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27 Mick Andreas’s reaction on learning of ADM’s role in sponsoring the FBI from Paul Craig Roberts, Washington Times, “Price-fixing Fabricators?” January 31, 1997, p. A16. Eich_0767903277_5p_03_r1.qxd 10/11/01 3:58 PM Page 575
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27 In a letter to the author, Thomas Frankel essentially denied everything I have written in this book about him, describing my references to him as “misleading, inaccurate, and incorrect.” However, much of the information comes directly from government records, and every portion of the book related to Frankel—with the exception of the direct quotes from government records that appear below—was shown to representatives of ADM or its executives, who did not dispute the accuracy of what appears here.
The public story about the resignation of Frankel was reported by Scott Kilman,
“Archer-Daniels Treasurer Resigns after Securities Losses Are Discovered,’’ Wall Street Journal, September 16, 1991, p. A8. The following day, a criminal investigation into possible wire fraud was opened at the FBI’s Chicago Field Office, case file number 196B-CG-82508. Several financial institutions and ADM were subpoenaed in the course of the investigation. ADM’s cooperation in the case, however, was limited. Without the eager participation of the victim in the case, the investigation was closed without prosecution in July 1993. But ADM officials told me that the circumstances surrounding the Frankel affair were far broader than were ever publicly revealed. Afterward, the head of the board’s audit committee stepped down for failing to detect the transactions, a director involved in the situation said. A July 23, 1993, letter written by Special Agent Gregg Schwolback to a prosecutor in the Chicago U.S. Attorney’s office details the specifics of the investigation into Frankel’s activities. It stated, “By way of background, the investigation involved a $14.6 million loss to Archer Daniels Midland Company, Decatur Il., which had been caused by the Treasurer, Thomas H. Frankel, between 1984 and August 1991. The loss resulted to ADM because Frankel failed to place a $26 million hedge position to offset the company’s $350 million short position, a position which ADM had held since 1984. Since the hedge position had not been placed by Frankel, ADM began to incur losses as interest rates declined over the seven-year period. By August 1991, the cumulative loss to ADM totaled $14.6 million. Frankel prevented detection of the loss by creating fictitious internal trading documentation and other records to make it appear as if the hedge position existed throughout the seven-year period. On August 30, 1991, Frankel resigned after other ADM officials discovered the loss and the fictitious trading documentation and other records which he had created.’’
The Frankel investigation was impeded by several factors in addition to ADM’s reluctance to cooperate, according to government records and interviews. According to the July 23 letter, a review of documents subpoenaed from ADM “failed to reveal any violations of federal law that occurred in the Northern District of Illinois,’’ which is covered by the Chicago office. The letter mentioned that the proper venue for the Frankel investigation was with the Springfield division, but that it was unlikely to be pursued there because Springfield “was presently conducting an investigation of ADM for price-fixing.’’
On July 20, 1993, Agent Schwolback contacted Special Agent Joe Weatherall, who by that time was a co–case agent on the price-fixing investigation. Schwolback asked about the possibility of conducting a joint interview of Frankel when the pricefixing case was more fully developed. According to a memo of the call written by Schwolback that day, Weatherall said that “because of the progress being made in their case, they did not want Frankel to be interviewed at this time.’’ According to the memo, Weatherall indicated that Frankel would have to be interviewed at some point in the price-fixing investigation, but that interview never took place. One important question in the investigation was what had happened to the $26 Eich_0767903277_5p_03_r1.qxd 10/11/01 3:58 PM Page 576 576
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million that government records say was supposed to have been used to create a hedge position. ADM officials said that the company believed some of the money may have ended up with Frankel himself. According to interviews with the government, that was considered by the FBI as a possible “theory of the crime,” but the case was closed before the question could be adequately pursued. According to investigative notes reviewed by the author, information developed later in the related ADM
cases showed that a bank account linked to Frankel had attracted the attention of bank compliance officials because of large sums of money moving through it. It is not clear whether this account was linked in any way to possible wrongdoing since, ultimately, no further information about it was ever developed, and no charges were ever brought against Frankel.
