Informant (60 page)

“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.

“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.

“Anyone else know about this transaction?’’

“No. Just Mark and me.’’

“What happened to the money sent to Switzerland?’’

“Well, some time before, Mark and I went to the Cayman Islands, and we both set up bank accounts there. And after we got the money in Switzerland, Mark told me to transfer it to the accounts in the Caymans.’’

“How much did each of you get?’’

“Well, I got something like $170,000 to $190,000, which included the money I lost to the Nigerians, and some extra to pay taxes. The remainder of it, like four hundred thousand dollars, went to Mark in his Caymans account.’’

D’Angelo asked a few more questions about how the Caymans accounts had been set up. “Now, what happened to the money you received?’’

Hulse looked down at the table again, almost laughing.

“I took a bunch of it out of the account in 1992 to invest in a company called something like American National Securities, some brokerage firm about to go public.’’

Hulse said he invested $50,000 in the brokerage, while Whitacre put in $150,000.

“Where are the shares now?’’

Hulse said he didn’t know. Someone named Jerome Schneider was involved in the deal and was supposed to have transferred the shares to a New York brokerage. But now, Hulse said, he didn’t know where the shares were.

“Who knew Schneider?’’ D’Angelo asked.

“Whitacre found him,’’ Hulse said. “He saw some advertisement from Schneider in an airline magazine, like Delta magazine. Schneider advertises in those publications about how to set up offshore bank accounts.’’

“Okay. What happened to the rest of the money?”

“In late 1993, I moved about $141,000 from my Caymans account to Mark’s.’’

D’Angelo blinked. “You sent it to Mark?’’

“Yeah,’’ Hulse said, nodding. “Mark was getting big returns because he had a managed account, you know, where somebody’s making investments for him. But I didn’t have enough for that type of account. So Mark let me put my money in his account for larger returns, and promised to give it back later, whenever I wanted.”

“So how did you do?’’

Hulse made a face. “Not well. Mark told me in 1994 that I had only earned like five or six percent.’’

D’Angelo wrote down the percentages. He wondered if Whitacre had been skimming money from his friend. Who was managing the account? he asked.

“In the Caymans? A guy name Beat Schweizer.’’

Beat Schweizer?
The investigators were jolted. Whitacre had said he met Schweizer in Germany, while working for Degussa. What was the man doing in the Caymans?

“Schweizer eventually left the Caymans bank and set up his own business in Switzerland,’’ Hulse said.

“Did you have any other contact with him?’’

“No. He tried to solicit my business when he went out on his own. But I didn’t do any other business with him.’’

D’Angelo brought out documents provided by Williams & Connolly. Hulse identified many of them as being bogus invoices and letters he had created.

After reviewing the documents, Hulse assured the investigators that he had told them about all of his transactions with Whitacre.

“Do you know about other ADM employees doing similar transactions?’’

Hulse looked nervously over to his lawyer, and nodded.

“Reinhart Richter,’’ he said softly.

“How do you know about him?’’

Breaking in, Zenner explained about Richter’s call on the voice-mail system.

“Do you have a copy of the message?’’ D’Angelo asked.

Zenner reached for the telephone on the table.

“Why don’t we call his voice mail right now?’’ Zenner asked. “He saved it.’’

•   •   •

Once they learned that Richter’s voice mail still existed, the investigators wanted a copy. One prosecutor hustled out of the room, coming back with a tape recorder.

Hulse looked down at the table, shaking his head.

“I don’t feel right about this,’’ he told Zenner. “Reinhart’s a friend.’’

“You don’t have a choice here, Sid,’’ Zenner said. “They need to hear this.’’

The investigators watched, unmoved. If Hulse didn’t want them to hear this, it never should have been mentioned. Finally, Hulse relented. They called the ADM voice-mail system on a speakerphone. As Richter’s words filled the room, tears streamed down Hulse’s face.

“I feel terrible about this,’’ he muttered. “Just terrible.’’

