Raid by federal investigators at Caterpillar is unusual move
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A couple of weeks ago, the heavy-equipment company Caterpillar was getting a very public thumbs-up from President Donald Trump. Then, last Thursday morning, investigators from three federal agencies descended on Caterpillar’s world headquarters in Peoria, Illinois, to grab files and computer equipment.
No charges have been filed, but it’s very rare for federal investigators to show up at a company like this.
“It’s not unusual to go in and do a search of, say, a crack house. But it is somewhat unusual to go to a Fortune 500 — Fortune 100 company and begin conducting a search to find evidence of a crime,” said Ken Yeadon, a Chicago attorney who served as a federal prosecutor for 10 years, and an enforcement attorney for the Securities and Exchange Commission before that.
- A glossary of tax evasion
- Inching global trade growth, through the eyes of a Caterpillar
- Construction workers needed as building industry booms
Yeadon said he hasn’t seen this kind of raid since the FBI moved on Enron about 15 years ago.
The items demanded in the search warrants, which are under seal but were made public by a local newspaper, include information about “efforts to thwart or avoid law enforcement scrutiny.” Also on the list: “Counter-forensic” computer programs “that are designed to eliminate data.”
Usually, investigators trust big companies to just cough up whatever evidence officials ask for. The theory goes that it’s better for the company in the long run to comply, explained Renato Mariotti, another former federal prosecutor.
“A company has an interest, separate and apart from any particular individual — even if it’s the CEO — to make sure that the government understands that they are being compliant with the law and that the company shouldn’t be charged,” Mariotti said.
In that scenario, a few individuals may get caught for an infraction, but everyone else moves on, and the company keeps out of further trouble.
In this case, Caterpillar has already been under scrutiny for years over one of the same issues that federal agents are investigating: a tax haven in Switzerland, which was the subject of a 2014 Senate investigation. (The basic conclusion: Deeply uncool, but technically not illegal.)
That is business as usual, Mariotti said.
“There are a lot of things that companies do that are perfectly legal, but the average person would find absolutely shocking,” he said. That’s why smart companies play by the rules.
In an emailed statement, Caterpillar spokeswoman Corrie Scott said the company has been in full cooperation with law enforcement.
“I also want to stress,” she wrote, “Caterpillar is a company with the highest integrity.”
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