Informant

by Kurt Eichenwald

  The Springfield supervisors were energized that morning. Already they had learned bits and pieces from Dean Paisley, enough to know that Shepard may have stumbled onto something big. It was just what the office needed. Historically, the headline-grabbing cases turned up in Chicago, leaving Springfield with something of an inferiority complex. Over the years, some in the Bureau had even suggested just shutting down Springfield. The case Paisley had described—if true—was sure to silence the critics and give the Springfield agents a much-needed boost in morale.

  Hoyt gathered up Kevin Corr, the office’s principal legal advisor, and Bob Anderson, the squad leader in charge of most white-collar cases. In less than a minute, the three men appeared in the doorway of Stukey’s large, wood-paneled office. Shepard was already there, sitting beside Paisley on one end of a dark brown leather couch. Stukey was in a matching chair, talking with the two men.

  Stukey looked up as Hoyt and the others walked in. “Why don’t you guys find a spot?’’ he said.

  Hoyt glanced at Shepard as he took a seat. The man looked terrible. His usual rumpled appearance had a harried edge to it that morning. Hoyt couldn’t help thinking that the agent looked somewhat like a deer caught in the headlights of an oncoming car.

  Paisley opened the meeting.

  “As most of you know, Brian met last night with Mark Whitacre from ADM,’’ he said. “Things didn’t go quite as expected.’’

  Paisley looked over to Shepard. “Brian, why don’t you tell everybody what’s going on.’’

  Shepard looked at his notes. “Well, as you know, yesterday I was attempting to go to Mark Whitacre’s house to place a recording device on his phone line.’’

  For several minutes, the words came tumbling out. Shepard’s lack of sleep worked against him. He had never been given high marks as a briefer, but his effort this morning was particularly rambling. He had trouble focusing on Whitacre’s words, instead drifting repeatedly into the atmospherics of the interview. It was proving immensely frustrating to his supervisors.

  “The meeting went on just very, very late,’’ Shepard said. “We were out in the car for three or four hours, and it was really dark. It was hard to take notes. And I knew I had a meeting this morning . . ’’

  Stukey broke in. “Brian, just start at the beginning again and tell us specifically what happened. What did the man say?’’

  Under gentle questioning, Shepard recounted the story. He described Whitacre’s uneasiness, his concern about being found out. This was a man, Shepard said, who was scared to death. Shepard listed everything that Whitacre had described, from the price-fixing to the theft of microbes to the effort to mislead the FBI.

  The supervisors reeled. They were uncertain what charges all this involved. Probably obstruction of justice for conspiring to lie to the FBI. Maybe interstate transportation of stolen property for the theft of microbes. Regardless, there was little doubt Whitacre was describing something illegal.

  One potential problem, Shepard said, was Mark Cheviron. The security chief was pushing to be briefed on developments in the Fujiwara investigation. He had even scheduled an appointment for that afternoon with the Springfield supervisors. Everyone understood they would have to be circumspect, to avoid tipping off the investigation’s new direction.

  As the supervisors discussed the Cheviron meeting, Shepard glanced out the window, catching a glimpse of the state capitol dome a few blocks away. He was having trouble hiding his anxiety about this case. Whitacre’s statements had bothered him deeply. He knew the case had to be investigated but wasn’t eager for the job. He had lived in Decatur almost ten years; he was part of the community. He went to church with ADM employees; his kids played with their kids. How could he take on the company and still be part of the company town? What would happen to his family?

  Hoyt could see the wheels turning in the agent’s mind. He decided to corner Shepard later and find out what was bothering him.

  After more than an hour, Shepard finished his briefing. No one spoke for an instant.

  The silence was broken by Stukey. “I’ll tell you,’’ he said, “this doesn’t surprise me.’’

  Stukey related his experiences as a young agent, when he played a small role in the Watergate investigation. He had never forgotten that it was Dwayne Andreas’s money that had been laundered into the account of a Watergate burglar. While Andreas had known nothing about it, the event had left Stukey suspicious. These were people who worked at the edge of the law, he said. Now, his team had to figure out if they had not just bent, but broken the rules.

