The Arrogance of Power (44 page)

Two full years later, in the summer of 1971, Silberman said, he received a message asking him to meet the recently retired Republican governor of Nevada, Paul Laxalt, at Harrah's hotel casino in Reno. Silberman agreed, and in the course of their discussion Laxalt asked, as if the question were hypothetical, what Silberman thought might happen if the United States closed “the gold window.”

Simply stated, such a step would mean the United States ceased to exchange gold for dollars with other countries at the fixed price. This would be a drastic measure, designed to rescue the dollar as a currency at a moment of potential disaster. It was also, predictably, a move sure to trigger a massive hike in the price of gold on the public market. Silberman told Laxalt that someone who had advance knowledge of such a decision and knew how to operate in that area of finance would have the opportunity to make a fortune. Laxalt
revealed that he had such advance knowledge, and asked Silberman to come up with a plan to take advantage of it.

Events then moved swiftly. At a second meeting, Laxalt handed Silberman a satchel containing $215,000 in cash: $180,000 to invest in the gold scheme and $35,000 as a fee for his services. Within days Silberman began buying gold futures through a Canadian bank at a time when, with the gold price virtually static, it seemed a pointless investment. When the gold window did close, however, in August of that year, the opposite proved true: Silberman went to Canada and collected more than $10 million.
¹⁴

Following instructions he had been given in advance, he claimed, he transported the cash to the United States packed in cardboard boxes in the back of a Dodge van. He crossed the border at Peace Arch State Park, in Washington State, and was waved through the customs point—the easiest crossing he had ever experienced. At a prearranged spot north of Seattle he switched vehicles with another driver who was waiting for him. He later learned, he said, that the money “got to where it was supposed to be,” which he has always believed was the Republican party.

Silberman had no proof of his story. There is no documentary trail, and he would not reveal who gave him the detailed instructions regarding the border crossing and the cash handover. Paul Laxalt, who later became a U.S. senator and an intimate of President Reagan, responded to a letter from the author in 1999. A spokesman for Laxalt said the former governor “did not recall” having met Silberman and characterized the claim about a cash handover as “absolute fiction.”

Allegations have been made in the past linking Laxalt to organized crime. He played a role in an early effort to deliver a secret cash donation to Nixon from the millionaire Howard Hughes, and within months of the episode alleged by Silberman he made a personal appeal to Nixon for the release of the jailed Teamsters leader Jimmy Hoffa, whom he termed a “political prisoner.”

Silberman's story ended as it had begun, with direct references to Nixon. In late 1973 or early 1974, he said, he was asked to travel to San Clemente to meet with Nixon. The summons came at a time when Nixon's presidency was sliding to disaster in the welter of Watergate revelations and—as the files show—after the phone tips to the FBI about Silberman. The smuggler recalled driving to the “Western White House,” being escorted from the gate, waiting awhile, then seeing Nixon in his study. He remembered the room as having been smallish, with shutters, probably brown, facing the ocean. Nixon, who looked “beat,” told Silberman there was a “problem.” There might be trouble, and Silberman might be questioned. “About what?” Silberman said he asked. “I don't know anything.” It was apparently the right answer, for Nixon thanked him for his services and said “the party” would be grateful.

According to Silberman, he met Nixon one final time, after the fall. In 1976 or 1977 he was asked to attend a small supper gathering at San Clemente. Among the guests, perhaps a dozen of them, was Laxalt. Silberman
and Nixon exchanged only small talk, but Nixon amazed him with his recall of personal details: Silberman's wife's name, how many children he had. At the close of the evening he returned home.

How credible is Silberman's story? The closure of the gold window, a measure that could be taken only under an executive order by the president, is a matter of historical record. The possibility had been rumored for some time, and Nixon took the decision against the advice of some of his top advisers. As treasury undersecretary Paul Volcker had forecast at a meeting with the president, gold speculators seized on the moment “to make a mint.” The price of gold did indeed shoot up as a result.

Silberman urged the author to contact Alfred Selix, the businessman who, he claimed, took him to his first meeting with Nixon. Selix, however, had died, and his widow said she was not aware of any contact he had had with the president. She confirmed, however, that her husband knew Silberman, as did a mutual woman friend of both men.
¹⁵

Nixon was indeed at San Clemente in late 1973 and early 1974, the period referred to by Silberman.
¹⁶
A former senior aide has confirmed that the president's study was laid out as described, brown shutters included, a detail not located by this author in any book.

As for the second alleged visit, another former woman friend of Silberman's recalled—apparently without prior discussion with Silberman—that he had asked her to join him at a social occasion at San Clemente, again during the relevant time frame. She declined because of another commitment, she said, but remembered Silberman describing the evening later and saying Laxalt had been present.

Three witnesses tracked down by the author—the former secretary, a cousin, and another woman friend—recalled Silberman's alluding to contact with Nixon and Rebozo, and a money deal, as early as 1974 and again in the years that followed. If Silberman's account is untrue, he was telling fragments of it in private long ago.

There this particular trail ends, but the story does not stand as an isolated incident.

_____

Just months before the Silberman scam, across the continent in Florida, a wealthy divorcée named Elizabeth Newell, whose family owned a newspaper in Indiana,
¹⁷
moved into a high-rise apartment on Key Biscayne. From the windows of her new abode, with the island laid out before her, she could see Bebe Rebozo's Key Biscayne Bank. “I decided to move my money there,” she recalled in 1998. “With the president of the United States' best friend running it, how could it be anything but safe? What could possibly go wrong?” Newell was, as she put it, “a good Republican.”

