Informant

by Kurt Eichenwald

  Stukey walked to the front passenger side of his blue Mercury, opening the door for Freeh while Hoyt piled into the back. Griglione headed to a neighboring car, driven by the senior resident agent. The two cars pulled into traffic, headed to Springfield. As they drove onto the highway, Stukey tried striking up conversation.

  “How was your flight?’’ he asked.

  “Okay,’’ Freeh responded.

  Pause.

  “You had to get up pretty early to catch it.’’

  “Yup.’’

  Pause.

  “Are you going directly back tonight?’’

  “Yup.’’

  Pause.

  “How’s the family and kids?’’

  “Okay.’’

  An eerie discomfort settled in. Stukey launched into an overview of the Field Office. At times he would pause, hoping for a question. But Freeh would say nothing, and Stukey would continue his monologue—or fall silent for five to ten minutes at a stretch.

  Shifting uneasily in the backseat, Hoyt watched the two men, unsurprised at how badly this was going. He had heard about inspections at other offices; Freeh never fraternized with the SAC or ASAC until after he had met alone with the agents. Word was that the Director didn’t like chatting until he decided—based on the agents’ comments—whether the supervisors would keep their jobs.

  Hoyt sat back. This, he felt sure, would be one of the longest drives of his life.

  Hours later, Freeh sat at a large conference table in Springfield, looking out at the faces of a small group of Special Agents. He brought out a sheaf of notes.

  “It’s good to be here,’’ he said. “I’ve read about some of your cases, and you guys are doing a great job.’’

  He glanced down at his notes.

  “Scott Easton, I’ve read about your work on the Gangster Disciple case,’’ Freeh said, looking at the agent. “Is there anything you want to add?’’

  For twenty minutes, the conversation continued. The agents were strongly impressed; Freeh was able to speak knowledgeably about most every major case in the office. Few of them had ever seen a Director show such an interest in their daily work.

  Freeh looked down the middle of the table, where Shepard and Herndon sat on either side.

  “Well, I know Bob and Brian are working on the ADM case,’’ he said. “You had some good success going overt back in June. But I understand there are some issues with the cooperating witness. Anything you want to tell me about?’’

  Herndon spoke first. “Is there anything we can do to make sure that the field is consulted before decisions are made?’’ he asked. The Justice Department hadn’t consulted them on rulings, such as sending parts of the case to San Francisco and Atlanta.

  Freeh looked surprised. “I agree, the field should be consulted on big decisions.’’

  The agents followed up, mentioning their concerns about being cut off from Whitacre. He was the person best able to help them with conversations when a tape was unclear, they said, but they were forbidden from even contacting him for that.

  Freeh nodded. “I understand your concerns,’’ he said. “But, for now, I do believe it’s a good idea for you guys to remain separated from the CW until he pleads.’’

  After a few more comments, the discussion on Harvest King was done. Freeh moved on to the next case.

  Early that afternoon, Freeh was back in the car with Stukey and Hoyt, ready for the return trip to St. Louis. From the moment they pulled away, Freeh was a different man than the one who had been in the car that morning.

  “Boy, you guys really have some good stuff going,’’ he buzzed. “You need people on this ADM case. It’s big.’’

  Whatever the agents had said, obviously Stukey and Hoyt had passed the test.

  Freeh looked at them. “What else do you need to push this case ahead?’’

  This, the two supervisors knew, was the time to bend Freeh’s ear about the troubles with Harvest King.

  “That case is frustrating,’’ Stukey said. “Bob and Brian have knocked themselves out, and the only impression we get from DOJ is them wanting to prosecute us.’’

  The supervisors explained about the allegations that had been raised—apparently with no evidence—of wrongdoing by the agents. They also described the “Chinese wall’’ between the fraud and antitrust investigations. Perhaps there was a reason to keep the Harvest King agents away from Whitacre for now, but there was no reason to treat them like suspects. Information from the two investigations should be shared. All the bureaucracy was slowing both cases, to the benefit of the real criminals.

