The Informant

by Kurt Eichenwald

  It was Whitacre.

  “Listen,’’ Whitacre whispered, “I haven’t been telling you the whole truth. I’ll clear it up in there.’’

  “What are you talking about?’’ Zaideman asked.

  “Come on, let’s go,’’ Epstein barked, pushing back out of the room. There was no way Epstein would allow a prosecutor to hear his client’s story before he did.

  “No, no,’’ Whitacre objected. “I want to tell them.’’

  Whitacre walked in and found his seat. His lawyers reluctantly joined him at the table. Epstein took a breath. He couldn’t believe this was happening.

  As the meeting began, the antitrust prosecutors handed Epstein a letter for Whitacre. It was notification, Griffin said, that Whitacre had violated the terms of his cooperation agreement with the government.

  “The Department of Justice is operating under the opinion that Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 375

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  there is no agreement between the government of the United States and Mr. Whitacre,’’ Griffin said. “Accordingly, any promises regarding immunity for him are void. The agreement was breached by Mr. Whitacre’s criminal conduct and his failure to make full disclosure to the government of his criminal conduct.’’

  “This is outrageous,’’ Epstein responded. “My client is here. He’s been great to you. He clearly made mistakes, but he’s trying to make this right.’’

  Epstein argued that the government was still bound by the agreement, but Griffin disagreed. Finally, Epstein tossed the letter on the table. “All right,’’ he said, “this will be an argument for another time.’’

  Griffin, Lassar, and Mann left the room. Now, the fraud prosecutors were in charge. Herbst eyed Whitacre. He was pale and his tie was askew. He looked like someone on the verge of a breakdown—or maybe just returning from one.

  “Mr. Whitacre,’’ Herbst said, “I’m Ed Herbst from the FBI in Washington, D.C., with the Economic Crimes Unit. I’m here to discuss a case of fraud against you.’’

  For several minutes, Herbst quizzed Whitacre about his background. Whitacre truthfully described his education, saying that in addition to his doctorate from Cornell, he had received a business degree from Kensington University, a correspondence school.

  “When did your first criminal conduct begin at ADM?’’

  Whitacre shifted in his seat. “In early 1992.’’

  His job was to build the ADM Bioproducts Division, Whitacre said, a $1.5 billion business. Over the years he handled that work, he had signed five hundred contracts.

  “Now, I didn’t get any kickbacks in more than ninety-nine percent of those contracts. More than ninety-nine percent.’’

  “How did you start taking kickbacks at ADM?’’

  “Well, I learned it basically from Mick Andreas. He’s the one who taught me how to use embezzlement and kickbacks as tax-free compensation.’’

  Whitacre nodded. “He’s the one.’’

  For more than an hour, Whitacre spelled out details of the scheme. Fraud was integral to ADM’s culture, he said. Almost everyone was involved in similar crimes. Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 376 376

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  “Now, I know the frauds that I committed are wrong,’’ Whitacre said, “and I accept responsibility for them.’’

  “How do you approach people on these kickbacks?’’

  “Well,’’ Whitacre said, “you just go overseas and tell them, ‘I’ll give you a $1.5 million contract, but you’ve got to give five hundred thousand dollars back to me.’ ’

  Whitacre brought out some notes. He hadn’t reviewed any documents, he said, so some details might not be correct. He began ticking off the crimes. One of the first kickbacks, he said, took place in 1992 and involved a company called Eurotechnologies. The company was American owned, but headquartered in Switzerland.

  “ADM contracted with Eurotechnologies, and we paid them seven hundred thousand dollars to get regulatory approval in Europe for some of our products,’’ Whitacre said.

  “Who did you deal with there?’’

  “Sid Hulse,’’ Whitacre answered. “Sid was the representative with Eurotechnologies, and he paid me two hundred thousand dollars on the contract.’’

  He cleared his throat. “Sid works at ADM now. He’s a friend of mine.’’

