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Rachel Maddow Presents – BagMan – Episode 2: Crawling In (transcribed by Sonix)

Rachel Maddow: Richard Nixon and Spiro Agnew were officially sworn into office for a second term on January 20th, 1973.

John Chancellor: And welcome to the 47th Inaugural of an American President. David Brinkley and I here to cover that, something the United States has been doing since 1789 …

Rachel Maddow: The festivities that day were a celebration of what had just been a political annihilation. Nixon got 520 electoral votes that year. George McGovern got 17. The Nixon-Agnew ticket won every state in the country except Massachusetts. Newly re-elected Vice President Agnew celebrated that night with his wife, Judy, at a party that was thrown in their honor at the Smithsonian.

Judy Agnew: This time, I know more or less what to expect.

Male Voice: What do you expect, Mrs. Agnew?

Judy Agnew: Oh, what do I expect? Well-

Spiro "Ted" Agnew: She expects to have fun.

Judy Agnew: Fun, right. I expect to be much more relaxed this time.

Rachel Maddow: Spiro Agnew was in triumphant good spirits that night, blissfully unaware of the danger that was unfurling for him just a short drive up the Baltimore Washington Parkway.

Rachel Maddow: In Baltimore, Maryland, just days before that inauguration, a team of three young federal prosecutors were preparing to unleash a blizzard of federal subpoenas with no warning.

Tim Baker: And we put together a team of IRS agents, and we had all 50 subpoenas served on a Monday morning.

Rachel Maddow: That's Tim Baker, one of the federal prosecutors who worked up these subpoenas out of the US Attorney's office in Maryland. These prosecutors were hoping to bust open a political bribery scheme in local Maryland politics. In terms of who exactly they thought they would nab though, the expectations, at least, early on, were relatively low.

Ron Liebman: And I think the general thinking was maybe we'd be able to find a corrupt Congressman, maybe a State Legislator. I think that's what the level of expectation.

Rachel Maddow: That's Ron Liebman. He was the second prosecutor on the team. And you can hear from him there that this was a little bit of a fishing expedition. But these prosecutors did have one particular fish in mind. They were after the head of the county government, the Baltimore County executive at the time who was a Democrat named Dale Anderson.

Barney Skolnik: The word is, you know, the word on the street, the rumor, the scuttlebutt is that Dale Anderson is corrupt and is taking bribes.

Rachel Maddow: That's Barney Skolnick, the lead prosecutor on the team. What he, and Tim Baker, and Ron Liebman started to uncover evidence of was that corruption scheme that they'd been hearing all these rumors about, that County Executive Dale Anderson was taking cash payoffs as bribes and kickbacks for handing out county contracts.

Male Voice: Anderson was cited on 39 counts involving more than $46,000 in contracting kickbacks.

Rachel Maddow: This local official, Dale Anderson, was their big fish. And these prosecutors were now getting the goods on him and on this big bribery scheme in that specific county government. But here's the thing, the man who had Dale Anderson's job right before he did was just then being sworn in for his second term as Vice President of the United States.

Male Voice: Off behind and out of power range, Vice President Agnew has just gotten into his limousine with Mrs. Agnew. Presidential motorcade is lining up here on the south lawn of the White House.

Rachel Maddow: Spiro Agnew, before he ever got to the White House, began his political career in that county. He had been Baltimore County Executive for four years. And, now, the guy who had that job right after him was being busted for taking bribes in what was starting to look like a pretty slick, well-established, smooth-running bribery kickback and corruption criminal enterprise.

Rachel Maddow: Had Vice President Agnew taken part in running that same criminal scheme while he was in that job? What prosecutors didn't know at that moment, but what Spiro Agnew very much knew that night while he was celebrating his re-election at the Smithsonian is that not only had he taken part in that same criminal scheme back then; in fact, he had just accepted an envelope stuffed with cash.

Rachel Maddow: I'm your host Rachel Maddow. And this is Bag Man: The Wild and Untold Story of the Presidential Line of Succession, Impeachment, Indictment, and Panic in the White House.

Male Voice: Good evening. Washington was stunned today by the disclosure that Vice President Agnew is under criminal investigation by federal authorities in his home state of Maryland.

Male Voice: I read his expression as saying, "I need this right now like I need another hole in the head."

Male Voice: This was this was like opera, you know, on the grand scale. It really was.

Spiro "Ted" Agnew: I will not resign if indicted. I will not resign if indicted.

Male Voice: The constitutional problems raised by the Agnew investigation aren't bewildering. We've never had a problem like this one before.

