The prosecutors in the case, Skolnik, Liebman and Daniel J. Hurson, were restrained and reserved at a press conference they held a few hours after the verdict was returned.
"It's my firm belief that all the defendants received a fair trial," Liebman said. "The system does work, though it grinds slowly . . . Justice was done."
Weiner, Mandel's chief attorney, disagreed.He told reporters on the courthouse steps that the prosecution had involved a new application of old mail fraud laws. Weiner added that the conviction definitely will be appealed.
While Mandel is pressing that appeal, however, his former lieutenant governor, Acting Gov. Blair Lee III, is left in an odd sort of limbo. When Mandel leaves office, he will become a governor by default, thrust into office by his predecessor's downfall.
Reaction from political leaders throughout the state was divided along predictable political lines with some of Mandel's oldest Democratic supporters rallying to his defense shortly after the verdict was announced.
Judge Allen Spector, a former Democratic city councilman and Mandel ally in Baltimore who now sits on the city's District Court, said today that the governor was a victim of new political standards.
"It's like they changed the rules in the middle of the ball game," Spector said. "In politics, we were all raised with the idea that the guys who helped you, you favored."
David Forward the chairman of the state's Republican party, said that "We have to do something to change the entire structure of the way the state is run . . . I think the Republican Party is the reform party."
However, all Republicans and Democrats interviewed today admitted that this latest in the growing string of successful prosecutions of Maryland politicians does nothing to help the state's reputation for corruption.
In his press conference today. Acting Gov. Lee called it "a sad day for all Marylanders."
The first defendant to leave the courthouse today was William Rodgers, who had held the highest hopes for acquittal. Holding his wife's hand and trailed by his six children, he hushed his wife, Dorothy, who exclaimed: "Why are all those people here?"
"Those people" were a familiar mixture of attorneys, onlookers and reporters, the same people who have kept the 13 day vigil here and talked with defendants as they bounced from elation to depression during the jury's deliberation.
This brings to end the ordeal fo the case of "United States v. Marvin Mandel et al." The investigation grew out of the original Agnew case, but no defendant was officially notified until the spring of 1974.
All six men were each convicted of 17 counts of mail fraud today. It addition. Hess and the two Rodgers brothers were each convicted of two antiracketeering charges while the other three defendants were each found guilty of only one racketeering count.
All six men were charged with engineering a scheme to corrupt the governor with hundred of thousands of dollars in gifts so that he, in turn, would manipulate the laws and lawmakers or Maryland to effect million-dollar profits for a race track owned secretly by his friends.
The victims of this scheme were said by the government to be the citizens of Maryland who were "cheated" of the unbiased, fair and honest services of their governor during most of his two terms in office.
The success of this scheme depended on one man - Marvin Mandel - and he was the dominant figure throughout the 10-week trial. His co-defendant's were wealthy insurance executives (Hess and the Rodgers brothers), a Laurel attorney who specialized in state regulated banks (Cory) and Mandel's best friend, Kovens, the millionaire political boss from northwest Baltimore.
They were all friends, except for Cory, who simply worked for them. They were charged with getting together to "keep Marvin Mandel happy" with lucrative gifts and favors so that he would throw his weight behind their business interests, including the Marlboro Race Track and legislation benefiting it.
The legislation came up in 1972, the prosecutors said after Hess the Rodgers brothers, Kovens and Cory secretly purchased the track on New Year's Eve, 1971.
By this time, the codefendants already had given Mandel an option to join Tidewater Insurance Agency owned by the Rodgers' and Hess once he left office about $1,000 worth of suits and shares in two business ventures worth about $183,000 to the governor.
The State of Maryland regulates race tracks by parceling out the number of days a track can hold meets and earn money. More than the physical plant of the race course, the racing days are the assets of a track.
Marlboro Race Track was owned by a number of obscure Prince George's County families in May, 1971, when Mandel vetoed legislation that would have doubled the number of racing days there from 18 to 36. The track was variously described as "rinky-dink" and "run-down" compared with the full mile tracks like Laurel, Pimlico and Bowie.
Because of the status of the tracks, the bill seemed almost innocuous to the legislators. The governor's veto was easily over-ridden in 1972.
