National Affairs: 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.