Female Voice: The news breaks, details start pouring in.

Male Voice: All the breaking news items. You've got some news on the FBI investigation.

Female Voice: How will you keep up? TuneIn Premium exclusively brings you live commercial free news, so you can hear 24/7 breaking news without the breaks.

Male Voice: A trillion dollar market, and it's 250 billion, and it has to get to a trillion.

Female Voice: Try TuneIn Premium for seven days free and never miss the action as it happens. Hear it now, hear it live on TuneIn.

Rachel Maddow: Episode 2: Crawling In.

Richard Nixon: As the new Attorney General, I up today named Elliot Richardson, a man of unimpeachable integrity and rigorously high principle.

Rachel Maddow: Elliot Richardson had just become the new Attorney General of the United States in the Spring of 1973. He'd been Nixon's Secretary of Defense. He was Health Secretary before that. But from the moment that he became the Attorney General, Elliot Richardson's life was consumed by the Watergate Scandal.

Elliot Richardson: I have decided that I will, if confirmed, appoint a special prosecutor and give him all the independence, authority, and staff support needed to carry out the task entrusted to him.

Rachel Maddow: One of Richardson's closest aides at the time was a young lawyer named JT Smith.

JT Smith: He knew that Nixon was under a cloud. He didn't know what was in the tapes, but the White House didn't seem eager for the tapes to see the light of day. He knew that the mood in the White House on the part of the President and his staff was quite bleak.

Rachel Maddow: That summer though, Attorney General Elliot Richardson also knew something else. He held a secret that only a handful of people in the entire government knew. In the middle of that summer, right in the middle of Watergate. Elliot Richardson got a visit from his US Attorney in Maryland, George Beall and Beall's team of three assistant US attorneys. What those prosecutors brought to him that day was hard evidence that the sitting vice president Spiro Agnew was actively engaged in criminal activity. These prosecutors had not set out to discover that. But they had launched an investigation into local corruption in Maryland and where that investigation ultimately led them was inside the office of the Vice President.

Spiro "Ted" Agnew: Ladies and gentlemen I'm Ted Agnew, I'm a candidate for governor. And I ask for your vote …

Rachel Maddow: To the extent that Spiro Agnew is remembered in history, it's for this sort of vague sense that he went down over tax evasion or something sort of benign. What he actually did though was way worse than that, to the point of being sort of bonkers.

Rachel Maddow: When he was Baltimore County Executive, Agnew would had the power to award local contracts. What prosecutors discovered is that he was awarding those contracts almost exclusively to local businessmen who were paying him off, who were delivering him cash bribes, literally stacks of bills stuffed into envelopes.

Rachel Maddow: Here's Barney Skolnik one of these federal prosecutors in Baltimore who helped crack the case.

Barney Skolnik: The scheme, it doesn't even deserve the appellation scheme. It wasn't a scheme. It was just a payoff.

Rachel Maddow: When Agnew left that County Executive job and became governor of Maryland, prosecutors learned that he took the payoff system with him. But then, of course, it wasn't just small-time local contracts he was controlling anymore. As governor, of course, he moved up to big state contracts. And that required him to scale up his criminal efforts. Here's Ron Liebman, another one of the prosecutors on the team.

Ron Liebman: When Agnew became Governor, it was explained to him, "If you want a bag man, you don't want to take directly, you want to insulate yourself because, then, it's just you against another person." And Agnew had at least one bag man, I think two, But he also took directly. He was greedy, absolutely greedy.

Rachel Maddow: Agnew, as Governor, enlisted his State Roads Commissioner to start awarding state contracts to the firms that would pay Agnew off. And as advised, he also got himself a bag man, a longtime friend named Bud Hammerman. Bud's job was to personally go collect the money from the companies that just got the contracts.

Ron Liebman: The deal was that the contractor would pay Hammerman. He's holding the money and paying the money directly to Agnew because he's one of the bag man.

Rachel Maddow: What Agnew put in place as Governor was a slick, well-run extortion ring. Agnew himself would keep 50% of the cash. His Roads Commissioner, who picked the contractors, and his bag man who leaned on them for the cash, they would each get to keep 25%. So half for the two of them, half for the governor. Here's Barney Skolnick.

Barney Skolnik: I mean, taking large sums of cash in a succession of white envelopes over, and over, and over again is about as crass as it can be if you're a public official.

