The Investigator; From Watergate to the United Way, Terry Lenzner Has Shown No Mercy

It was mid-December when “Terrible Terry” got the call that would put him in the middle of the biggest charity scandal of them all.

For weeks, former employees of the United Way of America had been getting questions from two reporters about the organization’s accounting and spending practices.

The first queries, from Regardie’s reporter Alicia Mundy, had caused little concern at United Way headquarters in Alexandria. When nine months of investigation had not resulted in a story, she says, one of her sources contacted reporter Charles Shepard of the Washington Post.

Shepard, whose reporting had helped bring down televangelist Jim Bakker, was aforce to be reckoned with, members of the United Way board believed. They realized that they were about to have a big public-relations problem. So they hired Hill & Knowlton vice president Frank Mankiewicz, a master at smoothing things out with the Washington press corps.

But before he could deal with Shepard, there was one thing Mankiewicz needed: the answers to the questions Shepard was asking about United Way president William Aramony’s $390,000 annual salary, his relationship with a United Way spin-off company headed by his son, and what seemed to be extravagant travel expenses. No one at United Way seemed to know the answers, or wanted to say.

The man to answer them, Mankiewicz told United Way general counsel Lisle Carter, was attorney Terry Falk Lenzner, chairman of the Washington-based Investigative Group, Incorporated.

“I’d always liked his work,” says Mankiewicz, “and he’d been in here about six months earlier trying to get some work. So I figured what the hell, he woulddo a good job.”

Following Mankiewicz’s advice, general counsel Carter–with the concurrence ofWilliam Aramony–hired Lenzner and IGI to prepare a confidential report on the United Way’s financial practices.

Lenzner was told to work quickly. Shepard had not yet called any of the principals in the story. “And when Shepard did call,” says Lenzner, “they wanted Frank to have the answers.”

With the information Lenzner turned up, Mankiewicz hoped to be able to say that the United Way was already aware of whatever problems there might be and was taking steps to correct them.

It seemed like a good plan. But in hiring Terry Lenzner to conduct the investigation, the United Way didn’t quite get what it expected.

A wealthy, Harvard-trained lawyer who has been known for his confrontational style since he arrived in Washington in 1964 to work at the Justice Department, Lenzner helped the Senate’s Watergate investigation in 1973 and ultimately delivered the subpoena for presidential testimony to President Richard Nixon. Lenzner is described by friends and adversaries alike as “distrustful,” “secretive,” and “intense.” His personal feuds have made him one of the most controversial lawyers in Washington.

But life to Lenzner is not a popularity contest. And with his toughness comes a reputation for integrity–and success. He spent ten years rooting out corruption surrounding the building of the Alaska Pipeline–and getting paid handsomely for it. He has investigated racially motivated crimes in Boston, child murders in Atlanta, and corporate scandals on Wall Street. In 1986, a New York investment bank hired Lenzner to look into a $200- million carpet-cleaning business called ZZZZ Best; he discovered that the company was a front for laundering drug money, and the company’s founder was indicted and sent to prison.

Recently he has been hired to do investigative work on Mike Tyson’s rape- conviction appeal and to track down thirteen art treasures stolen from a Boston gallery.

Lenzner’s impatience is legendary inside his office. He is demanding and admittedly difficult.

“He inspires loyalty in the people under him, but he can’t work collegially with others,” says a former Lenzner investigator. “He’s bright as hell, he reads fiction voraciously, and he always knows when someone is lying.” Lenzner himself talks about being able to look into a person’s eyes as if he were prey, to see if he is telling the truth.

He likes to hire former journalists as investigators. Freelance writer Brooke Shearer, daughter of Parade magazine founder Lloyd Shearer and wife of Time magazine’s Strobe Talbott, recently joined IGI. Lenzner’s partner, Jim Mintz, who heads the company’s New York office, is also a former reporter.

Lenzner says that IGI operates much like a journalistic enterprise. He claims,for example, not to pay for information, and to tell investigators not to misrepresent themselves–although he acknowledges that if someone assumes that an interviewer is someone other than who he is, there is no need to correct the assumption.

