July 27, 1974

HR Judiciary Com discloses in its statements of information that IRS Comr Donald C Alexander conceded that he handled tax penalties against Pres Nixon differently than IRS normally would for other taxpayers; rept shows that IRS investigators informed Alexander that evidence of fraud in Nixon's returns might be found if Pres aides who had refused to testify on matter were compelled to do so; Alexander says IRS simultaneously notified Nixon that it had found large deficiencies on his return and was assessing him a 5% negligence penalty rather than 50% fraud penalty; charge that Nixon's tax returns were fraudulent was 1 of articles of impeachment proposed by HR Judiciary Com staff, which said that investigation of alleged fraud ‘remained incomplete and inconclusive’ solely because Nixon is Pres; IRS found Nixon underpaid his taxes for yrs ‘69‐'72 by total of $419,229.69, a figure that was somewhat lower than $444,022.32 deficiency that was found by Cong Joint Com on Internal Revenue Taxation; reasons for differences between 2 figures discussed; bulk of com's rept is devoted to discussion of largest item of controversy in Nixon's tax returns: deductions, totaling $482,000, that Nixon took for gift to Natl Archives of some of his pre‐Pres papers; Robert L Browne, chief of intelligence div of Balitmore dist office, made statements about aides’ testimony; Browne's subordinate, William Jackson, agent who did bulk of fraud investigation, had reptd to Browne about ‘inconsistencies’ in testimony of Frank DeMarco Jr, appraiser Ralph Newman and Edward L Morgan; Jackson's rept noted that DeMarco's partner Herbert W Kalmbach had denied having anything to do with preparation of Nixon's ‘69 return; but Jackson rept says Kalmbach's diary notations indicate that he was involved in matter; rept also noted that John D Ehrlichman was apparently also involved in gift of papers and ‘69 return; Jackson suggested that grand jury be asked to investigate roles of DeMarco, Newman, Morgan, Ehrlichman and Kalmbach in preparing Nixon's ‘69 return and gift of papers; Alexander recommended such an investigation to Watergate prosecutor Leon Jaworski; HR Judiciary Com repts statement that Nixon got refund on his ‘69 tax return as originally filed (it amounted to $35,301.17) in 2 wks; Judiciary Com statement includes several memos from Nixon's tax attys, Kenneth W Gemmill and H Chapman Rose, asserting, among other things, that they believe Nixon would be upheld in ct on several of tax items that had been disallowed by both Cong Joint Com and IRS (L)

Greek acceptance of Turkish proposals on Cyprus averts breakdown of Geneva conf of Brit, Greek and Turkish Foreign Mins; Greek Min George Mavros earlier repts that he was awaiting final formal session before declaring conf ‘failure’ and going home; demanded that Turkey carry out UN cease‐fire agreement as condition for continuing talks and said he could not stay in Geneva without Turkish assurances that fighting on Cyprus would be ended; Brit Foreign Sec James Callaghan then asked Turkish Foreign Min Turan Gunes to provide assurances that would be sufficient to keep conf going; both Greece and Turkey insist they want settlement, but positions have apparently hardened; Greece raises possibility of intervention by Greek Army on large‐scale in Cyprus if Turkish Army advances continue; main elements of Turkish pkg include cease‐fire along present lines, buffer zone between Greek Cypriote and Turkish forces and between Greek Cypriote and Turkish Cypriote communities occupied by UN forces, and delegation of responsibility of Nicosia airport to GB, Greece and Turkey, with Brit maintaining mil base at airport; Greece reptdly opposes pledge to convene another 3‐party conf within wk to discuss new const order restoring duties of Turkish Vice Pres on Cyprus, mixed Turkish Cypriote and Greek Cypriote diplomatic missions abroad, and 2 autonomous adms on Cyprus, with Greek part under Greek Cypriote Pres and Turkish part under Turkish Cypriote Vice Pres (L)

Fed Judge Jack B Weinstein withdraws earlier ruling that NYC alter Coney Island's housing and social patterns in order to integrate Mark Twain Jr HS and on July 26 gives central Bd of Educ and Community School Bd 21 until fall of ‘77 to raise number of white children in school to 70%; Weinstein's original decision was 1st time that Fed judge had blamed outside factors for school's racial imbalance; his order to city, state and Fed housing authorities to correct Coney Island's racial imbalance brought arguments from attys from all levels of govt who were against having their agencies involved in a direct desegregation order; Weinstein's July 26 ruling settled for assurance from housing authorities that they would cooperate in seeking Coney Island's renewal (M)

Sidney L Jones, deputy to White House econ counselor Kenneth Rush, hopes consumers will not take Pres Nixon's request in July 25 speech literally and save additional 1.5% of their income; says he does not want to see a consumer boycott; Jones illus (S)

Pres Nixon's atty James D St Clair, under pressure from Judge John J Sirica, agrees to begin turning over subpoenaed records of 64 White House conversations by July 30; makes agreement subject to Nixon's approval; White House deputy press sec Gerald L Warren says that draft of ct order embodying agreement is being sent to Western White House by Telecopier; Sirica will sign order once Nixon signals his agreement; agreement provides that White House will give Sirica by July 30 original tapes of 20 conversations that were included, to varying extents, in edited White House transcripts that Nixon released Apr 30; agreement sets Aug 2 as ‘target date’ for turning over records of as many of remaining 44 conversations as possible; St Clair worked out timetable with Watergate prosecutor Leon Jaworski at hearing convened by Sirica; Jaworski discloses that he and St Clair had at one point considered out‐of‐ct compromise on subpoena in which Nixon would agree to turn over tapes of 18 conversations selected by prosecution as especially important; he would also turn over tapes of 20 conversations of which portions were included in White House transcripts; in return, Jaworski would drop his pursuit of remaining tapes; Jaworski says Nixon rejected compromise after listening to some of tapes in question; St Clair does not contest Jaworski's account but says that 1 part of proposed compromise was that there would be no disclosure at that point of the fact that Watergate grand jury had named Nixon as unindicted co‐conspirator in cover‐up case; pors of St Clair and Jaworski (L)