“Okay,’’ he said when Herndon finished, “let me give you another one.’’
“Okay.’’
Whitacre paused again.
“What if, hypothetically, the activity involved was kickbacks by corporate executives?’’
Herndon and Shepard didn’t flinch.
“Well, Mark,’’ Herndon said, “you know better than I do that there are plenty of ways companies try to attract business. I mean, you know, they buy meals at restaurants for potential customers; they buy them tickets to sporting events. They even buy them gifts. That happens.’’
Shepard chimed in. “I don’t know if there would be federal violations involved in something like that. Maybe it’s ethically not right, but it’s done. I mean, it’s widely known that businesses do that.’’
Whitacre pondered the agents’ words. He appeared to be considering how to respond.
“Umm, I need to ask,’’ Whitacre said. “Is this conversation on or off the record?’’
“Definitely on the record, Mark,’’ Shepard replied. “A report will be generated about whatever you say.’’
Herndon shoveled some orange chicken into his mouth, watching Whitacre as he ate. He could tell the man was uncomfortable and that they had some distance to go. But at this point, there was no telling where they were headed.
“Okay,’’ Whitacre said. “Well, what if the kickbacks to executives were generally accepted in the company?’’
“What do you mean?’’ Shepard asked.
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“What if the company generally accepted kickbacks to executives? Like ten to twenty thousand dollars for low-level guys and more for higher-level executives.’’
Shepard set down his fork. “How much money are you talking about?’’ he asked.
Whitacre was slow to respond. “Like as much as five hundred thousand.’’
Shepard and Herndon stared at Whitacre, speechless.
“Well,’’ Shepard finally said, struggling to recover, “taking cash in any amount is different from having meals paid for or receiving tickets.’’
Herndon glanced over at Shepard. Thanks for the brilliant observa- tion, Brian.
“But this is a difficult question,’’ Shepard continued. “The funds sound like they would be corporate, so I’m a little uncertain regarding possible violations.’’
As far as he knew, Shepard said, fraud cases handled by the FBI usually involved federally insured money. Herndon shook his head; he knew almost any embezzlement could be charged as a wire fraud and said so.
“Well, what if the money wasn’t from the executive’s company?’’
Whitacre asked. “Would it be any different if the transaction involved a foreign company?’’
Where was this going? The conversation was driving both agents crazy. Whitacre was giving bits and pieces but never letting them see the whole picture. If a foreign company was involved, it could lead to more violations, Herndon said. But it was hard to say without specifics.
Shepard decided to push. “What do you mean by a foreign company being involved?’’ he asked. Whitacre ignored the question. “Would it make any difference if it was solicited by a foreign supplier?’’
“No, Mark,’’ Shepard said. “It probably wouldn’t.’’
Herndon couldn’t believe the man was a Ph.D. He was acting like a simpleton. Why was he dragging this out? What was all that garbage about company cars? And—oh yeah, what about half a million bucks in kickbacks, too?
During the conversation, they had finished their food. They paid their bill and headed to the car. Herndon climbed into the back, and Whitacre took the front seat.
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Herndon leaned up on the seat and looked at Whitacre.
“Let’s not go home right now,’’ he said. “Let’s talk about this a bit more, okay?’’
Whitacre nodded, saying nothing. They drove for a short while, going down a country road outside of Taylorville. Finally, Shepard pulled off the road, onto a small embankment beside a cornfield.
“Okay,’’ he said. “When was this first transaction?’’
Whitacre looked down. The “hypothetical’’ cover was being dropped.
“December of 1991.’’
The agents wrote that down. The meaning was not lost on them. Whitacre did this long before meeting the FBI.
“Did you receive money?’’ Shepard asked. “And if so, how was it paid?’’
“By check. There were checks deposited in various accounts. But the amount was always under ten thousand dollars.’’
Herndon winced. The number had a meaning in law enforcement. To guard against money laundering, banks send currency transaction reports, or CTRs, to the government for every transaction involving more than $10,000. But structuring payments so that no check exceeds
$10,000 could also be a crime, if the purpose was to avoid the CTR.
“Why below ten thousand?’’ Herndon asked.
“Big checks draw suspicion in a small town.’’
“Is that really the reason, Mark?’’ Herndon asked sternly. “Or were you trying to come under the level that would require the banks to report it?’’
Herndon’s tone shocked Whitacre. He told Herndon that he didn’t understand. Herndon explained the law. Whitacre denied he had been trying to avoid reporting.
“When did you set up these accounts?’’ Shepard asked.
“Over a period of time.’’
Shepard didn’t want to ask the next question. “Did you get any of these checks after meeting me in 1992?’’
Whitacre looked back at Shepard blankly. He nodded.
“A couple may have been deposited after that.’’
The agents’ faces showed their disbelief and anger.
“What are you guys gonna do with this?’’ he asked. “Is ADM going to find out? Is my attorney going to find out?’’
The agents stared at him. How can he think we wouldn’t turn this over? Who does he think he’s dealing with?
