correct, Mr. Morgan's signing on April 10, 1970, would not have been a re-execution.

E. DELIVERY OF 1969 DEED TO GENERAL SERVICES ADMINISTRATION

The staff has not been able to determine the precise date on which a signed xerox copy of the 1969 deed was delivered to the General Services Administration, but it has some information that enables it to narrow down the period during which delivery occurred.

On April 6, 1970, the Archives sent a copy of Ralph Newman's letter of March 27, 1970, to the Office of the General Counsel of the General Services Administration. This copy has a note attached to it in the handwriting of Hart Mankin, the General Counsel. It is dated April 10, 1970, and states, "Ed Morgan says there is a chattel deed-will furnish copy. Now in California."

On April 22, 1970, Mr. Morgan prepared a right of access (Exhibit I-49) to Mr. Newman "pursuant to Chattel Deeds from Richard M. Nixon to the United States of America, dated December 30, 1968, and March 27, 1969, respectively." This was forwarded to Dr. Reed by Mr. Morgan with a covering memo on April 24, 1970. The memo is stamped "April 27, 1970," which is the day it was received by Dr. Reed.

Staff Analysis.-Based on these two documents and interviews with the people involved, the staff believes that the deed for the second gift of papers was picked up from Mr. Morgan's office by a representative of the General Services Administration sometime between April 10, 1970, and April 22, 1970.

F. SUBSEQUENT TRAVELS OF THE DEED

Return of the Deed to the White House, September 1971.-In an interview with the staff, Richard Jacobs, Dr. Reed's deputy at the Office of Presidential Libraries, stated that there was some discussion of the deed in the General Counsel's Office of the General Services Administration in 1970. On July 10, 1970, the General Counsel, Hart Mankin, sent a memo to Mr. Morgan (Exhibit I-50) asking to discuss the deed. In an interview, William Casselman, the GSA General Counsel in 1971-73, said that when he took over in that job in June 1971, his predecessor, Mr. Mankin, told him that there were two "technical issues" to be resolved about the deed. These were that Mrs. Nixon had not signed the deed and that the President had not signed it.

Mr. Jacobs said that he received a call from Dapray Muir, who was on the staff of John W. Dean III, the White House Counsel, in late August or early September 1971. Mr. Jacobs said that Mr. Muir wanted to discuss how previous Presidents had donated their papers and was concerned about the lack of control over the records of Presidential task forces and commissions. Mr. Jacobs said he met with Mr. Muir several times to discuss these matters, along with Mr. Casselman and his deputy, Bill Barth.

Both Mr. Jacobs and Mr. Casselman said that at one of these meetings on September 10, 1971, Mr. Casselman gave Mr. Muir the deed and asked him to look into the problem of President and Mrs. Nixon's failure to sign it. Both Mr. Jacobs and Mr. Casselman said that Mr. Muir did not expect to receive the deed at the meeting.

Peter Kinsey replaced Mr. Muir in October 1971, and he told the staff that he found the deed in the files, along with a memo from Mr. Muir to Mr. Dean on the problems of the signature on the deed. Mr. Kinsey said that in late December 1972 or January 1973, when he was cleaning out his files prior to leaving the White House staff, he sent the deed back to John Nesbitt, the head of the liaison staff between the National Archives and the White House.

1973 Audit of President Nixon's Tax Returns.-The staff has interviewed the revenue agents who audited President Nixon's 1971 and 1972 tax returns in May 1973. They stated that Mr. DeMarco never showed them the deed and that they did not ask for a deed.

Original Deed. The deed delivered to the General Services Administration was a duplicate original, a signed xerox copy, Mr. DeMarco says he brought the signed original back to California, where it remained in his files until October 1973, when he sent it to the White House. Mr. DeMarco says he got the deed back from them on January 17, 1974, and showed it to the staff in his interview the next day. The staff has not located the third copy of the deed that DeMarco says Morgan signed.

PART TWO

PURCHASE OF PROPERTY AT SAN CLEMENTE AND SUBSEQUENT SALE OF A PORTION TO THE B & C INVESTMENT COMPANY

1. Scope of Examination

On July 15, 1969, the President purchased approximately 27 acres of property in San Clemente, California. The property is generally referred to as the "Cotton estate." On October 13, 1969, the President purchased an additional 2.934 acres of property, known as the "Elmore property", immediately adjacent to the Cotton estate. Then, on December 15, 1970, pursuant to the President's original desire to own only a portion of the Cotton estate (as indicated in the White House statement on President Nixon's finances released on December 8, 1973), the President sold a large portion of his interest in these adjoining properties to the B & C Investment Company. The portion of his interest sold represented a large part of the Cotton estate and all of the Elmore property.

In reporting this transaction on President Nixon's 1970 income tax return, it was stated that the sale to the B & C Investment Company did not result in any gain which was taxable to him. This resulted from the claim that the amount of the original purchase price of the property allocated to the portion of the property sold was exactly equal to the sales price, thus resulting in no gain or loss on the transaction.

Because a number of questions have arisen with respect to this transaction, the staff made an independent review of the sale to the B & C Investment Company. To assist the staff in determining whether this transaction was reported correctly for income purposes, an engineering firm and a real estate firm located in Southern California were commissioned to independently determine the value of that portion of the property sold and that portion of the property retained at the time of the sale. In addition to this appraisal, the staff examined other appraisals made on the property and analyzed Mr. Blech's rationale for treating the transaction as he did on the President's tax

Shortly after the 1968 Presidential election, President and Mrs. Nixon decided to purchase a home in California. As a result of this decision. Mr. H. R. Haldeman contacted Mr. Raine, a real estate broker in California, and asked him to find a piece of property which would be suitable to the President's needs-one which met the President's requirements for security and which was located near Federal property. Mr. Raine eventually found approximately 27 acres in San Clemente commonly referred to as the Cotton estate. This property is located on the Pacific coast, half-way between Los Angeles and San Diego (Exhibit II-1). The Cotton estate was then owned in trust for the benefit of several members of the Victoria Reyes Cotton Ogden family.

