By Colleen Kave, J.D.
Volkswagen AG pleaded guilty to three criminal felony counts and agreed to pay criminal and civil fines totaling $4.3 billion in connection with a long-running scheme to sell diesel vehicles in the United States equipped with defeat devices designed to cheat government mandated emissions tests. The plea agreement, which is subject to court approval, includes a $2.8 billion criminal fine. VW also agreed to pay $1.5 billion to settle civil environmental, customs, and financial violations, and to strengthen its compliance and control systems, including the appointment of an independent monitor for the next three years. The Department of Justice also announced that six VW executives and employees have been indicted for their individual roles in the scandal.
Criminal case. With respect to the criminal charges against Volkswagen, the company was charged with, and plead guilty to, participating in a conspiracy to defraud the United States and U.S. consumers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers regarding whether certain VW, Audi, and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process, and concealing material facts about its cheating from U.S. regulators. VW was also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits.
Indictments. The six former high-level VW executives who were indicted for participating in the emissions conspiracy are: Richard Dorenkamp, Bernd Gottweis, Jens Hadler, Heinz-Jakob Neusser, Jurgen Peter, and Oliver Schmidt. These key executives all held positions of significant responsibility at VW, including overseeing the company’s engine development division and serving on the company’s management board. According to the charging documents and statement of facts, they abused their power and were charged with a range of crimes, including conspiracy to defraud the United States, violations of the Clean Air Act, and wire fraud.
Civil Settlements. VW also entered into three civil resolutions, consisting of:
- A Third Partial Consent Decree settling the EPA’s remaining claims against six VW-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer of the Northern District of California. This settlement is in addition to the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and the $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects;
- A settlement of civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities for knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. The $1.45 billion paid under the Third Partial Consent Decree also resolves CBP’s claims; and
- A $50 million settlement for alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only.
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