It was between the veto and the veto override that Hess, Rodgers, Cory and ovens bought Marlboro.
None of the legislators appeared to know this until news reports years after the fact. Two legislators who testified at the trial remembered however, that Mandel, through his chief legislative lieutenant, had encouraged that override, an assertion vigorously disputed by the governor and his lawyer.
The 1972 General Assembly session also saw the only large-scale attempt to consolidate race tracks during Mandel's eight-year term in office. To protect Maryland racing from competition of neighboring states, the legislature had often considered streamlining the state's racing network pruning out half-mile tracks and making the sport year-round.
Yet in the 1972 consolidation bill Marlboro was kept in the system the only half-mile track to remain and it was allotted 58 more racing days and allowed to run its days at the more lucrative one-mile tracks like Pimlico and Laurel. The bill was defeated on the last night of the session but not without strong lobbying efforts by the governor to get it passed.
Marlboro received other favorable actions from the state to make up for that loss. By the year's end, the secret Marlboro owners merged their track with the one-mile Bowie Race Course. The next year the State Racing Commission gave temporary approval to the transfer of Marlboro days to Bowie. One year later permanent permission was granted by the General Assembly. By 1974 the still-secret owners of Marlboro had made a profit of well over $1 million and owned a piece of one of the three major tracks in Maryland.
The jury had to decide whether Marlboro was a success story for the owners because of their shrewd business skills or because of their relationship with Marvin Mandel.
There was little dispute over Mandel's receipt of favors from his millionaire patrons; the $350,000 worth of vacations, diamond jewelry, clothing, loans, bonds and shares in business ventures. The argument was over the purpose of the gifts.
Because most of these benefits were handed over to the governor in a disguised fashion, the prosecutors contended that they were clearly designed to corrupt Mandel. For what other reason they asked, would a gift of tailor-made suits be marked on a receipt as guard uniforms for a race track? Why would defendant Hess back-date a letter by five years to show that he owed Mandel legal fees, the explanation for Hess signing over to Mandel part of his share in a real estate company to Mandel that was worth some $140,000?
The major favors - $40,000 portion of an Eastern Shore farm and the share of Hess' partnerships in Security Investment - were given to the governor when the important race track legislation was pending. Mandel did pay $150 for his farm property but his name was erased from corporate minutes and his stock held in the name of codefendant William Rodgers.
Friendship, especially welcome during his difficult divorce, was the defense Mandel had for the benefits from his codefendants. His boyhood friend, Kovens, gave him $2,333 worth of clothes because he thought he governor did not dress up to his office. When Mandel negotiated his 1974 divorce settlement, worth an estimated $400,000, Kovens put up $155,000 worth of bonds (a loan, Mandel said and guaranteed the payment of most of the settlement).
Florida trips for himself and his second wife, Jeanne, also came from his codefendants with a diamond bracelet for his first wife, Barbara, which was variously described as the winnings from a political bet and a gesture of friendship for her help in her husband's first campaign.
The only way the prosecutors matched this pattern of favors with the Marlboro Race Track venture was through circumstantial evidence. Why would a governor accept these expensive favors from men who did business with the state - about $7 million in contracts - unless there was a corrupt relationship? the prosecutors asked.
Manded maintained throughout that he never knew his friends owned the Marlboro Race Track until 1975. His codefendants said they kept it from the governor to save him political embarrassment.
There was not a unified defense, however on all charges, Cory, as the attorney for the track venture, prepared over a half-dozen fraudulent documents for official state bodies that put the track's ownership under different names. State legislators sympathetic to both sides in the case testified that they wished they had the names of the true owners of the track before they made their decisions. Yet Cory's defense was that he followed proper legal practice and since he did not give any favors to the governor he was not part of the scheme.
Kovens denied that he owned the majority share of the track and his attorney presented no defense. The prosecutors argued that Kovens owned 60 per cent of Marlboro through a front man named Irving (Tubby) Schwartz and they presented direct evidence of that by breaking a secret code of the owners.
William Rodgers, a secret owner of the track and partner with Hess and his brother Harry Rodgers in Tidewater, claimed that he know nothing of a scheme and he agreed to hiding the track's ownership only to please his brother's demand for privacy.