Law enforcement officials searching Caterpillar offices Thursday Mar 2, 2017
Chris Kaergard Journal Star political reporter @ChrisKaergardMatt Buedel Journal Star Caterpillar/industry reporter @journobuedel
PEORIA — Federal officials executed a search warrant at three Caterpillar, Inc. facilities in the Tri-County Area — including the corporate headquarters — Thursday morning.
Company officials confirmed the presence in a statement without specifying which agency was performing the search or what the search was in regard to. A spokeswoman declined by email to provide further details.
"Caterpillar is cooperating," the brief statement said.
The spokeswoman for the U.S. Attorney for the Central District of Illinois confirmed that facilities in three communities were the subject of the activity — Peoria, East Peoria and Morton.
The investigation appears to stem from revelations about the company's tax strategy as outlined in a 2009 federal wrongful termination lawsuit brought by Daniel Schlicksup. The lawsuit alleged the company shifted profits to offshore shell companies to avoid paying more than $2 billion in U.S. taxes. Schlicksup settled the suit in 2012.
Caterpillar in its annual 10-K filing with the U.S. Securities and Exchange Commission last month acknowledged a criminal investigation into the tax strategy.
The company included the following statement on legal proceedings in the filing: "On January 8, 2015, the Company received a grand jury subpoena from the U.S. District Court for the Central District of Illinois. The subpoena requests documents and information from the Company relating to, among other things, financial information concerning U.S. and non-U.S. Caterpillar subsidiaries (including undistributed profits of non-U.S. subsidiaries and the movement of cash among U.S. and non-U.S. subsidiaries). The Company has received additional subpoenas relating to this investigation requesting additional documents and information relating to, among other things, the purchase and resale of replacement parts by Caterpillar Inc. and non-U.S. Caterpillar subsidiaries, dividend distributions of certain non-U.S. Caterpillar subsidiaries, and Caterpillar SARL and related structures. The Company is cooperating with this investigation."
At the Downtown Caterpillar global headquarters building, at least some company employees were directed to the building's cafeteria and were told to remain there and not leave, according to one employee at the facility. Another source with direct knowledge indicated those sequestered there include employees in the tax and accounting divisions, as well as from executive offices. At least some of those employees were released to go home for the day at approximately 11 a.m.
An employee at Building AD in East Peoria said the arrival of agents at that facility was less disruptive than the one in Downtown Peoria appeared to be, with agents executing warrants at the East Peoria site appearing to concentrate on securing emails and electronic records.
Some of the agents entering the headquarters building wore jackets bearing an Internal Revenue Service logo, others appeared to be from the Federal Deposit Insurance Corporation. Others simply denoted that they were federal agents. A placard in the window of one of the federal vehicles noted it was used by police from the U.S. Department of Commerce Bureau of Industry and Security Office of Export Enforcement.
Since news of the search warrants broke, Caterpillar stock fell more than $3.50 from an opening-bell price of $98.36 per share and continued to trend lower throughout the morning.
This story will be updated.
Poster's note: Caterpillar has long been the stongest foundation of the construction industry in the world.