28–29 Allen Andreas has never before been publicly disclosed as the executive who contacted the CIA. However, his conversations with Dwayne and Mick Andreas were described—without mentioning Allen’s name—during the trial of U.S. v. Michael D. Andreas et al.
CHAPTER TWO
31–32 Some details of Worthington’s call to John Hoyt from an internal teletype, from FBI-Springfield to FBI headquarters, dated November 5, 1992. 32–34 Some details of Shepard’s personal history from U.S. v. Michael D. Andreas et al. 33 Shepard’s residence in Matawan from local real-estate records. The time of the commute from that town from the New York Times, “If You’re Thinking of Living in: Marlboro,’’ July 12, 1987, section 8, p. 11. Marlboro residents relied on the Matawan train station.
35–38 Some details of the FBI interview of Michael Andreas from his 302 dated November 4, 1992, for case file number 192B-SI-45899. 37 The statements by the FBI that ADM could keep any “superbug’’ that the company obtained from Fujiwara was supported in testimony of Mark Cheviron before the Special January 1996 Grand Jury, on November 12, 1996, in the case titled “In Re: Grand Jury Investigation,’’ court caption number 95 GJ 573. 38 The stories Whitacre told at ADM of his personal history were described in Macleans, “The Mole Who Cracked a Conspiracy,’’ February 22, 1999, p. 49. Also from a sworn deposition from Reinhart Richter of May 18, 1998, in the civil case Archer Daniels Midland Company v. Mark Whitacre et al. , case number 96-2237, filed in the United States District Court for the Central District of Illinois. 38–40 Whitacre’s anxiety about speaking with the FBI has been described in several documents. First, Shepard discussed Whitacre’s general anxiety at the time in his court testimony in U.S. v. Michael D. Andreas et al. It is also mentioned in the grand jury testimony of Mark Cheviron, before the Special January 1996 Grand Jury, on November 12, 1996, in the case titled “In Re: Grand Jury Investigation,’’ court caption number 95 GJ 573. Finally, Whitacre alluded to it himself in Fortune, “ My Life as a Corporate Mole for the FBI,’’ September 4, 1995, pp. 56–57. 39 Some details of Mark and Ginger Whitacre’s personal history from “Little Miami High School 15th Year Reunion Information Sheet,’’ dated June 8, 1991. A copy of the document was provided by a former classmate of the Whitacres. Eich_0767903277_5p_03_r1.qxd 10/11/01 3:58 PM Page 577
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40–41 Shepard described the delay in speaking to Whitacre during his court testimony in U.S. v. Michael D. Andreas et al.
The plan of action for the Fujiwara investigation was described by Shepard in a teletype to FBI headquarters, dated November 5, 1992. 42–43 Shepard’s first interview with Mark Whitacre is described in several documents, both confidential and publicly available. The foremost record of the meeting is the FD-302 dictated by Shepard for file #192B-SI-45889. Shepard also described the meeting in his testimony during U.S. v. Michael D. Andreas et al. Details were also contained in an FBI teletype prepared by Shepard on November 5, 1992. Finally, additional information about the meeting was described by Mark Cheviron in his testimony before the Special 1996 Grand Jury. Some of this information conflicts. Neither the 302 nor the teletype indicates where the meeting took place. In his court te
stimony, Shepard said that the interview took place at the FBI office in Decatur. In his grand jury testimony, Cheviron insisted that was incorrect, and that the meeting took place at Jim Shafter’s office. After cross-checking as much information as possible, I have concluded that Agent Shepard’s recollection is in error, since it is not consistent with any other information that was obtained. Cheviron’s recollection is consistent with all of that other information. This is simply a mistake that can easily be expected with the passage of years.
43–44 Some details of Whitacre’s false story about the threat to his daughter from the FD302 of his interview with Brian Shepard on November 6, 1992, as well as from Ronald Henkoff, “The ADM Tale Gets Even Stranger,’’ Fortune, May 13, 1996, p. 113. 44–46 Cheviron described the events of November 5, 1992, in his grand jury testimony of November 12, 1996.
