Volkswagen settles more civil cases in SF

The U.S. Justice Department announced Wednesday that automaker Volkswagen AG will pay $4.3 billion to settle a criminal case in federal court in Detroit and civil cases in federal court in San Francisco in a pollution cheating scandal.

The new agreements will be added to $15.7 billion in previous civil settlements in the court of U.S. District Judge Charles Breyer in San Francisco in lawsuits filed on behalf of 590,000 Volkswagen buyers and government agencies.

The cases stem from Volkswagen’s use of a so-called “defeat device” in engines it advertised as “clean diesel.”

The devices would turn on emission controls when cars were tested by regulators but turn them off when the vehicles were driven on the road.

The cars sometimes released 40 times the allowed amount of smog-producing nitrous oxides, the Justice Department said.

Volkswagen engineers began planning the fraud in 2006 and implemented it in 2009. Company officials finally admitted to the deception in September 2015, after evading questions from the U.S. Environmental Protection Agency and California Air Resources Board for nearly two years, according to documents filed in the cases.

In addition to settling criminal charges against the company itself, the Justice Department announced that a federal grand jury today indicted six top VW engineers and executives on charges of conspiring in the scheme beginning in 2006, violating the U.S. Clean Air Act and committing wire fraud.

Those charges were not settled and remain pending.

One of the indicted executives is Oliver Schmidt, who was arrested on Jan. 7 as he sought to return from Miami to Germany. He formerly headed Volkswagen’s Environment and Engineering Office in Auburn Hills, Mich., which prepared certifications that the cars sold in the United States met air pollution standards.

The other executives are believed to be in Germany, the Justice Department said.

U.S. Attorney General Loretta Lynch said Wednesday:

“Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws.”

The Justice Department “will continue to pursue the individuals responsible for orchestrating this damaging conspiracy,” she said.

Volkswagen Chief Executive Officer Matthias Mueller said in a statement:

“Volkswagen deeply regrets the behavior that gave rise to the diesel crisis. We will continue to press forward with changes to our way of thinking and working.”

In the criminal case in Michigan, VW agreed to plead guilty to charges of conspiracy, violating the Clean Air Act and wire fraud, and agreed to pay a penalty of $2.8 billion. It also agreed to the appointment of a corporate compliance monitor.

In federal court in San Francisco, it agreed to pay $1.5 billion to settle civil claims filed by the EPA and federal customs and financial agencies.

Volkswagen admitted responsibility for the air pollution and customs violations, for which it promised to pay $1.45 billion. While agreeing to pay an additional $50 million to settle the financial claim, it did not admit to liability for that claim.