Investigators from the U.S. attorney's office for the Central District of California are looking into whether a Caterpillar subsidiary may have dumped train parts in the ocean near the Port of Long Beach as part of a scheme to conduct fraudulent train repairs, according to a regulatory filing and newspaper report.
Caterpillar Inc. disclosed in a filing with the Securities and Exchange Commission three weeks ago that Progress Rail, a rail and locomotive repair firm it acquired in 2006, was being investigated for possibly improperly disposing of train parts, equipment and other items.
The Wall Street Journal, citing anonymous sources, first reported Friday that Progress Rail was possibly breaking environmental laws by dumping in the ocean.
A spokesman for the U.S. attorney's office declined to comment on the investigation. A spokeswoman for Caterpillar said the company is cooperating with the authorities and declined to comment further.
Nonetheless, the filing said Progress Rail on Oct. 24 received a grand jury subpoena requesting documents and other information relating to the allegations that it was conducting unnecessary repairs and billing clients for the work.
The company said in the filing it can't predict the outcome of the investigation but that the "matter will not have a material adverse effect on the company's consolidated results of operation, financial position or liquidity."
Caterpillar acquired the Alabama-based Progress Rail seven years ago for $1 billion. It's one of the largest rail repair firms in the country.
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