US charges Volkswagen executive with fraud in diesel scandal

US authorities charged a Volkswagen executive with fraud and conspiracy, saying he helped cover up the “dieselgate” emissions-cheating scandal, the Justice Department said.

Oliver Schmidt, who led the German automaker’s US regulatory compliance office from 2012 to March 2015, appeared in a Miami court yesterday to face charges he knowingly lied to US regulators.

He did not enter a plea, and was ordered held for another hearing Thursday, according to news reports.

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The FBI arrested Schmidt Saturday in connection with a scandal in which Volkswagen admitted to installing software on as many as 11 million diesel vehicles sold worldwide to circumvent tests for emissions.

The cheating technology allowed the cars to pass the emissions tests but release up to 40 times the permitted amounts of nitrogen oxides during actual driving.

Volkswagen already has agreed to pay more than $15 billion to fix or replace the affected cars in the US.  However, the German auto giant still faces a criminal US investigation, and prosecutors are pursuing possible charges against other individuals.

An FBI affidavit depicts Schmidt as a key player in deceiving and obfuscating Volkswagen’s use of the “defeat device” software to regulators.

Schmidt, 48, did not come clean when he learned in April 2014 of a study by the nonprofit International Council of Clean Transportation that uncovered the discrepancy of vehicle emissions from tested levels, according to an FBI affidavit.

“It should first be decided whether we are honest,” Schmidt wrote in a note to a colleague. “If we are not honest, everything stays as it is.”

Schmidt and other officials subsequently developed a plan to continue to conceal the use of the software in August 2015 meetings with California regulators, about a month before the conspiracy was disclosed by regulators.

In July 2015, Schmidt and other Volkswagen employees briefed senior executives at its German headquarters of the defeat device, saying regulators were not aware of the mechanism.

“Rather than advocate for disclosure of the defeat device to US regulators, VW executive management authorized its continued concealment,” the FBI said.

Dozens of Volkswagen officials in Germany have hired US criminal defense attorneys over the last few months, according to Bloomberg News.

The FBI affidavit cited three cooperating witnesses in their case against Schmidt, including James Liang, a former Volkswagen engineer who in September pleaded guilty for helping devise the defeat device.

Volkswagen has said it is cooperating with US investigators and is eager to move past the case.