VW to pay $2.8B fine, gets 3 years probation

Melissa Burden
The Detroit News

Detroit — Volkswagen AG was sentenced Friday to a $2.8 billion fine and three years of probation after last month pleading guilty to three criminal charges for its 10-year conspiracy to rig nearly 600,000 diesel cars to cheat U.S. emissions standards.

Judge Sean Cox, in a hearing Friday morning in federal court in Detroit, ruled there would be no restitution to alleged victims tied to the criminal case because it would complicate and delay sentencing.

Cox said he believes the fine is fair punishment for the corporation and he hopes it will send a message to other companies not to act in similar ways. He said consumers and laborers have been hurt the most by the company’s actions.

“This is a very serious and troubling case involving an iconic automobile company,” he said. “...I just can’t believe that VW is in this situation that it finds itself in today.”

Cox said the case involved “deliberate destruction of evidence by VW management and with the participation and under supervision by legal counsel.”

“This is a case of deliberate, massive fraud perpetrated by VW management,” Cox said. “We don’t know how far up the corporate ladder it goes. Hopefully, the [Department of Justice] and more importantly the German government will do its duty and find out and prosecute.”

After the March plea, the judge had wanted more time to consider a plea deal and fine negotiated by the German automaker and the Justice Department. Attorneys for both the government and Volkswagen had asked Cox to accept the plea and immediately sentence the company to $2.8 billion in criminal fines.

The penalty appears to be the largest ever paid by an automaker in the U.S. and tops other U.S. government fines in other scandals slapped on General Motors Co., Takata Corp. and Toyota Motor Corp.

Volkswagen’s General Counsel Manfred Doess apologized Friday to the government and U.S. customers for the automaker’s misconduct and regrettable behavior that he said was not consistent with company values.

“Plain and simple, it was wrong,” Doess said. “We let people down and for that we are deeply sorry.”

Doess said Volkswagen is taking the necessary steps to make sure nothing like this happens again and to regain trust of U.S. consumers.

Doess in March had pleaded guilty on behalf of the company to conspiring to defraud the U.S. by violating the Clean Air Act, obstructing justice during the government’s investigation and a charge of entry of goods by false statement.

The carmaker 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. The scandal came to light in September 2015.

The government also has appointed Larry Thompson to serve as a federal monitor in the case.

Thompson previously was a deputy attorney general during President George W. Bush’s administration from 2001 to 2003. His tenure coincided with the Justice Department’s prosecution of energy giant Enron Corp.; Thompson oversaw the prosecution of several company officials.

Thompson earned his law degree from the University of Michigan, and the 71-year-old’s resume includes a stint during law school working for Ford Motor Co. as an industrial relations representative.

The compliance monitor will ensure the culture of Volkswagen changes in a positive way, Assistant U.S. Attorney John Neal said Friday.

Neal in March told Cox that federal guidelines called for a fine between $17 billion and $34 billion, based on the depth of the company’s conspiracy.

Neal then said Volkswagen did not disclose its illegal behavior and obstructed the government investigation by destroying documents and data after learning of the probe. But because the automaker did disclose its own obstructive conduct and agreed to a three-year independent monitor, the government believes the criminal penalties should be reduced to $2.8 billion.

None of the alleged victims tied to the criminal case spoke in court Friday, though some submitted statements that Cox said he took into consideration.

Some attorneys for consumers who feel they were wrongfully led by the company in the emissions cheating scandal had filed objections to reject the government’s plea deal because it did not include any court-ordered restitution. Some consumers wanted to receive full buyback of the diesel cars they bought plus a penalty because they feel they were defrauded.

The German automaker is paying an additional $1.5 billion in civil penalties in the case. It has agreed to pay $11.2 billion to buy back or repair diesel cars in the U.S., and contribute another $4.7 billion to federal efforts to reduce pollution.

Six current and former VW executives have been indicted in criminal cases.

Oliver Schmidt, a German national and former VW executive once responsible for the company’s compliance with U.S. emissions regulations, was arraigned on criminal charges in February. Last month, Cox denied a pretrial bond release for Schmidt and set a trial date for January 2018.

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. He faces up to 20 years in prison on the wire fraud charges.

Another former Volkswagen executive already pleaded guilty. James Liang, leader of diesel compliance for VW from 2008 through June, pleaded guilty to a criminal charge in Detroit last fall and is expected to be sentenced in May.

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Staff writer Jim Lynch contributed.