  “ADM and its managers are being ignored, while DOJ is concentrating their efforts looking into allegations against Whitacre and our agents,’’ Hoyt said. “They appear intent on catching goldfish while Moby Dick swims away.’’

  Freeh nodded. “This needs to be resolved,’’ he said.

  The conversation continued until Stukey pulled up in front of the airport terminal. They walked Freeh inside, where he was joined by Griglione. Once the plane was called, Freeh thanked the supervisors, congratulating them and then heading through the departure gate.

  As they watched Freeh leave, Stukey and Hoyt felt giddy. Not only had things gone well, but Freeh seemed set on fixing the problems with Harvest King.

  Perhaps soon all the craziness would be over.

  At his house outside Mexico City the next Sunday morning, Reinhart Richter dialed the phone, hoping to send a voice-mail message to two ADM colleagues.

  Richter, president of ADM Mexico, was overwhelmed with dread. Williams & Connolly had contacted him, instructing him to fly to Washington for a meeting on Wednesday, September 13. Somehow, they had found records of the bonus he had received in his earliest days at ADM. It was his worst nightmare. Since seeing the news stories about Whitacre, Richter had feared it would be only a matter of time before someone started asking about his own money.

  Once in the voice-mail system, Richter pushed the buttons on his keypad to leave a confidential message. He had heard that his friends from the Bioproducts Division, Sid Hulse and Marty Allison, were in similar situations. He wanted to talk, maybe discuss what they should say. At 9:01, Richter heard a beep telling him to begin recording.

  “This is a confidential message, message to Sid and to Marty,’’ Richter said. “I hope you had a great weekend.’’

  He paused. “See, my friends, I’m in trouble. When I started at ADM as an employee—not as a distributor, an employee—I got a startup bonus and, uh, some payments to me which now seems to complicate my life.’’

  Richter sighed.

  “I got, uh, money through two invoices,’’ he said. But the invoices were for work that had never been done.

  “ADM told me to do it, uh, I think,’’ he said. “ADM was Mark for me at that time, of course. And, uh, I don’t know whether and with whom he discussed this, but that’s the way Mark, uh, told me how to do it. So I’ve got two invoices, and uh, I would appreciate hearing from you.’’

  Richter mentioned that Williams & Connolly had contacted him, saying he believed that they wanted to speak with him about the invoices and the payment.

  “Man, it’s just crazy; it’s just stupid,’’ he said. “All right, guys. I hope you dream well, and uh, I would appreciate your call. Thank you. Bye now.’’

  Early the next morning in Atlanta, Sid Hulse called his voice mail. Pressing the number three on the keypad, he heard the header of a message from Sunday.

  Hulse pushed another button and listened to the message. His mind raced as he heard Richter’s words. The man was actually confessing. At the end of the message, the system instructed Hulse how to delete it. But before he did anything, he decided to call his lawyer, Sheldon Zenner. In recent days, FBI agents had been pushing for an interview with Hulse and were scheduled to meet him that week. Maybe they would be interested in hearing this voice-mail message from his friend.

  Two days later, the government’s interview with S
id Hulse took place in a cramped conference room at the Fraud Section’s Fourteenth Street offices in Washington. Bassett had a scheduling conflict, so Rob Grant, the new supervisor on the case, accompanied D’Angelo to the meeting. The agents arrived an hour early, giving them time to prepare with the fraud prosecutors, Don Mackay and Jim Nixon.

  The group was already at the conference table when Hulse arrived, accompanied by Zenner and another lawyer, Sean Berkowitz. Hulse, a huge man, appeared nervous. Zenner swapped stories with the agents about some high-profile Chicago cases and cracked a few jokes.

  Zenner sat back. “All right,’’ he said. “I’m just here to meet you guys. I’m not taking part in this interview. I think you want to hear from Sid.’’

  First, the ground rules. Hulse was appearing pursuant to a proffer agreement—a deal in which he promised to tell the truth so long as none of his statements could be used against him at trial. Both sides agreed.

