Hunt, feeling left hung out to dry, returns to DC and hires a lawyer prepared to tell all to the investigators.

Gleason recruits Judy Hoback Miller (known only as “The Bookkeeper” in “All the President’s Men” until revealing her identity in 1992), another CRP employee, who tells the FBI about the strange practices at CRP including a slush fund of cash.

Gray asks Felt if the investigation could be limited to the burglars along with Hunt and Liddy, but Felt tells him it will go much higher the further they dig. Felt sees that Gray will likely keep the full truth from coming out leading him to find another outlet for this information.

Bernstein meets with a former White House employee who worked in Colson’s office. She describes the secretive nature of the work and that it appeared they were investigating Ted Kennedy particularly about Chappaquiddick. Bernstein contacts a White House librarian who initially says she remembers Hunt checking out several books, but then retracts her statement saying she’s never heard of Hunt.

Nixon tells Ehrlichman that their can be no appearance of a cover up.

Walter Rugaber of The New York Times reports that at least 15 phone calls were placed from suspected burglar Bernard Barker’s phone in Miami to the Committee to Re-Elect the President. Bernstein learns that a local Florida DA has subpoenaed the records. The DA says his investigator, Martin Dardis, will cooperate if Bernstein comes to Miami.

When Bernstein reviews the checks himself, he finds one for $25,000 made out to Kenneth H. Dahlberg, but Dardis doesn’t know who that is. Woodward and Bernstein learn Dahlberg works for the Nixon campaign as Midwest finance chairman. Dahlberg tells Woodward he turned the money over to either Hugh Slone (CRP’s Treasurer) or Maurice Stans (CRP’s financial chairman).

Woodward’s source at the General Accounting Office reveals a “slush fund of cash” inside CRP.

Felt/Deep Throat tells Woodward they cannot continue to speak on the phone and Woodward will need to come up with another way to signal when he wants to meet in person. They agree Woodward will move a flower pot with a red flag to the rear of his balcony. They would then meet at 2am in an underground garage in Rosslyn, Virginia. If Felt needs to contact him, he will draw a clock on page 20 of Woodward’s copy of the New York Times.

As the cover up continues, Nixon tells Haldeman, “I’m not that worried about it…”

Clark MacGregor, the new head of CRP, tells reporters that Liddy had used campaign funds for his own priorities.

Having acquired a list of CRP employees (a classified document), Woodward and Bernstein begin visiting the homes of the employees looking for information. In most cases, people either refuse to talk or say they wished they could. Others express great concern at being spotted with the reporters at all. This reaction gives the reporters the sense that their story is bigger than they may have previously understood.

The Washington Post reports that the GAO uncovered that more than $500,000 in campaign funds had been mishandled and at least $100,000 was set aside for an illegal security fund. The report itself gets delayed and is not released as scheduled that day.

Richard Nixon is nominated for a second term as President at the Republican National Convention.

Back in Miami, Bernstein, obsessed with the $89,000 in Mexican checks found, learns from Dardis that Stans has been laundering campaign donations perhaps exceeding $750,000 in Mexico to ensure their origins could not be traced.

Nixon addresses reporters and says both sides have had campaign violations, but he is unable to give any details on Democratic violations. He rejects the suggestion that a special prosecutor be appointed, saying the FBI, Justice Department and others were already conducting investigations. He also says John Dean, special counsel to the President, has conducted his own investigation and concluded that “no one on the White House staff…presently employed, was involved in this very bizarre incident. What really hurts in matters of this sort is not the fact that they occur…What really hurts is if you try to cover it up.” Dean’s private reaction to the comments was one of surprise considering he’d, in fact, been spending his time creating the cover up, not investigating it.

Woodard and Bernstein’s visits to CRP employees yields some information including that Sally Harmony, Liddy’s secretary, had withheld information to the grand jury and the FBI in order to protect others. There are also repeated claims that documents were destroyed not long after the Watergate break in, but no one could say they had personally witnessed this taking place.