By on January 11, 2017

Volkswagen TDI

The United States has now laid charges against six former or current Volkswagen officials for their role in the diesel emissions scandal.

A federal grand jury in the Eastern District of Michigan returned an indictment today, fingering the execs for playing key roles in a decade-long conspiracy to deceive the U.S. government and public. While five of the men live in Germany, one man — Oliver Schmidt, former head of VW’s regulatory compliance department — was nabbed by the FBI in a Miami airport on Saturday while attempting to return to Germany.

As the charges were handed down, the embattled automaker pleaded guilty to three criminal federal counts and agreed to pay $4.3 billion in criminal and civil penalties.

According to the Department of Justice:

VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about 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 is 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.

The steep price tag includes $2.8 billion in criminal fines, plus another $1.5 billion in civil penalties. This, plus the 2.0-liter diesel engine settlement, pushes the cost of VW’s emissions scandal to about $20 billion in the U.S. alone. Further costs — including a 3.0-liter settlement and various lawsuits — should land in the coming months.

Part of the guilty plea includes agreeing to a probationary period of three years, while accepting a DOJ-appointed overseer for that period.

The executives charged are Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59. All six face charges of conspiracy to defraud the U.S. and VW’s customers, and violate the Clean Air Act.

Dorenkamp, Neusser, Schmidt and Peter face a further charge of violating the Clean Air Act, while Neusser, Gottweis, Schmidt and Peter face charges of wire fraud.

“Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws,” said Attorney General Loretta Lynch in a statement.

While the charges are new, each of the six men were impacted by the scandal in various ways. Heinz-Jakob Neusser, former head of powertrain development and board member, was axed in September 2015, shortly after the scandal broke.

Hadler held the powertrain position before Neusser, and was present for the launch of the defeat device-equipped TDI engines in 2008. He has since resigned from the company.

Dorenkamp is a former head of technical development for the automaker’ lowest-emission engines, and led the team of engineers that created the U.S.-bound 2.0-liter TDI engine.

Gottweis oversaw crisis prevention, and is said to have penned the infamous internal memo former CEO Martin Winterkorn may or may not have seen over a year before the scandal broke.

Peter served as a regulatory liaison, working in VW’s Quality Management and Product Safety Group.

The scandal has led to the buyback or fix of 475,000 emissions-cheating 2.0-liter vehicles in the U.S., and the looming buyback or fix of about 83,000 3.0-liter vehicles. According to the DOJ, the plan was hatched in 2006.

“When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests,” the department stated.

Once the men allegedly decided to use the defeat device to fool regulators, it was full speed ahead. Each of the six had a role to play in pulling off the deception.

Again, from the Justice Department:

Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly.

Germany isn’t known for extraditing its citizens to face charges in other countries, though it could make an exception in this high-profile case. There’s also the possibility German authorities could decide to prosecute the men in their own country.

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30 Comments on “Six Volkswagen Executives Indicted by Department of Justice...”

  • avatar
    SCE to AUX

    “conspiracy to defraud”
    “violate the Clean Air Act”
    “lying and misleading”
    “using cheating software to circumvent”
    “concealing material facts”
    “obstruction of justice”
    “destroying documents”
    “false statements”

    But some folks around here think it’s nothing.

    And who really believes the culture has changed at VW?

  • avatar

    I’m sure these guys are shaking in their space boots. Not.

    Hell. Europe won’t even arrest and extradite a man who fled justice after being convicted of drugging and raping a child in California (his name is Roman Polanski if you don’t know). And they know where he is!

    These assclowns have nothing to worry about. They can all live next door to Polanski in a nice lakefront house in Switzerland and have BBQ’s together while laughing at the US justice system.

  • avatar
    Steve Lynch

    “Gottweis oversaw crisis prevention…”

    You can’t make this stuff up.

  • avatar

    Do we know of any deaths caused by the increased emissions? We do know that GM killed at least 125 people with their ignition switches, but no one was indicted. The switch manufacturer told GM that the switches, as designed, did not meet the specification demanded. GM said to keep shipping the switch as they could not afford to stop the line while a redesigned switch was implemented. When the redesigned switch was manufactured, the part number was kept the same, so one could not tell if the original switch or the improved switch was in the car. It took ten years for GM to admit that they had engaged in dishonest behavior. I find that GM and Volkswagen both deceived regulators and the public, but the punishment meted out to each was markedly different. To me it is a much larger transgression to have killed 125 of your customers than to have increased emissions outputs.

    • 0 avatar

      People who put a lot of weight on a rotating switch without expecting it to rotate share a great deal of the blame.

      Shame on GM for not stopping stupid.

      • 0 avatar

        Has any other manufacturer had this problem with a traditional key? People’s expectations may be based on prior GM cars plus the vast majority of cars that aren’t GM.

        Wonder whatever happened to the guy who fixed the problem on the qt w/o proper internal documentation after he was told to forget about it?

        And it still doesn’t get VW off the hook though.

    • 0 avatar
      SCE to AUX

      We keep having this discussion.

      1. You’ve distorted the facts to suit your view of the situation.

      2. GM was guilty of negligence and incompetence. There was no willful criminal activity.

      3. VW’s crime was premeditated and its consequences were understood from Day One.

      4. GM’s ignition switches weren’t identified as the root cause of the crashes and deaths for quite a long time, because it is exceptionally difficult to do so. Approximately 18 people die daily in GM cars. Over the course of 10 years, that works out to over 65000 deaths in GM cars. How were they to know that 0.2% of them were attributable to faulty ignition switches? It’s not like GM has operators standing by to evaluate every death in their vehicles, particularly when other factors like poor maintenance, speed, alcohol, and weather are involved.