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They had to document everything, Herndon explained again. Those records would be turned over to the defense at some point, so yes, ADM would find out. And they would have to tell the prosecutors. Shepard leaned in, trying to mask his feelings. “Who else knows about this? Who else have you told?’’
“Nobody knows about this.’’
“Oh, come on, Mark,’’ Herndon interrupted. The man who couldn’t keep his role in the case secret didn’t tell anybody about taking kickbacks?
“Really, no, honestly, I didn’t tell anybody.’’
Pause.
“Well, when the transaction happened, Randall questioned me about the amount,’’ Whitacre said. “He said, ‘Looks like you’ll be getting some of this yourself.’ And when he said that he kind of snickered. Kind of snickered.’’
“Okay, Mark,’’ Herndon said, an edge in his voice. “So first nobody knew, now Randall knew. Anybody else?’’
“Nobody. I promise you. No one else at ADM ever said anything about it.’’
“Come on, Mark,’’ Herndon said.
“No, really, I promise you. Nobody else would know.’’
Whitacre shifted in his seat. He looked frightened.
“How much could ADM find out?’’ he asked. “Do they have a way of investigating?’’
Of course they could investigate, the agents said. ADM had the paperwork. They could trace whatever they wanted.
“Well, the company condoned this. I mean, Randall knew all about it. I’m not the only one. Other people do this.’’
There had been a treasurer years back, Whitacre said. A guy named Frankel. He had received money. ADM knew about that
, too. The agents wrote down the name.
Whitacre stared into his lap, silent. The magnitude of what was happening appeared to be settling in.
Suddenly, he looked up. “Is this going to affect the price-fixing case?’’
Shepard and Herndon answered in unison. “Yes.’’
Whitacre looked into his lap again.
“Well, you know,’’ he said, looking up, “it was such a pervasive attitude at ADM. I mean, they really promoted this kind of stuff. It wasn’t the same at Degussa.’’
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That didn’t change things, the agents said. If he broke the law, he would have to face the consequences.
“Okay, Mark,’’ Herndon said. “Anything else that you’re involved in that you need to tell us about?’’
Whitacre shook his head. Just the $500,000.
“Okay,’’ Herndon said. “This isn’t good for the case, and it’s not good for you. But if we know everything now, we can work with it better than if we don’t have the full story. So, I’m asking again, is there anything else?’’
“No. There’s no more. Absolutely, that’s for sure.’’
Silence.
Shepard spoke. “Mark, does Ginger know any of this?’’
“No. Absolutely not. Not at all.’’
Shepard looked Whitacre in the eyes. “Tell her.’’
Herndon nodded. “Brian’s right. You need to brace her before this becomes public. Tell her right away.’’
Whitacre nodded, saying nothing.
The conversation had gone about as far as it could. Shepard started the car. As they drove to Moweaqua, the agents pressed Whitacre on other issues. How many people did he tell about the investigation before the raids?
“Kirk Schmidt, Kathy Dougherty, Liz Taylor. Oh, and Ginger. But that’s it.’’
Whitacre took a breath and waited. Nothing. Apparently, the agents didn’t know that he had also told Buffett, Wayne Brasser, and several others.
Shepard asked if Whitacre knew how reporters were learning details of the case. He replied that coworkers had told him they were speaking with the press.
“They said that they’re doing it because they want to help me,’’
Whitacre said. He decided not to mention his interview with Fortune magazine. The article was still weeks from publication. They arrived at Whitacre’s house, and the agents said that they wanted to go inside for their equipment. They also wanted to see Ginger. Whitacre trudged into the house. The family was bubbling with excitement about moving to Tennessee and getting away from ADM. The agents asked to speak with Ginger and walked to a distant part of the house.
“How’s he holding up?’’ Shepard asked.
“Terrible,’’ she said. “He’s withdrawing from the family. He’s having trouble with the negative press.’’
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“Tell him to be patient,’’ Herndon said. “His day is coming. The press is going to change when the tapes come out. The evidence is very explicit.’’
“I know, Bob,’’ she said. “But he can be difficult. He’s isolating himself from the family. Some days, he’s said he wants to kill himself. This isn’t easy.’’
The agents praised Ginger for keeping the family going. They told her that they understood how hard it was, without mentioning that they now knew it was about to get harder.
About thirty minutes later, the agents thanked Ginger and returned to Mark. They collected their equipment, and Mark followed them to the door. Outside, Shepard faced him.
“Mark, tell Ginger,’’ he said. “She needs to know.’’
“Okay,’’ Whitacre mumbled.
The agents headed to their car, saying nothing as they drove down the driveway. They continued in silence for about a quarter mile down the road.
“Unbelievable,’’ Herndon finally muttered. “Just unbelievable.’’
He looked at Shepard.
“Well,’’ he said, “I guess we know what Aubrey Daniel wants to talk about.’’
