Former VW Executive To Plead Guilty in Diesel Scam

Oliver Schmidt faced 169 years in prison on 11 felony counts.

by on Jul.25, 2017

Former VW manager Oliver Schmidt is the only official currently in U.S. custody.

Oliver Schmidt, one of nine current and former employees charged in connection with Volkswagen’s diesel emissions cheating scam, has agreed to plead guilty, according to a federal court spokesman in Detroit.

A one-time senior engineer based in Michigan where he ran VW’s U.S. environmental operations, Schmidt was accused of helping to cover up the automaker’s efforts to rig two diesel engines so they would illegally pass emissions tests. Since the ruse was uncovered in late 2015, the German automaker has had to pay out around $30 billion in fines, fees and for a buyback program covering about 500,000 vehicles sold in the U.S.

Clearing the Air!

Schmidt would be the second VW employee to plead guilty to charges related to the diesel scam, 62-year-old James Robert Liang the first to do so last September. Like Liang, Schmidt is expected to get a break by agreeing to aid the ongoing investigation by the U.S. Justice Department. Separate criminal investigations are underway in Germany.

The 48-year-old Schmidt was one of seven VW employees named in connection with the case. The indictments were released at the same time the Justice Dept. confirmed it had reached a criminal settlement with Volkswagen last January.

VW diesel engineer James Liang was the first to plead guilty in the VW diesel scam case.

Schmidt was arrested while transiting through the U.S. after a vacation on his way home to Germany. The others indicted at the time remain in Europe and are not currently subject to extradition.

“It is now clear that Volkswagen’s top executives knew about this illegal activity and deliberately kept regulators, shareholders and consumers in the dark – and they did this for years,” Andrew McCabe, the assistant FBI director, said during a Detroit news conference in January.  “We can’t put companies in jail but we can hold their employees personally accountable.”

(Audi recalling 850,000 diesel vehicles to repair rigged engines. Click Here for the latest.)

An eighth executive working for VW’s luxury marque Audi was arrested earlier this month as prosecutors in the U.S. and Germany expand their efforts to look at collusion by other brands within the Volkswagen Group.

Sixty-year-old Giovanni Pamio headed thermormodynamics in Audi’s Diesel Development Department in Neckarsulm, Germany, and prosecutors allege he “directed Audi employees to design and implement software functions to cheat the standard U.S. emissions tests.”

The scam was based around efforts to rig both a 2.0-liter turbodiesel, as well as a more upscale 3.0-liter engine so they could detect when they were undergoing emissions tests. That would trigger a more aggressive pollution control program to kick in. During real-world driving, however, the engines could produce levels of pollutants, such as smog-causing oxides of nitrogen, dozens of times greater than the law allowed.

(Click Here for more about Daimler’s recall of 3M diesels in Europe.)

Roughly 500,000 diesel vehicles made by VW and its subsidiaries have faced buyback.

Schmidt’s decision to plead guilty was presented to the Detroit-based federal judge overseeing the VW diesel case earlier today by both prosecutors and the German national’s attorneys. He was originally scheduled to face trial next January. Schmidt was being held in a Michigan prison, the government arguing against bail because they feared he was a flight risk.

Federal judge Sean Cox will formally entertain the guilty pleas at a hearing on August 4th.

If found guilty on all 11 felony counts facing him Schmidt could have been subject to as much as 169 years in prison. He is now expected to receive a much lighter sentence – but will also need to assist in the ongoing government probe.

Among those indicted but not currently in custody are Heinz-Jakob Neusser, the former head of development for the Volkswagen brand, as well as Jens Hadler and Richard Dorenkamp, two former heads of engine development.

(U.S., German prosecutors target Audi, make arrest in expanded diesel probe. Click Here for the latest.)

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