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VW Exec Arrested On Fraud Charges Over Fuel Emission Scandal

A Volkswagen executive in charge of the company’s regulatory compliance office was arrested Saturday on charges of conspiracy to defraud the U.S., according to reports from The New York Times.

Oliver Schmidt, who led the company’s regulatory office from 2014 to 2015, was arrested by the FBI and is expected be put on trial Monday in Detroit, two people knowledgeable about the case told TheNYT.

Schmidt allegedly played a crucial role convincing government regulators that excessive fuel emissions from diesel-powered vehicles were caused by technical issues, not deliberate cheating, officials of the California Air Resources Board have said.

VW acknowledged in September, 2015, installing the so-called “defeat device” in many of its most popular vehicles, including the Beetle and Porsche Cayenne, expressly to curb smog-producing nitrous oxide emissions. Nearly 585,000 vehicles in the U.S. had the software, and roughly 11 million vehicles worldwide.

The scandal will cost the German automaker more than $15 billion, $10 billion of which will go to the owners of the tainted vehicles, while another $2.7 billion will go to the Environmental Protection Agency for environmental mitigation. The company will plow another $2 billion investment into electric vehicle technology, which will be distributed within the next decade.

The arrest comes after New York Attorney General Eric Schneiderman filed a lawsuit against VW claiming the company had fudged fuel emission measurements for more than a decade.

The New York Democrat explained in painstaking detail the specifics of how and why the German automaker spent so much time cheating emissions tests, even implicating one of the company’s former senior executives as among those covering up the illegal activity.

Schneiderman’s lawsuit claims VW’s top U.S. official, Michael Horn, misled the House Committee on Energy and Commerce when he testified that software engineers were responsible for the scandal in 2015, adding that the beleaguered company engaged in fraud because it wanted to increase market share in the U.S.

Emissions-cheating technology also allowed VW to conceal engineering deficiencies.

Schmidt is the first VW executive to be arrested in connection with the scandal. One of the company’s engineers, James Liang, pleaded guilty in September to charges of defrauding the government.

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