  Stukey divvied up the assignments.

  “Brian, get some rest if you can, but prepare a 302 of your interview,’’ he said.

  Anderson was given the job of writing a teletype to inform FBI headquarters about what was happening. Shepard and Corr, the legal advisor, were told to examine the price-fixing laws and figure out what role the FBI played in such investigations.

  “Once you finish all of that,’’ Stukey said, “let’s take a look at what we get, and we’ll make a decision on exactly how to proceed.’’

  The meeting ended, and the agents all scattered. They had a lot of work to do. And the first thing was to learn about price-fixing.

  For 102 years before that day, American law prohibited price-fixing—at least on paper.

  The law was a logical outcome of the industrial revolution, as capitalism blossomed while also plumbing its worst extremes. The birth of cross-country railroads—and with them, the flourishing of industries from banking to energy—had exacted change at a stomach-churning pace. Never before had possibilities seemed so limitless—for travel, for economic growth, for national supremacy.

  But those opportunities came at a terrible price. Vast corporate empires, known as trusts, had been constructed by industrial robber barons such as J. P. Morgan and John D. Rockefeller Sr. Prices were set in backrooms by secret agreements, not by battles in the marketplace. The country was quietly being robbed of capitalism’s promise. For the first time, it became evident that a free market left to its own devices would not be free at all, but enslaved to the whims of the powerful.

  Shopkeepers and small distributors railed against the trusts. Amid the outcry, Congress stepped in with the Sherman Antitrust Act in 1890, prohibiting conspiracies “in restraint of trade or commerce,’’ with violators subject to fines and imprisonment. The public interest appeared to have defeated the trusts.

  But the sense of victory was short-lived; the law quickly became derided for its insignificance. Its language was vague, its enforcement spotty. It was riddled with so many loopholes that it was commonly mocked as “the Swiss Cheese Act.’’ For all the good it did, the law may as well have not been adopted at all.

  Then came the turn of the century and with it the onset of the most active period of the Progressive Era. Americans came to realize that the conditions bringing great wealth to the few were also bringing misery to the many. Child labor, grim working conditions, tainted foods—these were the ancillary products of unfettered capitalism and misplaced faith in the benevolence of corporate despots.

  In the White House, Teddy Roosevelt capitalized on the public sentiment. In February 1902, Roosevelt revived the moribund Sherman Act by filing suit against the Northern Securities Company, a railroad that was part of the J. P. Morgan empire. Four years later, the government filed suit under the Sherman Act to dissolve Rockefeller’s Standard Oil. By 1911, with the Supreme Court’s affirmation that the once powerful oil trust should be broken up, the dominance of the law was unquestioned.

  In the years that followed, price-fixing emerged as one of the principal accusations leveled in cases brought under the Sherman Act. The concept was simple enough. Say there are two companies that manufacture washing machines. If the quality of the machines is the same, the companies can compete for customers mostly over price. If one company wants more business, it will drop its price; if the other wants to keep customers, it will match the price. In
theory, that competition serves to keep prices low, to the benefit of consumers and the most efficient corporations.

  All of that changes with price-fixing. Under such schemes, companies secretly agree on the price for each washing machine. To insure neither loses business, they might divide up markets, planning which company gets to offer the agreed price to which customer. In the end, the scheme strips consumers of their power. No matter what customers purchase or prefer, prices remain the same, dictated by companies set on evading the rigors of the capitalist system that gave them birth.

  With price-fixing so corrosive to markets, the Supreme Court ruled in the early twentieth century that all such schemes—regardless of motivation—are illegal. As a result, since the adoption of the Sherman Act, most criminal antitrust prosecutions have been for price-fixing or related charges.