  Another kickback occurred in March 1992, Whitacre said. ADM

  was introducing products in Asia and hired a consultant for help with regulatory approval.

  “I forget his name,’’ Whitacre said. “Something Tarrapong. That’s his last name. He’s a veterinarian.’’

  The contract, Whitacre continued, was worth $1.5 million, and he received a five-hundred-thousand-dollar kickback from Tarrapong.

  “How did you receive the money?’’ Herbst asked.

  “Primarily by check,’’ Whitacre replied.

  Spearing shook her head. “Come on, they paid a kickback by check? ’’

  “Yeah, by check,’’ Whitacre said, shaken by Spearing’s tone. “I deposited them in my Decatur bank account.’’

  He said that he also established a company in Switzerland as a place to store the money he obtained illegally. He started it up in October of 1993 with $70,000 in “seed money’’ that he had obtained in kickbacks.

  “What was the name of the company?’’ Herbst asked.

  “I don’t really remember. It was something like Agriconsulting and Trading, something like that.’’

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  Herbst brought out some corporate records obtained from Williams & Connolly. The documents showed Whitacre had set up a Swiss company called ABP Trading and granted power of attorney over it to someone named Beat Schweizer. The company had then been used as part of the $2.5 million transaction involving the bogus ABP

  contract.

  “Does this help your memory?’’ Herbst asked, sliding the records across the table.

  “Yeah,’’ Whitacre said. “That’s it. ABP Trading.’’

  Herbst studied Whitacre. He was convinced that the man was lying. He recalled every detail of small transactions but became forgetful once they crossed into millions of dollars. But Herbst didn’t want to confront him now. First, let Whitacre lock himself into his story. The lawyers weren’t interested in that technique.

  “You can’t possibly be telling us you don’t remember this transaction,’’ Nixon said. “That’s ridiculous.’’

  “Come on,’’ Whitacre said, sounding pained, “I’ve got a lot going on in my life.’’

  Epstein leaned in. “Hey, we’re coming to you guys. We’re going to cooperate, and we’re going to get the money back. What else do you want?’’

  “It’s entirely reasonable for us to do this,’’ Herbst said. “If you think we’re being hard on him, wait until he’s under cross-examination on the stand. They’re going to kick the daylights out of him.’’

  After several minutes, everyone cooled off. Herbst resumed his questioning.

  “Tell us about Beat Schweizer.’’ The person with power of attorney over ABP Trading.

  “He’s a Swiss guy, from Switzerland,’’ Whitacre said. “He’s in the business of setting up companies there. You know, just off-the-shelf businesses.’’

  “How did you meet him?’’

  “Oh, he’s a good guy. He doesn’t know what’s going on. And he tried to get me to do it legitimately.’’

  Why are you protecting Beat Schweizer? Herbst thought.

  “How did you meet him?’’ Herbst repeated.

  “At Degussa. I met him when I was in Germany.’’

  Herbst decided to change topics for a moment.

  “So how did this transaction work?’’

  ABP had sold ADM a threonine microbe in 1992, Whitacre said. Eich_0767903277_5p_02_r1.qxd
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  But the first bug had problems, and Whitacre had insisted that ABP

  provide another at no charge.

  “But I didn’t tell ADM that I had talked them into giving it to us for free,’’ Whitacre said. “I had ADM pay $2.5 million for it.’’

  To make the transaction look legitimate, he had created a bogus contract based on the original. That’s what Mick Andreas told him to do, Whitacre said. That was the way it was done. ADM couldn’t go around cutting checks for that amount filled out to Mark Whitacre. They needed supporting documentation.

  “Now, the contract had to be authorized by Jim Randall,’’ Whitacre said. “But Randall doesn’t read things too closely. He’s a guy that signed anything put in front of him. So he signed the second contract.’’

  No one said that they knew the second Randall signature was a fake. Without commenting, Herbst pulled out copies of the contracts. Whitacre looked surprised.

