A summary of the Teapot Dome scandal from the Brookings Institution; with several quotes from the congressional inquiry, this provides a good background on the case in a fairly readable fashion.

 

 

One Lesson From History: Appointment of Special Counsel and the Investigation of the Teapot Dome Scandal

by Leslie E. Bennett
Intern for the Independent Counsel Statute Project

Table of Contents

I. The Trail is Uncovered
   A. The Leases
   B. Disclosure

II. The Trail Widens: Congress Investigates the Teapot Dome Lease
   A. A Call For Special Counsel
   B. Appointment of Pomerene and Roberts
   C. Loss of Confidence in the Justice Department

III. The Special Counsel Follow the Trail
   A. The Cases

Civil Litigation
U.S. v. Pan American Petroleum
U.S. v. Mammoth Oil Company

Criminal Prosecutions
U.S. v. Sinclair
U.S. v. Doheny, Doheny, and Fall
U.S. v. Fall and Sinclair
U.S. v. Sinclair
U.S. v. Fall
U.S. v. Doheny and Doheny

   B. Roberts Seeks to Resign
   C. Special Counsel Face Financial Difficulties

IV. The Trail Ends
 

PRESIDENTIAL APPOINTMENT OF SPECIAL COUNSEL:
THE TEAPOT DOME MODEL

     If Congress considers alternatives to a system of temporary, court appointed independent counsel, history provides an important model--the investigation and prosecution of the Teapot Dome scandal. In 1924, President Coolidge nominated two special counsel, one a Republican and one a Democrat, to investigate and pursue the civil and criminal cases arising from allegations that members of President Harding's cabinet had corruptly leased naval oil reserves to private oil firms. His appointees, Democrat Atlee Pomerene and Republican Owen Roberts, were confirmed by the Senate.

     Deep concerns over the integrity of then Attorney General Harry Daugherty mobilized Congress and the President to look outside the Department of Justice for counsel who could be trusted to vigorously pursue the case. Once such counsel were appointed, Congress continued to play a critical role, aggressively pursuing the facts through a Senate committee and working cooperatively with special counsel to further their efforts. The President, for his part, offered counsel his assistance but then withdrew to permit them the necessary independence to pursue the wrongdoers. The investigation was fraught with difficulty and high drama, consuming more than six years and culminating in significant victories in civil litigation and a mixed bag of results in the criminal prosecutions. Special counsel suffered intermittent shortages of funds and for one of them, frustration with the impact of the job on his ability to maintain his law practice.

     Those difficulties notwithstanding, history has largely judged the Teapot Dome investigation a success. The tale of corruption was told, the fraudulent leases were set aside and the oil leases returned to the government, and at least some of the perpetrators were successfully prosecuted. Consequently, when allegations of high-level wrongdoing in the government again arose, Teapot Dome has served as a call to action. See, e.g., Watergate: Clean-Up Precedent, Chr. Sci. Monitor, reprinted in 119 Cong. Rec. 13721 (1973) (Watergate); Byron York, How Congress Can Break Through the Reno Stonewall, Wall St. J., Dec. 16, 1997, at A18 (Campaign finance).

     Should the Teapot Dome model of presidentially appointed and Senate confirmed prosecutors be considered for any future investigation that has significant political implications?


--Elaine W. Stone

I. The Trail is Uncovered
[TABLE OF CONTENTS]

     It started with rumors that members of the Harding Administration had leased a rich naval oil reserve in Wyoming to private interests in return for bribes. It resulted in numerous investigations, the resignation of several cabinet members and civil and criminal prosecutions spanning more than six years. Teapot Dome became the nomenclature for what North Dakota Senator Gerald Nye called "the slimiest of slimy trails beaten by privilege." S. Rep. No. 70-1326, Part 2, at 3 (1928). Seventy-five years later, it remains an important chapter in the ongoing debate over how best to investigate and prosecute alleged criminal activity by high-level government officials. (1)

     A. The Leases
      [TABLE OF CONTENTS]

     The naval oil reserves were three oil-rich tracts of land set aside by the Taft Administration to provide naval ships with fuel in case of a national emergency. Congress gave the Secretary of the Navy control over the reserves through the naval appropriation bill approved on June 4, 1920. It provided that the Secretary of the Navy would have the power "to conserve, develop, use and operate the same in his discretion, directly or by contract, lease, or otherwise, and to use, store, exchange, or sell the oil and gas products thereof, and those from all royalty oil from lands in the naval reserves, for the benefit of the United States." 41 Stat. chap. 228 (1920).

     The reserves consisted of three pieces of property: Naval Reserve Number One, in Elk Hills, California; Naval Reserve Number Two, in Buena Vista, California; and Naval Reserve Number Three, in Salt Creek, Wyoming, better known as Teapot Dome because of the shape of a formation on the land.

     The protection of the naval reserves was short-lived, however, as private interests found a receptive ear in members of the Harding administration. Soon after Albert B. Fall was appointed Secretary of the Interior, he sought to have jurisdiction over the naval reserve lands transferred to the Department of the Interior. Fall convinced Secretary of the Navy Edwin Denby that he should support transferring authority to Fall because he had more experience with such matters. President Harding agreed and with the signing of Executive Order 3474, authority over the lands shifted from the Secretary of the Navy to Secretary of the Interior. Executive Order No. 3474. (2)

     Critics were skeptical that Fall would adequately protect the resource, since his record favoring commercial development was well known from his participation on the Senate Public Lands and Surveys Committee. That skepticism was well founded.

     The first of the oil reserves surrendered to private interests were in California. Edward L. Doheny was an "old prospecting pal" of Fall's and the owner of the Pan-American Petroleum and Transport Company. During 1921 Fall and Doheny began making preliminary arrangements for a lease of part of the Navy's oil reserves.

     In November of that year, Doheny made what he and Fall would later characterize as a loan to Fall. Doheny had his son draw $100,000 in cash from the son's account, wrap the bills up in paper, put them in a little black bag and bring the bag to Fall in Fall's apartment. In later testimony some thought implausible, Doheny claimed that he had received a note from Fall for the money, eventually producing a note whose signature had been torn off. Busch, Enemies of the State at 112-13.

     During 1922, Doheny's company leased portions of California Naval Reserve Number One (Elk Hills) and Number Two (Buena Vista). Doheny was obliged to build storage tanks at Pearl Harbor, fill them with oil, erect a refinery in California and build a pipe line from the naval reserves to the refinery. In return, Doheny received exclusive rights to exploit about 30,000 acres of proven oil lands, with a profit estimated by him at one hundred million dollars. Two other companies had expressed interest but had insisted that Congress approve the proposed contract before it was executed, a condition rejected by Fall and Navy officers. Werner and Starr, Teapot Dome, at 42, 54-57, 84-86.

     During the same period, Fall was secretly negotiating away Wyoming's Teapot Dome, believed to be the richest of the remaining oil reserves. See 62 Cong. Rec. 6042 (1922). Harry F. Sinclair was head of the Mammoth Oil Company. In December, 1921, Fall entertained Sinclair, his attorney, Colonel J.W. Zevely, their wives, and several others at his ranch at Three Rivers, New Mexico: "[i]n the evenings, Sinclair and Zevely sat before Fall's ranch-house fire and discussed a lease to Sinclair of the entire naval reserve at Teapot Dome." Werner and Starr, Teapot Dome at 56. They also discussed Fall's cattle needs. After Sinclair returned home, Fall received six heifers, a yearling bull, two six-months-old boars, four sows and for his foreman, an English thoroughbred horse. Id. at 57.

     On February 3, 1922, Sinclair, Fall, Admiral John Robison (Chief of the Navy's Bureau of Engineering and at one time in charge of the administration of the Naval Petroleum Reserves), and others met in Fall's office to outline the terms of an agreement. Teapot Dome would be leased in its entirety, Sinclair would build a pipe line with adequate capacity from the Teapot Dome oil fields, and the proceeds from the Navy's share of oil from the reserve were to be used by Sinclair to build storage tanks on the Atlantic coast and fill them with fuel oil. Under their arrangement, the Navy would not receive any cash, as cash would have to be turned over to the United States Treasury and the Navy could then only benefit in the ordinary way, through congressional appropriations. Id. at 59.

     During these discussions, the participants considered whether they should obtain an opinion from Attorney General Daugherty on the legality of the exchange, but Fall rejected the idea:

[W]hen questioned later about his failure . . . [to ask Daugherty for a legal opinion] he said that he himself had been a lawyer for many years and neither needed nor wanted outside legal opinions. In this way, Fall protected himself from cutting Daugherty in on his profit and Daugherty was glad to be able to say later, when he was in trouble for shady deals of his own, that at least he had had nothing to do with Teapot Dome.

