Volkswagen Executive Charged for Alleged Role in Conspiracy to Cheat U.S. Emissions Tests

Oliver Schmidt was charged with one count of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act

Volkswagen Executive Charged for Alleged Role in Conspiracy to Cheat U.S. Emissions Tests
Image: Volkswagen
January 11, 2017

Oliver Schmidt, a Volkswagen (VW) engineer, was charged in a criminal complaint unsealed this week for his alleged role in a nearly decade-long conspiracy to defraud U.S. regulators and U.S. Volkswagen customers by implementing software specifically designed to cheat U.S. emissions tests in hundreds of thousands of Volkswagen "clean diesel" vehicles.

Assistant Attorney General Leslie R. Caldwell of the U.S. Department of Justice (USDOJ) Criminal Division, Assistant Attorney General John C. Cruden of the Environment and Natural Resources Division, and U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan made the announcement.

Schmidt, a resident of Germany, was charged with one count of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act. Schmidt was arrested on January 7, 2017 in Miami.

According to the complaint, Schmidt joined VW in or about 1997, and from 2012 to March 2015 was general manager for VW in Auburn Hills, Michigan, where he was primarily responsible for communicating and coordinating with U.S. regulatory agencies, including the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). In March 2015, Schmidt was promoted to principal deputy of a senior manager of VW and returned to VW headquarters in Wolfsburg, Germany where he played a direct role in VW's response to questions from U.S. regulators.

In about 2006, VW employees based in Germany in the engine development department started to design a new "EA 189" 2.0-liter diesel engine for sale in the United States. When employees realized that they could not design a diesel engine that would meet the stricter U.S. emissions standards, they allegedly designed and implemented software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or being driven on the road under normal driving conditions (the defeat device) in order to cheat the emissions tests.

As part of the certification process for each new model year, including model years 2009 through 2016, the co-conspirators continued to falsely and fraudulently certify to EPA and CARB that VW diesel vehicles met U.S. emissions standards and complied with the Clean Air Act, according to the complaint affidavit.

By the summer of 2015, U.S. regulators had discovered that VW diesel vehicles emitted substantially higher emissions when being driven on the road than when undergoing standard U.S. emissions tests and had repeatedly asked VW for an explanation of this discrepancy. The complaint alleges that Schmidt knew that the reason for this discrepancy was VW's use of defeat device software. Nevertheless, in the summer of 2015, Schmidt allegedly agreed to travel to the United States to participate in direct conversations with U.S. regulators. According to the complaint, during in-person and teleconference meetings with U.S. regulators, Schmidt hid the existence of the defeat device from the U.S. regulators.

View the full complaint