  “Where did you get that?’’ he asked.

  “These are ADM’s records.’’

  “Well, look at that,’’ Whitacre said. “With all the contracts I signed, how did they know this was the one?’’

  He looked around the room again. “That’s how they keep people under wraps. They pay us this money, then use it against us if we talk.’’

  Whitacre went on to say that he had faked the signature of Lennart Thorstensson, the ABP president, by using a photocopy from the original contract. Then, it was a simple matter to fill out a request for the check.

  “I called Beat Schweizer and told him I had a check for $2.5 million,’’ Whitacre said. “I told him I needed his help to cash the check, deposit the money, and make disbursement to my various accounts.’’

  “Where did you meet with Schweizer?’’

  “I don’t remember. Either Switzerland or London.’’

  What did Schweizer think of this check?

  “He was very concerned,’’ said Whitacre. “He asked for assurances that the check was from legitimate activities.’’

  How much was Schweizer paid?

  “Something like $350,000,’’ Whitacre said. “We had an agreement that he would receive ten to fifteen percent of each transaction, depending on the work involved.’’

  Fifteen percent? For cashing a check? The answer hit the room hard. Everyone was familiar with the world of fraud. If Whitacre was telling the truth, then Schweizer was receiving the going rate for a money launderer.

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  Spearing sat at one end of the table, shaking her head. Jim Nixon, who had been taking notes furiously during the interview, slammed his pen down. They didn’t believe Whitacre was this naïve. He was lying. Whitacre looked anxiously at the prosecutors before continuing. He explained that he had instructed Schweizer to wire $1 million each to two bank accounts he maintained, one in Hong Kong and one in the Cayman Islands.

  “Umm, I have a few other things to tell you about,’’ Whitacre mumbled. He described $20,000 in kickbacks he had received in 1992 from a person in Mexico.

  “There’s also some things I did with Marty Allison,’’ he said. “He’s a vice president at ADM. He received cash kickbacks from customers and split them with me.’’

  The total amounts of the kickbacks, he said, were around $40,000.

  “Did you have an agreement for him to do that?’’

  “No, he did it on his own,’’ Whitacre replied. “We didn’t have any agreement.’’

  Spearing and Nixon let out soft, short laughs. This was ridiculous. Hey, boss! I just got forty grand in kickbacks. Want some?

  “There was also a gift I got, you know, a bridle and saddle,’’

  Whitacre said. “It was worth like eight thousand dollars, from an ADM

  distributor in Venezuela. It wasn’t a bribe or anything. But I wanted to tell you about everything.’’

  “Anything else?’’

  Whitacre nodded. “With Sid Hulse. Before he worked at ADM, he worked at a vendor. He gave me one hundred thousand dollars on a three-hundred-thousand-dollar contract. We made it look like a loan. But I never made any payments, and we both knew the loan would be forgiven.’’

  The prosecutors pressed with other questions, aggressively challenging Whitacre’s recollections. Eventually, Epstein stood. It was time for a break.

  Whitacre headed with his lawyers to another room. Epstein closed the door and turned toward his client. The lawyer’s cool facade collapsed, replaced by open dismay.

  “Mark, what is this?’’ he asked sharply. “What about Lennart Thorstensson?’’

  Whitacre shrugged. “He had nothing to do with this,’’ he said evenly.

  “Nothing to do with this?’’ Epstein repeated, throwing up his Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 380 380

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  hands. “You were saying before this guy stole a million dollars! Now he has nothing to do with it?’’

  For a second, Whitacre seemed to consider Epstein’s words. “I didn’t like Lennart very much,’’ he said softly.

  Epstein sank into a chair.

  “Well, Mark,’’ he said, “if he knew you almost implicated him in a million-dollar theft that he had nothing to do with, I’m sure he wouldn’t like you very much, either.’’

  In the men’s room, Herbst ran into Don Mackay.

