Mysteries of San Clemente

The Santa Ana Register, a conservative daily in California's Orange County, caused quite a stir last month. It reported that federal investigators were looking into whether President Nixon had used as much as $1,000,000 in unreported 1968 campaign contributions to buy his opulent San Clemente estate. The White House instantly denounced the report as "totally unfounded" and promised to supply a full explanation within 24 hours.

The statement was finally released eleven days later--but was so full of complex figures and tortured explanations that it raised many questions. It did reveal that the President had borrowed $625,000 from a friendly industrialist in connection with the purchase; that Nixon bought the property and later sold an interest in part of it to a still unnamed investment company; and that he ultimately made a good deal for himself. The industrialist-lender was Robert Abplanalp, the aerosol spray-valve tycoon. Still another of Nixon's helpful millionaire friends, C. Arnholt Smith, gained unwonted attention last week. He was in deep trouble with the Securities and Exchange Commission and the Internal Revenue Service (see ECONOMY & BUSINESS).

As the White House tells it, Nixon and Wife Pat took a fancy in 1969 to the ten-room, Spanish-style house in San Clemente where the late millionaire real estate developer Henry Hamilton Cotton liked to entertain his fellow Democrats, once including Franklin Roosevelt. The Nixons wanted only the house and a parcel of 5.9 acres, but the Cotton heirs insisted on selling the entire property, covering 24.6 acres. To swing the deal, the Nixons agreed to pay $1.4 million, with $400,000 in cash and a $1,000,000 mortgage.

For the cash, Nixon borrowed heavily from Abplanalp. In 1970 he took a second loan from Abplanalp after buying a small adjacent parcel of land. The two loans put the President in debt to Abplanalp for $625,000, on personal promissory notes at 8% interest.

This transaction raised some still unanswered questions.

First, why were details of the purchase concealed for so long? When the deed covering the Nixons' original purchase was registered on July 15, 1969, Orange County Recorder J. Wylie Carlyle noticed something unusual: the real buyers were unnamed. The buyer of record was the Title Insurance & Trust Co. of Los Angeles, which was the Nixons' trustee. A rich or famous buyer may follow this procedure to avoid boosting the prices of nearby property skyhigh. But, says Carlyle, "I've seen only one other deed like it, and that was for Disneyland."

Another question: Was it wise for the President to be so deeply indebted to one businessman? According to the White House, Nixon paid back the loans in December of 1970, by selling 18.7 acres of the San Clemente land to "an investment company set up by Mr. Abplanalp." In this deal, Abplanalp wiped out the $625,000 debt and took over mortgages totaling another $624,000. In effect that meant Abplanalp paid $1,249,000 to the Nixons for the 18.7 acres--just about the going rate for such property.

When all the dust had settled, the Nixons were left with the house and the remaining 5.9 acres at a net cost of only $251,000, plus $123,514 in improve ments, the difference between the original purchase price and the amount paid by Abplanalp. Not counting mortgage payments, the cash outlay made by the Nixons appears to have been $34,514.

Technically, Abplanalp may not own the acres that he bought. All the San Clemente land is still held under a trust agreement in the name of the Title Insurance & Trust Co. What the Nixons did was assign to Abplanalp's unnamed investment company "an interest in the trust." There may be sound legal or tax reasons for this, but the White House offers no fuller explanation. Meanwhile, as long as Abplanalp's company does not take formal title or develop the balance of the property, the Nixons enjoy the benefit of a generous buffer zone, at no cost to them.

There are other oddities. A month after the Nixons had bought the whole Cotton estate, the White House still was saying that the President would buy only about five acres. And as late as last October, John Ehrlichman, then the President's Domestic Affairs adviser, told an interviewer from the Los Angeles Times that Nixon was still looking for a buyer for the land--the same land that the White House now claims he sold in 1970.

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