Ex-VW Official to Stay in Jail -- WSJ

By Mike Spector Features Dow Jones Newswires

A federal appeals court has denied a former Volkswagen compliance executive's bid to overturn a decision keeping him imprisoned before trial on charges he participated in the German auto maker's emissions fraud.

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The Sixth U.S. Circuit Court of Appeals in Cincinnati on Wednesday affirmed a district judge's order keeping Oliver Schmidt behind bars in Michigan amid concerns he would flee the country if released on a $1.6 million bond. Mr. Schmidt, a German citizen, for several years headed Volkswagen's environment and engineering office in Auburn Hills, Mich., where he liaised on compliance matters with U.S. and California environmental regulators.

The appeals court found U.S. District Judge Sean Cox in Detroit correctly weighed relevant legal factors when denying Mr. Schmidt's request to be freed on bond during a hearing in March.

"The record demonstrates the district court considered the relevant statutory factors, and we find no clear errors in the district court's factual findings," three appeals court judges wrote in a brief order. "We agree that no condition or combination of conditions will reasonably assure Schmidt's appearance as required."

The judges unanimously concluded that hearing oral arguments from lawyers was unnecessary to rule on Mr. Schmidt's appeal.

A lawyer for Mr. Schmidt didn't immediately respond to a request for comment. A Volkswagen spokeswoman declined to comment.

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Mr. Schmidt has pleaded not guilty to the charges.

Judge Cox in March said the case was a "very, very serious" one that involved defrauding U.S. officials as part of a conspiracy to rig nearly 600,000 diesel-powered Volkswagen vehicles with software that allowed them to dupe government emissions tests and pollute beyond legal limits on the road.

The government during the March hearing successfully argued that Mr. Schmidt risked fleeing if released. He was arrested in January at Miami International Airport before boarding a flight to Germany.

Volkswagen as a corporation pleaded guilty to criminal charges in the scandal earlier this year. In the U.S., the German auto maker has agreed to fines and settlements collectively totaling billions of dollars with the Justice Department, regulators, state attorneys general, consumers and dealers.

Mr. Schmidt is one of seven Volkswagen executives or employees criminally charged in the U.S. for alleged roles in the company's emissions deception. Five others reside in Germany and aren't expected to be extradited to the U.S. Another engineer pleaded guilty in September to criminal conduct for helping Volkswagen cheat on emissions tests and is scheduled to be sentenced in July.

Write to Mike Spector at mike.spector@wsj.com

(END) Dow Jones Newswires

May 26, 2017 02:47 ET (06:47 GMT)