Informant (75 page)

•   •   •

Thirty hours later, Bill Walker, Whitacre’s new attorney, was making his way through a hectic swirl of crowds at O’Hare Airport. He had picked up a copy of the
New York Times
and was reading it as he headed for his plane. Then he saw a headline that brought him to a halt.

A
RCHER
D
ANIELS INFORMER ADMITS RECENT DECEPTION
.

Oh, shit!
Walker thought.

Whitacre had given him no idea this was coming.

That same day, a federal grand jury in Springfield indicted Whitacre on forty-five felonies, including wire fraud, tax evasion, and money laundering. His nighttime visit to Ron Ferrari’s home in October 1995—when he had urged his friend to confirm his story of a corporate-wide scheme—led to an obstruction-of-justice charge. There were no other mentions of the under-the-table bonus story.

For once, there was no public comment from Whitacre. He remained under psychiatric care in a Chapel Hill hospital, where he would stay for much of the week. He was not allowed access to newspapers or television news. His doctors believed that they might worsen his condition.

In the months that followed, the job of negotiating a plea for Whitacre fell to his new lawyers, Bill Walker and Richard Kurth. But unlike Epstein, who had already made headway with the Justice Department, the new lawyers started from several yards back. Not only did they arrive with no cache of trust, their decision to file the Shepard suit had crippled their credibility with the government.

Neither lawyer seemed to recognize the incalculable damage caused by their gambit. At meetings with fraud prosecutors, Walker rambled about Shepard’s purported misdeeds that were raised in the lawsuit. But there were also new, more incredible allegations. Walker told prosecutors that Shepard had forced Whitacre to join other ADM executives in a tryst with prostitutes at New York’s Waldorf-Astoria Hotel; the lawyer claimed that Shepard feared Whitacre would be ostracized by other ADM executives if he did not participate. This had torn apart the family, Walker said, since Whitacre had recently confessed the indiscretion to Ginger and explained Shepard’s role in it.
*

At the end of each monologue, Walker would look knowingly at the prosecutors, informing them that, of course, many of these allegations could be proved with the evidence that Whitacre had gathered on tape.

But those supposed tapes were elusive. Whitacre claimed that in the summer of 1995, he had sent the Shepard recordings to a friend for safekeeping. The friend’s name was familiar to the government. It was David Hoech, the now-infamous Lamet Vov. To prove his new claim, Whitacre produced a tape of a phone conversation with Hoech. In it, Hoech told Whitacre that he had received the material and destroyed it. But Whitacre insisted that the tapes still existed.

Walker also claimed that there was taped evidence from Harvest King proving that ADM had authorized the payments to Whitacre. The recording, he said, was from the spring of 1994, and had captured Mick Andreas openly discussing the $2.5 million payment to Whitacre. When the FBI had questioned Whitacre about it at the time, Walker said, his client had explained the matter away as merely a discussion of a salary boost. The fraud prosecutors told Walker’s claims to Herndon, who reported back that no such recording existed.

Eventually, Walker presented his terms for a plea agreement. They were difficult to understand. But as best as Mackay could tell, Walker was hoping for a plea that would allow his client to keep at least some of the money from ADM and serve no prison time. Mackay telephoned and rejected the offer.

Weeks later, Walker arrived for a meeting in the Fraud Section conference room. Mary Spearing was there, along with Mackay and Nixon. Walker, in short sleeves and no tie, took a seat on the far side of the table. As the meeting began, he brought out a sheet of paper from his shirt pocket. It was his original terms for a settlement. He asked about them again. Spearing gave Mackay a look.

“Didn’t Don get back to you on this?’’ she asked.

“Yeah, he did,’’ Walker said.

Spearing stared at him for a moment. “We’re not here to negotiate this,’’ she said.

But Walker wouldn’t drop it. Spearing left the room as Walker listed his terms again, explaining the reasoning for each. Eventually, Mackay had enough, and held up his hands.

“All right, Bill,’’ he said. “Thank you. I get it.’’

Walker stared at the prosecutors.

“You know, you’ve been around Mr. Mackay,’’ he said slowly. “This all goes back many years, probably before you were born. This is bigger than any of us, and it’s ongoing. And I know who’s behind it.’’

