Ferrari nodded. “Yeah, I’ll think about it.’’
The agents prepared to leave. Ferrari stopped them.
“Uh, one other thing,’’ he said. “When you look through my records at Wells Fargo Bank, you’re going to find a twenty-five-thousand-dollar deposit from earlier this year. I used the money to pay down debt on our family farm.’’
The agents listened.
“The money came from my Wells Fargo safe deposit box. My wife and I are big savers; we’re very conservative, and we’ve always saved cash. But that money has nothing to do with Whitacre, ADM, or FES.’’
“Where did this cash come from?’’ Bassett asked.
“Just from savings. You know, I accumulated a lot of it before I was married.’’
This, the agents knew, was a topic they would have to revisit. But for now, the interview was over. They said their good-byes and left. In the parking lot, the agents got into the car and shut the doors.
“This guy’s full of shit,’’ D’Angelo said.
“Yeah,’’ Bassett agreed. “He’s lying. His explanations aren’t good.’’
Bassett turned the key and drove out of the lot. Both men knew that they were far from done with Ron Ferrari.
In the days that followed, Reinhart Richter finally appeared—at least in the press.
After more than a week of haggling with ADM’s lawyers, Richter had been fired on September 22. Now, he was explaining to reporters that it was all part of a cover-up. Whitacre was telling the truth, Richter said, about ADM’s under-the-table bonuses designed to help its executives evade taxes.
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payments when he joined ADM. But, he maintained, Jim Randall, ADM’s president, had authorized it.
“He said to me, ‘What are you going to do with all that money? Are you going to buy a Ferrari?’ ” Richter told Fortune magazine. Now, said Richter, he was feeling misused and bitter. When he told ADM’s lawyers about Randall’s involvement, Richter claimed that they had refused to listen.
“The lawyers ignored the truth,’’ Richter told Fortune. “They were just looking for ways to dump things on Mark and his colleagues.’’
Rapidly, the Chicago agents were facing a new problem: Relations with the prosecutors were deteriorating.
The first signs of trouble had been obvious during the summer, when the fraud prosecutors were pushing to wrap up the investigation quickly. What mattered, the agents had argued, was thoroughness, not speed. During the fall, the problem emerged again, at a meeting in Washington.
“This is an important case,’’ Spearing told the agents. “We need Whitacre indicted by Thanksgiving.’’
“We’re going to do a complete and thorough investigation,’’ Bassett responded. “And if it takes us past Thanksgiving, it takes us past Thanksgiving.’’
The agents argued that if they failed to follow up Whitacre’s allegations of corporate-wide wrongdoing, it would be his ultimate defense. The FBI investigation would be attacked for simply concentrating on him.
“We don’t care about that,’’ one of the prosecutors said. “We want Whitacre prosecuted. We can deal with these other allegations later.’’
This all seemed absurd. They hadn’t been allowed to interview any ADM executives. Records were still dribbling in. How could they close the case without all of the information? Still, by the end of the discussion, the agents agreed to focus their efforts on Whitacre. But as the 302s came in, prosecutors grew annoyed. What was all this with Ron Ferrari? The 302 of that interview made it seem as though they were going after him, not after Whitacre. Finally, on October 13, Don Mackay and Jim Nixon called Rob Grant, the case supervisor with the FBI.
“Listen,’’ Mackay said, “we’re concerned you guys are deviating from the Whitacre investigation into other areas. Remember, at our Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 448 448
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last meeting we agreed that the focus would be Whitacre and everything else would be put aside.’’
“That’s what’s happening, Don,’’ Grant said. “Whitacre remains the focus. Everything that we’re developing that isn’t directly related to the frauds of him and his co-conspirators is not being addressed right now.’’
The two sides discussed access to information, with Grant spelling out some of the problems that were occurring between Springfield and Chicago because of the still-present Chinese wall. Springfield had interviewed Howard Buffett earlier, but wanted to speak with him again. Whitacre had told the Chicago agents information about Buffett. But, under the rules, none of that could be shared with Springfield before those agents sat down with him.
“Why is that a problem?’’ Mackay asked.
“It’s a fundamental desire on the part of all investigators to know as much as possible about an interview subject,’’ Grant responded. Well, Mackay said, he didn’t like the restrictions, either, but they had been put in place by high-level officials in the Justice Department. Abruptly, Mackay changed the subject.
“What’s going on with Scott Lassar?’’ Mackay asked. “What’s he up to? Is he pumping Mike and Tony for information? He’s only supposed to be getting it from us.’’
Grant took a breath. The bureaucracy was getting ridiculous. The prosecutors didn’t even trust each other.
That morning, Jim Epstein stood among a crowd of commuters at the Evanston station, watching as a train to Chicago rumbled to a halt. The doors opened, and Epstein moved forward with the crowd, finding his way to a seat.
Epstein hadn’t bothered to pick up a paper that day; he had plenty of work to review during his commute. He was reading a document when the man beside him brought out a copy of that day’s Chicago Tribune. Epstein’s eyes wandered over to check what was going on in the world.
