For­mer VW man­ager pleads guilty in scheme

He faces up to seven years in prison in the emis­sions case.

Los Angeles Times - - BUSINESS BEAT -

A for­mer Ger­man Volk­swa­gen ex­ec­u­tive pleaded guilty Fri­day to con­spir­acy and fraud charges in Detroit in a scheme to cheat on emis­sions tests of nearly 600,000 diesel ve­hi­cles.

Shack­led at the wrists and an­kles and wear­ing red prison garb, Oliver Sch­midt ap­peared be­fore U.S. Dis­trict Judge Sean Cox as part of the U.S. gov­ern­ment’s case in­volv­ing the au­tomaker, which has ad­mit­ted to us­ing soft­ware to get around U.S. emis­sions stan­dards.

Sch­midt, 48, is a for­mer man­ager of a VW en­gi­neer­ing of­fice in sub­ur­ban Detroit who was ar­rested in Jan­uary. He faces up to five years in prison for con­spir­acy to de­fraud the U.S., wire fraud and vi­o­la­tion of the Clean Air Act. A sec­ond count of giv­ing a false state­ment un­der the Clean Air Act car­ries a pos­si­ble sen­tence of up to two years in prison.

He re­mains jailed and is sched­uled to be sen­tenced Dec. 6. He also could face de­por­ta­tion. Sch­midt is ac­cused of telling reg­u­la­tors that tech­ni­cal prob­lems were to blame for the dif­fer­ence in emis­sions in road and lab tests.

“Sch­midt par­tic­i­pated in a fraud­u­lent VW scam that pri­or­i­tized cor­po­rate sales at the ex­pense of the hon­esty of emis­sions tests and trust of the Amer­i­can pur­chasers,” Deputy As­sis­tant Atty. Gen. Jean E. Williams, who is in the Jus­tice Depart­ment’s En­vi­ron­ment and Nat­u­ral Re­sources Di­vi­sion, said in a news re­lease af­ter Fri­day’s plea.

Sch­midt’s at­tor­ney de­clined to com­ment af­ter the plea hear­ing.

VW pleaded guilty in March to de­fraud­ing the U.S. gov­ern­ment and agreed to pay $4.3 bil­lion in penal­ties, on top of bil­lions more to buy back cars. Most of the VW em­ploy­ees charged in a scheme are in Ger­many and out of reach of U.S. au­thor­i­ties.

U.S. au­thor­i­ties had been press­ing Volk­swa­gen over emis­sions test dis­crep­an­cies, and the cheat­ing had been go­ing on for sev­eral years. In 2015, news emerged in the U.S. of Volk­swa­gen’s use of soft­ware that turned off emis­sions con­trols. The soft­ware de­tected when cars were be­ing tested and turned the emis­sion con­trols off dur­ing nor­mal driv­ing. The re­sult was that the cars emit­ted more than 40 times the U.S. limit for the pol­lu­tant ni­tro­gen ox­ide.

Sch­midt told Cox on Fri­day that VW man­age­ment directed him in 2015 not to dis­cuss the soft­ware.

About 11 mil­lion cars world­wide were equipped with the soft­ware. Meet­ing U.S. emis­sions stan­dards was part of the com­pany's “clean diesel” mar­ket­ing strat­egy.

“You knew th­ese rep­re­sen­ta­tions made to U.S. con­sumers were false,” Cox told Sch­midt.

VW has reached a $15-bil­lion civil set­tle­ment in the U.S. with en­vi­ron­men­tal au­thor­i­ties and car own­ers.

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