Matthew J. Connelly, a close associate of U.S. president Harry S. Truman, was serving as Truman’s appointments secretary when he conspired to fix a tax case. Also involved in the conspiracy was T. Lamar Caudle, the head of the Justice Department’s tax division.
After being sworn in as commander in chief following the death of U.S. president Franklin D. Roosevelt, Harry S. Truman, the humble man from Missouri, said, “I felt like the moon, the stars, and all the planets had fallen on me.” However, history has been kind to the unassuming Truman. He has been looked upon favorably for his leadership in such critical matters as World War II, the containment of communism, and the racial integration of the armed forces.
One of Truman’s legacies, to which modern political leaders often make reference, is the aura of complete honesty and integrity that he brought to the White House. This reputation was well earned nationally by his famous
During the 1940’s political world of party bosses, machine politics, and patronage appointments, a conspiracy unfolded within the high reaches of executive power. Though Truman was never directly implicated in the conspiracy, it certainly happened on his watch by those at least somewhat close to him personally.
Irving Sachs owned a sizable shoe manufacturing company in St. Louis, Missouri, called Shu-Stiles, Inc. Sachs was guilty of flagrant tax fraud and was investigated by agents from the Bureau of
Sachs turned to Kansas City lawyer Harry I. Schwimmer to avoid prosecution for this crime. Before resorting to more sinister measures, the attorney tried two defenses. First, he claimed that Sachs had made full disclosure to the government agents. This was false, as Sachs had repeatedly lied to federal representatives. Second, Schwimmer argued that Sachs could not stand the ordeal of being prosecuted for this crime, as he was an epileptic and it would kill him. However, a physician appointed by the courts to look at Sachs concluded that the odds of Sachs dying from a prosecution were sufficiently “remote.”
Now that Schwimmer had exhausted the usual paths to protect his client, he took an ill-advised turn into illegalities. Conspiracies, by their very nature, are secretive affairs. In this instance however, criminal proceedings have shed at least some light on what happened next. Schwimmer was a business associate of Tom L. Evans, who happened to be an old friend of President Truman. Evans also was a friend of the president’s appointments secretary, Matthew J. Connelly. Whether Evans introduced Schwimmer to Connelly, or whether Schwimmer made the connection himself, the Missouri roots of this scandal are apparent.
Schwimmer was paid forty-six thousand dollars by Sachs to assist him in this matter. Though ostensibly the money was for legal fees, during the 1940’s this sum was a gross overpayment for such a service. By late 1949, the Sachs case had made its way from the BIR to the Department of Justice (DOJ). Now, Schwimmer’s goal was to secure letters from both of the government agencies involved that there would be no prosecution of his client.
Connelly, though not formally a high-ranking official, had great informal power within Washington, D.C. As Truman’s confidant and appointments secretary, he served as a gatekeeper to the chief executive. In politics, such face time with the boss is sought by many. Consequently, the bargaining power that Connelly brought to bear on executive department officials was strong indeed.
Connelly first contacted Charles Oliphant, the chief counsel of the BIR. Oliphant would have been in charge of overseeing Sachs’s prosecution from the BIR’s side. Oliphant cooperated with Connelly in thwarting Sachs’s prosecution, as he is thought to have also done in the cases of many large corporations that were able to go through his boss, Secretary of the Treasury John W. Snyder.
With one-half of the deal sealed, the urgency now lay with getting the DOJ’s assistant attorney general for tax cases, T. Lamar Caudle, to conspire as well. This group of Schwimmer, Connelly, Oliphant, and now Caudle spoke many times on the phone together and colluded to protect the heavily connected and well-bankrolled Sachs. In hindsight, the zeal with which they approached their task cannot be explained away simply as working for a bribe. They also were no doubt helping a genuine friend and partner in arms. Their actions also represented the status quo in Washington, D.C., for disputed matters such as this.
Several pieces of evidence provide insight into the conspiracy, and the conpirators’ ultimately short-lived victory in obtaining a DOJ letter promising Sachs a “get-out-of-jail-free card.” First, during the 1940’s, the official phone calls of high-ranking officials were transcribed by federally employed secretaries. These officials were foolish enough to work out a portion of their misdeeds on official phone lines rather than on their private office lines.
Written accounting records from Sachs and Schwimmer also gave prosecuting attorneys evidence for use in the courtroom. Conspiracies are hard to prosecute without such evidence, but in this case that hard evidence was readily at hand. Connelly was the chief beneficiary of the illegal payments, as would not be surprising given his place of power outside the Oval Office. Connelly, at minimum, received an oil royalty worth about thirty-six hundred dollars, cash in the amount of twenty-five hundred dollars, two custom suits, and a top hat. Caudle received a thirty-three hundred dollar oil royalty as well.
The group’s prosecution would wait until Republican president Dwight D. Eisenhower was firmly in power in 1956. At that point there would be no Oval Office shield for the shadow operators. Connelly, Caudle, and Schwimmer would be indicted on twenty-four separate counts, ranging from conspiring to defraud the government to perjury. Sachs pleaded guilty and paid forty-thousand dollars in fines for tax
Connelly, convicted on June 25, also was sentenced to two years in prison, for which he served six months, but only after a four-year delay for appeals. He served his time in 1960 and was pardoned in 1962, “fully and unconditionally,” by Democratic president John F.
This criminal tax-evasion case in many ways pales in comparison to later White House scandals. Ordeals such as the 1972 Watergate
The Connelly scandal was, however, considered a serious one during the 1950’s. Truman-era scandals were used as campaign
Similarly, the BIR had been run by political appointees who were chosen for their loyalties rather than for their knowledge of tax code. In turn, these high-level appointees chose their own lower level political appointees. This type of intimate system was begging for an incident like that involving Connelly. In the end, Truman remained loyal to Connelly but fired Caudle for this case as well as other misdeeds.
The Connelly tax scandal serves as an example of what can happen if power is left unchecked. Since the time of Truman, so-called sunshine disclosure laws have been passed, and the federal bureaucracy has become increasingly complex and professionalized. In sum, fixing a tax case is no longer like fixing a traffic ticket.
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Abels, Jules. The Truman Scandals. Chicago: Henry Regnery, 1956. Polemical books aimed at top government officials are not new. This 1950’s example of muckraking journalism squares off against Truman. -
Kuttner, Bob. “The Taxing Trials of the I.R.S.” The New York Times, January 6, 1974. This news article provides a solid picture of IRS (BRI) lawsuits from the second half of the twentieth century. -
McCullough, David. Truman. New York: Simon & Schuster, 1992. As a work of literature, this tome redefined the well-written presidential biography. Concerning Truman, it demonstrates the power old friends had over him as he rose in power. -
Roberts, Robert North. Ethics in U.S. Government: An Encyclopedia of Investigations, Scandals, Reforms, and Legislation. Westport, Conn.: Greenwood Press, 2001. A comprehensive encyclopedia documenting American political scandals, ethical controversies, and investigations from 1775 to 2000. -
Wise, David. “Why the President’s Men Stumble.” The New York Times, July 18, 1982. A well-written article on presidential-staff scandals from the time of Franklin D. Roosevelt through Ronald Reagan.
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