As a brief aside, it is interesting to describe how the money paid to Agnew was generated.
Clearly, these payments had to be made in cash in order to avoid leaving records of the transactions. However, engineering fi rms are not paid in cash for their services and thus don’t typically have large amounts of cash on hand. One method of generating cash was to give cash “bonuses” to key employees. After retaining a suffi cient amount to pay the income taxes on the bonus, the employee returned the cash to the fi rm, where it was placed in a safe until needed. Of course, this practice is a violation of the tax code: The company books record the transac- tion as a bonus, yet much of the money is retained by the fi rm. This practice sub- jected Matz, Childs and Associates to prosecution under the federal tax code. This method didn’t always generate the required amount of cash, so other means were also used. For example, large “loans” were made to colleagues, who cashed the money and returned it to the fi rm. These loans were then “repaid” slowly over a long period of time to make the books appear right.
With federal prosecutors threatening to indict Matz and Childs for income-tax evasion and other charges, they decided to provide evidence to the government of the wrongdoing of Agnew and his successor as county executive. Agnew’s lawyers and the prosecutors reached an agreement whereby Agnew would resign as vice president and plead nolo contendere (no contest) to a single count of income-tax eva- sion, a felony, for payments received in 1967. This plea is the legal equivalent of a plea of guilty; the defendant doesn’t admit to the crime, but does acknowledge that there is enough evidence to convict him. On October 10, 1973, Agnew resigned as vice president, the fi rst vice president to have resigned in disgrace. Later that day, in a dramatic appearance in a Maryland courtroom, he entered his plea. The judge fi ned him $10,000 and honored the plea agreement whereby Agnew received no jail term, but only three years of unsupervised probation. For agreeing to cooperate with the prosecution, Matz and Childs were not prosecuted.
These events took place against the backdrop of one of the most intense gov- ernment crises in U.S. history. Although Nixon and Agnew had been reelected in a landslide in the 1972 election, the Watergate scandal hung over the administration. Shortly after the events of this case, the Watergate scandal intensifi ed, culminating in the resignation of Richard Nixon from the presidency.