Caterpillar Sued by Investor After Corporate Offices Raided

  • Federal officials seized records related to Swiss affiliate
  • Suit alleges company made false and misleading statements

Caterpillar Inc. was sued by a shareholder for alleged deception a day after federal officials raided its corporate headquarters in Peoria, Illinois, seeking evidence as part of a criminal probe.

The company is accused in the investor suit of making false and misleading statements and failing to disclose that it used its foreign subsidiaries to avoid paying billions of dollars in U.S. taxes. Plaintiff Jacob Newman seeks class-action status and unspecified damages for "significant losses," according to the complaint filed Friday in federal court in Chicago.

Officials from the Commerce Department, Internal Revenue Service, Federal Deposit Insurance Corp. and Illinois State Police moved in and out of the company’s corporate headquarters on Thursday. Bloomberg News obtained copies of three related search warrants, signed Feb. 24, that authorized seizure of a broad range of documents and electronic files related to Caterpillar’s Swiss affiliate, CSARL. 

Authorities are seeking evidence related to potential crimes, including “failure to file or submitting false electronic export information” and “false and misleading financial reports and statements," according to the warrants.

A company representative didn’t immediately respond to voice-mail and e-mail messages seeking comment on the suit.

Caterpillar shares, which had been soaring this year amidst the promise of increased infrastructure spending since President Donald Trump’s election, fell after the raid on Thursday, losing the most since June. On Friday, they rose 36 cents to $94.72 at 1:50 p.m. in New York trading.

Caterpillar, which traces its roots back 125 years, has long fought government allegations that it owed taxes on profits from parts shipments involving its CSARL unit, which is based in Geneva. In a filing last month, Caterpillar said it is “vigorously contesting the proposed increases to tax and penalties” of about $2 billion.

The case is Newman v. Caterpillar Inc., 17-cv-01713, U.S. District Court, Northern District of Illinois (Chicago.)

— With assistance by Joe Deaux

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