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Sour Milk San Antonio The dairy scandal \(Obs., keeps taking its toll. Two attorneys from John Connally’s Houston law firm have asked the court’s permission to withdraw from the defense team in the government’s anti-trust suit against American Milk Producers, Inc. Charles T. Newton, Jr., refused to discuss the action with the Observer. “I don’t think it would be possible to comment on it,” he said. Asked if the withdrawal had anything to do with the fact that Connally’s name keeps popping up in the scandal, Newton offered another “no comment.” The senior AMPI attorney with Vinson, Elkins, Searls, Connally & Smith is Leroy Jeffers, president of the State Bar of Texas. Jeffers was out of town and could not be reached for comment. George Mehren, the general manager of the milk coop, mentioned Connally’s name a number of times in a deposition taken in San Antonio in December. AMPI, the largest dairy coop in the nation, is headquartered in San Antonio. According to the Associated Press, Mehren said he met with Connally in , his treasury department office March 12, 1972, a month after the Justice Department filed the anti-trust proceeding. Connally reportedly phoned John Mitchell, who, by then, had left the attorney general’s office to head President Nixon’s reelection campaign. As Mehren reconstructs the meeting, Connally picked up the phone and reached Mitchell “quite quickly.” ” ‘You’re going to lose the Midwest. I’m getting it from everybody,’ ” Mehren quoted Connally as saying. ” ‘You’d better get some people out there to see what’s wrong. . . . We’re going to have some political trouble out there.’ He said it rather forcefully, I might add.” Mehren said Connally also called Kansas Sen. Robert Dole, the chairman of the National Republican Committee, and made generally the same pitch to him. At no time, the coop manager testified, did Connally refer to “intervention of the executive department.” THE 40,000-member coop contributed $202,000 to Nixon in 1971 through TAPE, the Trust For Agricultural Political Education. AMPI probably would have given more $2 million was promised as one point but the donations received adverse publicity. Mehren, a Democrat, became general manager early in 1971, and he was reluctant to make further gifts. During the March 12 meeting, Mehren said Connally discussed the contribution situation with Jake Jacobsen, a former LBJ aide who was working for AMPI. Connally told Jacobsen that if the milk men chose to contribute in 1972, it was his professional judgment that the money come later in the year rather than immediately. Connally has been privately questioned by the Ervin committee about his role in the milk scandal. Washington sources reported in November that Watergate investigators had evidence that between $10,000 and $15,000 in dairy money was in a bank safe deposit in 1971 and that Connally may have been offered the use of it. Connally has affirmed that Jacobsen told him sometime in 1971 that $10,000 was available in contributions and that Connally was welcome to designate where the funds should go. The former Texas governor told Washington reporters, “I said I did not want to do that because I was a Deinocrat in a Republican administration.” Connally called allegations that he received money from the dairy industry “a categorical lie. Anyone that supposes he was present when I received a payment is a categorical liar.” In 1971, when he was secretary of the treasury, Connally did put in a good word or two for the dairymen on behalf of a higher milk parity. He attended the meeting on March 22, 1971, during which Nixon decided to increase the milk support after all \(Obs., AMPI is contending that the anti-trust suit, filed Feb. 1, 1972, was an extortion attempt prompted by Mehren’s refusal to contribute further dairy funds to CREEP. The dairy lawyers filed a motion of discovery last November for White House and Justice Department documents pertaining to the filing of the suit and AMPI’s campaign contributions. The motion contends, “The available evidence, albeit largely circumstantial at this point, strongly suggest the existence of a conspiracy among officials of the Justice Department and the fundraisers for President Nixon \(particularly Messrs. the anti-trust laws for an entirely extraneous and illegal purpose, that is, to extort political contributions from AMPI and/or TAPE.” AMPI asserts that the Chicago office of the Justice Department conducted its investigation of the anti-trust suit between April and August of 1971. “Normal investigative channels were not employed. The government was apparently content to rely on materials and information supplied by private plaintiffs in the instant cases. … No further action was taken until Mehren, a Democrat and a former assistant secretary of agriculture in the Kennedy and Johnson administrations, became general manager, an event which could reasonably signal the possible termination of TAPE contributions to CREEP.” According to the AMPI motion, the Justice Department notified the coop on Jan. 27, 1972, that it was prepared to file an anti-trust suit unless AMPI signed a consent decree within the traditional 60-day period. The following day the 60-day period was cancelled and AMPI was notified it would have only two days to sign the consent decree. AMPI didn’t sign and the suit was filed Feb. 1. On Feb. 3 Mehren met in Los Angeles with Kalmbach and expressed reluctance to give CREEP any more money. THE GOVERNMENT filed its answer to the AMPI motion a few weeks ago. The brief points out that Mehren himself has repeatedly denied that there was any hint of a quid pro quo in discussions of campaign contributions with Kalmbach. According to the government timetable, the Justice Department’s anti-trust division in Chicago began the investigation early in June of 1971. On Aug. 10 the Chicago staff requested authority for a grand jury to look into criminal charges against AMPI. Attorney General Mitchell did not approve the request. On Nov. 30, the Chicago staff again asked for a grand .jury. Mitchell met that January 18, 19 74 9