After listening to the message twice, D’Angelo asked if Hulse knew of any other wrongdoing at ADM. Hulse repeated rumors he had heard from Whitacre. He had been talking to Whitacre a lot, he said.

“I called him when I saw that story in the newspaper about the $2.5 million theft,’’ Hulse said. “I was worried that some of my money was tied up in that.’’

“What did Whitacre tell you?’’

“He said not to worry,’’ he sighed. “He told me ADM is in trouble.’’

Hulse and his lawyers left about fifteen minutes later. By the time they were on the elevator, the prosecutors and agents were whooping it up.

A taped confession!
It wasn’t often that any of them had come across evidence this strong so quickly. Richter apparently had been trying to coordinate his story with Hulse and Allison, and in the process had cooked himself.

“This is great,’’ Don Mackay giggled.

Mackay looked over at D’Angelo and Nixon.

“Well,’’ he said, “looks like we need to go down and speak with Mr. Richter.’’

Reinhart Richter was potentially the key to everything. Of that, the Williams & Connolly lawyers felt sure. With Richter’s help, Mark Whitacre would be beyond redemption.

By early September, the defense lawyers—using investigators coordinated by Kroll Associates, the renowned corporate detective agency—had tracked down money that went to Richter, Hulse, and Allison. Now ADM held all the cards. On September 13, the day after Hulse’s FBI interview, Williams & Connolly offered Richter a deal.

In exchange for Richter’s cooperation in the investigations of Whitacre, ADM would keep him as an employee. He would be required to repay, on mutually agreeable terms, the money traced to him—$180,966. Williams & Connolly would then work to make sure that Richter received immunity from the Justice Department.

The terms seemed fabulous. But Richter demurred. He would have to think about it, he said.

Hulse and Allison were not treated quite so gently.

That same morning, the two were notified that they were being fired, and were immediately barred from the office. Their passwords to the voice-mail system were deleted. They would never be allowed access to ADM again.

At Emory University’s business school, Ross Johnson strode to a podium, ready to take questions from the assembled students, faculty, and alumni. Johnson had come to give a speech about his old company, RJR Nabisco, and the famous takeover battle that had engulfed it. But one member of the audience wanted to know about Johnson’s work as an ADM director. What could he say about events unfolding there?

Johnson smiled.

“It’s a pretty exciting experience when you find out that one of your top division presidents has been recording everything you’ve said for two and a half years,’’ he said. “It’s a mystery.’’

The idea that Whitacre was a Boy Scout who went to the FBI with stories of price-fixing made no sense, he said.

“The FBI—who have got some good scumbags in there too; it’s almost a criminal mentality—they came in and got the goods on this guy,” Johnson remarked. “For immunity, he signed this great, long agreement.’’

But once the case went public, the company found that Whitacre had shoved his hand deep into the till, Johnson said.

“Then, you know, he tried to commit suicide,’’ Johnson continued. “But he did it in a six-car garage, which, I think, if you’re going to do it, that’s the place to do it.’’

The audience laughed.

In the end, Johnson said, he had no idea how everything would come out.

“But certainly we feel a lot better about it today than when it came over the air and the seventy FBI agents arrived in Decatur,’’ he said. “But they love to do that; they like to extort. Their technique is to get the gun on somebody and then put the pressure on. And then that puts the pressure on somebody else.”

Johnson smiled. “Stay tuned,’’ he snickered.

As he spoke, Johnson thought nothing of the nearby video camera, recording his every word. But soon, transcripts of that tape would appear in magazines and newspapers. Anyone in the country would be able to read his description of the nation’s premier law enforcement agency as being little more than a bunch of hoodlums.

Dick Beattie of Simpson Thacher listened thoughtfully to the latest idea from Williams & Connolly. The government was responsible for Whitacre’s actions, and he stole money. His cooperation agreement prevented him from reporting wrongdoing—part of his fiduciary obligation. ADM had been harmed. The next move was obvious, Aubrey Daniel argued. ADM should sue the Justice Department for damages.