VW Executive Schmidt Pleads Guilty in Auto Emissions Scandal

(Bloomberg) -- Oliver Schmidt, a Volkswagen AG compliance executive charged in the company’s emissions-cheating scandal, pleaded guilty Friday in federal court in Detroit to conspiracy and violating the U.S. Clean Air Act.

Schmidt faces up to seven years in prison, said U.S. District Judge Sean Cox, with sentencing scheduled for Dec. 6. Schmidt agreed to be deported after he has completed his sentence, Cox said.

VW Executive Schmidt Pleads Guilty in Auto Emissions Scandal

Schmidt’s plea is the latest fallout stemming from VW’s admission in September 2015 that about 11 million diesel vehicles worldwide were outfitted with so-called defeat devices to cheat emissions tests.

VW attempted to boost sales by offering “clean diesel” that would meet heightened emissions standards and attract environmentally conscious customers. The company couldn’t sell vehicles in the U.S. without certifying they met the emissions standards and couldn’t meet the standards with its diesel vehicles without cheating.

Company Costs

The scandal has already cost the company more than $24 billion to settle U.S. civil and criminal claims. That includes VW’s agreement to pay $4.3 billion in penalties to resolve the federal criminal investigation and plead guilty to using false statements to import cars in the U.S. and obstructing investigations.

Schmidt, 48, is one of eight Volkswagen or Audi executives criminally charged in the U.S. for their alleged roles in the scheme. Five VW executives based in Germany were indicted along with Schmidt and a former Audi manager was charged last month.

Schmidt, a German national, is the most-senior VW executive to plead guilty. In September, Volkswagen engineer James Liang pleaded guilty for his role in implementing software that would cheat U.S. emissions tests. Liang, who is cooperating with prosecutors, is scheduled to be sentenced Aug. 25.

Schmidt, who was denied bail as a flight risk, has been in U.S. custody since he was arrested in January while on vacation in Florida. Schmidt was accused of conspiring with the company and other individuals to deceive U.S. and California regulators and customers into believing VW’s diesel vehicles complied with emissions standards.

As regulators were investigating discrepancies in emissions from the company’s diesel vehicles in August 2015, Schmidt met with an employee of the California Air Resources Board and “did not disclose that VW had intentionally installed software in the subject vehicles designed to cheat and evade emissions testing,’’ U.S. prosecutors said in court papers. He also was involved in providing false statements on documents required by the Clean Air Act, the U.S. said.

Schmidt was indicted along with Heinz-Jacob Neusser, former head of engine development who was suspended in 2015; Richard Dorenkamp, who led the failed effort to design a diesel engine that would meet the tougher emissions standards the U.S. adopted for 2007; Jens Hadler, who led engine development from 2007 to 2011; Bernd Gottweis, who was responsible for quality management from 2007 to 2014; and Jurgen Peter, a VW liaison with U.S. regulators during the months when they were growing more suspicious. These executives have remained in Germany where they’re safe from extradition to face the U.S. charges.

“Volkswagen continues to cooperate with investigations by the Department of Justice into the conduct of individuals,” the company said in an email. “It would not be appropriate to comment on any ongoing investigations or to discuss personnel matters.”

The case is U.S. v Schmidt, 16-cr-20394, U.S. District Court, Eastern District of Michigan (Detroit).