48 Details about the history of Moweaqua from records and news clippings on file with the Moweaqua Coal Mine Museum, Moweaqua, IL.
48–53 Some details of the November 5, 1992, interview of Mark Whitacre by Brian Shepard from two FD-302s of that date. Other information comes from an internal FBI teletype, prepared by Bob Anderson, a Springfield squad leader, on November 6, 1992.
Shepard also described many of the details in his testimony during U.S. v. Michael D. Andreas et al. His most detailed description came in his testimony of August 12, 1998. During that day’s testimony, Shepard described how Whitacre told him about being coached by Cheviron and Mick Andreas immediately before their first meeting. No evidence emerged in this investigation that Mark Cheviron had any personal knowledge of the price-fixing activities at ADM. He was never charged with any other wrongdoing either.
Shepard also testified that Whitacre had described conversations with James Randall about efforts to steal microbes from competitors. Those efforts, Shepard testified, included paying Michael Frein $50,000 for stealing a bacitracin bug, and using prostitutes who were hired by Mark Cheviron to get information from employees of competitors. Later in his testimony, Shepard was asked specifically if any of these separate allegations turned out to be true. Shepard replied, “In my opinion, they are true.’’
Through his lawyer, Jeff Cole, Randall denied any involvement in such activities. Also, through his lawyer William J. Linklater, Michael Frein firmly denied that he had ever improperly taken any microbes from his former employer. I am also Eich_0767903277_5p_03_r1.qxd 10/11/01 3:58 PM Page 578 578
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aware that, in a short discussion with an FBI agent, Frein denied any involvement in wrongdoing. According to notes I have reviewed, officials from IMC told the FBI that they had no knowledge of any microbe thefts, although they said that at the time in question, they had no means of determining whether any bugs were missing. Another ADM executive, Marty Allison, informed the government during an FBI interview that he had also personally heard from Randall that Frein had brought the bacitracin bug with him from his previous employer. Allison’s statement to Special Agent Herndon was recorded in a 302 dated February 13, 1996. Allison later pleaded guilty to charges in an unrelated criminal case involving actions he took while working for ADM.
The case was still under investigation in 1996, documents show. A January 30, 1996, letter to Frances Hulin, the United States Attorney in Springfield, from Special Agent Robert Herndon, described elements of the investigation to that point, including the allegations pertaining to Frein and Randall. No charges were ever brought against either man.
Finally, a December 23, 1992, teletype prepared for Bureau headquarters by Special Agent Joe Weatherall detailed many of the allegations that were the subject of the Springfield FBI’s investigation, including the possible interstate transportation of stolen property and what it described as “a pattern of obstruction of justice concerning the Springfield division matter.’’ Again, no charges were ever brought in either case. No charges were ever brought by the government involving the Corn Refiners Association, and no substantive evidence was ever developed indicating that the association itself was involved in price-fixing.
CHAPTER THREE
54–56 The meeting and attendance at the Springfield meeting in Stukey’s office from a private calendar maintained by one of the participants. 56–58 The history of the Sherman Antitrust Act comes from a variety of sources. The law’s legislative history and early years of performance comes from Ron Chernow’s towering biography Titan: The Life of John D. Rockefeller Sr. (Random House, 1998). Other details of the law, and of the Progressive Era, come from H. W. Brands, The Reckless Decade: America in the 1890’s (St. Martin’s Press, 1995), pp. 58, 158; Steven J. Diner, A Very Different Age: Americans of the Progressive Era (Hill and Wang, 1998), pp. 14–75; and William Manners, TR & Will: A Friendship that Split the Republican Party (Harcourt Brace & World, 1969), pp. 43, 191. Details on the use of the law in price-fixing cases from A. D. Neale and D. G. Goyder, The Antitrust Laws of the United States: A Study of Competition Enforced by Law (Third Edition), and Thomas W. Hazlett, “The Legislative History of the Sherman Antitrust Act Re-examined; Economics and 100 Years of Antitrust,’’ Economic Inquiry, April 1992, p. 263.
