Daniel Michew testified yesterday that whenever he got a "signal" from his former boss, Sen. Herman E. Talmaadeg (D-Ga.), he diverted campaign contributions into a secret bank account and later passed the laundered funds to Tamadge in envelopes containing $100 bills.
In addition to thousands of dollars he said were routed to Talmadge this way, Minchew said he also paid thousand more out of the account to Talmadge's son, Bobby, and sent at least one envelope with $500 through Talmadge to the senator's former wife, Betty.
Minchew, a key witness in the Senate Select Committee on Ethics' hearings on allegations of financial misconduct against Talmadge, told the panel that Talmadge was aware that his aide was also dipping into the secret account.
"He was aware because I told him I was having a lot of expenses, and he said in the process, 'Take care of yourself out of this,'" Minchew testified.
""And I did so," he added.
Senate auditors have determined that Minchew took $16,510 from the secret account for himself. Minchew has said that the $17,610 the auditors have not traced from the account went to Talmadge or his family.
Minchew's testimony yesterday also revealed for the first time that, in addition to the $39,000 that was funneled through the secret bank account, he withheld another $5,000 in cash contributions to the senator's campaign that were delivered directly to either Talmadge or himself.
There was no indication yesterday whether the $5,000 was mingled with the secret account funds or paid separately to Talmadge and the others.
Minchew's testimony is the bedrock of the case being presented against Talmadge, a powerful 23-year Senate verteran who has denied any knowledge of the secret account. Talmadge has labeled Minchew "a proven liar, thief and embezzler."
Looking confident in his second day before the Ethics Committee, Minchew described the process by which campaign contributions to Talmadge were diverted into the secret account in 1973 and 1974.
Talmadge would tip off Minchew, the former aide said, with a telephone call or a warning to be on the lookout for a particular contribution to be delivered to the senator's campaign.
"When I received the signal to be on the lookout for a particular contribution, that was my understanding that this money was to be handled in our special way," Minchew said.
And that way, he said, was either to lock the money in an office cabinet, if it was contributed in cash, or run it through a secret Riggs National Bank account Minchew claims he opened after consulting with Talmadge.
Minchew told the Ethics Committee he alwasy delivered cash to Talmadge in envelopes containing over $1,000 in $100 bills. On all occasions except one the deliveries took place in the senator's office in the Russell Office Building, he said.
One time, however, Minchew said he got a call from Talmadge shortly after Michew left the senator's staff in October 1974. He delivered on envelope to Talmadge in the lobby of the Embassy Row Hotel on that occasion, Minchew recalled.
"The signal," he said, "I think was a telephone conversation." He said Talmadge told him, "I'm coming to Washington.I want to see you. I'll be at the Embassy Row Hotel. Can you meet me in the lobby of the Embassy Row Hotel?"
"And did you regard that as an indication that he needed or wanted some money?" committee special counsel Carl Eardley asked.
"Yes sir," Minchew said.
Minchew said he also gave about $10,000 to the senator's son, Bobby, after Bobby Talmadge called him asking him to raise the cash. Bobby Talmadge died in 1975.
Minchew said he told Talmadge about his son's request for funds. "His basic response was, "Do what you can, but keep the lid on,'" Minchew said.
On another occasion he said he placed $500 in an envelope with the namd of Talmadge's former wife, Betty, on it and left the envelop on the Senator's briefcase. Minchew has claimed that in 1973 he received a typed note from Betty Talmadge instructing him to obtain some money for her.
He told the committee he has not been able to find the note. Betty Talmadge, who was divorced from the senator in 1977, denies ever having written it.
Throughout most of his two days of testimony, Minchew has been under generally friendly examination by Eardley. However, Ralmadge's chief attorney, James Hamilton, began his cross examination late in yesterday's session, pointing out that Minchew had lied on some points to Justice Department investigators last year and had given some inaccurate information to the committee's investigators.
Minchew acknowledged that he "was not totally candid" with the Justice attorneys. But he said he was acting on what he thought were instructions from Talmadge last years to confine the matter between just the two of them. CAPTION:
Picture, Daniel Minchew, right, with attorney Robert Stiller during a hearing break. Sen. Talmadge is in background. By James K. W. Atherton - The Washington Post