Summary of Criminal Prosecutions
E.D. Michigan 16-CR-20394
Friday, April 21, 2017
Volkswagen AG Sentenced in Connection with Conspiracy to Cheat U.S. Emissions Tests
Volkswagen AG (VW) was sentenced in federal court in Detroit after pleading guilty on March 10, 2017, to three felony counts of: (1) conspiracy to defraud the United States, engage in wire fraud, and violate the Clean Air Act; (2) obstruction of justice; and (3) importation of merchandise by means of false statements. During the sentencing hearing, the court accepted the parties’ plea agreement, which requires VW to pay a $2.8 billion penalty stemming from the company’s decade-long scheme to sell diesel vehicles containing software designed to cheat on U.S. emissions tests.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan, Deputy Assistant Attorney General Jean E. Williams of the Justice Department’s Environment and Natural Resources Division, Acting Assistant Administrator Larry Starfield of the EPA’s Office of Enforcement and Compliance and Special Agent in Charge David Gelios of the FBI’s Detroit Field Office made the announcement.
U.S. District Judge Sean F. Cox of the Eastern District of Michigan accepted the plea agreement, resulting in VW’s conviction on three felony charges. VW was convicted, first, of participating in a conspiracy to defraud the United States and its 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. Moreover, the company used cheating software to circumvent the U.S. testing process, and concealed material facts about its cheating from U.S. regulators. Second, VW was convicted of obstruction of justice for destroying documents related to the scheme. And third, VW was convicted of importing these cars into the United States by means of false statements about the vehicles’ compliance with emissions limits.
As part of the plea agreement, VW will pay a $2.8 billion criminal penalty to the U.S. and fully cooperate in the government’s ongoing investigation and prosecution of individuals responsible for these crimes. The parties also announced that the government had selected Larry D. Thompson as an independent corporate compliance monitor who will oversee the company during its three-year term of probation. Thompson is a former Deputy U.S. Attorney General. His team includes experts in automotive regulatory compliance, as well as the corporate monitors for Deutsche Bank in the London Interbank Offered Rate (LIBOR) manipulation prosecution and Duke Energy in the coal ash environmental prosecution.
“The sentencing of Volkswagen marks a significant milestone in this historic case,” said Acting U.S. Attorney Lemisch. “Volkswagen has been punished for its scheme to defeat U.S. environmental standards and cheat U.S. consumers. This prosecution sends a strong message to Volkswagen and others that we take our environmental laws seriously and that federal prosecution awaits those who defraud the EPA.”
“The Criminal Division will continue to be vigilant in assuring that all companies – foreign and domestic – that choose to benefit from our valuable economy and consumers abide by our laws, said Acting Assistant Attorney General Blanco. “The sentencing of VW vindicates the rights of U.S. consumers who for over a decade were victims of the calculated corporate decisions of VW and its senior management to fraudulently employ a device intended to deceive U.S. consumers and to defeat our environmental laws.”
“With today's sentence, VW is being held fully accountable for its deception and fraud perpetrated against American consumers and the environment, as well as the deliberate obstruction of the criminal investigation into its wrongdoing,” said Deputy Assistant Attorney General Williams. “We also hope this sends a message around the world that those who violate American environmental laws will be vigorously investigated and prosecuted.”
“Today's strong sentence recognizes the egregious nature of VW’s violations, and VW’s attempt to gain an unfair competitive advantage over automakers that follow the law,” said Acting Assistant Administrator Starfield. “Vehicle emissions standards help protect clean air and ensure a level playing field for companies that play by the rules. When those standards are broken, violators can expect to be held accountable.”
“Americans expect corporations doing business in the United States to conduct their business honestly,” said Special Agent in Charge Gelios. “Today's sentencing sends a clear message that the FBI, along with its federal partners, will continue to hold corporations, like Volkswagen AG, accountable when they defraud consumers and violate federal laws.”
Along with the January 2017 plea agreement, the United States also announced separate civil resolutions of environmental, customs and financial claims, in which VW agreed to pay an additional $1.5 billion to settle EPA’s claim for civil penalties in connection with the importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, that agreement requires injunctive relief to prevent future violations. The agreements also resolved alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
The FBI and EPA investigated the case. This case is being prosecuted by members of the Department of Justice’s Criminal Division, Fraud Section, including: Chief of the Securities and Financial Fraud Unit Benjamin D. Singer, as well as Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton and Gary Winters. Also prosecuting the case are members of the Department of Justice’s Environment and Natural Resources Division, Environmental Crimes Section, including: Senior Trial Attorney Jennifer Blackwell. Additionally, the case is being prosecuted by members of the U.S. Attorney’s Office for the Eastern District of Michigan, including Criminal Division Chief Mark Chutkow, Economic Crimes Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.
- Title 18 U.S. Criminal Code (TITLE 18)