Most of the company’s work is done by scouring public records at courthouses, libraries, and federal agencies, such as the Securities and Exchange Commission.IGI’s offices at 1140 Connecticut Avenue are loaded with computer data bases linking it with news and financial information.

When he was hired by United Way, Lenzner and investigator Jeff Nason didn’t have to skulk around in data bases. They were given access to United Way’s travel documents, receipts, and expense vouchers. Employees were told to cooperate, and Aramony ultimately agreed to three interviews with Lenzner.

When Lenzner began looking at the expense records, he instinctively knew that things weren’t right. Among other things, he found that United Way had spent $92,265 on limousine service for its president, another $19,700 on personal items such as golf clubs, and nearly $40,000 in travel expenses to Las Vegas. Lenzner also found that United Way of America funds had been used to purchase condominiums in New York and Florida that were used primarily as offices for spinoff companies.

On January 10 and again two weeks later, Lenzner briefed the United Way executive board on what he had found. “From the first oral report, our suggestion was that outside counsel be hired, and that our mandate be expanded to include giving recommendations on how this could be corrected,” said Lenzner.

After the second oral report, on January 24, three weeks before the Post brokethe story, the United Way agreed to hire the Washington law firm Verner, Liipfert, Bernhard, McPherson & Hand to assist in making recommendations to address the problems.

But Tony DeCristofaro, a spokesman for United Way, says the organization ran out of time. Shepard’s story was now scheduled to run in mid-February, and Mundyhad stepped up her timetable to compete with the Post. There was no way, says DeCristofaro, that the United Way could fix everything that quickly.

Even though Lenzner had told the board most of what would later come out aboutAramony’s activities, Mankie- wicz says, there was no talk of firing the man whoin 22 years had transformed the United Way from a small umbrella group of charities that didn’t even share the same name into a national organization thatcoordinates the raising of more than $3 billion a year.

“Lenzner’s report had focused on expenses, and the members of the board still weren’t sure that the things Aramony had charged for wouldn’t balance off thingsthat he had spent but wasn’t reimbursed for,” says Mankiewicz, who still represents United Way. “A lot of things were cloudy. Sure, it was known that United Way was paying for a condominium, but they hadn’t compared that to how much money they would have had to spend on hotels in those cities.”

Shepard’s February 16 story disclosed Aramony’s “lavish” spending habits and accused him of running the charitable organization like a Fortune 500 company.

Still, United Way officials thought Aramony could survive. Says DeCristofaro, “The first story didn’t really get picked up that much, because it came out two days before the New Hampshire primary.”

When Shepard came out with more details in a follow-up story a week later, local United Way chapters began feeling heat from givers.

With Lenzner’s confirming reports already in hand, there was little the UnitedWay could do but acknowledge the accuracy of the Post account. Mankiewicz says it was as much Lenzner’s investigation as Shepard’s that resulted in Aramony’s resignation on February 28.

For another month, Lenzner continued his inquiry. His final report on April 2,blasting Aramony for failure to “observe the kind of spending constraints which must control not-for-profit institutions,” was made public.

Aramony–who had walked so blithely into the arrangement with IGI–was livid over Lenzner’s conclusions. In an interview with the New York Times, Aramony said that the report was “pieced together with malice to make justifiable actions appear evil.”

Lenzner thinks Bill Aramony saw himself as someone who should live the life ofthe corporate executives from whom he sought donations and cooperation. As he interviewed Aramony and watched events unfold, he says, he was reminded of the fall of Attorney General John Mitchell in the Watergate case.

Lenzner’s office overlooking Connecticut Avenue has a look of impermanence–boxes strewn, papers piled as though they’d just been dumped there–even though the investigator has been in the quarters for a year and a half.

Terry Lenzner is fanatical about his work, obsessive about details. The officechaos allows him a chance to do what he does best: look for things.

Around strangers Lenzner is nervous. As his friend and one-time investigating colleague Scott Armstrong once told him, “Just because you’re paranoid doesn’t mean people aren’t after you.”

