Feds say life in prison 'sufficient' for Whitmer kidnap plotter

VW exec arraigned on federal charges in Detroit

Jennifer Chambers
The Detroit News

A former high-ranking Volkswagen AG executive made a brief appearance in a federal courtroom in Detroit on Thursday to be arraigned on criminal charges in connection with the automaker’s emission scandal.

Oliver Schmidt, 48, a German national and VW’s former top emissions compliance manager for the United States, was arrested last month in Florida and has been in federal custody awaiting his first court appearance in Detroit, where the government’s criminal case is based.

On Thursday, Schmidt appeared in a jail uniform with his hands cuffed and shackled to chains. His attorney, David DuMouchel, waived a reading of the indictment in court and Schmidt stood mute.

Schmidt is charged in a superseding indictment with conspiracy to defraud the United States, violating the Clean Air Act and aiding and abetting wire fraud. Schmidt was once responsible for the company’s compliance with U.S. emissions regulations. He is a former general manager of the Engineering and Environmental Office for VW of America.

U.S. Magistrate Judge R. Steven Whalen entered a not-guilty plea on Schmidt’s behalf and ordered him temporarily detained.

Schmidt faces up to 20 years in prison on the wire fraud charges, five years on the conspiracy charge and two years on the charge of violating the Clean Air Act.

Last month Schmidt was ordered held in Miami where prosecutors had argued he posed a flight risk if released. He sought release on bail over the objections of federal prosecutors.

DuMouchel said he would be seeking bond for Schmidt, who worked in VW’s Auburn Hills offices from 2012 to February 2015. DuMouchel told Whalen that Schmidt has been suffering from shingles and needed medication from his wife. He also asked that Schmidt be detained at the federal facility in Milan.

“This is a paper-intensive matter,” DuMouchel said in court, saying it would be easier for Schmidt to have access to computers and paperwork available at Milan.

Whalen said he would order that Schmidt be seen by a doctor while in detention but he cannot order prison placement.

In a criminal complaint filed Dec. 30, FBI Special Agent Ian M. Dinsmore alleges Schmidt, who had been stationed in Auburn Hills managing the environmental office, committed the crimes from 2012 to 2015.

Schmidt was responsible for communicating and coordinating with U.S. regulatory agencies, including the U.S. Environmental Protection Agency and the California Air Resources Board, the complaint says.

In March 2015, Schmidt was promoted and returned to VW headquarters in Wolfsburg, Germany, where he played a direct role in VW’s response to U.S. regulators’ questions, the FBI said.

By that summer, U.S. regulators had discovered VW diesel vehicles emitted “substantially higher” emissions when being driven on the road than when undergoing standard U.S. emissions tests, and had repeatedly asked VW for an explanation for this discrepancy, the complaint alleges.

“Schmidt knew that the reason for this discrepancy was that VW had intentionally installed software in the diesel vehicles it sold in the United States from 2009 to 2015 designed to detect and cheat U.S. Emissions tests,” the complaint reads.

Federal authorities allege Schmidt continued to deceive regulators by offering reasons for the discrepancy other than the fact that VW was intentionally cheating in order to allow sales to continue.

In all, six current and former VW executives were indicted in what regulators called a 10-year conspiracy to rig thousands of diesel cars to cheat emission standards.

Also charged in the case are: Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; and Jürgen Peter, 59, all of Germany.

James Robert Liang, leader of diesel competence for VW from 2008 through June, pleaded guilty to a criminal charge in Detroit in September for his role in the automaker's diesel emissions and is expected to plead guilty on May 5.

On March 10, Volkswagen AG is expected to plead guilty in Detroit to charges that it conspired to defraud the United States, violated the Clean Air Act and obstructed justice for its behavior in the emissions scandal.

The German-based company, which has offices in Oakland County, is charged by federal prosecutors with conspiring to enrich itself by deceiving U.S. regulators in order to get the necessary certificates to sell VW and Porsche cars in the United States, knowing those vehicles did not meet U.S. emission standards.

VW must pay $2.8 billion in criminal fines and $1.5 billion in civil penalties in the case.

The automaker has admitted to programming its diesel cars to trick emissions testers into believing the engines released far less pollution into the air than they actually do, in violation of the federal Clean Air Act. Regulators have said that in normal driving they emitted up to 40 times more smog-causing nitrogen oxide than the legal limit.

Volkswagen's plea agreement is pending approval by U.S. District Judge Sean Cox, who has been assigned to the case in Detroit.