  D’Angelo started with Hulse’s background. Hulse told how he had joined Degussa in 1982 as a sales representative for methionine. Shortly afterward, he met an energetic young nutritionist from Ralston Purina named Mark Whitacre. Hulse had been impressed and soon was suggesting that Degussa hire Whitacre. During the Degussa years, Hulse and Whitacre became friends. So in 1989, when Whitacre left for ADM, he quickly invited Hulse to come with him.

  “Mark didn’t leave Degussa on friendly terms and was prohibited from hiring Degussa employees,’’ Hulse said. “To get around that, he told me to set up my own company, and he would pay me as an independent contractor.’’

  Hulse became an ADM lysine salesman, drawing $13,500 a month as he helped the company break into the market.

  “Did you ever pay kickbacks to customers for lysine orders?’’ D’Angelo asked.

  “Never,’’ Hulse replied. “There were no irregularities on any lysine contracts.’’

  As time went on, Hulse said, ADM turned to him for assignments outside of his normal duties. For example, he said, there was a time when ADM was thinking about buying a competitor’s division and asked Hulse for an analysis of the business and a recommendation on the purchase.

  D’Angelo tried not to show disbelief. With teams of investment bankers on hand, ADM turns to a lysine salesman for a corporate analysis? That’s pretty weak, he thought.

  “Because of that extra work, Mark told me in mid-ninety-one that he had been authorized to pay me a bonus,’’ Hulse continued. “But it was going to be paid outside the normal channels. And Mark was getting a bonus, too. So Mark and I would both receive one hundred thousand dollars, and an additional hundred thousand would be paid to me to cover taxes for both of us.’’

  This made little sense. “Why would Whitacre receive a bonus through you?’’

  Hulse turned up his hands. “That was the way they wanted it done.’’

  To make it work, Hulse said, he set up a shell company called JT Technologies. Then, following Whitacre’s instructions, a three-hundred-thousand-dollar invoice was sent to ADM, using a different bogus company name. That money—which was actually used for the bonus—eventually was deposited with JT Technologies.

  “Why did you use a different company name for the invoice?’’ D’Angelo asked.

  “To keep it secret from other people at ADM, including other people who worked for Whitacre,’’ Hulse said. “Whitacre didn’t want other people knowing about it.’’

  Hulse looked at the uncomprehending faces of the government investigators.

  “He said this was common practice at ADM,’’ Hulse protested. “He told me that lots of bonuses like this were paid to high performers.’’

  “Why pay it like this?’’

  “Well, besides stock options, ADM doesn’t normally pay bonuses, and Whitacre didn’t want the bonus looked at too closely by the board’s compensation committee.’’

  D’Angelo glanced at his notes. Whitacre was the only ADM executive being mentioned. Did others at the company know about the payment?

  “Well,’’ Hulse said, “I was under the impression that Mark’s superiors knew.’’

  “Who did he say approved it?’’

  “Mark never said specifically,’’ Hulse shrugged.

  “What did the invoice say that the payment was for?”

  “Consulting fees.’’

  “Anything specific about what these consulting fees were supposed to be for?’’

  For a moment, Hulse thought. “The only thing Mark said was not to relate the consulting fees to methionine.’’

  After the invoice went in, Hulse said, the full $300,000 was sent to his Atlanta bank account. Whitacre was worried about taking back $100,000, so he told Hulse to prepare documents to make the payment look like a loan. That way, if needed, they would have a cover story.

  “How did you feel about trying to make it look like a loan?’’ D’Angelo asked.

  “I was uncomfortable with it,’’ Hulse said. “I mean, I think the three hundred thousand from ADM was legitimate, but I’ll admit the loan documents looked funny. But Mark wanted them, so he couldn’t be linked to the bonus payment.’’

  D’Angelo decided to press him with the central question.

  “Ever think Mark might be using the bonus to divert money from ADM?’’

  Hulse looked back at D’Angelo blankly.

  “That never occurred to me,’’ he said.

  D’Angelo reviewed his notes again. He realized there was one question about the JT Technologies transaction that he had not yet asked. He looked up at Hulse.

