The Friendliest People

Theron Lamar Caudle knew the friendliest people. Recently fired as head of the Justice Department's tax division, Caudle last week told a House subcommittee about some of his generous acquaintances. Punctuating his testimony with such exclamations as "Oh, my soul... Lord have mercy . . . Lord God almighty," Caudle writhed on the witness stand, lifting his hands above his head, joining them as if in prayer and rolling his banjo eyes upward. In a cotton-thick North Carolina drawl, he denied that he had done any tax favors for the men who treated him so generously.

One such was Larry Knohl, a New Yorker convicted of embezzlement, who bought an airplane from a Caudle crony for $30,000. Because he got Knohl and the airplane owner together, Caudle collected a $5,000 commission on the deal. Knohl at the time was an "investigator" for two shady New York used-machinery dealers who had evaded more than $200,000 in taxes. It also happened that the case against them was delayed time & again by Caudle's office. "But I want to say this," said Caudle, "that when this commission was paid to me, that Mr. Knohl did not have any idea in the world I was going to receive a commission."

Sleeping Enemies. Then there was Keith M. Beaty, a Charlotte, N.C. taxi-fleet operator, who got Caudle three cars at cut prices, lent him a fourth car and a wad of money. The U.S. has had a $2,400,000 claim for back taxes pending against Beaty and his associates. Caudle said he had disqualified himself from acting in the Beaty tax case. This talk that there was something wrong about the Beaty-Caudle relationship, said Caudle, was inspired by their enemies in North Carolina, where he was once a U.S. district attorney. The last time he was in Charlotte he said, somebody tried to run him down with a car. "I prosecuted so many people ... in tax cases in my state, I may have a lot of enemies lying around there, sleeping, that I don't know of," he cried. "The hatred and bitterness that they have against me is just incalculable."

Another Caudle chum was Troy Whitehead, a Charlotte machinery manufacturer, whose private plane flew Caudle to Florida twice for deep-sea fishing. Once, Caudle got up the whole party, which included Charles Oliphant, counsel of the Bureau of Internal Revenue. While these pleasant jaunts were going on, the U.S. was investigating Whitehead's tax status. Caudle said he had just a "faint recollection" that he might have telephoned Oliphant about removing a $40,000 tax lien the U.S. had against Whitehead's plant. That would have been "the most normal thing" to do, he said, since he talked with Mr. Oliphant almost every day. Day after his faintly recollected telephone call on the Whitehead case, the lien was lifted.

Little Sheepskin Coat. Then there was Jacob Landau, a New York attorney whose Washington office specialized in fighting tax cases brought by the U.S. Landau paid $5,000 for an oil lease from a man Caudle steered him to, and Caudle collected a $1,000 commission on the deal.

Landau arranged to get mouton coats for Caudle's daughter and for Mrs. Turner L. Smith, wife of Caudle's chief assistant. "A little sheepskin coat," said Caudle, for which he paid $125. But Landau's partner, Attorney I. T. Cohen, remembered things in a different way. The coats cost $563 wholesale, he told the subcommittee, and neither Caudle nor Smith paid anything for them. Christmas gifts, said Cohen.

Landau's friendship was warmer than a little sheepskin. He arranged to get Mrs. Caudle a mink coat for $2,400, then covered $900 of the price himself. And besides, after a telephone call to Landau, Mrs. Caudle was able to line up cut-rate mink coats for the wives of Democratic Senator John L. McClellan of Arkansas and Kenneth C. Royall, a native of Goldsboro, N.C., former Secretary of War.

"She didn't hardly have a coat worth anything," Caudle said of his wife. "She said she had some money she wanted to go to New York and buy one with. She went up there, and she shopped around with Mrs. Landau ... I told her to get a coat would be a pretty extravagant thing. I hoped the sweet thing wouldn't do it, but there was not much I could do about it." The $2,400, said Caudle, was the manufacturer's cost.* Asked what the insurance appraisal on the coat was, he said sadly: "I think either $3,500 or $4,000. The mink market has now dropped ... It has just dropped down just like the oil business . . . Everything has dropped out for me, it seems to me."

Some Bigger Names. As the Caudle tongue rolled garrulously on, some bigger names were dropped. Caudle said Attorney General J. Howard McGrath approved his taking the $5,000 commission on the airplane deal. McGrath replied that he had done so after Caudle had assured him that neither the buyer nor the seller was directly involved in any Government case.

In Charlotte, Pilot Walter B. Mallonee said he flew Caudle on trips to Florida. Among the tax-troubled Mr. Whitehead's guests, Mallonee said, was U.S. Supreme Court Justice Tom C. Clark, who was then Attorney General. In Washington, Clark said this was true, but that he didn't know Mr. Whitehead was having tax trouble with the U.S. His old friend Caudle arranged the trips, said Clark. It was Clark who brought Caudle out of the North Carolina hills in 1945 to head the Justice Department's criminal division. Later, Clark promoted Caudle to be the U.S. Government's top tax attorney, although he had no tax law experience and was up against the top legal tax specialists in the U.S.

At week's end, Caudle seemed puzzled that Harry Truman had demanded his resignation because of Caudle's "outside activities." Said he: "I still don't know why I was fired ... I haven't heard one word to tell me why."

* Manhattan's fur trade sniggered at the notion that special influence was required to buy a fur coat "wholesale." Most wholesale furriers will sell single coats to anyone who walks in, sometimes at more than the retail price. To get a real bargain requires real bargaining skill--or real influence.

This file is automatically generated by a robot program, so reader's discretion is required.