Was Cat really cooperating?
Friday, Mar 3, 2017 - Posted by Rich Miller
* Claire Bushy isn’t so sure that Caterpillar was fully cooperating with the feds…
Caterpillar has said it is cooperating with subpoenas tied to a federal investigation of undistributed profits from subsidiaries outside the United States. That’s how the system usually works: Prosecutors issue subpoenas, and a company’s top lawyer ensures evidence is preserved, collected and handed over. The raid raises the possibility that the U.S. Attorney’s Office of Central Illinois was worried that might not happen.
“The fact the federal government has decided to obtain and execute search warrant indicates they are concerned evidence will not be preserved or turned over to them unless they seize it themselves,” said Renato Mariotti, a partner at Thompson Coburn and a former assistant U.S. Attorney. “It’s a big step to send agents into the headquarters of a big company to seize documents.” […]
Caterpillar was sued in 2009 by a former executive who alleged the company had shifted profits overseas to avoid $2 billion in taxes. The lawsuit was settled in 2012, but two years later the company’s tax strategy was investigated by a U.S. Senate subcommittee.
Obtaining a warrant means persuading a judge that probable causes exists to search a person or property, said Ken Yeadon, a partner at Hinshaw & Culbertson and a former U.S. Attorney. It does happen, like when prosecutors were building a case against Chicago-based BCI Aircraft Leasing for fraud. But generally, law enforcement only seizes evidence in cases where there’s something that, “if you don’t act right away, you’re not going to get. A time-is-of-the-essence situation.”
The full search warrant is most definitely worth a read. Click here.
* Related…
* Caterpillar CEO Apologizes to Employees After Feds Raid Offices
* Federal agents raid Caterpillar offices as part of tax strategy investigation: 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 overseas and to offshore shell companies to avoid paying more than $2 billion in U.S. taxes. Schlicksup settled the suit in 2012.
* Federal Officials Raid 3 Caterpillar Offices in Illinois: Caterpillar reported sales fell 18 percent in 2016 to $38.5 billion and since late 2015 it has shrunk its workforce by more than 16,000 employees and consolidated or closed 30 facilities. Caterpillar cut 12,300 jobs in 2016, including 7,700 in the United States.
- Last Bull Moose - Friday, Mar 3, 17 @ 11:11 am:
To me the warrants signal a lack of trust. That will make the situation much worse for Caterpillar.
This no longer sounds like a disagreement on how to read the tax code.
- TinyDancer(FKASue) - Friday, Mar 3, 17 @ 11:12 am:
And the Oscar goes to……
- wordslinger - Friday, Mar 3, 17 @ 11:12 am:
As we saw with the banks, white collar types can cheat and steal plenty, and the worst that happens is their companies pay fines.
But if you destroy or alter evidence — that can land anyone in prison.
- Ron Burgundy - Friday, Mar 3, 17 @ 11:30 am:
Companies always say they are cooperating even if they are not. It only matters if the Feds say they are cooperating.
- Sue - Friday, Mar 3, 17 @ 11:30 am:
Overreach by the Feds- this is a longstanding corporate tax disputes not Al Capone. What benefit does this serve acting like storm troopers
- Scratch Fever! - Friday, Mar 3, 17 @ 11:33 am:
But the accountants were highly qualified. They got their CPAs from Trump University.
- downstate commissioner - Friday, Mar 3, 17 @ 11:33 am:
Have never seen an actual search warrant before: pretty interesting, Rich. Was obvious that they were looking for specific export information only.
My question is, what do the employees (whose computers were seized that have some of that information on it, but also have current stuff on it that they could be working on) do now? Do they get sent home, set around twiddling their thumbs, or what? Just curious…
- It depends - Friday, Mar 3, 17 @ 11:36 am:
Yeah, not many companies publicly take a position of refusing to cooperate with the government.
- Rabid - Friday, Mar 3, 17 @ 11:44 am:
If they were looking for electronic communication, they should of ask the Russians
- David - Friday, Mar 3, 17 @ 11:45 am:
News reports indicates all the employees were told to go to the caffeteria. Bloomberg has a story up that also wonders if this is about more than a tax despute. The FDIC presence really raises eyebrows. Though its legal their revenues would be inflated by the the wholesale and retail of the independent parts makers. That would fit with some employees that posted here with concerns about business volume. Let us hope it’s not Illinois Enron Cat is the biggest manufacturing employer. I think Abbot or Abbie vie is next
- Keyser Soze - Friday, Mar 3, 17 @ 11:54 am:
The Feds sure sprung into action following the 2009 blowing of a whistle. Yesterday’s raid may involve a real or arguable statute of limitations. Stay tuned.
- Puddintaine - Friday, Mar 3, 17 @ 12:17 pm:
Remember, only the first couple canaries get immunity. Don’t be third in line at the ark!
- Chicagonk - Friday, Mar 3, 17 @ 12:49 pm:
With Cat, nothing would surprise me. It’s amazing how much different (in a positive way) Deere’s culture is when compared to Cat.
- Ducky LaMoore - Friday, Mar 3, 17 @ 12:57 pm:
===With Cat, nothing would surprise me. It’s amazing how much different (in a positive way) Deere’s culture is when compared to Cat.===
Many, many people been saying that for years. And I agree.
- Demoralized - Friday, Mar 3, 17 @ 1:34 pm:
==What benefit does this serve acting like storm troopers==
See Enron.
- wondering - Friday, Mar 3, 17 @ 1:54 pm:
My first real attempt at snark, please bear with. Could this possibly be the Cat that ate the Canary Islands? Do we think the FDIC is simply auditing the workman’s comp claims that Illinois outrageously charges these job creators? I have met some Cat execs….such humble people, so docile, their group think so sweet…to know them is to truly love them….they get an “A” in my book,, for arrogance.
- Anonymous - Friday, Mar 3, 17 @ 2:07 pm:
the good news is that a $2.5 bn loss won’t be fatal to Cat. Just wipe out a little over a year’s net income.
- Anonymous - Friday, Mar 3, 17 @ 2:47 pm:
===Overreach by the Feds- this is a longstanding corporate tax disputes not Al Capone. What benefit does this serve acting like storm troopers ===
It averts emergency records purges. Also, they kind of had to go in fast because CAT’s executive vice president of sitting behind a desk and doing nothing until your stock options vest…err Head of North American Security is the former Peoria Police Chief. Despite his role in the Mayor’s Twitter fiasco a few years back, presumably he still has contacts in the force and would have otherwise given Cat a heads up.
- 61571 - Friday, Mar 3, 17 @ 3:24 pm:
No democrats for pols or CAT to blame. They dont exist in corps upper echelon.