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Off to the Midwest flew New York’s Governor Rockefeller, bound for a brisk round of political speechmaking and handshaking in Topeka and Omaha. The famous grin seemed as broad as ever. But behind him in New York, Rocky had left a reeking scandal that could damage his 1964 prospects. The scandal: appalling graft and bribery in the State Liquor Authority, which has power to grant, withhold or revoke the various permits needed by New York’s 100,000 bars, restaurants and liquor stores.

Some especially interesting aspects of the S.L.A. case involved lawyers who appeared before the S.L.A. or whose law firms represented clients seeking liquor licenses. According to some petitioners, there was such an animal as the “in” lawyer, one with enough influence to steer applications over the S.L.A.’s bureaucratic shoals. The “in” lawyer, of course, was usually able to succeed where “out” lawyers failed, and so commanded top fees for his work. There was nothing wrong with being an “in” lawyer, but what seemed curious was the fact that three former “in” types also happened to rank as virtually the top Republican politicians in the state government, after Rocky himself. The three: ∙JUDSON MORHOUSE, G.O.P. state chairman, and one of Rockefeller’s closest political advisers before the scandal began erupting last year. He got $18.000 from Chicago’s Playboy enterprises, which publishes Playboy and runs a string of private clubs featuring skimpily clad “bunnies.” The new Playboy Club in Manhattan needed a liquor license, was at first refused one, then got it after Morhouse was hired to do some legal and public relations work. Morhouse’s lawyer denies that there was any connection between Morhouse’s activities and the granting of the license. “Of course,” he adds, “it goes without saying that if he could put in a good word for them here and there in regard to their liquor license . . .” Morhouse has resigned his party and government posts.

∙WALTER MAHONEY, majority leader in the state senate. He has not appeared before the S.L.A. on behalf of a client for some time, but other members of his Buffalo law firm have. One client got permission to open a liquor store in a Rochester shopping center, although the S.L.A. normally refuses to license locations in shopping centers.

∙LOUIS LEFKOWITZ, attorney general. He was a “liquor lawyer” before he took office in 1957, and his law associate, Hyman Siegel, still is. A tape recording made surreptitiously in an S.L.A. office (and published in LIFE) suggest that after Lefkowitz was gone he was not forgotten:

Mrs. X (liquor store owner having license trouble): Afford the right lawyer? How much would that be?

S.L.A. Official: A good man would charge $7,500. But you say you can’t afford it.

Mrs. X: I’ll get the money . . . Who do I see?

Official: Well, I don’t know if I should give you Mr. Big’s name. You’re in the business; you should know it.

Mrs. X.: If I knew it, I wouldn’t be in this situation, would I?

Official: All right, you go see Louis Lefkowitz’ partner. You know Louis can’t handle things personally now. It’s obvious. I’ll write it down for you.

Since the scandal started breaking, Governor Rockefeller has cooperated energetically with the grand jury’s investigations and with the New York City district attorney’s office. He fired S.L.A. Chairman Martin Epstein, who refused to testify under an immunity waiver, appointed an ex-FBI man to take his place. Even so, Rockefeller will inevitably, as Governor, be tarred with some responsibility for the scandal, if only because he appointed Epstein chairman of S.L.A. And the scandal will not go away any time soon. New York City’s Assistant D.A. Alfred Scotti has ten accountants, 60 detectives and ten special investigators still digging.

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