Feds allege diesel conspiracy at Fiat Chrysler that defrauded buyers

DETROIT — Federal prosecutors Tuesday unsealed new criminal charges against three Fiat Chrysler Automobiles NV officials accused of conspiring to cheat federal emissions tests and defraud consumers about the fuel efficiency of more than 100,000 diesel vehicles.

The years-long conspiracy is outlined in an unsealed indictment of diesel senior manager Emanuele Palma, 42, of Bloomfield Hills and two Italian nationals who work for FCA Italy SpA, the Italian subsidiary of what is now Stellantis NV. They are senior diesel managers Sergio Pasini, 43, of Ferrera, Italy, and Gianluca Sabbioni, 55, of Sala Bolognese, Italy, who were responsible for developing and calibrating a 3.0-liter diesel engine used in FCA vehicles, including the Jeep Grand Cherokee and Dodge Ram 1500 models starting in 2014.

The indictment describes a six-year scheme that started in December 2011 and involved conspirators knowingly misleading federal regulators about the design, calibration and function of emissions control systems. The alleged cheating involved deliberately calibrating emissions control functions to produce lower emissions during regulatory testing and higher emissions during actual driving conditions.

Prosecutors said the trio and co-conspirators coined a phrase for the scheme: “cycle beating.” The scheme was designed to obtain regulatory approval to sell vehicles in the U.S., boost sales and enrich the conspirators, prosecutors said.

“We continue to fully cooperate with the Department of Justice, as we have throughout this issue,” company spokeswoman Shawn Morgan wrote in an email Tuesday.

The indictment was unsealed 18 months after Palma was first charged with federal crimes, and coincided with a separate federal crackdown on corruption within the U.S. auto industry, particularly the United Auto Workers. The corruption investigation has led to 15 convictions, including former Fiat Chrysler Vice President Alphons Iacobelli and two former presidents of the United Auto Workers union.

There was no immediate comment from a Stellantis spokeswoman Tuesday, and Palma’s lawyers did not respond immediately to a message seeking comment.

Lawyers for Pasini and Sabbioni are not identified in court records. It was not immediately clear whether the Italian nationals were in custody in the U.S.

The original 13-count indictment against Palma suffered a setback in November when U.S. District Judge Nancy Edmunds dismissed four wire fraud charges.