  “What happened to your share of the money?’’ he asked.

  Hulse’s face flushed. He glanced over at Sheldon Zenner, who leaned in.

  “Before Sid says anything, you know, of course, about these schemes with the Nigerian letters?’’ Zenner asked.

  The investigators and prosecutors knew what Zenner meant. The “Nigerian Advance Fee Fraud”—also known as a “419 Fraud’’ after the relevant portion of the Nigerian penal code—had in recent years become one of the most infamous swindles combated by international law enforcement. Each year, Nigerian con men send out thousands of letters, largely to executives whose names appeared in trade journals and professional directories. The letter writers claim to be Nigerian bureaucrats who successfully overbilled the country’s oil-rich military government for tens of millions of dollars by inflating contracts of foreign companies. The letter asks the executives to send corporate letterheads, invoices, and other documents that could be used to prove completion of the padded foreign contracts. In addition, the executives are asked to provide an offshore bank account, since the supposed bureaucrats need some place to send the money. Once the paperwork goes through, as much as $60 million will be wired to the account, with the executive promised some 30 percent of the illicit cash as a commission.

  When an executive responds by sending the letterheads and invoices—which are actually used to write letters of recommendation to other targets—the Nigerian criminals know they have hooked another potential victim. Promises are made that money will soon be wired to the bank account. But inevitably, tales of problems arise—money is needed for taxes, bribes, or fees. Without it, the Nigerians claim, the illicit millions will never be released. They beg the executive for cash, all the while dangling the prospect of a multimillion-dollar payday. If the executive sends money, more stories of problems emerge, again requiring cash. And so the scam continues, until the executive is either drained of every dime or realizes that it is a con. Oftentimes, the victims—embarrassed or reluctant to reveal their willingness to participate in the illicit arrangement—do not report the crime.

  But Zenner’s casual reference to the Nigerian fraud seemed out of place. What did that have to do with Hulse?

  “You always wonder who would be dumb enough to fall for something like that?’’ Zenner asked.

  “Sure,’’ D’Angelo said, curiosity in his voice.

  Zenner broke into a smile, and gestured toward Hulse.
<
br />   “My client,’’ he said grandly.

  Everyone laughed. That’s where the money went?

  “This is so embarrassing,’’ Hulse said.

  In 1991, Hulse explained, he and Whitacre had entered into a venture together. ADM was being deluged with faxes from Nigeria. As Hulse described the contents, it was clear that the letters were part of the Nigerian fraud.

  “Now, Mark told me that other people at ADM had been involved in Nigerian deals like this and had made sizable profits,’’ Hulse said. “And he guaranteed I wouldn’t lose any money I invested. He was very excited about it.’’

  Hulse said that he agreed to participate, and on two occasions wired a total of $120,000 to a bank in New York designated by the Nigerians. Whitacre had invested the same amount, and possibly more.

  D’Angelo found this particularly interesting. In his interviews, Whitacre had never mentioned the Nigerians.

  “Who did Mark identify at ADM who successfully invested with the Nigerians?’’

  “He told me Mick Andreas and some others had done these deals before.’’

  “Did Mark give you the instructions on what to do?’’

  Hulse shook his head. “No, those all came from the Nigerians.’’

  “Did you ever see any records of Mark’s investments?’’

  “No, but I do think he put in more than me.’’

  Still, Hulse said, he and Whitacre grew suspicious when the Nigerians kept pushing for more. Finally, they realized that they were being cheated.

  “Now, remember,’’ Hulse said, “Mark guaranteed my money. So when it fell apart, I went to him to collect.’’

  “How did Mark respond?’’ D’Angelo asked.

  Hulse shrugged.

  “He told me it was time for another bonus.’’

  Recouping the losses from the Nigerian fiasco was fairly easy. This time, Hulse said, he set up a shell company called Eurotechnologies, using his home computer to write bogus invoices to ADM of more than $600,000. For tax reasons, Whitacre wanted the money sent to Switzerland. So Hulse flew to Europe and opened a Eurotechnologies account at Swiss Bank Corporation.