On October 17, 1927, Harry F. Sinclair appeared in court, having been charged with conspiracy to defraud the United States government. The scandal, which would go down in history, happened on the watch of President Warren G Harding and involved Secretary of the Interior, Albert B. Fall and Secretary of the Navy Edwin Denby.
Here is how the trouble began:
At the turn of the 20th century, the United States Navy converted from coal to oil in order to fire its steam-powered ships.
In order to make sure that there would always be enough fuel available for the Navy, President Taft designated several oil-producing regions as Naval Oil Reserves.
In 1921, convinced Denby to turn over control of three oil fields -- Elk Hills and Buena Vista, both in the Kern County, California and Teapot Dome in Wyoming -- from the Department of the Navy to the Department of the Interior.
In 1922, Secretary Fall leased the oil production rights at Teapot Dome to his personal friend Harry Sinclair, founder of Sinclair Oil and the rights to Elk Hills to another personal friend, Edward Doheny, head of Pan-American Petroleum and Transport Company without the use of the competitive bidding process.
Fall received a number of gifts totaling $404,000 as well as a no-interest loan of $100,000 from his two friends. In 2011 dollars; that's about $6.19 million.
The lease was legal, but the gifts and loan were not.
Although he tried to keep his new-found riches a secret, the change in his lifestyle -- including lucrative business investments and improvements to his cattle ranch -- was obvious, and there were rumors of wrong-doing.
It wasn't until spring of 1922 that one of Sinclair's competitors in the oil industry wrote an angry letter to his senator complaining about the fact that Sinclair was given a competitive edge in a secret deal for the Teapot Dome reserve.
The Senator, John B. Kendrick, called for an investigation which lasted for more than two years. Fall had covered his trail well, and important pieces of paper kept disappearing. Although the congressional investigation had yielded no evidence of wrong-doing, the commission continued to try to figure out how he had gotten rich so quickly.
But the investigation began to wrap up when evidence of the loan he'd gotten from Doheny was uncovered.
The ensuing scandal left President Harding's legacy that of the scandal and a path of civil and criminal court cases, and forced the resignation of Fall as well as the Secretary of the Navy Denby.
The Supreme Court of the United States handed down the decision which affirmed that the oil leases had been obtained by fraud and corruption. Teapot Dome and the other reserves were taken out of the purview of Interior Department and returned to the Department of the Navy. The leases were invalidated.
President Harding stood by Fall, saying, "The policy which has been adopted by the Secretary of the Navy and the Secretary of the Interior in dealing with these matters was submitted to me prior to the adoption thereof, and the policy decided upon and the subsequent acts have at all times had my entire approval."
Albert Fall became the first member of a presidential cabinet to ever go to prison for crimes committed while in office when he was sentenced to serve a year in jail and fined $100,000.
Harry Sinclair refused to cooperate with the investigation and was eventually charged with contempt of court and jury tampering.
Edward Doheny was found not guilty of bribery in in 1930.