Rachel Maddow: What prosecutors discovered that spring was that this wasn't just some old scheme that Agnew had been running back in Maryland, which he then stopped when he became Vice President. What they discovered was that this was a scheme Agnew was still actively carrying out as Vice President of the United States, on the grounds of the White House itself.

Rachel Maddow: The prosecutors discovered a local Baltimore businessman named Lester Matz. Matz told them that he'd been making regular trips to the White House to secretly deliver cash to Agnew since Agnew had been in office as Vice President, in fact, starting pretty much immediately after Agnew was elected Vice President. Here's Ron Liebman explaining how it worked,

Ron Liebman: After the election the Vice President's office, temporary office was in the basement, I think, of the Old Executive Office Building. And Lester Matz went to see the Vice President-elect with an envelope stuffed with cash in his suit jacket pocket. And he walked in to see Agnew, as he told us the story and as I recall it. And one of them I think maybe Agnew pointed to the ceiling like don't say anything because we could be overheard, or taped, or something.

Ron Liebman: And Lester Matz took out this envelope with $10,000 in cash as I recall, stuffed envelope, and handed it to Agnew. Agnew took it, put it in the center drawer of his desk, and closed his desk. And when we heard that, we were just — couldn't believe it. I believe it, but I was just shocked, just shocked, and we all were, that kind of crass bribery.

Rachel Maddow: These young prosecutors had discovered at the height of the Watergate scandal that the Vice President of the United States was committing his own crimes on an ongoing basis inside the White House.

Barney Skolnik: I mean, cash in white envelopes, I mean, that's crazy to a Vice President.

Ron Liebman: I think we realized at that moment that we had a tiger by the tail.

Rachel Maddow: It turned out that Agnew was also getting paid off by a Maryland engineering executive named Allen Green. Green would make regular trips to the Executive Office Building right next to the White House. He would go into Agnew's office and hand Agnew plain envelopes stuffed with $2000 in cash.

Rachel Maddow: Allen Green told prosecutors he went to the White House three or four times a year during the whole first term of the Nixon Administration. On each trip, he delivered Agnew thousands of dollars, always in envelopes, always in cash. And prosecutors soon discovered that Agnew was secretly accepting illegal deliveries of cash inside his Vice Presidential residence, as well as in the White House.

Rachel Maddow: And if you're wondering what all these businessmen were paying for when they were paying off Agnew, these prosecutors soon figured out that where he could, Agnew was actually steering federal contracts to the businessmen who were now streaming into his office and his apartment with big wads of cash for him. So, it wasn't just a one-sided shakedown operation, it was a true quid-pro-quo, it was government, federal government for sale.

Rachel Maddow: These young guys from Baltimore had not set out to find this, but what they soon realized they had rock-solid evidence of was that the Vice President was running an ongoing bribery-and-extortion scheme from inside the White House.

Ron Liebman: It was shocking. I mean, all of a sudden, this case involving, perhaps, payoffs in Baltimore County, Maryland, or maybe in Annapolis was going to become not only more significant. Keep in mind, Watergate is going on. So, the President of the United States, to put it mildly, is under a cloud. And here, we, three Baltimore federal prosecutors, are being told that the next guy in line, the guy a heartbeat away, he's also under a cloud. So, it was shocking.

Rachel Maddow: It was shocking. And it was now time for them to do something about it. They realized they needed to tell the Attorney General about what they'd uncovered. Here's Barney Skolnik, again, with producer Mike Yarvitz.

Barney Skolnik: I had, in fact, no doubt at all that we had a prosecutable case. The issue was who the defendant was. If the defendant was John Smith, I had no doubt. I mean, I was a good enough prosecutor and an experienced enough prosecutor to know that when you have what we had, that's a case.

Mike Yarvitz: If it's John Smith, you've got it locked up.

Barney Skolnik: You just indict.

Mike Yarvitz: In this case, it was not John Smith.

Barney Skolnik: In this case, you say to the Attorney General, "What do you want us to do?"

Rachel Maddow: This wasn't just posing that question to any Attorney General. This was going to see Richard Nixon's Attorney General, which meant giving a presidential administration that was famous for covering up political scandals the chance to cover up one more. That's next.

Chris Hayes: Hey, it's MSNBC's Chris Hayes. If you enjoyed Bag Man, be sure to check out my friend Rachel Maddow on my podcast, Why is This Happening?, where I get the opportunity to dig deep into the forces behind the stories playing out in the news in order to understand why certain cultural and political phenomena came to be.

