Joe Sebo, File, Associated Press
FILE - In this March 25, 1981 file photo, President Jimmy Carter gestures in response to a reporter's question in the hallway outside his Atlanta office, where he and Charles Manatt, right, Chairman of the Democratic National Committee, met. Newly released FBI memos detail a sensitive investigation into fundraising in the Carter White House that started with a comparison to Watergate but fizzled after uncovering special access for donors but no criminal wrongdoing. The memos were released from the file of Charles Manatt, an Iowa native and former Democratic National Committee Chairman who was interviewed during the investigation. The records became public after Manatt died in July 2011 at age 75 in Richmond, Va.

IOWA CITY, Iowa — Newly released FBI memos detail a sensitive investigation into fundraising in the Carter White House that started with a comparison to Watergate but fizzled after uncovering special access for donors but no criminal wrongdoing.

The memos were released from the file of Charles Manatt, an Iowa native and former Democratic National Committee Chairman who was interviewed during the investigation. The records became public after Manatt died in July at age 75 in Richmond, Va.

Manatt grew up on an Audubon farm and studied rural sociology at Iowa State University before ascending to the top of the fields of law, business and politics.

While the investigation into whether President Jimmy Carter or aides improperly raised money at the White House received attention at the time, experts said the memos provide an intriguing look at one of the first major campaign finance investigations after Watergate.

Before his death, Manatt pushed Iowa State University to create the Harkin Institute of Public Policy, which was founded last year to house Sen. Tom Harkin's papers. Its director, Dave Peterson, said he'd never heard of the Carter case and the records provide "an interesting window into some of the early enforcement of the campaign finance laws."

According to the memos:

The case started when a source described as reliable and prominent called an FBI agent in Los Angeles in November 1978 to say he had knowledge of a scandal "of greater magnitude in consequence than Watergate," which had brought down President Richard Nixon. The source said several leading businessmen had been solicited for donations to the Democratic Party during a luncheon in the White House family dining room on Aug. 10, 1978, violating the ban on political fundraising on government property.

Attendees including oil magnate Armand Hammer, who had been convicted of concealing donations to Nixon's 1972 campaign, and entertainment executive Lew Wasserman were pressured to pledge $100,000 to retire $1.5 million debt the party had carried since the 1968 presidential campaign of Robert Kennedy, the source claimed.

Because of the "sensitive nature of this investigation," an FBI official told agents not to start until cleared by the Justice Department. An article in New York magazine titled "A Secret White House Meeting: Carter's Fat Cats," questioned whether the meeting was improper and Justice requested a limited investigation that soon expanded.

Investigators learned Carter and U.S. Sen. Edward Kennedy dropped by to thank donors for supporting the Democratic Party and, in Kennedy's case, his late brother's campaign. The party received donations from some attendees the same day, including $100,000 from Wasserman, who got a brief personal meeting and a photo taken with Carter.

Democratic Party officials told investigators the donations were received before and after the luncheon at an area hotel, and they were careful not to ask for money in the White House because they knew that was illegal.

Manatt, then a top Democratic fundraiser and prominent California lawyer, attended the meeting. He told investigators the purpose was to thank guests for support and "it was anticipated that this particular appreciation luncheon would generate continued support by the individuals in attendance."

"Manatt stated the luncheon was purely social in nature and the President did make certain comments regarding matters of national interest, but did not make any comments regarding issues of political campaigns," according to an FBI summary.

Manatt said he also was present when Carter met with Wasserman but couldn't recall specific conversation between the two.

Other attendees told FBI agents that Party Chairman John White did ask during the luncheon about the size of the debt, which prompted a brief discussion about retiring it. Hammer announced he and his wife planned to donate $100,000 apiece, but White cut him off and told him such discussion was improper, several attendees said.

Attorney General Griffin Bell in February 1979 announced he was declining to appoint a special prosecutor, saying there was no evidence Carter or aides solicited or received money. But Bell wanted more interviews done.

"We have been advised that the Attorney General desires that all 'loose ends' be covered and that 'no stones be left unturned' to avoid future criticism concerning the DOJ's handling of this matter," FBI official J.E. Henehan wrote.

From Atlanta to Detroit, agents tracked down others to ask about the purpose of the luncheon and whether they felt pressured to give.

Carter aide Joel McCleary told investigators the entire case was ironic. Carter was so "extremely careful" on ethics matters it had taken the DNC two years to get him to attend such events and the Democratic Party had failed to retire its debt: it still was more than $1 million.

The case was closed months later.

The investigation came up during FBI background checks when Manatt was considered for appointments by Carter and President Bill Clinton. Colleagues praised him as sharp, ethical, and worthy of the positions. Manatt served as DNC Chairman during Ronald Reagan's first term, and ambassador to the Dominican Republic from 1999 to 2001 under Clinton.

After graduating from ISU in 1958, Manatt briefly attended law classes at the University of Iowa before moving to Washington, where he earned his law degree at George Washington University. He later founded a banking law firm in Los Angeles that became one of the nation's largest and chaired the California Democratic Party before assuming a national role.