As it turned out, much was to go wrong for Newell. A large part of her
capital was to vanish irretrievably, and she would find herself encumbered with information about the president it would have been safer not to know.

At the bank her business was placed in the hands of the vice president in charge of the Trust Department, Franklin DeBoer. He had landed this senior post, he later told investigators, purely on the basis of answering an advertisement in the local newspaper. Rebozo, he said, thought him “the most honest man I have ever met.”

In fact, DeBoer's wife had known Rebozo for twenty years, and he himself had met Rebozo a year before he got the job.
¹⁸
It may not be irrelevant that he was also acquainted with James Crosby, the Rebozo friend who ran the Paradise Island casino, and his principal partner, who had been DeBoer's college roommate. He had first met Crosby, he admitted, “in days gone by when I was on Wall Street.” Both Crosby and his partner had accounts at Key Biscayne Bank.
¹⁹

In New York, less than a year before he had been hired by Rebozo, the Securities and Exchange Commission had barred DeBoer from working as a broker on charges that he had sold unregistered stock and appropriated to himself more than three hundred thousand dollars from a public company.
²⁰
Two years earlier the New York Stock Exchange had expelled him for making false statements and refusing to give testimony. He would eventually be jailed for filing false registration documents in Florida.

Not long after becoming a client at the bank, Elizabeth Newell started seeing DeBoer socially. “He was personable and fairly good-looking,” she recalled ruefully. “I was single, and I assumed he was. We began meeting for dinner two or three times a week. He was kind of a bore, not the romantic type. But when he drank, he became more talkative. He'd talk too much.”

When he became loquacious, DeBoer had startling things to say. “We were at a restaurant in Miami,” Newell remembered. “He was sort of bragging that he would tell me what was going on in the bank. He said, ‘They hired me because what they wanted done; they knew I knew how to do it.' He told me he could tell me what was going on in the bank concerning Nixon, and the illegal funds, the money that was coming in for Nixon. At the beginning it was illegal campaign funds filtered through the Bahamas. Later it was going straight to Nixon's portfolio.”

Newell was frightened by what she heard or, rather, by the potential danger she felt she might be placed in by being privy to it. After her newspaper executive nephew urged her to share the information with some reputable person as soon as possible, she spoke on condition of anonymity with a trusted ABC Television reporter and—later—with Watergate investigators. Her name has remained secret until now, as have her contemporary notes, which she supplied to the author.

Encouraged to keep up the contact, Newell went on seeing DeBoer. He talked of direct phone lines from the bank to the White House, of secret contributions to Nixon: an unnamed sum from Howard Hughes, five hundred
thousand dollars from
Reader's Digest,
three hundred thousand from Pepsi-Cola. She got the impression that the supply of money for Nixon was “endless.”

The coffers were filled with illegal funds, according to DeBoer, by contributors who traveled to Paradise Island and “lost” money at the casino, which would then be brought back to the United States. Those who transported the money, he said, included the casino boss, James Crosby, and Sy Alter, friend of Nixon and Rebozo since 1962.

The Paradise PR man, Ed Woodruff, said it was “his information and belief” that “large sums of money from the casino were transferred to Bebe Rebozo's bank.” The casino's cashier, Richard Stearns, recalled meeting Alter at the bank after hours so that he could exchange twenty-dollar bills for larger denominations.
²¹
All dealings with Alter, Stearns said, took place on Rebozo's personal instructions. Rebozo's guidance on how to handle Alter, DeBoer told investigators, was: “There are lots of things you don't ask questions about. Just let him to do what he wants.” DeBoer categorized Alter as “a bagman.”

At the request of her ABC-TV contact, Newell conducted some of her final conversations with DeBoer with a tape recorder under the coffee table—and a bodyguard close by.
²²
Her efforts to get him to repeat some of his contentions resulted in the following exchange:

With such a salary, DeBoer said, “I don't go out and piss in their face.” Stressing that he was sworn to secrecy, he asked: “When two people I'm directly involved with say this is the policy I wish to have adhered to, what would you do? Go out there and say, ‘Fuck thee, Nixon.' ”

As the pressure of the Watergate investigation mounted on Rebozo, on the bank, and on himself in particular, DeBoer grew nervous and urged Newell to forget everything he had told her. Were she to be questioned, he advised, “Always say you ‘don't recall.' ” Later, confronted privately by investigators with
what Newell quoted him as saying, he would claim it had all been a fabrication. “Don't ask me,” he said, “why I said it.”

“If they find out about it all,” DeBoer had told Newell, “Rebozo will go to jail and Nixon will have to resign.” But, he added, “It's all buried so deep they'll never find it.”

_____

“Burying money deep” usually means caching it in a secret bank account, often abroad, and is by definition beyond discovery by the U.S. tax authorities. “I have no foreign bank accounts, had none, don't have any,” Nixon would tell interviewer David Frost in 1977. “I have no foreign assets at all.” Yet even before he was engulfed in scandal, evidence that he did have assets abroad flickered briefly into view.

It came about as the result of Operation Tradewinds, a twelve-year-long IRS investigation that targeted individuals who hid their money in the Bahamas. The project was spearheaded by Richard Jaffe, a Florida-based agent of the IRS Intelligence Division commended by Robert Kennedy for his work against the Mafia and—as late as 1988—by the future U.S. attorney general, then a Florida state attorney, Janet Reno. For Tradewinds Jaffe set up an intricate information network, one that was to finger mafiosi, drug smugglers, casino developers, Hollywood figures, and crooked bankers.