Id. at 60-61. Fall, (Secretary of the Navy) Denby and Sinclair secretly signed a lease for the entire tract on April 7, 1922, and Fall locked it in his desk drawer.

     One month later (after a Senate inquiry into the leases had already begun), Fall sent his son-in-law, M.T. Everhart, to see Sinclair in Sinclair's private railroad car. Sinclair gave Everhart $198,000 in Liberty Bonds. Shortly thereafter, Sinclair gave Everhart another $35,000 worth of the same issue of bonds. Everhart in turn gave Sinclair a check for $1100, to pay for the livestock shipped from Sinclair's farm to Fall (presumably because congressmen were now asking questions about those gifts), and then advised Sinclair that Fall would like a loan. Sinclair obliged with $36,000 in cash. Id. at 69-70.

     As one historian wrote: "By the time he was finished leasing the navy's reserves, Fall had given his two benefactors reserves which each of them estimated roughly to be worth $100,000,000, and he had collected from them $409,000 in cash and bonds." Id. at 86. With respect to Teapot Dome, an oil man would later testify that it was so valuable that the government could have easily gotten "a bonus of at least $10,000,000, and possibly as much as $50,000,000, over and above the royalties Sinclair was obligated to pay, if the lease had been awarded after competitive bidding instead of in the privacy of Fall's ranch house." Id. at 79.

B. Disclosure
      [TABLE OF CONTENTS]

     Despite Fall's efforts to keep the Teapot Dome lease secret, the news began to spread: "[s]ome men in New Mexico became suspicious when they noticed Fall buying more land and improving his property there, and oil men in Wyoming and Colorado began to wire their Congressmen in protest and for information." Werner and Starr, Teapot Dome at 64. On April 14, 1922, the front page of the Wall Street Journal reported that Fall had leased Teapot Dome to Sinclair. Noggle, Teapot Dome: Oil and Politics in the 1920's, at 36.

     On April 15, 1922 the Senate passed Resolution 277, requesting the Secretary of the Navy and the Secretary of the Interior to inform the Senate whether negotiations were in fact pending to lease naval oil reserves and if so, the parties involved, the terms and conditions of any such proposed agreements and "whether opportunity will be given the public for competitive bidding for the operation of these lands . . . ." See Senate Resolution 277(3) and S. Res. 277, 67th Cong. (1922) (enacted).

     Responding to Senate Resolution 277, the first defenders of the lease were Denby and since Fall was out of town, Acting Secretary of the Interior Edward Finney. Denby and Finney provided the Senate with a copy of the lease. See S. Doc. No. 67-196 (1922). They rationalized in a letter to the Senate that the lease had been executed in the public interest because crude oil in the reserves was unsuitable as fuel for naval ships so it was necessary to exchange it for fuel oil and provide for the construction of storage tanks to minimize evaporation. S. Doc. No. 67-191, at 1 (1922).

     They also argued that drilling was necessary because millions of barrels of oil had already been lost from the California reserves due to drilling from adjacent lands and that Teapot Dome faced a similar fate. Id. at 1-2. Finally, they asserted that the lease did not contradict the administration's policies as "[t]he Interior Department and the Navy Department have been in close cooperation and have been endeavoring, as they saw it, to carry out the purposes for which these naval reserves were created, i.e., not the sale of oil for commercial or other purposes but the securing of a reserve of fuel oil for Navy purposes." Id. at 3.

     After the Senate received a copy of the lease, it unanimously passed Senate Resolution 282 on April 29, 1922, providing for the Committee of Public Lands and Surveys to conduct an investigation. Senate Resolution 282 (draft version)(4) and S. Res. 282, 67th Cong. (1922) (enacted). Senator Miles Poindexter, a Republican from Washington, defined the two issues needing resolution:

In the first place, was it necessary for the Government to sink wells or to have wells sunk upon its reserve in order to meet an attack upon the oil underneath its own property by which it was being drained? In the second place, are the means which have been adopted by the Government for doing that the proper ones, the best ones, to the greatest advantage of the Government, which could be obtained?

62 Cong. Rec. 6048 (1922).

     In response to Senate Resolution 282, Harding sent a presidential message to the Senate, asserting that "the policy which has been adopted by the Secretary of the Navy and the Secretary of the Interior in dealing with these matters was submitted to me prior to the adoption thereof, and the policy decided upon and the subsequent acts have at all times had my entire approval." S. Doc. No. 67-210, 67th Cong., 2d Sess., at III (1922). The message included a report from Fall, but Harding made clear that Fall's explanation "[was] not to be construed as a defense of either specific acts or the general policies followed in dealing with the problems incident to the handling of the naval reserves." Id. at 3.

     Fall too declared that the report was not "written in the slightest degree as an attempt at defense of actions or of policies" since "[t]he writer recognizes no necessity for such defense." Id. at 26. Closely following the President's message, Fall, in a letter to the Senate, again insisted that he was in compliance with President Harding's Executive Order of May 31, 1921, giving him permission to administer the naval reserves for the Secretary of the Navy and thus, the lease was proper. H.R. Rep. No. 67-1079, at 9 (1922). Fall also insisted that he had discussed the Teapot Dome lease with Denby. In his words, "[t]he Secretary of the Interior has proceeded under this order in constant communication and consultation and cooperation with the Secretary of the Navy, and is so continuing at the present time." Id.

     In the face of continuing reports that Fall's personal fortunes had mysteriously improved, these assurances were not enough to quell growing suspicion of wrongdoing. Members of the oil industry expressed their outrage to Wisconsin Republican Senator Robert La Follette, who presented their point by point letter of protest on the Senate floor on May 13, 1922:

    First. Against the policy of the Secretary of the Interior and the Secretary of the Navy in opening the naval reserves at this time for exploitation.

    Second. Against the method of leasing public lands without competitive bidding, as exemplified in the recent contract entered into between Secretary Fall of the Interior and Secretary Denby of the Navy and the Standard Oil-Sinclair-Doheny interest.

    Third. Against the policy of any department of the Government of the United States entering into a contract of any character whatsoever, whether competitive or not, which would tend to continue or perpetuate a monopolistic control of the oil industry of the United States or create a monopoly on the sale of fuel oil or refined oil to the Navy or any other department of the Government.

    For the following reasons:

    There exists no emergency or necessity which would warrant the opening of the naval reserves at this time for exploitation in order that the Navy might be supplied with the various grades of oil required by it, there being already above ground and in storage in the United States the greatest amount of oil that has been in storage in the history of all times.

    The prices of fuel oil at the seaboard are lower than they have been in years, and there is an abundant supply.

    The oil industry of the United States is just now convalescing from the greatest depression it has ever suffered, the daily production now being the largest in its history, and therefore, the turning over of Government lands to the large pipe-line interests for exploitation will have the direct result of depressing the price of crude oil without in any way relieving the people of the onerous and burdensome high prices of refined products.

62 Cong. Rec. 6893 (1922).

     News of the scandal was not only gaining the attention of Congress and the press, but also weighed heavily on the mind of President Harding, who commented while traveling across the country: "I have no trouble with my enemies, I can take care of them. It is my . . . friends that are giving me trouble." Noggle, supra at 56. Harding died suddenly on August 2, 1922 while he was in San Francisco. Calvin Coolidge assumed the presidency the next day.

II. The Trail Widens: Congress Investigates
the Teapot Dome Lease

[TABLE OF CONTENTS]

     Hearings on the Teapot Dome oil lease began on October 15, 1923 before the Senate Committee on Public Lands and Surveys. Only three members were in attendance at the first meeting. Since they lacked a quorum, the meeting was adjourned until the following week. Senate Public Lands and Surveys Committee, 67th Congress 3rd Session - 68th Congress, 1st Session: Minutes (October 15, 1923 and October 22, 1923).(5) That would be the first and only time the Senate Committee on Public Lands and Surveys adjourned for want of a quorum during these Teapot Dome hearings.

     As the steady stream of witnesses appeared before the committee, starting on October 23, 1923 and continuing through May 14, 1924, each name was penned in a small green notebook now housed at the National Archives. Id. (October 23-25, 1923). Senator Thomas Walsh, a Democrat from Montana, led the committee's investigation. The committee's first witness was former Secretary of the Interior Fall, who had resigned from his post effective March 4, 1923. Id. (October 23, 1923). Fall was followed on the witness stand by Secretary of the Navy Denby. Id. (October 25, 1923).

     Over the next few months, dozens of witnesses testified before the committee. As the weeks passed, however, the investigation appeared to lose momentum and was largely forgotten by the public. That changed in January 1924, when a tortured account of Fall's finances began to emerge. On January 24, 1924, Edward Doheny conceded in a statement that he read to the Senate committee that he had lent Fall $100,000, and Doheny's son had carried the cash to Fall. Walsh's next step was to call for appointment of special counsel.

