Volkswagen Settles Consumer Fraud Claims with Justice Department, EPA

Auto manufacturer Volkswagen has settled criminal and civil charges by the Justice Department and Environmental Protection Administration. The company has agreed to pay $4.3 billion in penalties and several employees face individual charges as a result of a decade-long emissions scandal.

Prosecutors in the U.S. Department of Justice and executives at Volkswagen have agreed that the company will plead guilty to three felony counts: conspiracy to commit fraud, obstruction of justice, and entry of goods by false statement. If the settlement is approved by U.S. District Court Judge Sean Cox in Detroit, VW will pay a $2.8 billion criminal fine to the DOJ and another $1.5 billion civil fine to the EPA for violations of the Clean Air Act. Volkswagen has also agreed to 3 years of independent monitoring for ethics and compliance.

In September 2015, Volkswagen admitted it had installed software in hundreds of thousands of U.S. diesel cars, and 11 million worldwide. The software was designed to allow the vehicles to cheat on exhaust emissions tests, making them appear to run cleaner in the study than they did in the real world.

“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,” said Andrew McCabe, deputy director of the FBI. “If environmentally conscious buyers are told they are purchasing green cars, they should actually be getting, in fact, green cars, not cars that spew out pollution in excess of federal and state regulations.”

At a joint news conference with the EPA’s Administrator Gina McCarthy Attorney General Loretta Lynch said:

“This is a case that illustrates a company that at very high levels knew of this problem and deliberately chose to continue with this fraudulent behavior. . . . Here we saw a company where this knowledge and the choice they made went to the executive level.”

Since the emissions scandal became public, VW has agreed to spend up to $17.5 billion in claims by regulators, owners, and dealers, and to buy back nearly 500,000 vehicles. But Justice Department officials say Volkswagen could have faced far more: as much as $34.1 billion in criminal fines alone.

Volkswagen also agreed to fire six employees, suspend eight, and discipline three more involved in the scandal. Six VW executives, all German citizens, also face federal criminal charges. On January 7, 2017, Oliver Schmidt, formerly in charge of environmental compliance was arrested while visiting Miami. The rest remain in Germany.

The settlement demonstrates the strength of U.S. consumer protections laws and how the various agencies can work together to protect American consumers from manipulative auto makers. Whether that strength will remain under the new administration remains to be seen.

Dani K. Liblang is a lemon law attorney at The Liblang Law Firm, P.C., in Birmingham, Michigan. If you were sold a defective vehicle, contact The Liblang Law Firm, P.C., for a free consultation.