VW executives charged in emissions fraud

Diess, Chairman Hans Dieter Poetsch and former CEO Martin Winterkorn were accused of deliberately informing markets too late about the huge costs to VW that would result from the scandal, which erupted when regulators discovered that millions of diesel cars had been fitted with software designed to thwart pollution tests.

Winterkorn was previously charged in the scandal itself. Poetsch and Diess had not faced charges.

Volkswagen called the new allegations “groundless” and threw its support behind Poetsch and Diess. But the case could require Diess to spend time on his defense at a crucial time for the company.

Also on Tuesday, an auto engineer who worked at an engine company owned by Fiat Chrysler pleaded not guilty in an alleged scheme to fool regulators about the amount of engine pollution emitted from more than 100,000 of that automaker’s diesel vehicles.

Emanuele Palma, a native of Italy who was a Detroitarea manager for diesel drivability and emissions, is charged with conspiracy, violations of the Clean Air Act, wire fraud and making false statements.

In January, Fiat Chrysler agreed to a $650 million civil settlement with U.S. and California regulators and said it would fix Jeep Grand Cherokees and Ram 1500 trucks with diesel engines made between 2014 and 2016. That deal didn’t resolve any potential criminal liability, however.

VW’S emissions scandal broke when the U.S. Environmental Protection Agency went public with it in mid-september 2015. That led to a drop in the automaker’s stock.

Prosecutors said Winterkorn had known of the scandal since at least May 2015, Poetsch since late June of that year, when he was the chief financial officer, and Diess since late July 2015, less than a month after he became head of the company’s VW brand. Winterkorn resigned shortly after the scandal erupted.

The charges could bring up to five years in prison, authorities said.