U.S. law enforcement searches Caterpillar's Illinois facilities

[Chosen Daughter]

U.S. law enforcement searches Caterpillar's Illinois facilities

ReutersMarch 02, 2017

CHICAGO (Reuters) - Federal law enforcement officials searched three facilities of heavy machinery manufacturer Caterpillar Inc on Thursday, a spokeswoman for the U.S. Attorney Office for the Central District of Illinois said, prompting a sharp selloff in the company's stock.

The spokeswoman, Sharon Paul, confirmed that federal law enforcement activity was conducted at locations in Peoria, East Peoria and Morton.

It was not immediately clear why federal agents raided the three locations.

Caterpillar spokeswoman Corrie Scott said in an emailed statement that the company was cooperating with authorities.

"Law enforcement is present in various Peoria-area Caterpillar facilities executing a search warrant. Caterpillar is cooperating," Scott said. She declined to comment further.

Caterpillar shares fell 4.6 percent to $94.00 on the news in afternoon trading.

http://finance.yahoo.com/news/caterpillar-illinois-facilities-searched-law-enforcement-171624724--sector.html

Whoah.  Is this IRS injustice or has the company really broken the law?  Caterpillar is huge. 

[Frank Cannon]

[Chosen Daughter]

Interesting.  And it looks like Trump tried the same threats to bring back jobs.

Looks like Caterpillar failed to bring back the jobs.

http://www.dailywire.com/news/11244/yes-crony-capitalism-bad-whether-its-obama-or-ben-shapiro

[kevindavis007]

Not good for Caterpillar..

[Chosen Daughter]

Not good for Caterpillar..

Sounds like this has been an ongoing thing since a whistle blower in 2009.  I guess Trump met with Caterpillar and saying he loved them.

https://www.bloomberg.com/news/articles/2017-03-02/caterpillar-falls-most-in-eight-months-as-facilities-raided

[Hondo69]

It was not immediately clear why federal agents raided the three locations.

We don't know much yet but a few things seem worth noting.  Any single Caterpillar facility is huge - a monster the size of several football fields.  Therefore you're not going to send in just a handful of guys, you'd need to send in a large force to conduct any type of comprehensive search.  And when I think in terms of "a large force" lots of red flags go up.

Given the fact that three facilities were searched we have to assume all three were simultaneous.  So now we're talking about "a large force" times three.  Getting the willies yet?

Now toss in the fact that Caterpillar ships a great deal of their products overseas.  Given the history of how these things typically go I smell a rat.

So it's way too early to jump to conclusions and it's always possible everything is on the up and up.  It's just that every once in awhile a story comes rolling along that makes the red flags go up all at once.  When my jaded, twisted, cynical brain starts screaming, "red alert, red alert" it's usually for a reason based upon past experience.  I'll hope for a false alarm but will also remember to keep a close eye on this one.

[Norm Lenhart]

I'm trying to understand what you need to search a Cat facility for outside the offices/computers. It's not like you can hide a T9 easily, nor do they crate them up to ship. Plenty of opportunity to search the goods during shipping. Then if you find something, you pretty much know exactly what facility and where to go.

[DB]

We don't know much yet but a few things seem worth noting.  Any single Caterpillar facility is huge - a monster the size of several football fields.  Therefore you're not going to send in just a handful of guys, you'd need to send in a large force to conduct any type of comprehensive search.  And when I think in terms of "a large force" lots of red flags go up.

Given the fact that three facilities were searched we have to assume all three were simultaneous.  So now we're talking about "a large force" times three.  Getting the willies yet?

Now toss in the fact that Caterpillar ships a great deal of their products overseas.  Given the history of how these things typically go I smell a rat.

So it's way too early to jump to conclusions and it's always possible everything is on the up and up.  It's just that every once in awhile a story comes rolling along that makes the red flags go up all at once.  When my jaded, twisted, cynical brain starts screaming, "red alert, red alert" it's usually for a reason based upon past experience.  I'll hope for a false alarm but will also remember to keep a close eye on this one.

If it were IRS issues wouldn't they use IRS agents? With federal law enforcement doesn't it suggest something else (not IRS issues)?

[bigheadfred]

I'm trying to understand what you need to search a Cat facility for outside the offices/computers. It's not like you can hide a T9 easily, nor do they crate them up to ship. Plenty of opportunity to search the goods during shipping. Then if you find something, you pretty much know exactly what facility and where to go.

It's a panty raid. 3 of the biggest Cat houses in the world.

[Smokin Joe]

I'm trying to understand what you need to search a Cat facility for outside the offices/computers. It's not like you can hide a T9 easily, nor do they crate them up to ship. Plenty of opportunity to search the goods during shipping. Then if you find something, you pretty much know exactly what facility and where to go.

When you think of all the things that could be smuggled in drums of lubricants, paint products, etc. there could be a lot to look for. Lots of places in a piece of machinery to hide things, too. A lot depends on which agency was looking for what.



Scrolll down to the seiure section of the article at https://en.wikipedia.org/wiki/Cali_Cartel

[Norm Lenhart]

When you think of all the things that could be smuggled in drums of lubricants, paint products, etc. there could be a lot to look for. Lots of places in a piece of machinery to hide things, too. A lot depends on which agency was looking for what.



Scrolll down to the seiure section of the article at https://en.wikipedia.org/wiki/Cali_Cartel

Right and thats what I mean. They would find them during shipping if they looked and would then know exactly where to go. If you stuff drums, go to the drum filling area etc. The security in these facilities wouldn't easily allow for large quantities of anything to be packed into something other than from their particular assembly areas.

With the scale of these parts it's not easy to disassemble them after construction and rebuild them.

