Between You and Me (23 page)

(No one had to be reminded that the best reporting on the Watergate cover-up was the gumshoe work done by print journalists, most notably Bob Woodward and Carl Bernstein at The Washington Post.) We set out to demonstrate that not only could we do such stories on 60 Minutes, we could do them as well as our brethren in print.

Over a two-year period, from the winter of 1976 to the spring of 1978, I focused most of my attention on investigative reports, some that struck nerves with our viewers, many of whom responded with expressions of outrage toward the miscreants and/or gratitude to us for having exposed the scoundrels.

The subject of a story we did in Chicago was corruption within the Medicaid program. On that one we worked closely with a non-partisan reform group called the Better Government Association. According to the BGA and other sources, several clinical laboratories in the Chicago area were offering lucrative kickbacks on their Medicaid transactions. In league with the BGA, we set up a bogus medical clinic and invited a number of the suspect labs to come in and discuss using their services for our Medicaid business. Since we had a hidden camera installed behind a one-way mirror on the wall, and I

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was listening to the conversations from an out-of-sight position in an adjoining room, it did not take us long to gather damaging evidence on all the kickbacks we were offered. “The Clinic on Morse Avenue”

was broadcast in February 1976; not long thereafter, nine labs in the Chicago area were permanently cut off from the Medicaid program, and eleven others were temporarily suspended.

The key figure in another story we did on corruption in Chicago was an accountant named Philip Barasch, who served as a middle-man in a scheme whereby certain city inspectors were accepting bribes to overlook serious building-code violations. We learned about him from Pam Zekman, an investigative reporter for the Chicago Sun-Times, who had joined forces with our friends from the BGA.

Zekman and a BGA investigator had come up with their own version of our phony clinic, in this case a neighborhood bar called (appropriately) the Mirage Tavern. Identifying themselves as the husband-and-wife owners of the tavern, they soon became clients of Barasch, who schooled them in the discreet niceties of bribe bestowal. His counsel was not confined to bribery: He also advised them on how to reduce their tax bite by shaving 40 percent off their income reports.

For me, the high point of the assignment came when I interviewed Phil Barasch in a hotel suite we had rented. After asking him a few leading questions, which he parried, I summoned Zekman and her “husband,” the BGA watchdog, from an adjoining room. Once Barasch realized he had been set up, he reluctantly acknowledged that he had given the couple advice on how to pay off the city inspectors. But he vigorously denied that he had shown them how to falsify their income reports. Shifting to a sympathetic tone (and a more subtle ploy), I suggested there was no reason for him to be so uptight about it, because it was my understanding that people who ran small cash-oriented businesses like the Mirage Tavern routinely received

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pointers from their accountants on how to conceal part of their income. I should also mention that even though our CBS camera was quietly rolling, we were in a private hotel suite where there was a strong sense of being cut off from the rest of the world. Which helps to explain what happened next. When Barasch agreed that the wide-spread practice of tax fraud was “common knowledge,” I gently moved in for the payoff, using a phrase that I would later adopt as the title of this book.

W A L L A C E : I know it’s common knowledge, and apparently, you are among the people who do it. That’s all that we’re trying to— I mean, look, between you and me—

B A R A S C H : Yeah.

W A L L A C E : —you do it, everybody does it.

B A R A S C H : I presume everybody does it to an extent . . .

W A L L A C E : You mean, if they wanted to put every tax accountant in jail who did that kind of thing—

B A R A S C H : They’d all be in.

Between you and me! Poor Phil Barasch had allowed himself to forget that our interview was being recorded on-camera, and when we broadcast the piece a few weeks later, his statement that “everybody does it” (including him) was made “between you and me” and the millions of viewers who were watching 60 Minutes that night. In large part because of that admission, a federal grand jury subpoenaed Barasch’s records and those of five other accountants who had been hired by the Mirage Tavern.

A California story that caught our attention had to do with a clinic at a spa called Murrieta Hot Springs. It promised to provide

“miracle cures” to victims of cancer and other serious diseases.

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From various sources, we heard about complaints that the man who ran the place, R. J. Rudd, went out of his way to court wealthy patients who, once enrolled in the cure program, were pressured into making large financial contributions to the clinic. Acting on the theory that it takes a con game to catch a con man, the producer of the story, Marion Goldin, and her film crew—cameraman Greg Cook and soundman James Camery—enrolled at Murrieta under false pretenses. Camery identified himself as a wealthy investment counselor who was suffering from an illness that had recently been diagnosed as leukemia. Cook claimed to be Camery’s concerned nephew, and to justify the camera equipment he had brought with him, he said he was a professional photographer, which actually was not that far from the truth. As for Goldin, she pretended to be the ailing man’s longtime secretary. To enhance the impression of afflu-ence, our 60 Minutes trio arrived at the clinic in a rented Rolls-Royce.

During their weeklong stay at Murrieta, our three poseurs were able to obtain enough information to prove that the clinic was an utterly fraudulent enterprise that had indeed been established for the sole purpose of prying donations out of wealthy patients, most of whom were elderly as well as ill. With their hidden camera and microphone, Goldin, Cook, and Camery were able to film and record most of that evidence. When the time came for me to appear on the scene, I had all the ammunition I needed to confront Rudd with a flurry of incriminating practices, from bogus diagnoses (Camery, who in truth was in fine health, was told by the doctor who examined him that his illness was not leukemia but a “leaky lung” that required treatment) to phony medications that were nothing more than place-bos. But when I accused him directly of running “a con-game operation,” he piously denied it.