  “He’s lying,’’ Mackay said flatly.

  “You think so?’’ Herbst asked.

  Mackay laughed. “You’re not buying this shit, are you?’’ he said.

  “He’s lying!’’

  Herbst shrugged. He agreed that Whitacre was lying. But he wasn’t sure that his story of a corporate scheme could be dismissed so easily. He had heard about what was on the ADM tapes. And as far as he was concerned, there was no telling what that company was capable of doing.

  When the meeting resumed, the prosecutors circled back, asking about inconsistencies. Eventually, Whitacre was asked to explain his involvement in Harvest King. He gave a rambling answer. Hours after the meeting began, everyone was exhausted. They agreed to meet in two days, this time in Washington. Whitacre and his lawyers left. Scott Lassar stopped back in, asking how everything had gone. Spearing ran through Whitacre’s story. Before she finished, Herbst broke in. There was a problem that needed to be handled quickly. He was a supervisor, he reminded them, only at this interview on an emergency basis. As much as he would like to, he couldn’t take the case.

  “We’re going to have to find agents to assign to this,’’ he said. The next afternoon, on the ninth floor of that same building, Special Agent Anthony D’Angelo reached for the ringing phone on his desk. An eleven-year veteran agent, D’Angelo was seated at his cramped bullpen area in the FBI’s Chicago Field Office, where he had been preparing for an upcoming trial. D’Angelo worked on a squad called WC-1, handling mostly bank frauds, and in the last few years, he had hit the jackpot. An investigation of a neighborhood bank had led to a corrupt waste hauler, who flipped and provided evidence against a bank officer. Later, that witness became the chief cooperator in the Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 381

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  public corruption unit’s Operation Silver Shovel, the massive investigation of bribery in Chicago city government. The thirty-seven-year-old D’Angelo didn’t look up from the records on his desk as he brought the phone to his ear.

  “FBI.’’

  “Ed Worthington.’’

  The acting Special Agent in Charge. A call from him was unusual. D’Angelo forgot about his documents.

  “Tony, you busy?’’

  “Yeah, really busy. Getting ready to go to trial.’’

  “Well, there’s a big case coming,’’ Worthington said. “It’s politically sensitive, and you’ve had sensitive cases. So
I want you to put everything aside and work on this. You’re going to be working with somebody else.’’

  This was odd. D’Angelo’s squad leader almost always gave him his assignments, not the SAC. “Does this case have anything to do with WC-1?’’

  “No,’’ Worthington said. “But I can’t tell you more right now. I’ll give you more information later.’’

  Worthington hung up.

  This was not normal procedure. It gave D’Angelo a bad feeling. In the basement of his suburban Chicago house, Special Agent Michael Bassett was watching television as he pumped the pedals on an exercise bicycle. An accountant by training, Bassett, thirty-seven, had been with the FBI for twelve years. He had arrived in Chicago in 1987 as part of an undercover assignment after ADM had raised allegations of fraud at the Chicago commodities exchanges. Assuming the identity of Michael McLoughlin, Bassett had trained at ADM and later had traded bond futures at the Chicago Mercantile Exchange, maintaining his undercover identity until the case went overt in 1989. In the years since, his path had crossed with ADM again when he played a bit part in Harvest King, conducting surveillance at Chicago’s Gaslight Club during a price-fixing meeting there.

  Bassett was picking up the pace of his pedaling when he heard the distinctive, shrill sound of his pager coming from upstairs in the kitchen. He hopped off the bicycle, pulling a towel from the handlebars and draping it around his neck. The pager was still beeping when he reached the kitchen. It was Dave Grossman, his squad supervisor, calling from home. Bassett headed over to the wall phone.

  “Yeah, Dave. It’s Mike. What’s up?’’

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  “Mike, I need you to take a case here. You’re going to need to be in Washington tomorrow to talk to a guy.’’

  “Okay, what’s the case?’’