      There is no moral or legal equivalence between these two cases.

      • 0 avatar

        while I take your overall point, as far as #3 goes I actually believe they *didn’t* understand the potential consequences. I think (and this is my own personal conjecture which may well be wrong) that they believed the EPA was as much of a wet noodle as the EU. the Euro 5 standards are looser than the US, and the EU test procedure is hilariously limp and full of loopholes. and thanks to the push for CO2 reduction and slanting the market in diesel’s favor, the penalties for cheating in Europe have been little more than a bop on the nose and a “right, got you! here’s a token fine, don’t do it again.”

        and I also think they naively didn’t realize that when the EPA says the maximum fine is $37,000 per violation per day, that it meant every single non-compliant car was a separate violation.

    • 0 avatar

      “The switch manufacturer told GM that the switches, as designed, did not meet the specification demanded. GM said to keep shipping the switch as they could not afford to stop the line while a redesigned switch was implemented. When the redesigned switch was manufactured, the part number was kept the same”

      Want to know how I know you have never worked in manufacturing?

      • 0 avatar

        again, that only means GM knew the switch could move unintentionally. if you read the damn Valukas report the error/negligence part was that nobody connected the dots to realize that the airbags would be disabled if that happened.

        I’ve been in DFMEA/PFMEA reviews for mind-numbing amounts of time. DFMEA (Design Failure Mode Effects Analysis) is where you think up any possible way a part or system can fail, what the likelihood of failure is, and how severe the effects of that failure are. Then potential failure modes are prioritized for action/prevent occurrance based on the predicted severity and likelihood. the severity of the ignition switch turning off was mis-classified too low because nobody linked it to the passive restraints being inoperative.

  • avatar

    “Heinz-Jakob, ve vill save a lot of money wiz zis ingenious software to detect emissions tests”

    “Ja, Oliver, zat is a great idea. Zose stupid Americans vill never notice, and ve vill save at least one million Euros, maybe even two million !”

  • avatar

    I may be wrong about this, but I don’t remember the US indicting a half-dozen US executives so readily, especially for violation of environmental regulations.

    I wish nationality didn’t matter, but I have a nagging feeling here that it does.

    • 0 avatar

      Not envirnomental, but the first thing that popped into my mind:

    • 0 avatar

      here’s another one:

      just because you’re not paying attention doesn’t mean it isn’t happening.

  • avatar

    Wow, zero American bankster thieves got indicted for the mortgage meltdown in 2008 but we caught six lying Germans. Good job, America!

    • 0 avatar

      Kudos for paying attention.

    • 0 avatar

      Go read the Yates Memo and understand the DOJ policy shift toward pursuing individuals as well as the companies they run.

      Yates was an outcome of the outrage felt by most after there were no individual indictments handed down in reply to the financial crisis.

      Yates was released in early September 2015. VW copped to its deeds a couple of weeks later. I bet they had never even heard of Yates at that point. Sally Yates was at the presser yesterday where the VW 6 were announced.

    • 0 avatar

      Proving criminal activity and intent in the VW case was relatively easy. But what about in the bankers case? Which bankers should be pursued? What laws did they actually break? The problem is that the bankers were selling toxic seccurities based on bad mortgages that shouldn’t have been allowed to exist. But they had plausible deniability because they bought the mortgages from other lenders or originators, and they relied upon the ratings of third party ratings companies to determine whether the investments were any good. Technically, it looks like they had their asses covered every step of the way. The issue with that is that the third-party ratings agencies are somewhat beholden to the banks for business, so they are reluctant to shit all over their products with bad ratings. So do we go after the ratings agencies for knowingly giving bad ratings? Well, the ratings agencies say that their ratings are just their opinions, protected by free speech, and what others do with their opinions isn’t their problem.

      The summary is, it doesn’t look like the bankers actually broke any laws. Their industry had enough loopholes to allow for plausible deniability and executives were able to cover their asses. That’s why congress tried to pass legislation after the banking meltdown, to try to close some of those loopholes.

  • avatar

    Everyone keeps glossing over the fact this was only a crime because some board of unelected officials convince d the lawmakers that we must have lower NOx levels that small diesels will be hard pressed to meet without expensive emissions equipment that will lower demand. What a coincidence that no domestic manufacturers were even trying for that market.Yes VW cheated the law, and these guys would be smart to avoid US soil.

    • 0 avatar

      Some board of unelected officials convinced lawmakers that it’s wrong if I just shoot people I don’t like. F*ckers.

    • 0 avatar

      Most regulations are developed by unelected people. This is not a problem, and is in fact the system working as designed.

      Do you propose that we elect the folks at the FAA who set standards for commercial aircraft, too?

    • 0 avatar

      “Exposure to NOx was significantly associated with mortality owing to respiratory diseases: relative risk (RR)=1.035 (95% confidence interval [CI]: 1.008-1.063) for lag 2, RR=1.064 (95%CI: 1.017-1.112) lag 3, RR=1.055 (95%CI: 1.025-1.085) lag 4, and RR=1.042 (95%CI: 1.010-1.076) lag 5. A 3 µg/m3 reduction in NOx concentration resulted in a decrease of 10-18 percentage points in risk of death caused by respiratory diseases. Even at NOx concentrations below the acceptable standard, there is association with deaths caused by respiratory diseases.”
      Here, I googled it for you.

  • avatar

    Herr Schmidt should have caught a fast boat to Cuba before trying to make a run for the fatherland.

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