  But there is a big difference between charging a violation of the law and proving it. Because of the secret nature of price-fixing, cases pursued by the government often relied on complex economic analyses to confirm the existence of the scheme. Frequently, FBI agents were called in to interview witnesses and review documents. But in the end, proving a price-fixing scheme was often like confirming the existence of black holes in space. Neither could be seen directly; their presence had to be deduced by examining the surrounding environment. Rarely in the history of the Sherman Act had a price-fixing conspirator voluntarily stepped forward, offering to record other participants as the crime was planned.

  By the time Shepard and Corr finished their review of the antitrust laws on that day in 1992, they knew that this nascent case had the potential to be historic. Mark Whitacre was a rare find. His continued cooperation would have to be cultivated carefully.

  Whitacre tried to look natural that morning as he strode into ADM’s hangar at the Decatur Airport. Jim Randall was waiting for him, looking irked. The two were supposed to fly to North Carolina by corporate plane so that they could check on a new plant. Randall liked an early start and was annoyed that Whitacre hadn’t been there, ready to go. On top of it all, Randall had received a message that Whitacre should call the office before takeoff. There was no telling how delayed this flight was going to be.

  “Hey, Mark,’’ Randall growled. “Call Cheviron. He wants to talk to you right away.’’

  Whitacre felt his heart drop. Had Cheviron already found out about what he had said to Shepard?

  “What does he want?’’

  “I don’t know. Just go call him.’’

  Whitacre nodded. The walk to the telephone seemed to last an eternity. He dialed ADM’s main number and asked for Cheviron, but he couldn’t get through. He called again as Randall stewed. Finally, he was connected to Cheviron’s home.

  “What happened last night?’’ Cheviron asked. Whitacre felt relieved. Maybe the security chief didn’t know anything.

  “Brian Shepard came over and put a recorder on my line.’’

  “Okay. They put a recorder on your line?’’

  “Yeah. I was instructed that when Fujiwara calls, I’m to record the conversation.’’

  Cheviron paused. He didn’t believe that the FBI would just leave the decision about what to record to Whitacre. He figured there was a good chance the line was tapped so that Shepard could check it out.

  “Make sure if Fujiwara calls that you record it,’’ Cheviron said, “because they may be checking to see if you’re going to or not.’’

  Cheviron’s message was clear. He didn’t trust Whitacre. He thought the man was up to something.

  At almost that very moment in Lund, Sweden, Harald Skogman of ABP International was leafing through a contract from ADM. Under its terms, ABP, a Swedish agricultural firm, would supply the microbe needed by Whitacre’s division to start a new venture—manufacturing threonine, a feed additive. In exchange, ADM would pay $3 million.

  Skogman flipped the contract closed and placed it on his desk. His company’s president, Lennart Thorstensson, had signed the document two days before. Skogman himself had sent two copies out yesterday by overnight courier to Rick Reising, ADM’s general counsel. Last night, he had personally faxed a note to Whitacre, letting him know that the contract would be on Reising’s desk today, waiting to be signed. Still, he had heard nothing in response.

  Reaching for the telephone, Skogman decided to call Whitacre and press him. The calls continued back and forth until finally, late in the day, Skogman secured a signed contract, ready to be filed away.

  For almost three years, the contract would remain largely unnoticed in filing cabinets at the two companies. Until then, no one would recognize the ultimate significance of the obscure document in the rapidly unfolding criminal investigation of ADM.

  Shepard sat on a couch in Hoyt’s office. He had tried to bury his feelings about the investigation, to hide his concerns. But now Hoyt was pressing him.

  “I’m just not sure if I’m the best person to handle this,’’ Shepard said.

  All the misgivings came out, as Shepard described his apprehension about being a member of a company town while simultaneously investigating its company.

  “This case is going to be bigger than one agent could handle,’’ he said. “Maybe it would be best if somebody else did it. I could help with introductions. I could introduce them to Whitacre.’’ Maybe, Shepard suggested, he should be left to do the other cases that came into the Decatur Resident Agency.

  Hoyt studied Shepard as he spoke. Right now, he appeared fragile. Like many agents who had spent years in a small office, Shepard seemed to have become accustomed to dealing with day-to-day criminals. His confidence was lacking for the big-time case.