This property borders on the ocean to the west and contains approximately eight acres of beach. Title to the property extends to the mean high tide line on the beach and (except when the President is at San Clemente), the public has access to the beach from the mean high tide line to the ocean. A railroad line cuts through the western boundary separating the beach from the remainder of the Cotton estate. The railroad line cutting through the Cotton estate is owned by the Atchison, Topeka, and Santa Fe railroad and is not counted as part of 27 acres of the Cotton estate. There is a relatively steep cliff rising directly behind the railroad property to the remainder of the Cotton estate. A private residential development known as Cyprus Shores borders the Cotton estate to the north. To the west and the south is a large tract of Federal property that is used by the U.S. Coast Guard. The Western White House complex which contains offices for the President and his staff was built on this property. Bordering on the Coast Guard property to the south and stretching for approximately 20 miles south along the coast is Camp Pendleton, a U.S. Marine Corps Base. The area at the top of the cliff is the main portion of the Cotton estate, representing approximately 20 acres. This land is relatively flat and contains several buildings including the main house which was built in 1925, a guest house, a caretaker's house, a five-car garage, and several small cottages which are presently being used as guest houses or storage buildings.

It was indicated in a White House press release dated December 8, 1973, that the President desired to purchase only a small portion of the Cotton estate. In an interview with the Joint Committee staff, Mr. Frank DeMarco and Mr. Herbert Kalmbach, who were the President's personal attorneys, reiterated this desire but informed the staff that the "Cotton" family insisted that the entire tract be sold as a single unit. The Cottons had set a price of $1,400,000 for this 27-acre tract. As a result, the President purchased the entire 27-acre tract with the intention of reselling to a "compatible" buyer all but a four- or fiveacre homesite and an adjoining portion of beach.

While the price offered by the Cottons was firm, the terms of the purchase agreement were subject to negotiation. This negotiation was handled on the President's behalf by Mr. Herbert Kalmbach. The final terms of the purchase agreement provided for a $400,000 down payment and a $1,000,000 promissory note which carried an annual interest rate of 7.5 percent. The promissory note provided that $100,000 of the principal was to be paid each year for the first four years and the remaining $600,000 of principal was to be paid at the end of the fifth year.

In order to consummate this purchase, the President's attorneys created a revocable trust on April 24, 1969, and named the Title Insurance and Trust Company of Los Angeles as trustee. In California, this type of trust arrangement is quite common for real estate transactions. It facilitates subdivision of the property since this can be accomplished simply by selling beneficial interests in the trust, thus avoiding the necessity of filing plat plans and recording deeds with the county. In addition, a trust arrangement of this type makes it easier for the actual owner of the property to remain anonymous.

The settlement date for the purchase of the property by the trust on behalf of the President was July 15, 1969. The President's total cost for the Cotton estate was $1,429,393. Of this total cost, $1,400,000 was paid for the property itself, a $25,000 commission was paid to Mr. Raine for locating the property, $4,293 was paid for soil tests of the property, and $100 was paid in miscellaneous costs.

In order to finance the down payment for the purchase of this property, the President borrowed $150,000 from a close friend, Mr. Robert Abplanalp. This loan was made on July 11, 1969, and carried an 8 percent interest rate. One year later, when the first $100,000 payment on the Cotton mortgage was due, the President borrowed an additional $175,000 from Mr. Abplanalp at a similar interest rate. Purchase of the Elmore tract

Several months after the President purchased the Cotton Estate, he purchased an additional 2.934 acres, known as the "Elmore property" for a price of $100,000. This property increased the President's holdings at San Clemente to roughly 30 acres and was purchased because it was felt that this property helped to "round out" the Cotton estate.

The settlement date for this purchase was October 13, 1969. Pursuant to the terms of the purchase agreement, the President made a $20,000 down payment and assumed an $80,000 mortgage carrying a 72 percent interest rate. The remaining principal payments were to be made at the rate of $16,000 annually in each of the next five years. The President made a $16,000 payment of principal in 1970, reducing the outstanding mortgage to $64,000.

Sale to B & C Investment Company

Mr. Frank DeMarco and Mr. Herbert Kalmbach informed the staff that the President desired to keep only a small portion of the entire Cotton estate and sell the remainder to a compatible buyer. This is confirmed by the fact that in April 1969, before the purchase of the Cotton estate, Mr. Kalmbach commissioned two appraisers to make an allocation of the $1.4 million purchase price to a smaller portion of the entire Cotton estate, representing roughly the acreage subsequently retained by the President. Mr. DeMarco and Mr. Kalmbach informed the staff that the original plan was to sell the remaining acreage to the Nixon Foundation so that the Foundation could use the land as a site for the Nixon Library; however, after a feasibility study was made, it was determined that the excess acreage would not be large enough for the Library, and as a result this plan was abandoned.

Some time thereafter, Mr. Abplanalp and Mr. Rebozo agreed to purchase the excess acreage from the President at a purchase price of $1,249,000. The purchase agreement for this transaction was drafted by Mr. DeMarco and was dated December 15, 1970. It was agreed that the portion of the Cotton estate retained by the President would contain all the buildings on the original Cotton estate, except the caretaker's house.

In order to determine the precise boundaries, a survey of the two portions of property was made by South Coast Engineering Service in the latter part of December. The survey was dated December 15, 1970, so as to conform to the date of the purchase agreement. As a result of this survey, it was determined that the actual interest in the