Not smiling now: ex-Porsche CEO Wendelin Wiedeking faces trial following a 3-year investigation stemming from the failed VW takeover bid.

Former Porsche CEO Wendelin Wiedeking has been indicated by German prosecutors for alleged market manipulation in the audacious – but ultimately unsuccessful – David v Goliath bid to take over industry giant Volkswagen AG.

The indictment of Wiedeking — once hailed as one of the industry’s best-and-brightest – along with ex-Porsche Chief Financial Officer Holger Haerter follows a three-year investigation that concluded Porsche misled investors prior to the attempted takeover.  In the end, Porsche wound up being subsumed by VW but there is still ongoing legal wrangling that includes one lawsuit by former Porsche shareholders seeking 2 billion Euros, or $2.65 billion, in damages.

“The investigation found the suspects in February 2008 at the latest made the decision to increase Porsche’s share in Volkswagen to 75 percent in the first quarter of 2009 to prepare a takeover,” said a statement issued by Claudia Krauth, a spokeswoman for prosecutors in Stuttgart, where Porsche is headquartered.

The prosecutors appear to have built the case around repeated public comments by Porsche that the sports car maker was not intending to acquire the bigger maker.

The two makers have had a long and complicated relationship, frequently working together on projects such as the Porsche Cayenne which shares the same foundation as the Volkswagen Touareg. Both firms trace their roots back to German automotive legend Ferdinand Porsche. One side of his family runs the Stuttgart-based Porsche, another wing runs Volkswagen.

Today’s indictment is the latest blow to Porsche and its former senior management. Haerter is already on trial for allegedly making false statements in the process of arranging a 10 billion Euro loan used in the takeover scheme.

It is now up to the Regional Court of Stuttgart to decide whether to actually take the latest indictment to trial.  Both former executives, as well as Porsche, have denied the allegations.  Prosecutors, in fact, sharply reduced the scope of their probe since it began back in 2010 – a year after the battle between the two makers was resolved, Porsche agreeing to be taken over by Volkswagen.

That marriage was put on hold due to uncertainty about the financial liabilities Porsche might have faced as the result of civil lawsuits. But VW and Porsche ultimately found a creative way to tie the knot earlier this year.

Nonetheless, there are still plenty of issues left to be resolved even if the court were to decide not to proceed with a trial.  A lawyer representing plaintiffs seeking more than 2 billion Euros in losses and damages insists the result of the investigation mirrors and supports the allegations disgruntled investors have made.

David Arnold, an auto analyst with Credit Suisse’s London office, told the Bloomberg news service, “This is clearly negative news given that the case will necessarily take quite a significant length of time, and moreover could well be viewed as supportive for other related actions.”