[Smokin Joe]

Right and thats what I mean. They would find them during shipping if they looked and would then know exactly where to go. If you stuff drums, go to the drum filling area etc. The security in these facilities wouldn't easily allow for large quantities of anything to be packed into something other than from their particular assembly areas.

With the scale of these parts it's not easy to disassemble them after construction and rebuild them.

No, it isn't easy to disassemble them, but for instance, 500 lbs of cocaine is a definite profit motive. (227 kilograms, with a value of over 6 million without being cut. Every 'cut' dilutes the drug, but increases the quantity, and thus the potential profit.) Add in that with heavy parts, relatively small (100 lb or more) weight changes could herald what are considered large quantities of drugs--and that is just one possibility. A small tub of grease could conceal a fortune in diamonds, for instance. The more stuff moving in or out, the harder to find the shipment unless someone knew exactly where to look, so vague intel would be pretty useless.

All of this is speculation, though, without knowing who/what they were looking for, and is not intended to imply that Caterpillar or any other manufacturer of heavy equipment is engaged in any illegal activity.

[Norm Lenhart]

No, it isn't easy to disassemble them, but for instance, 500 lbs of cocaine is a definite profit motive. (227 kilograms, with a value of over 6 million without being cut. Every 'cut' dilutes the drug, but increases the quantity, and thus the potential profit.) Add in that with heavy parts, relatively small (100 lb or more) weight changes could herald what are considered large quantities of drugs--and that is just one possibility. A small tub of grease could conceal a fortune in diamonds, for instance. The more stuff moving in or out, the harder to find the shipment unless someone knew exactly where to look, so vague intel would be pretty useless.

All of this is speculation, though, without knowing who/what they were looking for, and is not intended to imply that Caterpillar or any other manufacturer of heavy equipment is engaged in any illegal activity.

I think it's an ICE raid but they didn't identify it as such. Cat has been nailed for hiring illegals before IIRC.

As for the rest, I agree. but the problem remains in getting the coke through a facility to begin with without security catching it. Lots of cameras in those places these days.

[Hondo69]

The thing about factories is that they are also one heck of a rumor mill.  Damned few secrets are possible when you know who is sleeping with who, even if they aren't.  If Cat was hiring illegals or running drugs the whole damn town would know about it first.  And by the time the rumor mill effect takes hold the story gets magnified a great deal.  Pretty soon the story becomes smuggling human sex slaves for the drug cartels in Mexico.

[Cripplecreek]

More likely drug dealing being done among the employees than any large scale smuggling.

Work in any factory for long enough and you'll know who to go to for what. Its a lot safer than dealing with strangers on the street or bringing a lot of traffic to your home.

Gotta figure in a medium sized factory you have a couple hundred people coming together for legitimate reasons every single day. Its great cover out of the sight of police and objects are handed back and forth between employees all day long. 15 or 20 loyal customers in a shop can be worth a pretty good chunk of change. At the last shop I worked in "Ralph" told me he sold a pound per week.

[Hondo69]

When Bill Clinton was elected Governor the second time around he created a slush fund and gave it a fancy name that implied it was for economic development.  On one hand it sure as heck did its job because boy, money was flowing all around Mena, Arkansas.

One small company called Park-O-Meter was told to retool their equipment to make gun parts for the Contras.  The Contras had plenty of guns but a shortage of parts.  So Park-O-Meter whipped up the replacement parts and they were flown down to Nicaragua with a stop over in Belize to refuel.  It was a nice quiet operation for awhile even though most people around the small town of Mena knew exactly what was going on.  Secrets don't stay secrets very long in a small town.

But the flights were coming back empty creating a lot of waste in the operation.  Why not toss in some bundles of drugs from Columbia which were being routed through Nicaragua anyway?  The CIA was more than happy to furnish military grade transponders which could be attached to the bundles.  When they were pushed out of the door of the plane at night the transponders would direct those on the ground right to the location of the bundles.

It was a pretty slick operation for awhile.  Everyone was making good money, the bank in Mena was being loaded up with tons of cash, and everyone was getting fat and happy.  Of course everyone in and around Mena knew the score.  There's no such thing as a secret in a small town.  And when a state investigator came snooping around looking into "improprieties" the locals were only too happy to lay it all out for him.  That's when it all started to hit the fan.

And you know the rest of the story.

[Hondo69]

Apparently this is a tax issue with the IRS.

Which raises more questions than provides answers.  Plus, according to a Fox News story the NY Times has seen the report prepared by the IRS, but they are the only ones who have.  Caterpillar hasn't even seen the report yet.

[DB]

Apparently this is a tax issue with the IRS.

Which raises more questions than provides answers.  Plus, according to a Fox News story the NY Times has seen the report prepared by the IRS, but they are the only ones who have.  Caterpillar hasn't even seen the report yet.

Here it is officially: http://www.foxnews.com/us/2017/03/07/report-trump-touted-caterpillar-accused-tax-fraud-in-report-to-federal-investigators.html

[mountaineer]

 Despite raid by feds, Caterpillar reputation may emerge unscathed, experts say
Ally Marotti
Chicago Tribune

A day after federal authorities raided Caterpillar's headquarters, surprising executives, agents were concluding an on-site investigation Friday, and the heavy machine-maker's share price hadn't fully recovered.

Nevertheless, experts say the Caterpillar brand will likely emerge largely unscathed.

Authorities from three agencies, including the Internal Revenue Service, descended on three of the Peoria-based company's facilities Thursday morning to gather information tied to a parts subsidiary based in Switzerland and other records.

That subsidiary has drawn scrutiny for eight years, sparking a whistleblower suit, a Senate investigation, shareholder lawsuits, and billions of dollars in proposed taxes and penalties that Caterpillar continues to fight. But besides snagging national headlines and causing a slight dip in its share price, the raid seems to have had little immediate impact on the company's reputation.  ... Full story at Chicago Tribune