58–59 Whitacre’s call on the morning of November 6, 1992, was described in Cheviron’s grand jury testimony, as well as in the 302 of Mark Whitacre, for the investigation of that same day. 59 Copies of the ABP contract, and the note faxed by Harald Skogman to Mark Whitacre, were obtained by the author.
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60–62 Cheviron’s afternoon meeting with Shepard and the FBI is described in several records. They include Cheviron’s grand jury testimony of November 12, 1996, and Shepard’s trial testimony in U.S. v. Michael D. Andreas et al. It is also referenced in the testimony of Donald Stukey, at a pretrial hearing in that same case held on November 5, 1997.
62–63 The episode involving the call from Regina from the Inland Telephone Company is described in several records. They include Cheviron’s grand jury testimony of November 12, 1996; a transcript of a recorded conversation between Cheviron and Special Agent Brian Shepard that took place on November 9, 1992; an FBI 302 of Ginger Whitacre, dated November 6, 1992; and a 302 of Mark Whitacre taken that same day.
63–65 The meeting between Whitacre and Shepard on the night of November 6, 1992, was described in several 302s. They include two 302s prepared by Shepard, based on his notes of that night. At the time, Shepard was dividing his notes into separate 302s based on different possible crimes. That same night, he also interviewed Ginger Whitacre, and her comments were also recorded in a 302. 64–65 Shepard described his reaction to Whitacre’s story about the threat to his daughter in his testimony during U.S. v. Michael D. Andreas et al. 65–71 Some details of the meeting between Whitacre, Shepard, and Paisley on November 8, 1992, from two 302s prepared by the agents from Shepard’s notes of that meeting. Also, Shepard discussed this meeting in his testimony in U.S. v. Michael D. Andreas et al.
71–73 Cheviron discussed his conversation with Whitacre on the morning of November 9, 1992, as well as his subsequent telephone call with Shepard, in his grand jury testimony of November 12, 1996.
72–74 Cheviron described his November 9 conversation with Reising in a telephone conversation with Shepard that same day. The conversation was recorded, and a transcript was reviewed by the author. Shepard also described the conversation in his trial testimony in U.S. v. Michael D. Andreas et al. 73–74 The conversation between Paisley and Cheviron on November 9, 1992, from a transcript of the FBI tape 1B2 for case #60A-SI-46290. 74 Details of Paisley’s filing of the Cheviron tape, as well as its log number, from an FBI 504B of November 9, 1992.
75 The location and other details of the first recorded conversation were revealed by Shepard in his testimony during U.S. v. Michael D. Andreas et al. Some details of the appearance of the hotel from personal observation, as well as interviews with people who remembered t
he location’s look in 1992. 76 Details of the signing of the FD-472s and FD-473s from the documents themselves. 76–78 The conversation between Whitacre and Yamamoto from the transcript of the recorded conversation, government file number 1B1. While portions of this tape were played at the trial of U.S. v. Michael D. Andreas et al. , the full transcript has never been publicly released.
78 The description of the calls to Ikeda and Mimoto, as well as the other failed calls, from the transcript of the recorded conversation, government file number 1B1. Eich_0767903277_5p_03_r1.qxd 10/11/01 3:58 PM Page 580 580
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78 Details of the signing of the FD-504b from the document itself. 78–79 Some details of the conversation between Whitacre and Shepard on the night of November 9, 1992, from three 302s prepared by Shepard.
CHAPTER FOUR
80 The description of the weather on the road from Decatur to Springfield comes from records on file with the National Climatic Data Center in Asheville, North Carolina. The records include the hourly surface weather observations for November 10, 1992, from both the Decatur and Springfield stations maintained by the U.S. Department of Commerce.
80 The time frame of Paisley’s trip to Springfield was established by an FD-504b, a document that describes the chain of custody for tape-recorded evidence maintained by the FBI. The document shows that Shepard turned over the tape to Paisley at 10:25 that evening. Other information developed by the author showed that Paisley left his meeting with Shepard within five minutes of receiving the tape. Getting onto the highway from downtown Decatur could take anywhere from ten to fifteen minutes. So, by the time that Paisley had reached the open fields on Interstate 72, it would have been shortly before eleven o’clock.