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VW exec gets maximum sentence, fine for Dieselgate role

Ian Thibodeau
The Detroit News

Detroit — A maximum seven-year sentence for a former Volkswagen AG executive, handed down Wednesday, closes a long chapter in perhaps the largest and most expensive conspiracy in the global auto industry’s history.

Oliver Schmidt, 48, was sentenced to 7 years in prison and fined $400,000 in federal court here for his role in the automaker’s diesel emissions cheating scandal. The German national had pleaded guilty in August to two charges in Volkswagen’s scheme to rig nearly 600,000 diesel cars to evade U.S. pollution standards.

“This crime ... attacks and destroys the very foundation of our economic system: That is trust,” U.S. District Judge Sean Cox said Wednesday in sentencing Schmidt. “Senior management at Volkswagen has not been held accountable.”

Yet the furious backlash to Volkwagen’s duplicity drove former CEO Martin Winterkorn to resign in September 2015, soon after the scandal broke. It was one of the rare executive departures in a transatlantic scheme that rocked so-called “Deutschland AG,” undermined confidence in one of Germany’s corporate pillars and forced the automaker to pay at least $16 billion in fines and settlements.

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Six other former Volkswagen executives remain at large in the case, according to David Ashenfelter, a federal court spokesman. Experts have said Cox’s tough sentencing could make it unlikely that other indicted employees — most living in Germany and out of reach from U.S. law enforcement authorities — will be brought to justice in the scandal that marred Volkswagen’s image as an environmentally friendly company.

Schmidt worked at the German automaker’s Auburn Hills offices from 2012 to February 2015, and was arrested in Florida in January for his alleged involvement in what came to be known as Dieselgate. He had a base salary of $130,000, received bonuses of at least $40,000, and had a net worth over $1 million, Cox said Wednesday.

Schmidt pleaded guilty in August to conspiracy to defraud the United States to commit wire fraud and to violate the Clean Air Act; and for violating the Clean Air Act. A third charge of wire fraud was dropped.

David DuMouchel, Schmidt’s defense attorney, had asked that his client serve no more than 40 months and pay a $100,000 maximum fine. In a Nov. 29 letter addressed to Cox, Schmidt wrote: “The last eleven months behind bars in the United States has been the most difficult time in my life. I am truly embarrassed/ashamed to be standing in front of you.”

Wearing handcuffs and a red jumpsuit from the Milan federal prison along U.S. 23 in York Charter Township, Schmidt called Wednesday the hardest day of his life. He choked back tears as he apologized to his wife, who has a home in Michigan so she can visit him in prison.

“I accept the responsibility for the wrong I committed,” he said in court, reading from a prepared statement. “I justified my bad decisions. ... I am as ready as I will ever be to accept the punishment you believe is fair.”

Schmidt has said he was told in summer 2015 that Volkswagen had installed defeat devices on its so-called “clean diesel” vehicles that allowed pollution-control systems to work properly during laboratory emissions testing. But in normal driving, regulators have said, the cars emitted up to 40 times more smog-causing nitrogen oxide than the legal limit.

Schmidt admitted he did not disclose those illegal devices to officials during multiple telephone calls, meetings and filings. He wrote in his November letter that he should have disclosed those things, and that he felt “misused by my own company in the Diesel scandal.”

“Being arrested on the toilet of the airport in Miami by (eight) law enforcement officers and then being led to my wife in handcuffs was one of the most humiliating experiences of my life up until then,” he wrote in the letter to Cox. “This humiliation was surpassed by the public shaming that followed. My mugshot became the face of Dieselgate worldwide.”

DuMouchel on Wednesday asked for a smaller fine for Schmidt. He said his client has already been punished for his actions in a number of ways, and that he was not as involved in the scandal as other executives.

Prosecutors argued that Schmidt was “brazen” in the lies he told U.S. federal officials, and his role in the scandal was “important.”

Volkswagen AG, Europe’s largest automaker, pleaded guilty in March to three criminal charges related to the automaker’s decade-long conspiracy to evade U.S. emission standards. The company was fined a record-setting $2.8 billion and faces three years of probation.

In July 2016, Volkswagen reached a $14.7 billion civil agreement with the Environmental Protection Agency that calls for the automaker to spend $10 billion to buy back or repair about 475,000 2-liter diesel cars sold between 2009 and 2015. It also agreed to a $1.2 billion settlement with its American dealers.

Current and former Volkswagen executives were indicted in what regulators called a 10-year conspiracy to rig thousands of diesel cars to evade emission standards. Also charged: Heinz-Jakob Neusser, Jens Hadler, Richard Dorenkamp, Bernd Gottweis and Jürgen Peter, all of Germany. Former Audi executive Giovanni Pamio, who is from Italy, reportedly was arrested by Munich authorities in July.

In late August, James Robert Liang, head of diesel compliance for Volkswagen from 2008 to June 2016, was sentenced to 40 months in prison and a $200,000 fine for his role in the worldwide scandal.

Liang and Schmidt were crucial parts of a conspiracy that defrauded the average U.S. consumer, Cox said from the bench: “You viewed this as your chance to shine,” he told Schmidt. “It is a very serious and troubling offense.”


Twitter: @Ian_Thibodeau