And he froze.
Staring back at him from the top of the front page was a full-color picture of Mark Whitacre, dressed in a suit and seeming to be adjusting his glasses. Panicked, Epstein glanced at the headline that went with the photo.
ADM mole discloses a cache of $6 million; off-thebooks scheme endorsed by bosses, former executive says. Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 449
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Oh, my God.
“Excuse me,’’ Epstein said to the man beside him. “Can I see that a moment?’’
The man handed Epstein the paper, and the lawyer skimmed it quickly. It was worse than he imagined. In the first two paragraphs, Whitacre admitted acquiring millions of dollars through bogus invoices and then parking the money in overseas accounts. Epstein sagged in his seat. The only way to save Whitacre from a long prison term was to keep him valuable to the government as a witness in the price-fixing case. But that meant keeping a low profile, not handing ADM more ammunition for cross-examination. And now, right there on the front page of the Tribune, his client had just publicly confessed to a multimillion-dollar fraud.
Later that day, Whitacre arrived for a scheduled appointment with his psychiatrist, Dr. Derek Miller.
“So,’’ Miller said after Whitacre took his seat, “I see that you’ve been talking to the newspapers.’’
Whitacre nodded. He seemed achingly depressed.
“Didn’t come out the way I expected,’’ he said. “I thought they were just going to write about my new company.’’
Things had been slipping out of his control, Whitacre explained. He was beginning to feel the way he had before his hospitalization. He recognized that his behavior had become grandiose. He was being secretive with everybody, he said.
“That’s how it’s always been,’’ Whitacre said. “Even when I was a kid, I would constantly disobey my father, but he never found out. He never found out.’’
At the end of the session, Miller told Whitacre
that he wanted to increase his lithium levels. And from now on, he said, they needed to meet two times each week.
That night, Ron Ferrari was sitting on a living-room chair in his suburban Chicago home when he heard a knock at the front door. He glanced down a hallway. Through some glass, he saw his old friend Mark Whitacre on the stoop.
Ferrari felt a rush of anxiety. The FBI had rattled him; until then, he had been satisfied with Whitacre’s assurances that the government had no interest in him. Now, he was under investigation. After his first disastrous interview, Ferrari had moved quickly to fix things. He had Eich_0767903277_5p_02_r1.qxd 10/11/01 3:57 PM Page 450 450
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hired Jeffrey Steinback, a defense lawyer who commanded a good deal of respect from Chicago law enforcement.
Since then, Whitacre had tried contacting Ferrari; today alone, he had left several messages. But Ferrari had decided to cut off contact for a while. Now Whitacre was on his doorstep, and Ferrari didn’t know what to do.
“Susan,’’ Ferrari called to his wife. “It’s Mark.’’
“What does he want?’’ she replied.
“I have no idea,’’ Ferrari said.
Ferrari walked to the door, stepping outside before Whitacre could say a word. He shut the door behind him. He would not let Whitacre in.
“Hi,’’ Ferrari said.
“Why haven’t you called?’’ Whitacre said rapidly. “I’ve left lots of messages.’’
“I know you’ve left messages.’’
“But why haven’t you called? I’ve left messages. Why haven’t you called?’’
Ferrari stared at Whitacre. “We don’t have anything to talk about,’’
he said.
“Well, wait, what happened?’’ Whitacre said. “Have you met with anybody? Have you met with anybody?’’
Ferrari scowled. “Hell, yes, I’ve met with somebody. The Federal Bureau of Investigation came to visit me. It’s quite interesting what they had to say.’’
Whitacre held up his hands. “Hey, listen, this isn’t about you. Ron, listen to me, bud, they don’t want you. They want ADM. I know these guys.’’
“Well, that’s interesting. Because they’re asking me questions. Why are you saying I created invoices?’’
Whitacre babbled a response that made little sense.
“But listen,’’ he continued, “they don’t care about that. They want ADM.’’
Whitacre turned his hands as he spoke. “We’ve got to spin this thing. We’ve got to turn it back on them. Spin this thing. You’ve got to show it’s compensation. You know these guys were taking money. You know that.’’
Whitacre listed other executives who had taken money, saying Ferrari knew all about them. Ferrari started to get scared. Whitacre was wild-eyed, out of control.
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“I don’t know about any of this,’’ he said. “I never told you this. I didn’t know anyone was taking money.’’
“You’ve said it!’’ Whitacre protested. “You’ve said it! You’ve got to spin this! This isn’t about you; I didn’t want to get you involved. This isn’t about you. This is about them. They want ADM; they don’t want you.’’
Ferrari held up his hands. “I’m done. I don’t have anything else to talk about.’’
Whitacre blinked. “Does Susan know?’’
“No,’’ Ferrari lied. “She has no idea.’’
Ferrari opened the door. “We’re done, we’re not talking about anything else.’’
“Bud, I wouldn’t do this to you. You know me. I’ve been in your shoes. I wouldn’t do this to you.’’
Ferrari said nothing.
“You can’t say we ever met here,’’ Whitacre said suddenly. “You can’t say I was here to see you.’’
