VW diesel engineer James Liang was the first to plead guilty in the VW diesel scam case.
A one-time Volkswagen engineer who admitted playing a key role in the German automaker’s diesel emissions scandal has been sentenced by a Detroit federal judge to 40 months in prison and faces a $200,000 fine.
That was significantly more of a penalty than federal prosecutors originally had sought for James Liang, the first VW employee to plead guilty in a case that has now cost the company nearly $30 billion and led to the recall or buyback of millions of diesel-powered vehicles sold in the U.S., Europe and other parts of the world.
Separately, a former Volkswagen quality control engineer has told German prosecutors that he advised then-CEO Martin Winterkorn about the diesel rigging scandal on July 27, 2015. That was a month ahead of when Winterkorn and other members of the VW board had previously said they learned about the problem, and nearly two months before the scam was revealed by the U.S. Environmental Protection Agency.
“The conspiracy perpetrated a massive…and stunning fraud on the American consumer that attacked and destroyed the very foundation of our economic system,” U.S. District Judge Sean Cox told Liang, one of the perpetrators of the scam. “It was a very serious and troubling crime.”
(VW exec pleads guilty in diesel scandal. For the story, Click Here.)
Former VW manager Oliver Schmidt pleaded guilty in U.S. District Court in Detroit recently.
Liang admitted his guilt nearly a year ago and agreed to assist prosecutors in uncovering the full details of the diesel scam. For its part, VW was accused of rigging the 2.0- and 3.0-liter diesel engines used in about 11 million vehicles it sold worldwide. Liang and other conspirators came up with a way to program those engines to sharply reduce noxious emissions when undergoing tests. In real-world use, however, they produced up to 40 times more restricted exhaust gases, such as smog-causing oxides of nitrogen.
The 63-year-old Liang was expected to receive a lighter sentence and significantly smaller fine after agreeing to assist the U.S. probe. Prosecutors had asked for a 36-month sentence and a $20,000 fine. The lawyer for the one-time engineer, who had been working in the U.S. when the scheme was hatched, was asking the court to sentence Liang to home confinement. It is unclear if he may now seek to appeal the penalty.
Liang is expected to be deported to Germany, his home country, after he finishes serving his sentence.
Former VW CEO Martin Winterkorn.
Prosecutors in Germany are engaging in their own probe, though it is not clear if Liang could face additional penalties there. A number of VW employees, current and former, have been charged with crimes connected to the scandal, though only one other is currently in U.S. custody. Oliver Schmidt, a 48-year-old manager accused of helping develop and conceal the so-called “defeat device,” has indicated he also plans to plead guilty.
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The others, named in an indictment handed down by the U.S. Justice Department in January, are now in Germany and not subject to expedition. But, earlier this summer, authorities there did arrest an engineer with Audi, VW’s luxury brand, for his role in the scandal.
And the German investigation is moving forward with some reports from that country suggesting other engineers and executives could yet be charged. Among those in the center of the spotlight has been Martin Winterkorn, the demanding CEO at the time the plot was hatched. He has denied involvement and insisted he learned about the diesel rigging only just before advising the Volkswagen board and taking steps to deal with the impending scandal.
There have been three versions of the 2.0-liter diesel sold in the U.S., as well as the 3.0-liter model.
But an unidentified quality manager at VW has told investigators a different story, according to reports carried by the German daily Sueddeutsche Zeitung and broadcasters NDR and WDR. According to that VW employee he was called by Winterkorn on July 27, 2015, the CEO asking why VW’s latest diesel models weren’t yet certified by the EPA for sale in the U.S. The engineer says he advised Winterkorn the problem was that VW had “cheated” on emissions tests.
Among other things, Winterkorn faces allegations he concealed the rigging to try to prevent a crash in Volkswagen’s stock price. It is not yet clear if he could face criminal sanctions if the latest allegations prove accurate.
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VW has spent nearly $30 billion since the scandal was revealed to cover fines, settlements and an extensive buyback of rigged models. A number of senior executives have been forced out of the company, including Winterkorn. Additional shake-ups are expected at the Audi brand before the end of this month.