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Wednesday
Jan112017

Volkswagen pleads guilty in U.S. criminal case, six VW employees indicted

Volkswagen AG agreed Wednesday to plead guilty to three felony counts and pay a $2.8 billion criminal penalty for selling 590,000 diesel vehicles in the United States by cheating on federal and state emissions tests and lying to regulators.

VW also settled civil claims for $1.5 billion brought by the EPA for import violations and the U.S. Customs and Border Protection for customs fraud.

Volkswagen has admitted it lied about emissions tests for about 11 million diesel vehicles world wide.

The German giant agreed in June to spend up to $14.7 billion to resolve other federal and California civil allegations of cheating on emissions tests and lying to customers.

Also Wednesday, a federal grand jury in the Eastern District of Michigan indicted six VW executives and employees for their roles in the cheating scandal.

The six -- Heinz-Jakob Neusser, Jens Hadler, Richard Dorenkamp, Bernd Gottweis, Oliver Schmidt, and Jürgen Peter, all of Germany -- were charged with one count of conspiracy to defraud the United States, to defraud VW’s U.S. customers, and to violate the Clean Air Act.

The indictments alleged they made false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions standards.

Neusser, Gottweis, Schmidt, and Peter were also charged with wire fraud.

Schmidt was arrested January 7 in Miami during a visit to the United States. He appeared in federal court Monday.

"The other defendants are believed to presently reside in Germany," the DOJ said Wednesday.

In September, a Volkswagen engineer pleaded guilty to one count of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act.

James Robert Liang, 62, of Newbury Park, California, entered his plea in federal court in Michigan. He worked for VW in Germany and the United States.

Liang admitted VW couldn't design a diesel engine to meet U.S. emissions standards. Instead he and other engineers created and installed cheating software.

Volkswagen was also charged Wednesday with obstruction of justice. The company destroyed documents and imported cars into the United States "by means of false statements" about the vehicles’ compliance with emissions limits, the DOJ said.

Under the plea deal, which still needs court approval, VW will be on probation and have an independent corporate compliance monitor for at least three years.

The company agreed to cooperate with the DOJ's investigation and prosecution of individuals responsible for the emissions cheating.

*     *     *

The DOJ provided this background about the individuals charged Wednesday:

Heinz-Jakob Neusser, 56: From July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.

Jens Hadler, 50: From May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW.

Richard Dorenkamp, 68: From 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.

Bernd Gottweis, 69: From 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety.

Oliver Schmidt, 48: From 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.

Jürgen Peter, 59: He worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW.

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Richard L. Cassin is the publisher and editor of the FCPA Blog