A.  A Call for Special Counsel
      [TABLE OF CONTENTS]

     At an executive session of the Public Lands Committee on January 26, 1924, a Saturday, Walsh proposed that he introduce on Monday a Senate Resolution calling on President Coolidge to annul the leases of Teapot Dome and Elk Hills and to appoint a special counsel to investigate and prosecute those involved. The Committee unanimously agreed. Before Walsh could present the resolution to the full Senate, however, Coolidge beat him to the punch. Coolidge issued a statement at midnight that appeared in the newspaper the next day, on Sunday, announcing his intention to nominate two special counsel:

    It is not for the President to determine criminal guilt or render judgment in civil causes. That is the function of the courts. It is not for him to prejudge. I shall do neither; but when facts are revealed to me that require action for the purpose of insuring the enforcement of either civil or criminal liability, such action will be taken. That is the province of the Executive.

    Acting under my direction the Department of Justice has been observing the course of the evidence which has been revealed at the hearings conducted by the senatorial committee investigating certain oil leases made on naval reserves, which I believe warrants action for the purpose of enforcing the law and protecting the rights of the public. This is confirmed by reports made to me from the committee. If there has been any crime, it must be prosecuted. If there has been any property of the United States illegally transferred or leased, it must be recovered.

    I feel the public is entitled to know that in the conduct of such action no one is shielded for any party, political or other reason. As I understand, men are involved who belong to both political parties, and having been advised by the Department of Justice that it is in accord with the former precedents, I propose to employ special counsel of high rank drawn from both political parties to bring such action for the enforcement of the law. Counsel will be instructed to prosecute these cases in the courts so that if there is any guilt it will be punished; if there is civil liability it will be enforced; if there is any fraud it will be revealed; and if there are any contracts which are illegal they will be canceled.

65 Cong. Rec. 1520 (1924) (as reported by The New York Herald, January 27, 1924).

     At the last minute, Attorney General Harry Daugherty, who had theretofore demonstrated little interest in the matter, positioned himself as supportive of the appointments. Daugherty's 11:25 p.m. telegram to Coolidge read:

May I again urge the desirability you immediately appoint two outstanding lawyers who as such shall at once take up all phases of the oil leases under investigation of the Senate or others and advise you as to the facts and law justifying legal proceedings of any kind. As you know, I do not desire to evade any responsibility in this or other matters; but considering that Mr. Fall and I served in the Cabinet together, this would be fair to you, to Mr. Fall, and the American people, as well as to the Attorney General, the Department of Justice, and my associates and assistants therein. I do not desire to be consulted as to whom you shall appoint. The only suggestion I have to make in that regard is that those appointed shall be lawyers whom the public will at once recognize as worthy of confidence and who will command the respect of the people by not practicing politics or permitting others to do so in connection with this important public business. Their work can be done with or without the cooperation of the Department of Justice or anybody connected therewith as you and they may desire. The Department of Justice is at all times in this or any other matters at your service and at the service of your appointees in this connection.

65 Cong. Rec. at 1537-1538.

     The Washington Post on Monday ran a statement by Senator Walsh, recounting his intention to present a resolution to the Senate "authorizing and directing the President to institute suit to annul the leases and to employ special counsel who should have charge of the litigation." 65 Cong. Rec. at 1520. Walsh, skeptical of the coincidence that the committee would unanimously call for the appointment of special counsel and the same day the President would announce the same desire, related his belief that his plan was leaked to Coolidge. "It was agreed that the action of the committee should be regarded as confidential. But in the view of the statement from the White House, to which so obviously the information was conveyed, I give you this statement." Id.

     In the Senate on Monday, offense was taken at Coolidge's observation that special counsel from each party was needed because members of both parties were involved. Representative Hatton Sumners, a Texas Democrat, protested:

This reservation of the American Nation against the day of its need was surrendered by a Republican Secretary of the Navy; it was bartered away by a Republican Secretary of the Interior. The transfer and the lease were approved by a Republican Cabinet. I do not prejudge. But why try to dodge responsibility and talk about parties? There happens to be but one party involved and some dastardly thieves who ought to be in the penitentiary. But, gentlemen, it does not make any difference whether it were the Republican or Democratic Party. It is the business of the party in power to face the American Nation, stand responsible for the conduct of its administration, and to give the people of this Nation a prosecution in this case that will restore the confidence of the people not in the party in power merely, or any party, but in their Government, in the integrity of their public officials.

65 Cong. Rec. at 1582. Tennessee Representative Finis Garrett, a Democrat, said "we upon this side of the aisle are not objecting to the employment of special counsel" but he vehemently objected to what he saw as the President's politicization of the scandal:

[W]hy did the President of the United States, the President of the whole people, for the first time, so far as I know anywhere, any place, that this matter has been considered or discussed, suggest the idea of political parties in connection therewith. You know, of course, that it was an effort to try to stem the tide of suspicion running against so large a part of this administration.

Id.

     The idea of appointing two special counsel was well received by Congress, in part because there were serious doubts as to whether the Department of Justice and Attorney General Daugherty should conduct the investigation.

     Senator William King, a Utah Democrat, was among those who questioned whether "the President long before had decided that he had no confidence in the Attorney General or in any of the officials of the Department of Justice, and therefore, he felt that somebody outside of the department ought to be selected?" 65 Cong. Rec. at 1537. Representative Garrett suggested that the President was not the only one who had lost confidence in the Department of Justice:

[I]n view of the fact that we can not confide in the Department of Justice, in view of the fact that the public can not confide in the Department of Justice, in view of the fact that the President can not confide in his own Department of Justice, we feel that the time has come to give him special counsel.

65 Cong. Rec. at 1582.

     Accordingly, the Senate unanimously passed Joint Resolution 54 on January 31, 1924, stating that the leases to the Mammoth Oil Company and the Pan American Petroleum Company "were executed under circumstances indicating fraud and corruption" and "were entered into without authority" and "in violation of the laws of Congress." 65 Cong. Rec. 1728-1729 (1924). It directed the President to institute suit to cancel the leases "and to prosecute such other actions or proceedings, civil and criminal, as may be warranted by the facts in relation to the making of said leases and contract." Id. at 1729. The President was authorized "to appoint, by and with the consent of the Senate, special counsel who shall have charge and control of the prosecution of such litigation, anything in the statutes touching the powers of the Attorney General of the Department of Justice to the contrary notwithstanding." Id. The joint resolution authorizing special counsel was signed into law on February 8, 1924. 43 Stat. chap. 16 (1924). The funding mechanism, a joint resolution for $100,000 to cover the special counsel's expenses, was approved by the President on February 27, 1924. 43 Stat. chap. 42 (1924).

B. The Appointment of Atlee Pomerene and Owen Roberts
      [TABLE OF CONTENTS]

     The Senate was acutely aware that public attention had focused on the scandal and that the best legal talent was needed to prosecute the case. Washington's Senator Clarence Dill, a Democrat, spoke:

They think a great national scandal has been unearthed. The case demands the biggest men that the country has in its legal profession.
. . . May I pause for a moment to remind Senators of the kind of a case that is. It is a big case. Nobody knows the exact value of the properties involved. It is estimated at probably a billion dollars. Mr. Doheny, Mr. Sinclair, and Mr. Fall will have the best attorneys their millions can employ. The United States Government needs the biggest and best prosecutors that can be had to meet those attorneys in the courtroom and carry the criminal prosecution to conviction.

65 Cong. Rec. 2548 (1924).

     The President's first two nominees, Republican Silas Strawn and Democrat Thomas Gregory, both had connections with the oil industry. Their nominations were withdrawn when it became clear that the Senate would not approve their appointment.

     Pennsylvania's Republican Senator, George Pepper, thought a Republican attorney from Philadelphia, Owen Roberts, would make an excellent candidate, and he suggested Roberts' name to Coolidge. Pepper then summoned Roberts to Washington. Before meeting Coolidge, Pepper asked Roberts if he would be interested in "a very delicate piece of business—one which might make him a national figure, and one which might ruin him because he would be stepping on the toes of some mighty big people." Werner and Starr, Teapot Dome at 153.

     Roberts responded "that he had never been overly impressed by some mighty big people and asked what his friend had in mind." Id. Pepper revealed that "he had recommended him to President Coolidge as one of the two special counsels to try the oil cases and that they had an appointment with the President for that afternoon at 2:30." Id. An historian described the meeting among Coolidge, Roberts and Pepper this way:

After Roberts and Senator Pepper entered the President's office, Coolidge waited until they were seated and then said, "I understand you're a farmer, Mr. Roberts." He got up from his desk and pointed out a picture of his own farm in Vermont. Roberts, who operated a farm at Valley Forge, Pennsylvania, in which he took some pride, said "Guernseys are my money crop, and I've never shown a loss."