Ferrari stared at him. “We are done.’’
He closed the door.
From the entryway, Ferrari could see Whitacre still standing outside, obviously thinking his friend would return. Ferrari reached for the switch for the porch light and flicked it off, leaving Whitacre in the dark.
Ferrari walked back to the living room. This whole experience had thrown him off. His hands were trembling. Taking a breath, he headed to the phone. He wanted to call his lawyer, to tell somebody what had just happened.
As Bassett and D’Angelo questioned an ever-widening circle of potential witnesses, echoes from their investigation were beginning to find their way into the media. For weeks, a series of news reports had appeared, saying that the government was indeed investigating Whitacre’s allegations of an illegal, corporate-wide scheme to pay offthe-books bonuses to senior ADM officers. The stories enraged the company and Williams & Connolly. The defense lawyers met with prosecutors, pounding the table and demanding that something be done. Finally, on October 18, reporters received calls from an ADM spokesman. If they phoned the Justice Department press office, the spokesman said, they would be given a statement.
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As the calls came into the Justice Department, the statement was repeated, again and again.
“ADM is not a target or subject of a criminal investigation by the Criminal Division of the Department of Justice.’’
What the hell is going on?
D’Angelo and Bassett read the Justice Department’s words in the newspaper the next morning. They had never seen anything like it before—a statement appearing to clear a company before an investigation was over. Worse, as far as they were concerned, the statement wasn’t true. The investigation wasn’t far enough along to know if Whitacre was lying. This, they felt sure, was politics at its worst. After discussing it with Bassett, D’Angelo decided to make sure his boss knew about the latest outrage from Washington. He called Rob Grant.
“Hey, Rob,’’ D’Angelo said. “You’re not going to believe this.’’
“What’s up?’’
“Justice Department has come out with a statement saying ADM
is not a target in the fraud investigation.’’
“What do you mean ADM is not a target?’’ Grant shot back.
“That’s what it says. We don’t know anything more.’’
“Wait a minute. What about Randall? What about Mick?’’
“Just says ADM is not a target,’’ D’Angelo repeated. “Can you believe that?’’
“Why would they come out with something like that? What prompted that?’’
“We don’t know, Rob.’’
“Did you talk to anybody yet about it?’’
“No, we decided to call you first.’’
“I’ll call,’’ Grant said.
Calls went back and forth throughout the day. But the release of the bizarre and misleading statement would forever remain a mystery to the Chicago FBI.
Later that day, Rick Reising, ADM’s general counsel, stood on a bluedraped stage in a converted school, looking out onto a crowd of angry and concerned shareholders. In the wake of the raids, ADM’s stock price had plummeted. Now, many shareholders were arguing for new directors, independent of the Andreas family.
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little was mentioned about price-fixing. Instead, the executives issued explanations for Whitacre’s thefts. Still, there was good news, Reising said.
“The Department of Justice has confirmed that there is no credible evidence that Mr. Whitacre’s thefts were part of a plan by ADM to funnel compensation to its executives,’’ he said. The statement went far beyond anything Washington had actually said. But there was no arguing with the ADM executives running the meeting, as shareholders soon learned. At one point, Edward Durkin, a representative from the carpenters’
union, launched into a speech critical of the company. From the podium, Dwayne Andreas ordered that Durkin’s microphone be shut off.
Outraged, Durkin invoked Robert’s Rules of Order, the standard text for governing procedure at official meetings. Andreas was unmoved.
“This meeting, sir,’’ he snapped, “runs according to my rules.’’
In Chicago, Dick Beattie pushed through a revolving door, heading to the elevator that would take him to the Antitrust Division’s Midwest office. He was accompanied by two colleagues, including Charles Koob, Simpson Thacher’s top antitrust expert. Koob was going to be needed. For on this day, the government was, for the first time, going to play the Harvest King tapes to a representative of ADM. The idea had been a gambit conceived by Scott Lassar. ADM had been riding high since the Whitacre mess had emerged. Perhaps if the case depended on Whitacre, they would have good reason for confidence. But everyone was forgetting the tapes—the foundation of the case.
Williams & Connolly seemed determined to fight to the end. That made sense; the firm appeared, in many ways, to be shouldering the battle for the Andreas family. A corporate plea would imply the guilt of Mick Andreas. Striking a deal for the company seemed as if it would be awfully difficult for Williams & Connolly.
But Simpson Thacher was another matter. Beattie represented only the special committee. He seemed more likely to push a settlement if the evidence called for it. Once the tapes became public, the directors would be hard pressed to explain why they hadn’t resolved the case. Lassar had proposed making an approach to Simpson Thacher, in the hopes of persuading them to deal.
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already plugged in. For hours, as the tapes played, they took about 250 pages of copious notes.
By the end of the first day of viewing, any illusions that Beattie and Koob may have had about the price-fixing case were gone. For months, Beattie had been hearing arguments from Williams & Connolly that the tapes would never see the light of day. But from what he had just seen, Beattie was certain that was pure fantasy.
The Informant Page 57