Lenzner was born in Manhattan on August 10, 1939. His father, Joseph Lenzner, was a wealthy dentist. Terry was the youngest of three brothers. His oldest brother, Robert, is a syndicated financial columnist. Middle brother Allan is a financial consultant in New York.

Joseph Lenzner was a tough and demanding parent. The Trenton native had been astar end on the football team at the University of Pennsylvania, class of 1927, in the days when Ivy League football meant something. He tried to mold his sons in his own tough image. Allan Lenzner recalls him as a difficult man with whom to communicate.

Joe Lenzner exhibited the most pride in Terry, the youngest but toughest of the three boys. Terry started playing football at New York’s Trinity School, butin eighth grade, swelling in his ankles threatened his ability to play sports.

On the Christmas after his fourteenth birthday, Terry went into the hospital for what was expected to be a weekend visit to find a cure for the swelling. Thedoctors discovered rheumatic fever. His weekend hospital stay lasted three months, and he was immobilized for nine months.

“I was an active kid,” Lenzner recalls. “I was home in bed for six months. I was out of school for a year. Something happened to me lying there. I guess it made me realize that I had to get things done quickly, that I needed to move.”

If Lenzner was tough before the illness, he emerged from the ordeal as if he had something to prove. Allan recalls a football episode at summer camp when Terry, on defense, broke through the line, lifted his brother in the air, and slammed him to the ground, knocking him out.

When Allan tried to retaliate a few plays later by throwing the football at his brother, it bounced off his back and was run back for a touchdown by Terry’steam. “That’s the way it always is with him,” says Allan.

The team’s quarterback was Charles “Pug” Ravenel, who later would run for governor and senator in South Carolina. “Terry was always elected captain and I was always the runner-up,” recalls Ravenel. “It happened at Exeter and it happened again at Harvard. Woof was just a natural leader. He wasn’t a rah-rah kind of leader; he led by working so much harder than anyone else.”

At 207 pounds, Lenzner was a star lineman for Harvard but too small to play professional football. So he enrolled at Harvard Law School “for flexibility,” he says. “I didn’t really know any lawyers, and we didn’t have any in our family.”

After graduation from law school, Lenzner–classified 4-F by the Army–was hired by the Justice Department’s civil-rights chief, John Doar, as an assistantattorney. Lenzner threw himself into the job.

Recalls Doar: “We had some tough guys in our division, but when Terry believedsomething, he would come right at you. If you didn’t express your views as strongly as he did, he would just roll right over you.”

Some of Lenzner’s biggest battles were with Bob Owen, his immediate supervisor. Lenzner wanted to aggressively pursue indictments of police officersaccused of civil-rights violations, while Owen wanted to put more time and resources into voting-rights activities.

“Bob was a former paratrooper and football player, too,” says Doar. “Lenzner came right after him.” Lenzner says that despite his passion, Owen’s approach won the day.

“My emphasis was on prosecution,” says Lenzner. “Now that I look back on it, I realize Owen was right. It was from giving blacks the vote that real changes came to be made.”

Lenzner left the Justice Department in 1967 and became an assistant US Attorney for the Southern District of New York. But in 1968, when Doar was namedhead of a special panel assigned to improve conditions in New York City’s publicschools, he asked Lenzner to help, which he did.

Doar’s admiration for Lenzner had an odd result. Doar had been a Princeton classmate and friend of Illinois Congressman Donald Rumsfeld, who in 1969 joinedthe Nixon administration as director of the Office of Economic Opportunity.

One of the first people Rumsfeld called was Doar, asking if he wanted to come back to Washington. Doar, a Democrat, declined, but he said he did know a talented young lawyer, Terry Lenzner. “I thought he was good and strong and would work hard,” says Doar.

Rumsfeld met Lenzner in the spring of 1969 and shared Doar’s assessment. “I found him bright, appealing, and energetic,” says Rumsfeld, now chairman of General Instrument Corporation in Chicago. After working in Rumsfeld’s office for several weeks, Lenzner, then 29, was appointed director of the Legal Services Corporation, which then operated under OEO auspices.