    Coolidge considered this statement gravely for a moment and then abruptly launched into the reason for the visit. He asked Roberts what he knew about public-land laws.

    "Nothing whatever," Roberts replied. Senator Pepper tried to explain away this frankness. The President turned to him and said, "When I want an interpreter, I'll call on you." Roberts then went on to say that he had been a professor of the law of property at the University of Pennsylvania Law School for some years, and that he did not think that he would have much difficulty studying the public-land laws.

    The President walked over to the window and stood gazing for a while out at the White House lawn. There was a rather long silence. "Pepper," the President finally said, "I can see no reason why I should not appoint this man." Then he turned to Roberts and said, "If you are confirmed, there is one thing you must bear in mind. You will be working for the government of the United states—not for the Republican Party, and not for me. Let this fact guide you, no matter what ugly matters come to light. You may call on me for whatever assistance you may need. Don't hesitate to ask."

Id. at 153-54.

     Even though Roberts thus had Coolidge's seal of approval, he needed Senate confirmation. Pepper highly recommended Roberts on the floor of the Senate:

    For 25 years he has been engaged in the active practice of his profession at a bar which is not without men of ability. He has emerged from the struggles of the forum with a character unimpaired, a reputation unsmirched. He has stood the fire test of professional life. He is recognized by his entire community as a gentleman of integrity and honor.

    Senators, the man is in the prime of life. He is 49 years of age and a tower of physical strength. He is a ceaseless and tireless worker. When he is not in court he will be found in his office early and late. He has recognized that the law is a jealous mistress and has given but little time to activities outside the scope of his profession.

    . . . He began his experiences in active practice as an assistant district attorney in Philadelphia and for several years prosecuted with effect criminals at the bar of the courts. In the meantime he was building up a civil practice which has attained proportions second to none in our community. He has been in court continuously for 20 years. Day after day, week after week, term after term, he has tried all kinds of cases and has acquired equal facility in the trial of all of them. He is an admirable jury lawyer. He has the courage, the thoroughness of preparation, the resourcefulness, and the personality necessary for success in that difficult branch of professional work. And he has attained it.

65 Cong. Rec. 2637-2638 (1924).

     Coolidge paired Roberts with former Senator Atlee Pomerene, an Ohio Democrat. Pomerene was highly recommended by the man who had taken his seat in the Senate in 1922, Republican Simeon Fess:

    I simply desire to say this much about the man with whom I had a contest in Ohio. I have known him for many years professionally; I have known him politically, not much socially; but I know Atlee Pomerene as a man of unusual ability as a lawyer, which must have been clearly manifested in the remarkable manner in which he conducted the many investigations that were conducted by order of the Senate. I knew him as a witness once in one of the investigations. I recognized that no person who knows ability would question his ability and power as a cross-examiner. As a lawyer it would appear to me that he would fill the position and meet the requirements contemplated by the pending investigation.

    I knew him very well politically. I do not believe that there is a more upstanding, honorable, and courageous man in either party in my State than Senator Atlee Pomerene.

    . . . As a man of courage, I know no superior. As a man of probity, there certainly can be no question about him. With my knowledge of this former opponent of mine, I am free to say that I stated to the authorities here that it appeared to me that Mr. Pomerene would be a very good representative of one of the political parties to carry on the investigation. I have never known his Democracy to be questioned, and certainly I did not think it was questioned when I was in a contest with him two years ago.

65 Cong. Rec. at 2553.

     However, some in the Senate, like Washington Democratic Senator Clarence Dill, believed the two nominees fell short of the mark:

[I]n the appointment of Mr. Pomerene the President has chosen a man who has had no experience at all in public land law, a man who has had no practice in equity cases in the Federal courts, with the exception of one case, since he left the Senate. And this is the attorney who is to have charge of the prosecution of these cases as the attorney in chief.

    Mr. Roberts, the other man suggested, so far as I can learn, is a reputable trial lawyer at the bar in Philadelphia, but he, too, knows nothing about public land law. He, too, has no national reputation. He is a stranger to the public mind. Thus the Senate is asked to confirm the nomination of two attorneys neither of whom has ever made a national reputation as lawyers, neither of whom is fitted to handle the cases as compared with the men whom they must necessarily oppose.

Id. at 2548. Dill stressed the importance of the Senate's role:

I recognize fully, I hope, that ordinarily the power of confirmation in the Senate is more or less a perfunctory power in most cases and seldom goes further than the consideration of the reputation and general ability and character of a man. The ordinary appointee of the President is selected to carry out his particular policies as his agent, and, as such, is purely an administrative officer; but in this case there is a vast difference. The attorneys in this case will not be the representatives of the President to carry out his administrative policy. These attorneys are not to act under the Attorney General; these attorneys are to represent not merely the President, but all the Senate and the American people.

Id. Senator David Walsh, a Democrat from Massachusetts, and Dill continued:

Mr. Walsh: I suppose the Senator will agree with me that these attorneys will become more or less the agents of the Chief Executive, that they will be in touch with him, and have to make reports to him from time to time; that their industry and their enthusiasm will be measured somewhat by his interest and enthusiasm in the successful prosecution of these cases. I suppose the Senator will agree with that. I ask this question, has the Senator, as a member of the committee, or has any other member of the committee, any reason to believe that for the sake of politics or for the sake of covering up the facts there is any disposition on the part of the Chief Executive or the executive branch of this Government not to prosecute these oil-scandal cases with enthusiasm and with zeal and with vigor to a successful completion?

Mr. Dill: Mr. President I do not want to go into the motives of the President of the United States. There may be justification for the suggestion of the Senator—

Mr. Walsh: I do not mean to make any suggestion. I have heard it suggested that the committee have received no cooperation whatever from the executive department—

Mr. Dill: Certainly not—

Mr. Walsh I want to know if the Senator is convinced, the resolution having been passed, the people of this country may reasonably expect that the executive departments, all of them, are going to get behind this prosecution and manifest an interest in the successful prosecution of these cases?

Mr. Dill: I can only say to the Senator that I hope the President is anxious and enthusiastic to prosecute these cases. There is a phase of that question which does require consideration for a moment, and that is that when the President picks men who are ordinary lawyers, considered from a national standpoint, and who have corporate connections of which the people are suspicious, there is a probability that the public will believe that the cases are not being prosecuted with the vigor with which they should be prosecuted, with which the Senate desires to have them prosecuted. The danger is that the people will think, because the President selects as attorneys men who are not the great outstanding members of the profession, that he is not desirous of having these cases prosecuted to their fullest success, and if the Senate permits this confirmation to go through the Senate must share the responsibility. As one Senator, I refuse to have any part in the responsibility. Such a selection will arouse suspicion in the public mind, and if the cases fail, as they may fail, it will cause a revulsion of feeling in this country that will endanger the very Government itself.

    I want to say, Mr. President, that with the state of the public mind as it is to-day, this is no time to do things which encourage public suspicion. The American people everywhere are doubtful about the men here in Washington unearthing all the facts. They are questioning the sincerity of many of us and the selection of counsel who do not command public confidence when the counsel are so extremely important as they are in this case will but add to the public suspicion, already too great.

Id. at 2551-2552.

     Nonetheless, Pomerene was approved by a vote of 59 to 13 on February 16, 1924. Two days later, Roberts was approved by a vote of 68 to 8. That same day, Secretary of the Navy Edwin Denby sent his resignation to Coolidge.

     One account states:

    Offices were assigned to the special counsel in the Transportation Building at 17th and H Streets. On their first day of work, Roberts and Pomerene had an interview with Coolidge. Roberts reported to the President on his interview with Walsh and the senator's warning about the uselessness of the Department of Justice under the circumstances [see following section]. Coolidge listened to this account in silence and then decided that the only solution was to turn over to special counsel Treasury Department Secret Service men, who had a long tradition of quiet effectiveness and were known to be incorruptible. As they were leaving, the President reiterated his invitation to call upon him whenever help was needed, and he added that he had no doubt that they would need it. "And stop by the way," Coolidge said to Roberts with a faint smile, "stop back sometime and tell me more about those Guernseys."

Werner and Starr, Teapot Dome at 160.

     Within a month of the Senate's approval of Roberts and Pomerene as special counsel, the two sought indictments against Fall, Doheny, and Sinclair.

