Volkswagen Indictment Implicates Six Company Executives

Six car company executives face a Volkswagen indictment in a criminal prosecution over the company’s emissions cheating scandal.

U.S. Attorney General Loretta Lynch announced the indictment on Wednesday. Defendants Richard Dorenkamp, Heinz-Jakob Neusser, Jens Hadler, Bernd Gottweis, Oliver Schmidt and Jürgen Peter, all Volkswagen executives and German nationals, face charges of conspiracy, wire fraud, and violations of the Clean Air Act.

The Volkswagen indictment is one among many civil and criminal enforcement actions arising out of the announcement in September 2015 that Volkswagen purposely designed some of its diesel vehicle engines to produce fewer emissions during testing, then produce vastly more emissions during real-world use.

According to the Volkswagen indictment, between 2006 and 2015, the executives conspired to deceive U.S. regulators into certifying the illicitly-designed vehicles for U.S. sales.

In 2006, the company allegedly sought to develop an engine that would meet stricter U.S. emissions standards to take effect the following year. The executives then allegedly realized it would not be possible to design an engine that would both meet those standards and satisfy consumer demand for performance.

The defendant’s solution was to develop an engine that would lower its emissions specifically during emissions testing, the Volkswagen indictment says.

Allegedly under directions from defendants Dorenkamp and Hadler, engineers designed software that would recognize whether the car was being tested for emissions or driven on the road. The software would respond by lowering emissions only during testing, according to the Volkswagen indictment.

The defendants concealed Volkswagen’s intentional emissions cheating from regulators and the public, deceiving consumers by marketing their products as “clean diesel” vehicles, the indictment says.

Of the six Volkswagen defendants, only Schmidt has been taken into custody. Schmidt was general manager of Volkswagen’s Engineering and Environmental Office in Auburn Hills, Mich. from 2012 to 2015, according to the Volkswagen indictment.

Schmidt returned to Volkswagen headquarters in Germany in March 2015. Agents arrested him a few days ago during his visit to Miami.

In a related enforcement action, Volkswagen agreed to a $4.3 billion settlement of claims brought by the DOJ and U.S. Customs and Border Protection.

That agreement is itself linked to a settlement with the Federal Trade Commission requiring Volkswagen to set aside funds for environmental mitigation and development of cleaner emissions technology.

On the private civil litigation front, consumers of affected Volkswagen vehicles reached a preliminary settlement this past summer worth potentially $10 billion to those who bought or leased vehicles with the Volkswagen cheat device.

The civil settlement arose out of a multidistrict litigation, or MDL – a consolidation of a large number of individual civil claims into a single action in a single federal court.

Depending on certain case-specific factors, qualified claimants under the Volkswagen MDL settlement can take advantage of either a vehicle buyback program, have their lease terminated, or bring their vehicle in for an approved emissions modification.

Individual claimants can also qualify for cash payments of varying amounts, based in part of a percentage of the vehicle’s value.

The Volkswagen Emissions Scandal MDL is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, MDL No. 2672, in the U.S. District Court for the Northern District of California.