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CHAPTER 14
Aubrey Daniel showed no expression the next day, August 3, as he flipped a page in a black notebook, turning to a photocopy of a check. He glanced across the desk of Gary Spratling, watching as the Deputy Assistant Attorney General studied the same document in an identical binder—one Daniel had given him moments before. Spratling did not speak or show emotion. This, both men knew, was a high-stakes moment. They were wearing their best poker faces. Despite the impassive reaction, Daniel felt confident that this
$2.5 million check could doom the price-fixing investigation. It was the proof, Daniel argued, that the government’s cooperating witness, Mark Whitacre, had stolen millions from ADM—all while working with the FBI.
Every word on the document told part of the story. It was an ADM
corporate check, payable to ABP International of Lund, Sweden. It had been cashed at the Union Bank of Switzerland in Zurich. Spratling passed the notebook to Jim Griffin, who examined it before handing it to Scott Hammond, the third government lawyer at the meeting. Daniel and his colleagues had done their homework, and proceeded to reveal other documents that they said proved their case. They showed the original ABP contract and described a second contract that they said had recently been discovered. They produced affidavits from the people whose signatures appeared on the second contract—Jim Randall of ADM and Lennart Thorstensson of ABP—
both saying they had never seen the document before. And they flashed a report by a handwriting expert who concluded that the signatures on the second contract were photocopies.
“The evidence is clear,’’ Daniel said. “The contract is a fake.’’
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and requested a check for hand delivery to ABP. Whitacre took the check, and the check was cashed—even though ABP was not owed money and never received it. Whitacre had stolen it, Daniel said.
“This is just the tip of the iceberg,’’ Daniel said. “We have information indicating Whitacre was involved in other fraudulent schemes, beginning as early as 1991.’’
Daniel stared at the government lawyers evenly.
“And the FBI agents assigned to Whitacre may have been a party to his wrongdoing,’’ he said.
What?
“What’s your evidence?’’ Griffin shot back. He was burning; he knew Shepard and Herndon. These were two straight arrows.
“Two anonymous letters were sent last month to ADM,’’ Daniel said.
He described the letters postmarked from Knoxville, Tennessee, that had been delivered to Dwayne Andreas and Jim Randall two weeks before. Both letters contained the same claim—that Whitacre had received $2.35 million at a Cayman Islands bank, paid in 1991 by rogue FBI agents in exchange for his cooperation.
This sounded thin. Not only that, but the date was wrong. Shepard hadn’t even met Whitacre until late 1992.
The prosecutors pressed for details about other schemes, but the defense lawyers refused. At this point, information was power; they were not about to give it away.
As they asked their questions, the antitrust attorneys could not shake gnawing suspicions. ADM had known about Whitacre’s role for only a few weeks, and suddenly he’s a crook? It was too convenient, too perfect.
“How did you discover this $2.5 million transaction?’’ Spratling asked.
The scheme, Daniel replied, was first detected by an attorney reviewing documents relating to patent litigation between ADM and Ajinomoto. The attorney had examined the two contracts with ABP
and became suspicious.
“What made him suspicious?’’ Griffin
asked.
Daniel shrugged as he threw out some vague words in reply, seeming to sidestep the question.
“What was the timing of this?’’
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contrasted sharply with the exacting self-confidence he had exhibited moments before. The change reinforced their suspicions. Did ADM
know about the alleged misconduct before the search? Had they kept it under wraps in the event Whitacre ever strayed from the company? The Williams & Connolly lawyers pressed ahead, arguing that the evidence of Whitacre’s crimes was irrefutable. And the government, Daniel said, was responsible. “That is clear from the unprecedented and unconscionable cooperation agreement between Whitacre and the government.’’
Daniel brought up paragraph eight in the agreement, which required Whitacre to act at the direction of the FBI and the Springfield U.S. Attorney’s office. Then he raised paragraph nine, which said that Whitacre could only engage in crimes with the prior knowledge and approval of the FBI.
“The government appointed itself Whitacre’s supervisor, and every act or failure to act by Whitacre is directly attributable to his FBI handlers,’’ Daniel said. “The requirement that the FBI approve his crimes shows that the agents were either aware of Whitacre’s theft or that Whitacre was violating the terms of his agreement.’’
The implications were obvious. The defense was prepared to argue that either the FBI was hopelessly corrupt or that Whitacre had deceived the agents—destroying the credibility of the chief government witness.
The entire investigation, the defense lawyers maintained, had been driven by Whitacre and motivated by his designs to take over ADM. He had implicated his superiors to eliminate competition for the top job. He had stolen millions. He had lied to the agents or enticed them into crime. The government had gotten into bed with the wrong man.
“Face it,’’ Barry Simon said. “Whitacre’s a psychopath.’’
About that time, Shepard was listening impassively as Whitacre rambled over the phone from his home in Moweaqua.
“Brian, I’m calling for advice,’’ Whitacre said. “I think ADM’s really going to come after me. So I was thinking, do you think maybe I ought to release a statement or grant interviews about this financial stuff?’’
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