C. Loss of Confidence in the Justice Department
      [TABLE OF CONTENTS]

     Shortly after his confirmation as special counsel, Roberts met with Senator Walsh who gave him this advice about Attorney General Daugherty:

I wouldn't depend on the Justice Department for investigative purposes, nor would I approach the Attorney General's office for information if I were you. . .. It is my conviction that the man would go to any lengths to protect himself and his friends—and make no mistake about it, the people we are after are friends of the Attorney General. Harry Daugherty has had a hand in every dirty piece of business which has come out of the Harding administration. There is every reason to believe that, at the very least, Daugherty is one of the men who knows the whole sordid story of the oil leases—and there is enough evidence to warrant the suspicion that he himself might have profited from them. In addition, the Department of Justice and its Bureau of Investigation are hand-picked by Daugherty and rotten to the core.

Werner & Starr, supra at 159.

     The Senate immediately moved to address the acute loss of confidence in the Department of Justice that had necessitated the appointment of special counsel. Amid calls for Daugherty's resignation, Montana Senator Burton Wheeler, a Democrat, introduced Senate Resolution 157, providing for an investigation of the Department. Wheeler articulated the reasons for investigating Daugherty and the Department of Justice on the Senate floor:

    Ever since the Attorney General has occupied the important position which he now holds various charges have been made against him in the newspapers and by individuals from one end of the country to the other. Recently when the oil scandal first developed it appears that the Attorney General's name was mixed in it. It appeared, if you please, that he was the friend of Ned McLean. Everybody knows that he was the friend of Sinclair. Everybody knows that he was the friend of Doheny. Everybody knows that those three men met in the apartment of the Attorney General from time to time . . . .

    The newspapers in New York carried the details of how the Attorney General's former partner and friend, Mr. Felder, was collecting money for the purpose of selling offices, appointments, and for the dismissal of whisky (sic) cases in the city of New York. Everybody who knows anything about the history of the matter knows that other friends and confidential advisors of the Attorney General of the United States were collecting money and were giving as their reasons for collecting it that they could use influence with the Attorney General of the United States of America . . . .

    Not only that, but when the startling testimony came out in the oil investigation that McLean had given money to Fall there was not any prosecution. Then when McLean subsequently testified that he did not give the money and when the testimony was produced that Mr. Fall got the money from Doheny, that the money was sent in a sack by Doheny's son, and taken in connection with the other testimony given by Doheny upon a subsequent occasion, what effort was made on the part of the Attorney General or the Department of Justice to arrest or prosecute Fall? On the contrary he was allowed to be at large. He was allowed to stay in the house of Sinclair's lawyer. Throughout the entire investigation not one scintilla of evidence has been offered to the committee by all or any of the investigators of the Department of Justice.

65 Cong. Rec. at 2769-2770. Wheeler would have gone further, but was persuaded to remove the following two clauses from his resolution:

    Whereas it appears that said Harry M. Daugherty has lost the confidence of the President of the United States, as exemplified by the President's statement that he intends to employ, at great expense to the Government, special attorneys not connected officially with the Department of Justice, indicating that this department can not be trusted with the prosecution of the cases which have arisen by reason of the disclosures before the Senate Committee on Public Lands and Surveys and the United States Veteran's Bureau; and

    Whereas said Harry M. Daugherty has lost the confidence of the Congress of the United States and of the people of the country, and the Department of Justice has fallen into disrepute.

Id. at 2769.

     Daugherty responded to Wheeler's charges by writing a letter to Ohio Republican Senator Frank Willis:

    It is interesting to remind you that before the introduction of this resolution I requested the President to relieve me of the responsibility of prosecuting Albert B. Fall, and those with whom he is alleged to have been acting in collusion, because of the fact that Mr. Fall had been a member of the Cabinet in which I also served, and that the country might be better satisfied to have the conduct of the prosecution in control of lawyers in no way connected with the Government. You know that the President, approving this suggestion, did place this whole matter in the hands of two of the ablest lawyers in this country, Hon. Atlee Pomerene and Hon. Owen J. Roberts, whose appointments have been confirmed by the Senate, and who are now in full charge of the particular matters referred to in this resolution.
. . . .
    . . . I desire to say further that since I have been Attorney General I have never acted upon any information received as Attorney General which resulted in my personal profit. I was not called upon by Secretary Fall or anyone else for an opinion, written or oral, in regard to the wisdom or legality of the oil leases, and I never volunteered an opinion either written or oral, to Secretary Fall or anyone else. I had no part of any kind of character, directly or indirectly, in the negotiations leading up to the execution of the oil leases; no information ever came to me in connection therewith, and the leases were executed without my knowledge and without any official requirement or opportunity on my part to know of their execution.

65 Cong. Rec. 3307 (1924).

     Senate resolution 157, directing a Senate committee to investigate Daugherty's failure to prosecute, among others, the cases arising from the Teapot Dome scandal passed by a vote of 66 to 1. 65 Cong. Rec. at 3410. The investigation also included "numerous charges of illegality, graft, and influence-peddling in the Justice Department." Hasia Diner, Congress Investigates -- A Documented History 1792-1974 15 (1983).

     After much pressure from Coolidge and under protestations of innocence, Daugherty resigned on March 28, 1924. Daugherty was replaced as Attorney General by Harlan Stone, who was succeeded by John Sargent when Stone was appointed to the Supreme Court in 1925.

     With the change in Justice Department leadership, the need to maintain separation between the two special counsel and the Department evidently diminished. Roberts and Pomerene "were 'specially retained' by the Attorney General of the United States, to serve as special assistants to the Attorney General," and in prosecuting Fall, worked with the U.S. Attorney for the District of Columbia and another counsel retained by the Attorney General. See United States v. Fall, 10 F.2d 648, 649 (D.C. Ct. App. 1925).

III. The Special Counsel Follow the Trail
[TABLE OF CONTENTS]

     Roberts and Pomerene began their investigation by studying the Senate record, briefing the law and drafting complaints against the Pan American and Mammoth Oil companies. Then they investigated the records of the Navy and Interior Departments and sent out private detectives to gather evidence in California, New Mexico, Texas and New York. Within six months, the two were managing a complicated and diverse web of civil and criminal cases that would reach witnesses in Canada, France and Cuba. A chronological list located in the Department of Justice Government Oil Case Files memorializes the intensity of their effort during the first three years of their investigation. Chronological Index of Activities of Special Counsel.(6)

     Their investigation was not without dramatic incident. Secret Service Agent Thomas B. Foster was detailed to the investigation and proceeded to examine Fall's financial transactions. On his trail were both agents of the Department of Justice's Bureau of Investigation and private detectives, assigned to follow him and find out what he was discovering. On the trail in Colorado, he found his hotel room ransacked. Werner and Starr, Teapot Dome at 171-73.

     Atlee Pomerene's notes from 1925 reveal his thoughts on the investigation:

The issues involved in the pending litigation are far-reaching . . . Can the Naval Oil Reserves of such great value be bargained away in secret by public officials to their favorites? Can millions of barrels of royalty crude oil be delivered to these same favorites, without competitive bidding, for the construction of steel tankage and for fuel oil? Can duel depots be thus established by the Secretary of the Interior and the Secretary of the Navy, when this power never was lodged in the Secretary of the Navy by the repeal legislation of 1913? Can the public business be thus transacted and in secret? Shall men be permitted to make alleged "loans", (not to use an uglier term), to public officials with whom they are dealing for the public domain? Shall these officials be justified in representing to the public that the Naval Oil Reserves are not to be leased while they are privately negotiating with and executing leases to others? Shall an Admiral's course be approved, when he says: "It was the intention that the public and Congress should not get knowledge of what was being done until it had been in fact done"? These questions are involved in the pending litigation.

AP-TO dated 4/29/1925.(7) Pomerene's questions would receive a variety of responses from the courts in the coming years.

A. The Cases
      [TABLE OF CONTENTS]

     Pomerene and Roberts brought numerous civil and criminal actions against those involved in the fraudulent leasing of Teapot Dome and the Elk Hills reserves. Two civil trials and six criminal trials ensued. Ultimately, these cases restored the naval reserves to the United States, put Sinclair in jail for nine months for contempt of Congress, and landed Fall in prison. Francis Busch, an historian, writes:

    Today these cases have a dual significance. For lawyers they record a highly complex and bitterly contested litigation in which both sides were represented by some of the most brilliant advocates of their generation. For laymen these cases demonstrate democracy's boast that no man, rich or poor, of high or low estate, is above the law.

Busch, Enemies of the State 91.(8)

     1. Civil litigation
     [TABLE OF CONTENTS]

a. United States v. Pan American Petroleum and Transport Company, Pan American Petroleum Company: Elk Hills Leases Voided

     A civil complaint was filed in the United States District Court for the Southern District of California in Los Angeles against the Pan American Petroleum and Transport Company and the Pan American Petroleum Company to cancel the two contracts and leases of the Elk Hills reserve. The bench trial opened October 21, 1924. Roberts and Pomerene represented the United States; Frank J. Hogan headed a team of nine lawyers for the Pan American companies. Neither Fall nor Denby took the stand; instead, their testimony and statements before the Senate Lands Committee were introduced into evidence. Busch, Enemies of the State, at 118-19. On May 28, 1925, Judge Paul J. McCormick ruled that the contracts and leases were void and ordered them canceled. See United States v. Pan American Petroleum and Transport Company, 6 F.2d 43 (D. Cal. 1925).

