RECALLS LEAD TO INDICTMENTS & ARRESTS

 

In a prior blog of February 23, 2017, we discussed criminal indictment of three Takata employers by a Detroit Federal Grand Jury.  The employees were charged with wire fraud and conspiracy for concealment of defect in the airbag inflators.  Takata, the corporation has agreed to plead guilty to wire fraud and to pay $1 billion in criminal penalties.

The Justice Department following up on manufacturer recalls and concealment of defects, a top Volkswagen executive has been arrested on conspiracy suspicion from the German Automakers emissions scandal.  According to an article in USA today, The Journal News on January 10, 2017, by Kevin McCoy and Tiera Baldors, a weekend arrest of Oliver Schmidt who directed Volkswagen’s regulatory compliance in the United States from 2012 to 2015 was a result of the FBI looking into executive rank on suspected wrong doing.  By virtue of Schmidt’s position, he had to know Volkswagen “intentionally installed electronic software that enabled diesel engines to defeat U.S. auto emission tests”.  A FBI special agent, Ian Dinsmore filed an affidavit in Federal Court.  Schmidt traveled to the US in 2015 for meeting in which he “intended to and did deceive and mislead US regulators” about the corporate cheating on emissions.

FBI investigators believe they have enough evidence to establish Schmidt and other Volkswagen employees “conspired and unlawfully agreed to defraud the US by impeding auto emissions enforcement” and committed wire fraud and violating the Clean Air Act.  Volkswagen, the corporation (like Takata) admitted to rigging its diesel auto to bear emissions tests and Volkswagen is paying about $11 billion to buy back cars and compensate owners.

A former Volkswagen engineer James Liang, plead guilty in September, 2016 to charges that included conspiracy to defraud the Federal Government and violating the Clean Air Act.  Two other unidentified employees who work in Volkswagen engineering development department have agreed to cooperate in exchange for agreement not to force US prosecution.

Federal prosecutors have followed these two largest recalls by Takata and Volkswagen and it has led to indictment and arrests of company executives and engineering department employees.  The deterrent of Federal prosecution of individuals as well as the companies themselves is a great tool to stop auto industry fraud on the American people.