For several minutes, Walker weaved tales of mysterious conspiracies, driven by powers he would not describe.

“I know you’re skeptical, but I’ve seen it. I know who they are. But I can’t tell you who right now.’’

Mackay suppressed a smile. “Is that because you’re afraid for your safety?’’

“Well, no,’’ Walker said. “I’ll tell you someday when this is all over.’’

Walker looked Mackay in the eye. “I’ll tell you the identity of the Master Puppeteer,’’ he said.

Mackay blinked. “Who?’’ he finally stammered.

“The Master Puppeteer. I know who it is. And no, it’s not who you’re thinking.’’

“Who am I thinking?’’ Mackay asked.

“It’s not Dwayne Andreas. He’s just small fry.’’

Mackay knew that if he looked at Nixon, he would crack up.

“I can’t tell you now,’’ Walker said. “But I promise, I’ll reveal the identity when this is all over.’’

“Well, I guess this is somebody who’s alive, then.’’

Walker raised his hands. “I’m not saying any more.’’

The prosecutors rushed Walker through the rest of the meeting. After seeing him out, they headed back into Mackay’s office. There, they both collapsed in laughter.

Whitacre’s allegations against Shepard set off a series of new problems for the price-fixing prosecution. Lawyers for Mick Andreas and Terry Wilson demanded a hearing to determine whether the FBI had destroyed exculpatory evidence. Federal Judge Blanche Manning, who had been assigned the case, granted the motion.

In preparation for the hearing, the prosecutors launched a series of meetings with Shepard and Herndon, reviewing the investigation. At one session, the group met in a large conference room at the Antitrust Division’s Chicago office. Boxes of documents were piled around. Scott Lassar led the discussion from the head of the table.

“Okay, Brian,’’ he said. “Walk me through the beginning of the investigation.’’

Shepard nodded. “All right,’’ he said.

Starting with the first phone call, Shepard described the earliest days of Harvest King—the first interview with Mick Andreas, the delay as he waited for Whitacre that same night, the Fujiwara allegations.

“Of course,’’ Shepard said, “nothing came from the Fujiwara investigation.’’

Lassar shrugged. “Well, that was just part of Whitacre’s fraud,’’ he said simply.

What?
The words hit the agents hard.

“What are you talking about, Scott?’’ Herndon said.

“That whole Fujiwara episode was part of Whitacre’s fraud,’’ Lassar repeated. “Think about it. He’s telling ADM there’s a saboteur who can be stopped if they pay millions of dollars, wired to Swiss and Cayman Islands accounts.’’

Lassar looked from Herndon to Shepard.

“There’s only one person we know of who had accounts there. It was Whitacre. He was trying to steal the money.’’

The agents were shaken.

“Wait,’’ Herndon said. “That makes no sense. This isn’t like the other frauds. It doesn’t involve invoices.’’

“Yeah, Scott, I don’t know,’’ Shepard said. “He did nothing else like this.’’

Lassar held up his hands. “Guys, we’ve all got to be on the same page. One big question in this hearing is going to be what Fujiwara was all about. What other explanation is there? Who was going to get that money?’’

“But Scott,’’ Herndon said, “ADM isn’t going to hand Whitacre ten million dollars and say, ‘Drop it off with the extortionist. See you at work tomorrow.’ That money isn’t going to go out the door easily. They’d trace it.’’

“No, they wouldn’t,’’ Lassar replied. “It was going to Swiss and Caymans accounts. They’d never figure it out.’’

Shepard shook his head. “I don’t agree with this.’’

“Yeah, Scott,’’ Herndon said. “I’m not saying you’re wrong. But I’m not going to be able to testify to that. We don’t have any evidence to prove that.’’

Shepard and Herndon left the meeting unconvinced, even a little angry. The idea required them to readjust everything that they had believed about the investigation.

But over time, logic overpowered their emotional resistance. Lassar’s theory explained so much—why Whitacre had been so nervous in the first days, why he had stressed that the price-fixing was more important than the Fujiwara threats, why he had been so volatile.

The agents had always thought that Harvest King had, indirectly, led to the discovery of Whitacre’s frauds. But eventually, they understood that the opposite was also probably true: The frauds had indirectly led to the FBI’s discovery of price-fixing.