     Both parties appealed that decision to the United States Circuit Court of Appeals for the Ninth Circuit. In January 1926, the Ninth Circuit affirmed the cancellation of the leases and contracts and dealt a financial blow to Pan American. Instead of affirming the district court's decision to credit the company for the money spent on building storage containers pursuant to the contract, the appeals court held that the company was not entitled to any such credit. See Pan American Petroleum and Transport Company v. United States, 9 F.2d 761 (9th Cir. 1926). Pan American applied for a writ of certiorari that was granted on March 22, 1926, but on February 28, 1927 the Supreme Court affirmed the Court of Appeals' decision. See Pan American Petroleum and Transport Company v. United States, 273 U.S. 456 (1927).

b. United States v. Mammoth Oil Company, the Sinclair Crude Oil Purchasing Company and the Sinclair Pipe Line Company: Teapot Dome Leases First Held Valid, then Voided On Appeal

     On March 13, 1924, a civil complaint was filed in the United States District Court for Wyoming against Mammoth Oil, Sinclair Crude Oil Purchasing and Sinclair Pipe to cancel and annul the Teapot Dome lease. In March 1925, the trial got underway. It too was tried before a judge. Roberts and Pomerene again represented the United States. Martin W. Littleton led a group of eight lawyers who represented Sinclair's companies. Sinclair, Fall and Denby did not testify. Busch, Enemies of the State, at 119.

     Special counsel faced considerable difficulty in obtaining the testimony of important witnesses. Evidence had emerged that a short-lived Canadian shell corporation had served as a vehicle to produce profits to oil interests in the form of United States Liberty bonds. Some of those bonds had eventually found their way from Sinclair to Fall. At this juncture, however, the government was unable to develop this evidence. Several participants who testified had failed memories. A key Canadian witness, H. F. Osler, refused to testify on grounds of the attorney-client privilege. The highest court in Canada would eventually rule against that claim, but not until the Wyoming trial was over. Two other witnesses, James O'Neil and Harry M. Blackmer fled for France before they could be served with a subpoena. Letters rogatory were served, but they refused to testify. Id. at 119-21.

     Mahlon T. Everhart, Fall's son-in-law who had carried the Liberty bonds from Sinclair to Fall, refused to testify on the grounds of self-incrimination:

    I have never been an employee of the United States Government. I have never been in any way connected officially with the Mammoth Oil Company or with Harry F. Sinclair. I had nothing at all to do with the transaction of the making of the lease of Teapot Dome. I decline to answer on the ground aforesaid whether if I had anything to do with any property for Mr. Fall I did it merely as his agent or his messenger.

    I am asked the question "If you had anything to do with any property for Mr. Fall you did it merely as his agent or messenger, did you not?" My reply to that question is "No." I desire to state to this court that I did have in my possession certain bonds, about which Government Counsel has interrogated me; I had them in my own right as a principal, and to give further evidence concerning same will, I believe, tend to incriminate me . . . .

Transcript of Record U.S. v. Mammoth Oil Co., et al., 537.(9)

     The trial ended in March 1925. In June 1925, U.S. District Court Judge Kennedy ruled that the contract with Mammoth Oil was valid and dismissed the suit. See United States v. Mammoth Oil Company, the Sinclair Crude Oil Purchasing Company and the Sinclair Pipe Line Company, 5 F.2d 330 (D. Wyo. 1925). Kennedy's decision sparked considerable controversy. Letter from Albert D. Walton, United States Attorney, to Atlee Pomerene, Special Counsel, 1-2 (December 13, 1930).(10)

     The government appealed the decision. In September 1926, the U.S. Circuit Court of Appeals for the Eighth Circuit unanimously reversed the district court and ordered it to cancel the lease and subsequent contracts. See United States v. Mammoth Oil Company, the Sinclair Crude Oil Purchasing Company and the Sinclair Pipe Line Company, 14 F.2d 705 (8th Cir. 1926). Pan American appealed to the Supreme Court. In October 1927, the Supreme Court affirmed the Court of Appeals' decision, holding that the lease and contracts should be declared void because of the conspiracy between Fall and Sinclair. See Mammoth Oil Company, the Sinclair Crude Oil Purchasing Company and the Sinclair Pipe Line Company v. United States, 275 U.S. 13 (1927).

     2. Criminal prosecutions
     [TABLE OF CONTENTS]

a. United States v. Harry F. Sinclair: Sinclair Convicted of Contempt of Congress

     When the Senate Public Lands and Surveys Committee called upon Harry Sinclair to answer questions, he refused to testify, claiming that the committee lacked jurisdiction. On March 31, 1924, a grand jury of the District of Columbia returned a criminal indictment charging Sinclair with contempt of Congress.

     The Supreme Court of the District of Columbia trial judge found Sinclair guilty of contempt. On appeal, the Supreme Court affirmed the conviction and held that Congress has the power to investigate and compel witnesses to testify. See Sinclair v. United States, 279 U.S. 263 (1929).

b. United States v. Edward L. Doheny, Edward L. Doheny, Jr. and Albert B. Fall: Defendants Acquitted of Conspiracy to Defraud the United States

     On June 30, 1924, a criminal indictment was filed in the District of Columbia charging Edward L. Doheny, his son Edward L. Doheny, Jr. and Secretary Fall with conspiracy to defraud the United States. On November 22, 1926, the trial began. After extensive testimony from witnesses, hundreds of exhibits and nineteen hours of deliberation, the jury found the defendants not guilty. Alabama Senator James Heflin, a Democrat, expressed his dismay at the result. Especially disturbing to him were reports that the jury broke into song before announcing the verdicts:

Mr. President, all law-abiding citizens will hang their heads in shame and humiliation as they read about this farcical court proceeding in the Capital of the Nation. God help us as the trusted representatives of the people to wake up to the dangers that threaten our country. Think of it; one of these men, Fall, occupied a place in a President's Cabinet. He held a high and responsible position in the controlling force of the greatest government of the globe; and now, after the testimony shows him to be guilty of betraying this trust and betraying his country, his criminal conduct is condoned and sanctioned by a rollicking, singing jury in the District of Columbia, here in the Capital of the Nation.

68 Cong. Rec. 569 (1926).

c. United States v. Albert B. Fall and Harry F. Sinclair: Conspiracy to Defraud Case Ends in Mistrial and Sinclair Convicted of Criminal Contempt of Court

     On June 30, 1924, a criminal indictment was filed in the District of Columbia charging Albert B. Fall and Harry F. Sinclair with conspiracy to defraud the United States. The trial began on October 17, 1927 but ended prematurely two weeks later when the government presented evidence that Sinclair had hired a detective agency to shadow the jury. The judge declared a mistrial. Sinclair was tried for criminal contempt of court. More than a hundred witnesses were called. The trial judge found Sinclair and his associates guilty. Sinclair was sentenced to six months.

d. United States v. Harry F. Sinclair: Sinclair Acquitted of Conspiracy to Defraud

     After several continuances necessitated by Fall's deteriorating health, special counsel chose to pursue the conspiracy to defraud charge against Sinclair alone. In April 1928, the conspiracy to defraud trial against Sinclair got underway in the Supreme Court of the District of Columbia. Much of the testimony was the same as was heard in the civil trial involving Sinclair and Fall, where Sinclair had refused to testify on grounds of self-incrimination. The notable exception was the testimony of M.T. Everhart, who for the first time gave details of how he had carried a package of bonds from Sinclair to Fall.

     Obtaining Everhart's testimony was a coordinated effort by special counsel, the Department of Justice and Congress, spurred by a suggestion from Senator Alva Adams, a Colorado Democrat:

I am not able to give you accurate information as to the motives which led Mr. Everhart to persist in refusing to testify, but am disposed to think from what I have heard that he has been impressed with the idea that having taken the position which he did in Cheyenne that it was his duty as a matter of loyalty and consistency to persist in the same course. His family and close associates feel greatly outraged that Secretary Fall should put Mr. Everhart in this position and apparently insist on him continuing in a course so damaging to him. Mr. Everhart reported on his return that he received the utmost consideration and courtesy from you and Mr. Roberts but that his treatment from those whom he was befriending and protecting was discourteous and a little short of shameful. I believe that Mr. Everhart will welcome the passage of legislation to force him to testify. The service of subpoena upon Mr. Everhart for his appearance at the next hearing should be made upon him at as early a date as possible. Such early service, I am permitted to say to you, will not be unwelcome and may be advisable.

