MIAMI/DETROIT--Volkswagen AG suffered a new setback on Monday when an executive was charged with conspiracy to defraud the United States over the company's diesel emissions cheating and the automaker was accused of concealing the cheating from regulators.
Oliver Schmidt, who was general manager in charge of VW's environmental and engineering office in Michigan, did not enter a plea at an initial appearance in U.S. District Court in Miami on Monday and was ordered held pending a hearing on Thursday by U.S. Magistrate Judge William C. Turnoff. Schmidt, who was shackled and wearing a jail uniform, was charged with fraud and conspiracy in not disclosing a cheating device used to rig U.S. diesel emissions tests from 2006 through 2015.
He was arrested on Saturday in Florida after attempting to return to Germany from a vacation there, the Justice Department said. Schmidt's lawyer David Massey said Schmidt had learned of the investigation and reached out to the U.S. Federal Bureau of Investigation to offer to cooperate. Schmidt then met with FBI agents in London last year, he said.
The arrest was first reported by the New York Times. The arrest and court appearance come as VW nears a $3 billion plus - and potentially $4 billion - settlement with the Justice Department and Environmental Protection Agency to resolve civil and criminal investigations into the diesel scandal, which sources have told Reuters could be announced as soon as Wednesday. Talks are still under way about some details of the settlements and no deal has been reached, sources said.
An FBI complaint unsealed on Monday against Schmidt said he and other VW employees told executive management about the "existence, purpose and characteristics" of an emissions cheating device in July 2015, and that the executives chose not to immediately disclose it to U.S. regulators. The FBI complaint accused VW of deliberately misleading regulators about cheating pollution tests in the United States, but did not charge the company with a crime.
Schmidt and other employees gave a presentation about the "defeat device" on or about July 27, 2015, more than a month before the automaker disclosed the device to U.S. regulators in September 2015, the complaint said. The cheating allowed nearly 580,0000 of VW's U.S. diesel vehicles sold since 2009 to emit up to 40 times legally allowable pollution levels.
"In the presentation, VW employees assured VW executive management that U.S. regulators were not aware of the defeat device," the complaint said. "Rather than advocate for disclosure of the defeat device to U.S. regulators, VW executive management authorized its continued concealment."
One slide in the presentation included "Indictment?" if regulators did not approve its diesel software for 2016 models, according to the complaint. The complaint said that in 2006 VW employees realized they would not be able to meet U.S. diesel emissions standard and decided to create cheating software.
Volkswagen said it could not comment on an ongoing legal matter. Hinrich Woebcken, VW's chief executive of the North America region, told reporters at the Detroit auto show on Monday that the automaker was "surprised" by the criminal charge.