Although Lenzner knew no more about poverty programs than he had about civil rights, he again threw himself into the job. His enthusiasm antagonized the Nixon White House, and he was repeatedly asked by Rumsfeld to have the attorneysin the field stop filing so many suits against state governments and agencies. Lenzner refused. At a White House dinner President Nixon greeted him with the words, “You’re the guy that’s causing all the trouble.”

Although Rumsfeld quietly admired Lenzner’s tenacity, White House aides began calling him “Terrible Terry.”

Finally, on November 20, 1970, Lenzner was called upstairs to Rumsfeld’s office. “I knew what was about to happen,” Lenzner says. “So I lit the smelliest cigar I could find and walked into this room with Rumsfeld, Frank Carlucci, and Dick Cheney, who were both aides of Rumsfeld.”

Rumsfeld asked Lenzner to resign. “You have refused to follow my directions,”he said.

Replied Lenzner: “That’s interesting. What instruction have I not followed ?”

“None–you haven’t followed any of them,” said Rumsfeld, exasperated.

Puffing on his stogie, Lenzner said he would not resign and insisted that he be fired. The following day he called a press conference. He charged that his firing was political and denounced California Governor Ronald Reagan and ArizonaSenator Barry Goldwater by name, saying they had agitated for his dismissal because his agency was working aggressively in their states.

Actually, Lenzner had never been very political. He had taken the jobs he had because of the challenges they presented, not to advance a philosophy. But the Legal Services experience seemed to radicalize him. To fill the time until he found another job, Lenzner joined the defense of Father Daniel Berrigan in an anti-war trial, associating himself with such radical lawyers as Ramsey Clark and Leonard Boudin.

Lenzner was working for an American Bar Association committee and lawyering part-time when Sam Dash, chief counsel of the Senate Watergate Committee, chose him as one of his three top assistants; the other two were David Dorsen and James Hamilton.

Hamilton, a courteous South Carolinian, was dismayed by Lenzner’s aggressive approach to the Watergate investigation. The two men battled incessantly; their fights made almost as much of an impression on other staff members as Lenzner’s zeal to get Nixon did.

Once again, though, it wasn’t politics that motivated Lenzner, it was revenge.As he later walked down the corridors of the White House to deliver the first congressional subpoena ever served on a president, Lenzner delighted in the irony: Here he was getting even with the man who had wanted him fired three years earlier.

After the Watergate Committee, Lenzner joined a small law firm that became Truitt, Fabrikant, Bucklin & Lenzner. The environmental practice seemed an odd choice for a lawyer with Lenzner’s resume and Watergate celebrity. He had offersfrom larger firms, but they weren’t prepared to put his name on their letterheads. “For some reason, that was important to me at that point in my life,” he recalls.

Then came one of Lenzner’s biggest breaks. A friend had asked him to representa group of native Alaskans in a land- claim case. It was the type of case a lawyer takes when he is starting in practice and needs work. But while he was inAlaska, Lenzner made contacts with some state officials, including the deputy attorney general, who Lenzner discovered was a fellow Exeter graduate.

The state wanted to find out if it was being bilked by contractors on the Alaska pipeline. Lenzner was asked to conduct a six-month investigation–for a fee of $850,000.

“When they said the amount, I really had to work hard to keep a straight face,” Lenzner recalls. “I was doing work at the time for $65 an hour.”

The $850,000 was only the beginning. After Lenzner completed his report documenting cost overruns, Alaska hired his firm to sue the wrongdoers. The litigation wended its way through the courts for nearly a decade before all the suits were settled in 1986.

The little Truitt firm couldn’t handle all the work involved in the pipeline case. “We were so busy we didn’t have time to run the firm,” recalls founding partner Thomas Truitt. The solution was to merge with Wald, Harkrader & Ross, which after the merger had more than 100 lawyers.

At the new firm, Lenzner was a star, albeit a difficult one. “He was a little squirrelly, but essentially a person you could deal with,” says Truitt. “Any person with the talent he had is going to be complex and hard to handle, and he was both of those.”