Letter from Alva Adams, Senator, to Atlee Pomerene, Special Counsel (November 14, 1927).(11)

     The strategy used to elicit Everhart's testimony was a change to the statute of limitations for fraud against the United States and its agencies. Several witnesses had used the then-existing six year limitation as a reason not to testify; still subject to prosecution, they claimed they would incriminate themselves. By reducing the limitation to three years, Everhart and others would not face charges. Pomerene requested that the Assistant to the Attorney General William Donovan consider the idea and "have some of your experts draw this proposed amendment" since they were "most anxious to have some legislation bearing upon this subject." Letter from Atlee Pomerene, Special Counsel, to William Donovan, Assistant to the Attorney General (November 14, 1927).(12)

     Roberts was hesitant to support special legislation and suggested that the same goal could be accomplished by providing immunity for Everhart "giving the right to the district attorney or prosecuting officer to insist upon the testimony, conditioned upon the statement that the witness shall not be prosecuted by reason of any matter or thing connected with his testimony." Letter from Owen Roberts, Special Counsel, to Atlee Pomerene, Special Counsel, 1-2 (December 8, 1927).(13) Further, Roberts speculated that calling Everhart to the stand and having him refuse to answer the questions could be as effective as his actual testimony. After Everhart had refused to answer questions posed to him at the Sinclair trial, Roberts had heard that the jurors were of the opinion "that in view of his performance there could be very little doubt that there was something radically wrong and crooked about the deal." Id. Nevertheless, Pomerene pursued the idea of reducing the statute of limitations.

     An assistant to Attorney General Donovan had an amendment drafted that changed the six year limitation to three years. Letter from William Donovan, Assistant to the Attorney General, to Atlee Pomerene, Special Counsel, 1 (December 7, 1927).(14) Pomerene then met with Senator Walsh who was "rather disposed to favor the repeal of the section extending the statute of limitations to six years, so as to leave the old exemption stand at three years." Letter from Atlee Pomerene, Special Counsel, to Owen Roberts, Special Counsel, 1 (December 10, 1927).(15) Roberts responded to Pomerene, with a measure of reserve:

It seems to me that you have acted promptly and taken all the steps that it is necessary special counsel should take in the premises. After all, it is not our business to press legislation affecting the cases in which we are concerned. It does seem to be our duty to call to the attention of the proper parties any situation where it may be deemed proper to get additional legislation. When this has been done we have done our duty as it seems to me, and perhaps we ought not to be in the position of pressing for legislation.

Letter from Owen Roberts, Special Counsel, to Atlee Pomerene, Special Counsel (December 12, 1927).(16)

     Thereafter, when asked by the Attorney General for his opinion on whether the President should sign the legislation reducing the statute of limitations, Roberts expressed his support: "[t]he old six year statute has stood greatly in our way in the oil prosecutions for the reasons that witnesses have been enabled to allege that they might be in some way connected with the oil transactions which constitute a fraud on the Government, and that therefore they are liable to self incrimination, and have therefore refused to testify." Letter from Owen Roberts, Special Counsel to John Sargent, Attorney General (December 23, 1927).(17)

     Everhart first tried to avoid testifying at Fall's trial. He called Senator Adams and asked "what he could do in regard to a subpoena just served on him" because he believed "there [was] nothing which he can contribute to the present trial." Letter from Alva Adams, Senator, to Atlee Pomerene, Special Counsel (September 19, 1929).(18) Adams suggested that Everhart "communicate directly with [Pomerene]." Id.

     That same day, Everhart sent Pomerene a letter suggesting that he be "relieve[d] . . . of making a trip to Washington at this time" because of his livestock business. Everhart explained that he had no information regarding Doheny and Fall: "inasmuch as I did not participate in any way in these transactions and have no knowledge whatever concerning them other than newspaper reports and hearsay, it has occurred to me that I will be unable to be of any benefit to the Special Counsel as a witness in the case." Letter from M.T. Everhart to Atlee Pomerene, Special Counsel (September 18, 1929).(19)

     Pomerene wrote back to Everhart, apologizing for the inconvenience but said it was "impossible for us to excuse you" because "[t]he testimony which you have in the Sinclair case is competent in the present case." Letter from Atlee Pomerene, Special Counsel, to M.T. Everhart (September 24, 1929).(20) In Pomerene's response to Senator Adams, written on the same day, he further illuminates the need for Everhart's testimony:

Our contention is that in the bribery case evidence of similar transactions is competent for the purpose of showing the intent; in other words to characterize the end. It will be contended on the part of the defendant that the $100,000 was a loan. You and I feel confident that it was never intended that it should be repaid. Similarly, the Sinclair-Fall transaction in the form it took was a mere ruse.

    Of course, we do not for a moment think that Mr. Everhart was in the real confidence of either of them.

    I am writing you this confidentially.

Letter from Atlee Pomerene, Special Counsel, to Alva Adams, Senator (September 24, 1929).(21)

     Everhart's testimony at Fall's criminal trial did not disappoint. For the first time, the financial connection between Sinclair and Fall was confirmed. Everhart admitted that he had received the bonds from Sinclair in May 1922 and delivered them to Fall:

Q: When you got to Mr. Sinclair's private car, what if anything, did Mr. Sinclair give you?
A: He gave me a package of bonds.
Q: A package of bonds.
A: Yes.
Q: What kind of bonds?
A: They were three and one half percent Liberty Bonds.
Q: Were they counted there in your presence, in his car?
A: No, sir.
Q: Did you open them?
A: No, sir.
Q: Where did you take them?
A: I took them to the Wardman Park Hotel.
Q: Who lived there?
A: Secretary Fall.
Q: To whom did you deliver them?
A: To him.

U.S. v. Fall, Trial Transcript, Vol. 8, at 818-819 (October 15, 1929).(22)

     Everhart's testimony would later prove pivotal to Fall's conviction, but here the jury found Sinclair not guilty. Pomerene speculated that "if the oil cases could have been tried in other jurisdictions the result would have been different." Letter from Atlee Pomerene, Special Counsel, to George Norris, Senator (April 24, 1928).(23)

e. United States v. Albert B. Fall: Fall Convicted of Accepting a Bribe from Doheny

     On June 30, 1924, a criminal indictment was filed in the District of Columbia charging Albert B. Fall with accepting a bribe from Doheny. On October 7, 1928 the trial got underway in the Supreme Court of the District of Columbia, despite Fall's deteriorating health. Even though the trial concerned Fall accepting money from Doheny, the judge allowed Everhart's testimony showing the financial relationship between Sinclair and Fall. That testimony was used to show that Fall had lied to the Senate committee when he declared that he had not accepted any money.

     The trial transcript shows that on October 25, 1929, when the judge called the jurors by name to report their verdict they each said "guilty." Perhaps responding to Fall's ill health, they then each asked for "mercy of the Court." U.S. v. Fall, Trial Transcript, Vol. 16 (October 24, 25 1929).(24) Fall moved for a new trial on the grounds that admitting the Everhart testimony was improper. That motion was overruled. Fall was sentenced to one year in prison and a $100,000 fine. Fall appealed the decision. On April 7, 1931, the Court of Appeals affirmed the conviction. The court identified Everhart's testimony as pivotal:

[These are] evidentiary facts tending to establish the relations between Fall and Sinclair. Considering the close relation of the parties, that, in the handling of the bonds between Sinclair and Fall, Everhart had been the intermediate agent, we think that all these transactions were evidentially relevant to the general issue of conveying to the jury the full Sinclair-Fall transactions as evidence of the motive and intent that Fall had in receiving the money from Doheny in the present case.

Albert B. Fall v. United States, 49 F.2d. 506, 513 (D.C. Ct. App.) cert. denied, 283 U.S. 867 (1931). Fall's application for a writ of certiorari from the Supreme Court was denied on June 6, 1931. His application for an executive pardon likewise was refused. Fall was incarcerated at the New Mexico State Penitentiary in Santa Fe and served a little more than nine months.

f. United States v. Edward L. Doheny and Edward L. Doheny, Jr.: Defendants Acquitted of Offering that Bribe to Fall

     On June 30, 1924, a criminal indictment was filed in the District of Columbia charging Doheny and his son with offering a bribe to Fall -- the same bribe which Fall had been convicted of receiving from the Dohenys. The evidence "was practically identical" in the two cases, with "one important difference -- [at the Dohenys' trial] no testimony was offered on Fall's financial transactions with Sinclair. Werner and Starr, Teapot Dome at 167. The Dohenys were acquitted by a jury.