  But Brian Shepard was a good investigator, and in this case, he was the best person for the job. Finding agents to handle the normal Decatur caseload would be easy; finding someone who knew the community as well as Shepard would not. Already, Whitacre had trusted Shepard enough to open up. Changing agents now might cause their new cooperator to shut down.

  Hoyt leaned in on his chair. “Brian, you are simply the most knowledgeable person in the FBI about ADM,’’ he said. “That is a tremendous resource. We can’t waste it. We have the full trust in you that you can do this investigation. And you won’t be alone. There is no individual or company that is bigger than the FBI. We will stand behind you one hundred percent.’’

  Shepard nodded. He wasn’t comfortable, but knew that as long as he had the Bureau’s backing, he would probably get whatever support he needed. He was not alone; his ASAC had now made it clear that the resources of the government were standing behind him.

  Over time, that would prove optimistic.

  “We don’t want the FBI going through all of ADM’s closets.’’

  As he said the words, Mark Cheviron stared across Stukey’s office, into the eyes of the Springfield SAC. The meeting between the Springfield supervisors and ADM’s security chief had begun at 2:30 that afternoon. With every statement he made, Cheviron made clear ADM’s concerns about the investigation. In part, he said, that stemmed from the fallout after the sting operation at the commodities exchanges a few years before.

  “Our reputation suffered because of that, and that has made us very reluctant to cooperate with the FBI,’’ he explained. “Our reputation is more important to us than a couple-of-million-dollar extortion.’’

  ADM wanted limits on the investigation, Cheviron said. Without them, the company might not cooperate.

  “Dwayne Andreas is concerned about the FBI going off and investigating high-level ADM executives. We’re also not sure we want to cooperate to the extent of allowing you to monitor our phone calls.’’

  The agents listened carefully. With the information from Whitacre, they knew that this conversation could have hidden meanings. Sure, ADM might not want the FBI eavesdropping on its business. But maybe the truth was that the company was afraid its price-fixing and other conspiracies might be overheard.

  Stukey assured Cheviron that the only phone being monitored by
the FBI was Whitacre’s off-premises extension—the OPX line. Cheviron nodded.

  “Now, I believe what Whitacre’s said about Fujiwara,’’ Cheviron said amiably. “But you have to understand, Whitacre is a young Ph.D. who’s paranoid. All this has an effect on him.’’

  Cheviron looked at the agents around the room. “Our bottom line is, we have a business to run. We don’t want our executives getting caught up in this to the extent that they can’t do their jobs. That would not be worth our continued assistance. So, for us to keep helping, we need to know what’s going on.’’

  Stukey’s response was the model of politeness.

  “We appreciate your concerns, but please understand that we don’t need a complainant to pursue this,’’ he said. “If we have knowledge of a crime, it’s the FBI’s responsibility to pursue an investigation whether we have the cooperation of a complainant or not. Now, we will keep you advised of what is happening as much as possible, but there will be certain things that cannot be disclosed to you.’’

  The conversation moved to the next stage of the Fujiwara in-vestigation. Kevin Corr handed Cheviron a rough draft of a con-tract between ADM and the FBI. It said that the FBI would provide $3 million to ADM to use in the Fujiwara sting. If the money was not recovered within twelve hours, ADM would reimburse the government. Cheviron said the contract needed to be reviewed by ADM lawyers; they would come back with a response.

  The meeting ended. Cheviron stood to shake hands, all smiles and pleasantries. The message he was conveying was simple: He understood law enforcement. He was a former cop. Maybe they differed on this investigation, but beneath it all, they were the same.

  Stukey escorted Cheviron to the front lobby. Smiling, the SAC pushed open one of the glass doors. In a moment, Cheviron was on an elevator, heading down to the street.

  Shepard gathered his notes from the meeting. Stukey wanted Cheviron’s statements written up in a 302 while memories were fresh. He knew that someone might have to testify someday about everything the ADM security chief had just said.