Follow the Money: Uncovering the Watergate Scandal Through $1300 in Clues
“Follow the money.”
This is the advice given by the confidential source known as “Deep Throat” to Bob Woodward in the movie version of “All the President’s Men.” Good, solid advice that investigators of financial crimes have been following for years.
To show how this kind of investigation worked, here is a look at how one of the most famous examples of “following the money” unfolded.
Uncovering the Financial Trail
Let’s begin with the money itself.
On June 17, 1972, five men were arrested for breaking into the Democratic National Committee’s offices at the Watergate complex in Washington DC. They were not typical burglars – they were dressed in suits and ties, and they had 39 rolls of film, bugging equipment, and about $5,400 in $100 bills (about $40,000 in 2022 dollars), along with keys to nearby rooms where even more cash was found. (The picture below shows what was found on one burglar - Bernard Barker aka Frank Carter - when arrested, including two $100 bills and other currency).
Government Exhibit 10F, Watergate Investigation
This raised lots of questions, beginning with, “Where did all that money come from?”
The Role of “Follow the Money”
Fortunately, government investigators were able to track some of the bills backward using serial numbers – each bill of U.S. currency has a unique combination of eleven numbers and letters. This usually is very difficult, but the bills found at the Watergate were new and in sequential order – they had just been delivered by the Federal Reserve Bank less than two months earlier and had just been introduced into circulation.
Serial numbers showed that many of the bills had been withdrawn by one of the five burglars - Bernard Barker (aka Frank Carter, the name he initially gave when arrested) – weeks earlier on May 2 and 9 from a bank account in Florida.
This much was shown in a trial exhibit from the first Watergate trial, which occurred in early 1973 and involved two defendants (not Barker, who pled guilty).
Government Exhibit 177-A, Watergate Investigation
But that still did not answer the big question about where the money came from.
That took further work and quickly came out in newspaper articles and a report by the General Accounting Office (GAO), which does non-partisan research for Congress and executive agencies and is now known as the Government Accountability Office.
Most of the money that Barker withdrew matched precisely four checks that all appeared to come from a Mexican lawyer, Manual Ogarrio Daguerre.
Investigative Breakthroughs
The New York Times reported this on July 31, 1972, in an article by Walter Rugaber (“Cash in Capital Raid Traced to Mexico”). According to the article, Ogarrio was in “delicate” health and could not speak, but a family member denied any connection to the checks and denied knowing Bernard Barker.
That could have been the end of this investigative angle, except for Carl Bernstein’s big scoop.
Bernstein had gone to Miami to talk to a prosecutor who was already looking into the burglars’ Miami connections. Upon arriving, he saw Rugaber’s article and thought about trying to fly to Mexico to learn more. No, editor Barry Sussman told him. See if you can find anything more from the prosecutor.
Bernstein dug in and eventually learned about one more check that had been deposited into Barker’s bank account. This was what became known as the Dahlberg check, after Kenneth Dahlberg, to whom the $25,000 cashier’s check (almost $200,000 in 2022 dollars) had been made out.
The Money Trail Deepens
Carl Bernstein passed this information to fellow reporter Bob Woodward, who managed to reach Dahlberg by phone.
Dahlberg admitted to Woodward that he had “accumulated some cash” “in the process of fundraising” and getting a cashier’s check made out to himself. He said that he gave the check-in in early April to one of two people who were high up in President Nixon’s re-election effort.
That’s as far as Woodward and Bernstein were able to get on July 31, 1972, but further investigation was able to follow the Dahlberg check and the Ogarrio checks even further back. Based on the press reports, the General Accounting Office opened its investigation and interviewed Dahlberg and other Nixon campaign officials.
On August 26, the GAO issued its report concluding that the Nixon re-election committee had failed to keep required records and referring the matter to the Department of Justice for possible prosecution.
Chronology of the Investigation
Here is the chronology, as constructed from the articles, the GAO report, and subsequent accounts (and as shown in the chart accompanying this article):
April 5, 1972. According to what campaign treasurer Hugh Sloan told the GAO in August 1972, Sloan received the checks that were written in the name of Manuel Ogarrio and that the checks were campaign contributions from donors in Texas who wished to remain anonymous.
April 7. New legal provisions go into effect that require disclosure of campaign contributions from this date onwards.
April 9. Corporate executive Dwayne Andreas gives $25,000 in cash to Dahlberg in Miami. Dahlberg later told the GAO that Andreas had spoken days earlier about making the gift.
April 10. Dahlberg has a cashier’s check for $25,000 made out to himself in Florida.
April 11. Dahlberg endorses the Dahlberg check and delivers it to the re-election finance committee’s chair, Maurice Stans. Stans gives the check to Sloan, who says he gave it to G. Gordon Liddy, along with the four Texas-Ogarrio checks.
April 20. The Dahlberg check and the Texas-Ogarrio checks are deposited into Barker’s account along with the four checks in the name of Manuel Ogarrio, totaling $114,000.
April 21 to May 8. Barker withdraws $114,000 in cash, including more than a hundred $100 bills.
Middle of May. According to Sloan, Liddy provides some of the funds from the five checks to Sloan. Sloan said that the total was significantly less than the total combined value of $115,000.
June 17. Barker, Frank Sturgis, Eugenio Martinez, and Virgilio Gonalzes (four of the five burglars) are arrested with new $100 bills in their possession, and more $100 bills are found in a room to which they had a key.
Days after the robbery. Liddy shreds the remaining $100 bills.
Conclusion: Following the Money’s Impact
Ultimately, “following the money” opened up much more of the Watergate scandal, eventually leading to many charges and convictions that have been overshadowed by other aspects.
Based on my own experience investigating as a reporter and as a lawyer, I’ve written and spoken about how lawyers can use data to conduct better investigations, and I’ve used this Watergate example to discuss one approach. “Track something,” I said. See how things develop over time, and pay attention to the details.
If you’re doing a healthcare fraud case, track a few patients over time and make sure you understand what happened and why. In one type of case that I handled when I was a federal prosecutor, doing this uncovered additional crimes and defendants and changed how my office handled such cases.
If you’re reviewing emails and find a good email or a particularly significant event, don’t just rely on search terms. Read all the emails surrounding that email and see if you can reconstruct the entire conversation.
And, of course, follow the money. Where did it come from? What was it used for? And where did it all end up?
Stephen Chahn Lee has written about the intersection of pop culture and the law for his entire legal career, most recently in “Modern Detection,” which focuses on lessons drawn from real-life and fictional investigations. Sherlock Holmes dreamed of writing a “textbook which shall focus the whole art of detection into one volume,” Stephen’s articles attempt to fulfill that dream in the modern age. Stephen’s analysis of the Sherlock Holmes stories has been featured in Harper’s magazine, and he was inducted in 2024 as a member of the Baker Street Irregulars.
For further insights on the Watergate Scandal or legal guidance on healthcare fraud defense, please contact Stephen Lee Law.
Sources:
Bernstein, Carl, and Bob Woodward. All the President’s Men. 1974.
Bernstein, Carl, and Bob Woodward. “Bug Suspect Got Campaign Funds.” Washington Post, August 1, 1972.
General Accounting Office / Government Accountability Office. “Audit of the Finance Committee to Re-Elect the President.” August 26, 1972.
Graff, Garrett M. Watergate: A New History. 2022.
Rugaber, Walter. “Cash in Capital Raid Traced to Mexico.” New York Times, July 31, 1972.
U.S. v. Liddy Trial Records, Government Exhibits. National Archives. https://www.archives.gov/research/investigations/watergate/us-v-liddy-trial-records-government-exhibits.