By the fall of 1997, the fraud investigation was effectively finished. The FBI and the prosecutors had interviewed scores of witnesses, hunted the Caymans for records, and reviewed thousands of documents.

Most of Whitacre’s stories were chased down, but invariably, the person portrayed as the source of the rumor told a markedly different version. While ADM’s financial controls were clearly slipshod, nothing had emerged to prove the existence of a corporate-wide fraud scheme.

Even though he was the last main witness to speak with the government, Marty Allison was granted the first plea bargain. He was charged with one count of conspiracy, signing the agreement a month after his critical interview. In consideration of his cooperation, he received no jail.

A grand jury indicted Reinhart Richter, but the charges remained under seal for many months. During that time, he met with the FBI again to clarify a few issues. He had never heard of an illegal bonus plan while working at ADM, he said; the money sent to him was used solely for recouping Nigerian losses. He also told investigators that he had partially misled them about the $425,000 check he had received from Whitacre—a portion of that was accrued salary that Whitacre had withheld from him. Eventually, Richter pleaded guilty to two conspiracy counts, but also received no prison time because of his cooperation.

To the dismay of the case agents, the prosecutors declined to pursue indictments against Ron Ferrari, Beat Schweizer, or David Page. Mackay and Nixon did seek approval to charge Sid Hulse, but their presentation to an indictment review committee was so poor that the request was denied.

D’Angelo was particularly outraged. Marty Allison had cooperated and was now a felon; Hulse, he thought, had tailored his story to limit his culpability, and would escape without a blemish. D’Angelo demanded a chance to appear before the indictment review committee himself. The unusual presentation by an FBI agent was so impassioned and well-prepared that the committee reversed itself. Indictments of Hulse for fraud and tax violations were approved.

The only major target left was Mark Whitacre.

•   •   •

The staff at Biomar crowded into a conference room, where Whitacre sat at the head of the table. Following his indictment and confession to manufacturing documents, Whitacre had been asked to step down as chief executive, but had been allowed to continue working with a smaller sister company called Clintech. But now Whitacre wanted to tell everyone that he would be out of the office for months.

“My lawyers and I have decided that it’s time for me to put forward my side of the story more aggressively,’’ he said. “For the next few months, I’m going to be involved in a media tour, involving television and newspapers.’’

Already, Whitacre told the group, his lawyers were making arrangements for appearances on NBC and ABC; an interview with Barbara Walters, the
ABC News
correspondent, had already been set up, he said.

“So, I just wanted everybody to know I’m not going to be around much in the next few months. I’m going to be out there, fighting to prove my innocence.’’

Whitacre finished his speech. Several longtime staff members crowded around him, wishing him luck.

There would be no media interviews. Instead, plea negotiations with Whitacre moved into high gear. Walker sought a maximum of five years in prison; the prosecutors were unwilling to go below a minimum of seven.

Days before Whitacre’s trial was scheduled to begin, a tentative deal was struck. Whitacre would plead guilty to thirty-seven felonies, including money laundering, wire fraud, and tax evasion. In exchange for his cooperation, the prosecutors would ask the judge to sentence him below the usual range dictated by the federal guidelines. Under those terms, Whitacre could expect a seven-year prison term.

After reaching the tentative agreement, on October 7 Mackay called Jim Griffin, letting him know the developments. Later that afternoon, Mackay and D’Angelo were working in the “war room’’ they had reserved in the Urbana federal courthouse in preparation for the Whitacre trial. The phone rang and Mackay put it on speaker.

“Don, it’s Scott Lassar.’’

Lassar was on a speakerphone in Chicago, joined by the rest of the antitrust team. They had heard about the Whitacre plea agreement, he said, and had concerns.

“What we’d like is to try and combine the two cases, and arrange for a global plea,’’ Lassar explained. “And—”

“His lawyer doesn’t want to combine the cases,’’ Mackay interrupted gruffly. “He’s saying the antitrust case really isn’t high on his radar screen.’’

“Well, Don, there’s a possibility that the judge might not accept a plea if it doesn’t resolve everything.’’

Mackay interrupted again with an objection. Lassar pressed forward.

“In our case, this deal is going to make it look like Whitacre got twenty years off his sentence. It will look sneaky, like we’re trying to put something past them.’’