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When we probed into Rudd’s shady past, we learned that Murrieta had been preceded by several other fraudulent schemes he had concocted over the years, and in other states besides California. In a spin-off of the title from an avant-garde French film, Last Year at Marienbad, we called our report “This Year at Murrieta,” and a few months after we broadcast it in January 1978, Rudd was convicted in Florida of bilking an elderly woman stricken with leukemia out of twenty-five thousand dollars in a land-investment swindle. The Murrieta Hot Springs health spa was declared bankrupt with liabilities of nearly thirty-seven million dollars.

Early on in my interview with R. J. Rudd—before I revealed that the wealthy folks who had arrived at his clinic in a Rolls-Royce were, in reality, members of the 60 Minutes team—he tried to impress me with his academic credentials. He boasted that he had a Ph.D. each in economics and philosophy, and to back up those claims, he showed me his diplomas from Christian Tennessee University and Trinity Christian College in Florida. I had never heard of either school, and with good reason; when we did some checking, we learned that Rudd’s diplomas were nothing more than mail-order degrees from fic-titious universities. We naturally included his phony education in

“This Year at Murrieta,” and in the flood of mail that came our way after we aired the piece, we read about numerous other people who had acquired sham diplomas. Our curiosity aroused, we went to work on an investigative story called “A Matter of Degrees.”

We soon discovered that diploma mills were a thriving industry from coast to coast. After looking over the crowded field, we decided to concentrate on California Pacifica University in Los Angeles. We were drawn to that college by its promotional brochure, which characterized California Pacifica as “the custodian of the intellectual capital of mankind.” Our next move was to provide a “student” worthy of

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that academic bastion. We arranged for a 60 Minutes cameraman, Wade Bingham, to meet with the president of California Pacifica, Ernest Sinclair.

Bingham, who was in his early fifties, had attended college as a young man for just one year. But Sinclair assured Bingham that his thirty years as a cameramanwere all the credits he needed for a master’s degree in business administration. Bingham paid $2,150 for tuition, and although he never went to class, never read a textbook, and never took an exam, he received his degree from California Pacifica.

Not long after Bingham’s “graduation,” a film crew and I visited the California Pacifica “campus,” which was located in a Hollywood building just above a wig shop. I’ll never forget the expressiononErnest Sinclair’s face whenwe walked into his office. Eventhough he was talking onthe phone at the time, he promptly acknowledged our arrival.

S I N C L A I R : (On phone) Hey, wait a minute. Hey, 60 Minutes is in here. Can you believe it?

W A L L A C E : How are you?

S I N C L A I R : 60 Minutes here! Hold the phone.

W A L L A C E : Nice to see you.

S I N C L A I R : (Still on phone) I’m trying to tell you his name.

Let’s see . . . Hey, this is my favorite. Gosh! What’s your—

What’s your last name?

W A L L A C E : Wallace. Mike Wallace.

S I N C L A I R : Mike Wallace!

The effusive greeting was typical of Sinclair, who turned out to be one of the most engaging rogues I’ve ever encountered. His flaky exuberance was a large part of his charm, and when I questioned him, he cheerfully admitted that his fake-diploma operationwas a lucrative

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racket. I complimented him on the slick brochure for California Pacifica and the impressive array of faculty members featured in it. I then asked him about some of them, starting with a man named Mario Ugarte, who was identified as the dean of the college of education.

W A L L A C E : Is he here now?

S I N C L A I R : He’s not here.

W A L L A C E : Rosalba Riano, the administrative assistant?

S I N C L A I R : Right. We did make communication with her by telephone, and she is alive and well, and she’s in New York in the garment district.

W A L L A C E : But she’s no longer your administrative assistant?

S I N C L A I R : No. I know I’m— No, she never did come to our school.

W A L L A C E : Terrel Harvey, is he still deanof your college of law?

S I N C L A I R : I could— I could probably say yes, and I could probably say no.

Although his glib patter was entertaining, Sinclair was talking himself into serious trouble, and he must have understood that, because he was no stranger to legal difficulty. He already had served time in three states for mail fraud, and a few days after we broadcast

“A Matter of Degrees” in April 1978, he was arrested and once again charged with that crime. Ingratiating to the end, Sinclair later wrote from prison to let me know that he intended, finally, to go straight and to thank me for helping put him on the road to reform.

And so it went through the late 1970s and beyond as we steadily built up our investigative credentials and infused 60 Minutes with a bold new spirit and identity. It was around this time that someone

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came up with the line “You know it’s going to be a tough week when you show up at your office on a Monday morning and a 60 Minutes camera crew is waiting there.” The remark soon became a kind of defining mantra that we heartily embraced. In the eyes of our admirers, our show had become a television descendant of the muckrakers, that vigorous breed of reformers whose moral passion and diligent reporting did so much to strengthen the craft of journalism back in the early 1900s.

We also had more than a few detractors. For the most part, the criticisms that came our way had to do with the various deceptions we employed to get the goods on our quarries. By the early 1980s, the complaints had become so frequent that almost every time we aired an investigative story, our tactics were called into question. So we decided to confront the accusations directly in the open forum of our own broadcast, and in September 1981 we launched the new season with a special edition of 60 Minutes, a program devoted entirely to the subject of our alleged transgressions.

We invited three distinguished print journalists to appear on the show: Eugene Patterson, the crusty veteran editor of the St. Peters-burg Times (and before that, The Atlanta Constitution and The Washington Post); Ellen Goodman, the syndicated columnist from The Boston Globe; and Bob Greene of Newsday, who had won a Pulitzer Prize for his work as an investigative reporter. In one of his rare on-camera appearances, Hewitt sat in on behalf of 60 Minutes, and so, in my humble, self-effacing way, did I.

To provide stimulus for our panel discussion, we looked at excerpts from some of our more flamboyant investigative pieces, including “The Clinic on Morse Avenue” and “This Year at Murrieta.”

Most of the criticisms were voiced by Patterson and Goodman, and they centered on our use of hidden cameras and other furtive tech-