B. Roberts Seeks to Resign
      [TABLE OF CONTENTS]

     Roberts had a successful law practice before he became special counsel, one to which he attempted to return in the waning days of the prosecutions. However, it was Attorney General John Sargent's opinion that since Roberts was appointed by the President, with the "advise and consent of the Senate" that Roberts was an officer prohibited from practicing before different departments of the federal government. H.R. Rep. No. 70-1959, at 2-3 (1928). He contended that Roberts' representation of a client before the Board of Tax Appeals, would violate the law that prohibited United States officers from representing parties against the United States.

     Roberts grew increasingly frustrated with the limitations thus imposed on his practice. When Pomerene requested advice from Roberts concerning the case involving the Elk Hills tract, Roberts responded "I note that you have advised the parties that you will not agree to anything without conferring with me. As I have heretofore advised you that I cannot take any part in this trial I think that you should do exactly what you want about the matter without any reference to me." Letter from Owen Roberts, Special Counsel to Atlee Pomerene, Special Counsel (September 20, 1928).(25)

     The following day Roberts again wrote to Pomerene distancing himself from the litigation and expressing his intention to resign:

I am going to Washington next week to see the Attorney General and to ask him to permit me to formally resign from all of my appointments other than the appointment of President Coolidge in the oil cases. I am doing this preliminarily prior to going to the Treasury Department and trying to get straightened out the question of my right to practice before the Treasury. I have spoken to you about this matter before, that the Treasury's attitude up to date has been one that has caused me a great deal of inconvenience and loss.

Letter from Owen Roberts, Special Counsel, to Atlee Pomerene, Special Counsel (September 21, 1928).(26)

     Senator Walsh then sent Roberts a letter disagreeing with the Attorney General's position and expressing his hope that Roberts would reconsider his decision:

I notice by the press that you have apparently severed your connection with the work that devolved on you in connection with the lease of the oil reserves. I hope there is some mistake about this. I understood your employment was "for the duration of the war," and if so I am sure you will feel, as I do that you ought to stay with the fight to the end.
. . . .
    The intimation has reached me in some way that you quit because of the loss to which you are subject in consequence of a supposed inability to represent clients before the departments or Government boards or commissions. I can not believe that you are subject to any such inhibition. The place you fill is one of employment, rather than an official situation, I would say without giving study to the subject.

S. Rep. No. 70-1338, at 1 (1928).

     Walsh suggested that the matter be resolved by Congressional action and proposed to "undertake to get through an appropriate joint resolution, relieving you from the operation of the law." Id. Roberts welcomed the suggestion and commented that President Coolidge had made a similar proposal. See id. at 2-3. As Roberts characterized it, the Attorney General's position forced him "to sit here and twiddle my thumbs for 18 months or 2 years to come while the Senator and I finished up the few matters that remain in the oil cases and practically stay out of all business." Id. at 2.

     The joint resolution met with little opposition in the Senate. There was one lone voice raised in opposition in the House, that of New York Republican Representative Fiorello La Guardia:

    It simply singles out one man and sets aside wise, sound, and necessary provisions of the law in order to obtain the legal services of one particular lawyer . . . .

    I do not believe and can not agree that there is only one man in the United States who can prepare the briefs and argue the particular case for the Government in this particular instance . . . .

    But assuming that . . . a lawyer has the government, so to speak, by the throat, assuming that he is the only man who can prepare these briefs and argue the case, then I submit it is manifestly unfair for him to say, "I will not continue. I will resign unless you amend the law especially for me so that I can come in and practice before the departments of the Government in matters against the United States, even though I am retained as special counsel for the same United States."

70 Cong. Rec. 830 (1928). La Guardia observed that the Teapot Dome investigation had become a sacred cow:

When the oil cases are mentioned, it seems everybody is afraid to speak. . . . [i]f you are going to annul the law prohibiting a Government official from appearing against the Government, you are going to destroy a great protection for the government and Government resources.

    I will state frankly that considerable pressure has been brought for the passage of this resolution. This matter was mentioned in the message from the President of the United States. He recommends the passage of the resolution. It has passed the Senate and the Committee on the Judiciary of the House has reported it out without a dissenting vote except my own; but if I am the only Member of this House to-day to take this position, I am going to take it and stand here and oppose it, because I conscientiously consider it unwise and dangerous.

Id. The resolution passed both the House and Senate and was signed by the President on December 21, 1928. See 45 Stat. chap. 45 (1928).

C. Special Counsel Face Financial Difficulties
      [TABLE OF CONTENTS]

     Congress made a number of $100,000 appropriations for the work of the special counsel. The first $100,000 appropriation was signed on February 27, 1924. See 43 Stat. chap. 42 (1924).

     Even though appropriations for expenses of the special counsel went smoothly from 1924-1927, problems arose in 1928. In a meeting with Coolidge, Pomerene told him that since February 3, 1928, no payments had been made for "ourselves, or assistants, or clerks, or expenses." Memorandum from Atlee Pomerene In Re: Naval Oil Litigation - Special Counsel, Conferences with President and Attorney General, 1 (May 27, 1930).(27)

     On the same day, May 26, 1930, Pomerene so advised the Subcommittee of the House Committee on Appropriations. He explained that the special counsel had received no money for more than two years and asked for a reappropriation of $149,707.51, the balance of the appropriation that had been made the year prior. Pomerene suggested that "[n]ot much of that appropriation has been expended, due perhaps to our negligence in presenting bills, I guess." Second Deficiency Appropriation Bill, 1930: Hearings Before the Subcomm. of House Committee on Appropriations, 71st Cong. 826 (1930).(28) Pomerene explained, "Mr. Roberts has paid the assistants in his office, and my firm of Squire, Sanders & Dempsey have paid my assistants. We have paid our own hotel and other expenses-except, of course, our railroad fares and Pullman fares were paid by travel vouchers, also telegraph and telephone charges were largely paid by the Government." Id. at 831. Pomerene told the committee "all that money is subject to disbursement by the President." Id. By Executive Proclamation, the President extended the balance of the available appropriations to June 30, 1932 to enable Roberts and Pomerene to conclude their work.

IV. The Trail Ends
[TABLE OF CONTENTS]

     In the wake of the Teapot Dome investigation tumbled the resignations of Secretary of the Interior Fall, Secretary of the Navy Denby and Attorney General Daugherty. The scandal would forever cast a shadow on the Harding administration. On February 25, 1928, the President returned the administration of the oil and gas naval reserves to the Secretary of the Navy. 45 Stat. chap. 104 (1928). The "slimy trail" finally ended, as North Dakota Senator Gerald Nye observed:

The investigation has shown, let us hope, privilege at its worst. The trail is one of dishonesty, greed, violation of law, secrecy, concealment, evasion, falsehood, and cunning. It is a trail of betrayals by trusted and presumably honorable men--betrayals of a government, of certain business interests and the people who trusted and honored them; it is a trail showing a flagrant degree of the exercise of political power and influence, and the power and influence of great wealth upon individuals and political parties; it is the trail of despoilers and schemers, far more dangerous to the well-being of our Nation and our democracy than all those who have been deported from our shores in all time as undesirable citizens. And in the end the story is one of the crushing of brilliant careers when finally the light was played upon those who schemed those unhealthy schemes born in darkness.

S. Rep. No. 70-1326, at 3 (1928).

     Owen Roberts ceased his work as special counsel when he was appointed as a Justice to the Supreme Court in 1930.

     Atlee Pomerene saw the litigation to the end. Among his last acts as special counsel was to pursue compensation from companies that had bought Teapot Dome oil from Mammoth Oil Company when Mammoth's bankruptcy meant recovery was impossible. Pomerene recovered more than $26,000 from Sinclair Pipe Line Company and Midwest Refining Company. Pomerene was later appointed by President Hoover to head the Reconstructionist Finance Corporation but was replaced when Franklin Delano Roosevelt took office.

The two were widely praised, even though some of their prosecutions were unsuccessful:

[They] left no stone unturned to win their case. No avenue of evidence was left unexplored, and no pains or expense were spared in preparing for trial. The government's side could not have been in more able hands. The skill with which the evidence was amassed and arranged, and the ability with which it was presented to the jury, left no possible room for adverse criticism. Messrs. Roberts and Pomerene adhered to the finest traditions of American jurisprudence throughout the preparatory and trial stages of this celebrated case; and no one who followed the case could doubt that if a verdict of guilty had been forthcoming it would have been due to the extraordinary efforts and ability of the government's counsel.

The Doheny-Fall Verdict, The Washington Post, December 17, 1926).(29)
 
 

Note: The views expressed in this piece are those of the author and should not be attributed to the staff, officers or trustees of the Brookings Institution.

Copyright 1999 The Brookings Institution