Chris Hayes: Rachel joins me to talk about covering the news in this unprecedented political moment. We also talk all about Bag Man and how this incredible podcast came to be. So, click on over and check out Why is This Happening?, and you can listen now wherever you get your podcasts.

Rachel Maddow: Richard Nixon didn't exactly have a stellar track record when it came to the job of Attorney General. By the summer of 1973, Nixon had already lost two different Attorneys General in connection with Watergate.

John Chancellor: A witness at the Senate Watergate hearings today directly implicated former Attorney General John Mitchell in the Watergate bugging and cover up and implicated the cover up …

Rachel Maddow: That summer of '73, as Watergate was full-on boiling, a little team of federal prosecutors in Baltimore was facing the prospect of going to Washington to tell Richard Nixon's newest Attorney General, Elliot Richardson, some news that they knew would be an absolute disaster for the Nixon White House.

Rachel Maddow: They were coming to Washington to tell him that at the height of Watergate, that Vice President Spiro Agnew was conducting an active criminal scheme of his own from inside the White House. These prosecutors were going to take that news to Nixon's Attorney General, knowing full well that he could do whatever he wanted with it. Here's prosecutor Barney Skolnik.

Barney Skolnik: I had a very conscious, not just realization that it was possible, but that under all the circumstances, it was highly likely that he was going to say, perhaps, for the most honorable of reasons. I mean, he probably wouldn't say, "Shut it down," but he could say words that would amount to "shut it down."

Rachel Maddow: These three young Baltimore prosecutors and their boss, the US Attorney George Beall, they all drove to DC and they went to go see the new Attorney General, Elliot Richardson, not sure what to expect, fearing the worst. But they knew they could no longer keep to themselves this criminal secret about the Vice President.

Ron Liebman: We all drove in one car up the Baltimore Washington Parkway, July 3, 1973, game-planning how we're going to do this. George is going to introduce us. Then, we're going to do this. And when we do this, we're going to do that. And when we do that, we're going to do this. So, we get there. We're ushered up to the Attorney General's office, which to say impressive is understated. And we wait, and we wait.

Tim Baker: And then Richardson comes in, and he's annoyed, "What's so important that I have to — You're interrupting my day, and you won't even tell my secretary what it's about. What's so important?" He's sitting there starting to take notes, but then more doodling, and more, and more impatient, and just at the point where the secretary comes in, and gives him a note. He just get up and leave, no explanation. Just gets up and leave. And he's gone for seems like hours, probably 20 minutes.

Ron Liebman: And the minute he leaves, of course, we're saying, "George, say this, say that." Then, Richardson would come back in, and George would begin, "Well, we started in Baltimore County. We're thinking about corruption." None of this, the Attorney General needs or wants to hear. And when George gets a little closer to the Vice President, another note comes in, Elliot Richardson gets up and he leaves, doesn't say excuse me, comes back. Richardson is clearly under pressure. And George says, "Okay, now, we're going to tell you why we're here."

Tim Baker: "We have evidence that Vice President Agnew took bribes as County Executive, Governor, and even as Vice President." Now, we have Richardson's attention. And my job, at that point, it was my job now to lay out the evidence that we had. And he's very interested in the evidence. What he, of course, wants to know is how, good a case is this? And it's a good case. I mean, we've got good stuff, and we know it. I just started banging away on, "So and so will testify, and he's got documents, and he's backed up by his vice president, nail, after nail, after nail, after nail.

Ron Liebman: I read his expression is saying, "I need this right now." Like, "I need another hole in the head." That was his expression like, "Jesus", you know, "Jesus, sweet Jesus."

Rachel Maddow: Put yourself in Elliot Richardson's shoes for a minute. He had just become Attorney General weeks earlier. He was overseeing the most sensitive investigation maybe in the history of the Justice Department, an ongoing, serious criminal probe of the President.

Rachel Maddow: And here were these barely-out-of-law-school Baltimore prosecutors who he's never met telling him, "We know you're investigating the President of the United States, but we need you to investigate the Vice President as well." If you were the attorney general, would you take on that burden? Here's JT Smith, Elliot Richardson's top aide.

JT Smith: I remember Richardson after that meeting saying to me, "Oh my god."

Barney Skolnik: You really were talking about a ship that's in bad shape, and the captain's having a heart attack. And, now, the first mate, you're going to throw the first mate overboard. I mean, what's going to happen to the ship? It made the whole thing very heavy. What's the right thing to do?

Rachel Maddow: The Baltimore prosecutors raced to DC. They dropped that bombshell on Elliot Richardson during that meeting. And then, they waited and watched to see how he would respond.

