Ex-VW Official Admits Role in Emissions Cheating -- WSJ

By Mike Spector in New York and Mike Colias in Detroit Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 5, 2017).

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A former Volkswagen AG compliance executive pleaded guilty to criminal charges stemming from his role in the German auto maker's yearslong emissions-cheating deception.

Oliver Schmidt, a German citizen who for several years headed Volkswagen's environment and engineering office in Auburn Hills, Mich., pleaded guilty in a Detroit federal court on Friday, admitting he helped diesel-powered vehicles evade U.S. emissions requirements.

Mr. Schmidt, 48 years old, was charged with participating in a nearly decadelong conspiracy to defraud U.S. officials and customers with vehicles that featured illegal software allowing them to dupe government emissions tests while polluting far beyond legal limits on the road. Volkswagen earlier this year pleaded guilty to criminal charges stemming from the scandal, and other individuals were also charged.

In a superseding criminal information, federal prosecutors charged Mr. Schmidt with one count of conspiracy to defraud the U.S., commit wire fraud and violate the Clean Air Act. Prosecutors also leveled a second stand-alone charge of violating the Clean Air Act.

U.S. District Judge Sean Cox accepted Mr. Schmidt's guilty plea during a hearing Friday morning. He scheduled Mr. Schmidt's sentencing for Dec. 6.

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Under terms of a plea agreement with federal prosecutors, Mr. Schmidt faces up to seven years in prison and a fine ranging between $40,000 and $400,000. The agreement requires he be deported from the U.S. after completing his prison sentence. Prosecutors dropped an additional wire fraud charge in exchange for Mr. Schmidt's plea, a court spokesman said.

Volkswagen in March pleaded guilty to criminal charges in the U.S. and has admitted to rigging nearly 600,000 diesel-powered vehicles with software designed to evade emissions testing. The company has said the software is on some 11 million vehicles globally.

A Volkswagen spokesman said the auto maker continues to cooperate with U.S. Justice Department probes of individuals and declined to comment further. In the U.S. alone, legal settlements could cost Volkswagen more than $25 billion, depending on how many vehicles the auto maker ends up repurchasing to compensate consumers.

Mr. Schmidt, dressed in a red prison jumpsuit and shackles, admitted to the judge during Friday's hearing that he knew about Volkswagen's use of the illegal software to mislead environmental regulators. The engineer told the judge he "omitted information about how VW intentionally installed defeat devices" during August 2015 discussions with regulators who had been probing the high output of pollutants from Volkswagen vehicles.

Mr. Schmidt has been behind bars in Michigan and had planned to stand trial before agreeing to plead guilty. Federal Bureau of Investigation agents arrested Mr. Schmidt in January at Miami International Airport before he boarded a flight to Germany. He will remain imprisoned while he awaits sentencing.

While heading Volkswagen's environment and engineering office in Michigan from 2012 to early 2015, he liaised with U.S. and California regulators on compliance matters, according to prosecutors. Mr. Schmidt learned of cheating software on Volkswagen vehicles during the summer of 2015, according to his plea agreement. In the ensuing months, Mr. Schmidt proceeded to conceal Volkswagen's use of the software from regulators, and he knew of fraudulent reports on vehicle emissions submitted to the Environmental Protection Agency, according to the plea agreement.

Mr. Schmidt is one of eight individuals charged in the U.S. in Volkswagen's emissions cheating. A former engine-development manager at Volkswagen luxury-unit Audi was charged in July. One engineer has pleaded guilty and is set to be sentenced later this month. Others charged are believed to reside in Germany and aren't likely to be extradited to the U.S. to face charges.

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

(END) Dow Jones Newswires

August 05, 2017 02:47 ET (06:47 GMT)