As with almost every superior he’d dealt with, Lenzner began to clash with firm leader Robert Wald. With the lucrative Alaska work, Lenzner’s position in the firm was almost unassailable, and he began to kibitz and complain. Friends who knew him only in connection with Watergate and OEO were surprised at his carping about his own compensation and especially about adding his name to the Wald letterhead. He wanted money, but he also wanted recognition.

In 1981 Lenzner abruptly quit the firm and became a name partner at Rogovin, Huge & Lenzner. Overnight, without a word, he moved his Alaska files to the offices where his name would be on the door. Lenzner says his obligation was to the client, not his partners. “We had a huge case, and to protect the state of Alaska, to assure a smooth transition, that was the way I had to do it.”

Lenzner’s departure began an exodus from the suddenly cash-poor Wald, Harkrader. Within three years the firm had closed its doors. Although the reasons for its failure were complicated, Lenzner’s midnight departure helped set it in motion.

Lenzner’s relationship with his new partners, Mitchell Rogovin and Harry Huge,didn’t fare much better. In 1984 Lenzner and Jim Mintz, an investigative reporter who had worked off and on with Lenzner since 1977, formed IGI. Mintz ran the office with John Hanrahan, a former Washington Post reporter. Eventuallythey were joined by Theodore Barry, a former producer at ABC News.

For the first three years, Lenzner remained at the law firm. But his law partners began questioning the arrangement. IGI was a law-related activity, Rogovin and Huge maintained; Lenzner should be sharing the company’s profits with his law partners. Lenzner held that IGI was a separate entity, so there wasno reason to share its profits.

IGI was doing a lot of business conducting investigations concerning corporatemergers and acquisitions. Its clients often were companies threatened by corporate raiders. IGI would try to dig up information that could be used to block the takeover–such as that the raider had assets in South Africa or secretownership in a company with conflicting interests.

The more the cash rolled in, the tenser the ownership issue became with Rogovin and Huge. Finally, in the summer of 1987, Lenzner was given an ultimatum: He could sell an interest in IGI to his law partners, or he could leave the firm. Lenzner went with IGI.

Hanrahan, who still works for IGI, says the transition was inevitable: “Terry hated being a lawyer. What he likes is investigating.”

But Lenzner’s move to IGI began taking a toll on personnel. One former employee calls him “a Jekyll-Hyde personality. He could be completely charming, but he also had explosions of temper. You never knew when he was going to go off.”

Lenzner acknowledges that he is hard to work with. “I’m trying to be more relaxed,” he says.

In the fall of 1991, the Isabella Stewart Gardner Museum in Boston hired IGI to locate thirteen stolen works of art– including the only known Rembrandt seascape, “The Storm on the Sea of Galilee”–after museum officials became skeptical of the FBI’s ability to track down the thieves, thought to be Europeans.

Lenzner’s investigators in London are on the case, and he says he is mining contacts across Europe and Asia to find the paintings, valued at $200 million.

With the collapse of the Soviet Union, Lenzner’s services also are being sought by US companies eager to do business there. Lenzner says he has hired twoformer Soviet KGB agents to check out Russian businessmen who are potential partners for his clients.

And IGI recently was hired by the law firm Williams & Connolly to work on the appeal of Mike Tyson’s rape conviction. Lenzner is investigating whether any jurors might have prejudged the case or had reason not to give it an impartial hearing. Part of the investigation simply involves cross-checking the jurors’ answers to written questionnaires with their answers during the selection process to make sure all told the truth. A finding that any juror lied might provide grounds for Williams & Connolly to ask for a new trial.

Few of Lenzner’s investigations, though, are likely to have as much impact as the United Way case. Lawyers hired by United Way to work with Lenzner found the assignment painful. “I have never seen a man with such an overblown sense of his own importance,” says one.

But conflict with allies is standard operating procedure for “Terrible Terry.”

“It was a lot like Watergate,” says Lenzner. “When we started this thing, we had no idea how big it was going to become.”