Ron Liebman: I remember watching Mr. Richardson, Elliot, very, very closely thinking, "All right. Is this where he's going to say, "Good work guys. Really, really good work. Thanks for coming in. Leave the files here. We'll see you later"? And what he did was, he started crawling into the case. He just crawled into the case, "So, what about this? What are you going to do about that?" Like he was a collaborating with us, which he was. He immediately crawled into the case with us. It was extraordinary.

Rachel Maddow: In that meeting, without flinching, Elliot Richardson took on the unimaginable burden, think of this, of overseeing an active criminal investigation of the President and the Vice President at the same time with two different cases.

Rachel Maddow: There's no telling what any other Attorney General might have done in that situation. You could almost understand an Attorney General saying, "I've got this investigation that might bring down the President, I can't wipe out the Vice President too. The country can't survive that."

Rachel Maddow: But Elliot Richardson's response to these young prosecutors who cracked this case was, "Keep going, keep digging." He told them that he would now directly oversee their investigation. It would be conducted in secret, with the knowledge of only the people in that room.

Rachel Maddow: The stakes were potentially taking out the President and the Vice President, which would effectively overturn an entire national election, which had been a landslide win for Nixon and Agnew. But Elliot Richardson, who had just gotten on the job, decided that he had to take on that burden. He had to.

Rachel Maddow: Here's how Barney Skolnik, one of the prosecutors, remembers that meeting with Elliot Richardson even today, 45 years later. The first voice, you'll hear is producer Mike Yarvitz.

Mike Yarvitz: What are your memories from that meeting, that first meeting with Richardson? What are you feeling going into that meeting?

Barney Skolnik: This is something about which I can get very emotional. I went to that meeting as, I think, most people in my position would have. We don't know him. I mean, I've heard good things about him, but we don't know him. And it's like very much with a great sense of anxiety that we are going to say to him, "Here, what do you want us to do?" And then, figuratively speaking, hold our breath until he tells us what he's going to tell us.

Barney Skolnik: Within the first few minutes of being with him, I knew, I think we all knew that we were in the presence of a very special human being. To me, it is the single most, it's the key to this whole saga. If Elliot Richardson had not been the Attorney General at that particular time, Spiro Agnew would have become President in August of '74. I mean, I'm certain of that.

Rachel Maddow: These Baltimore prosecutors happened to draw as an Attorney General a figure in American political life who was equal to the moment when, how could you expect that of anyone? Elliot Richardson was a Republican, a decorated military veteran. He went ashore on D-Day. He was an ex-federal prosecutor himself, unimpeachable integrity.

Rachel Maddow: What began at that moment, in that meeting with Elliot Richardson's decision was an unprecedented emergency mission inside the Justice Department to oust the Vice President of the United States before it was too late, before he ascended to the presidency himself.

Barney Skolnik: We're talking about the summer of '73, I mean, Watergate hearings are going on. Everybody was conscious that Nixon, aside from being a crook in his memorable word, might not last.

Rachel Maddow: Watergate was beginning to reach a boil. The President might go down at any moment, either by resignation or removal from office. And on top of that, teetering drama. It was now on the Attorney General and this small team of federal prosecutors to somehow make sure that an active criminal wasn't next in line to replace him.

Rachel Maddow: They had the criminal scheme in their sites. They had the evidence by then pouring in. They had leadership that almost, unbelievably, proved to be unafraid of the stakes and willing to see this through. The only problem was the man they were about to take on was not going to take any of it lying down.

Spiro "Ted" Agnew: I want to say at this point, clearly and unequivocally, I am innocent of the charges against me.

Rachel Maddow: Spiro Agnew was gearing up to wage war on this band of prosecutors. And he knew that his real power base was the legion of supporters he had, both in the public and in Congress, who loved what a hard liner he was, who love what a bomb-thrower he was, and who were willing to angrily support him basically through anything, no matter what Agnew got charged with. They were ready to go to war with him.

Carl Curtis: Will you inform me what he's done? No one has. Now, that's not American justice. I don't think he should resign or he will resign.

Rachel Maddow: That part of the story is next time.

Rachel Maddow: Bag Man is a production at MSNBC and NBC Universal. This series is executive produced by Mike Yarvitz. It was written by myself and Mike Yarvitz. Editorial and production support from Jonathan Hirsch and Marissa Schneiderman from Neon Hum Media. And you can find much more about the story on our website, which is msnbc.com/bagman.

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