Volkswagen Exec Arrested In Emissions Cheating Scandal: Feds

(Updated) DETROIT, MI — The FBI has arrested a second Volkswagen executive in the massive emissions cheating scandal, the federal government said Monday. Oliver Schmidt, who led the automakers regulatory compliance office in the United States, was arrested in Florida Saturday.

Schmidt, 48, lives in Germany, and was arrested in Miami. He was charged with a count of conspiracy to defraud the United States, to commit wire fraud and to violate the Clean Air Act. He made an initial appearance Monday before U.S. Magistrate Judge William C. Turnoff of the Southern District of Florida, who ordered Schmidt temporarily detained.

Schmidt is the second high-ranking employee and the first executive-level employee to be arrested and charged with conspiracy to defraud the United States government and wire fraud. He was arrested in Miami over the weekend and is expected to be arraigned in Detroit at a later date.

The FBI is investigating Volkswagen for allegedly intentionally installing software engineered to dupe regulators during emissions control testing on about 500,000 vehicles sold in the United States. The “defeat device” software turned on during testing but shot off during driving to give motorists better performance on the highway.

James Liang, a former engineer who worked for Volkswagen in California, pleaded guilty to charges that he conspired to defraud the government and with violating the Clean Air Act. He agreed to cooperate with the government in its ongoing investigation of the automaker’s alleged conspiracy to defraud U.S. regulators and U.S. customers, the Justice Department said.

The complaint against Schmidt, dated Dec. 31 and signed by FBI Special Agent Ian M. Dinsmore, alleges that he participated in the cheating scandal 2012-2015, The Detroit News reported.

In a statement Monday, Volkswagen said it is cooperating with the Justice Department’s investigation but said “it would not be appropriate” to comment on the ongoing probe or any personnel issues.

Volkswagen last month agreed to a $300 million settlement with owners of about 80,000 3.0-liter diesel VW, Porsche and Audi vehicles. Along with the agreement made by Volkswagen, the German company Robert Bosch, which produced software for the diesel vehicles, agreed to settle civil allegations made by diesel vehicle owners in the United States.

Additionally, the company agreed to recall 83,000 diesel vehicles with model years between 2009 and 2016. The automaker has also agreed to buy back older vehicles, terminate leases or offer to fix to substantially reduce emissions. If the new vehicles can be made emissions compliant, VW will not be required to buy the cars back.

The company previously reached a deal in June to address emissions cheating around 475,000 vehicles in which the company admitted to install secret software to cheat emissions tests. The 80,000 vehicles in question had an undeclared auxiliary emissions system that allowed the vehicles to emit up to nine times the allowable limit.

Photo by Gábor Kovács via Flickr Commons