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FOR IMMEDIATE RELEASE Friday, August 4, 2017

Updated August 4, 2017 JUSTICE NEWS

Department of Justice

Office of Public Affairs

Volkswagen Senior Manager Pleads Guilty in Connection With Conspiracy to Cheat U.S. Emissions Tests

The former general manager of Volkswagen AG's (VW) U.S. Environment and Engineering Office, who was a senior aide to VW's head of engine development, pleaded guilty today for his role in violating the Clean Air Act in connection with VW's sales of "clean diesel" vehicles in the U.S.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department's Criminal Division, Deputy Assistant Attorney General Jean E. Williams of the Justice Department's Environment and Natural Resources Division, and Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan made the announcement.

Oliver Schmidt, 48, a citizen and resident of Germany, pleaded guilty to one count of conspiracy to defraud the U.S., to commit wire fraud and to violate the Clean Air Act; and to one count of violating the Clean Air Act. He was indicted by a federal grand jury on January 11, along with five other VW executives and employees. The case is assigned to U.S. District Judge Sean F. Cox of the Eastern District of Michigan, who accepted Schmidt's plea today. Sentencing has been scheduled for December 6.

"Today's guilty plea by a VW senior manager follows the successful prosecution of the company earlier this year and of another VW engineer in 2016," said Acting Assistant Attorney General Blanco. "The Criminal Division is committed to holding both corporations and individuals accountable to the rule of law, and to protecting U.S. consumers and the environment. This case is a great example of this important commitment."

"Schmidt participated in a fraudulent VW scam that prioritized

corporate sales at the expense of the honesty of emissions tests and trust of the American purchasers," said Deputy Assistant Attorney General Williams. "Schmidt along with each and every official involved in this emissions scandal will be held fully accountable for their actions by the Department of Justice as this investigation continues."

"We hope this prosecution sends a message of the importance the U.S. Attorney's Office places on protecting the environment," said Acting U.S. Attorney Lemisch. "Where criminal charges are appropriate, we will prosecute both corporations and individual employees who pollute and illegally evade our clean air laws."

As part of his guilty plea, Schmidt admitted that he agreed with other VW employees to mislead and defraud the U.S. and domestic customers who purchased diesel vehicles, and to violate the Clean Air Act. In the spring of 2014, a non-governmental organization in the U.S. published results of a study that showed substantial discrepancies in nitrogen oxide (NOx) emissions from certain VW vehicles when measured on the road compared to standard drive cycle tests. During the summer of 2015, Schmidt was told of the existence of cheating software in certain VW diesel vehicles that had been in place for years that would cause the vehicles to emit substantially higher amounts of NOx when the software detected that the car was not being tested, he admitted.

Schmidt admitted that he participated in discussions with other VW employees in the summer of 2015 to determine how to respond to questions from U.S. regulators about VW's diesel vehicles without revealing the defeat device. After a meeting with VW management in July 2015, VW management instructed Schmidt to seek a meeting with a senior employee of the California Air Resources Board (CARB) and to obtain approval from CARB for the sale of additional VW diesel vehicles in the U.S. without disclosing the fact that VW was cheating on emissions tests. Schmidt admitted following VW management's instructions. During two meetings in August 2015, Schmidt attempted to obtain approval for the sale of additional VW diesel vehicles by responding to questions from CARB without revealing what he knew was the truth – that the real cause for the vehicles' substantially higher emissions on the road was that VW had intentionally installed software designed to cheat and evade emissions testing, he admitted.

Schmidt further admitted that he knew that in August 2015 VW employees submitted to the U.S. Environmental Protection Agency (EPA) two reports pursuant to the Clean Air Act that were fraudulent and misleading. Moreover, Schmidt knew that VW was falsely marketing diesel vehicles to the U.S. public as being environmentally friendly and compliant with U.S. environmental regulations, including by promoting increased fuel economy, he admitted.

As part of his guilty plea, Schmidt agreed that during his participation in the scheme, he and his co-conspirators caused losses to victims of more than $150 million and that he obstructed justice.

The case is being investigated by the FBI's Detroit Field Office and the EPA's Criminal Investigation Division, with assistance from Homeland Security Investigations. Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorney David M. Fuhr of the Fraud Section of the Justice Department's Criminal Division; Senior Trial Attorney Jennifer Blackwell of the Environmental Crimes Section of the Justice Department's Environment and Natural Resources Division; and White Collar Chief John K. Neal of the U.S. Attorney's Office of the Eastern District of Michigan are prosecuting the case.

Component(s):

Criminal Division

USAO - Michigan, Eastern

Press Release Number:

17-875

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