In the latest setback for beleaguered Volkswagen in the thus far un-ending Dieselgate scandal, a long-time employee – James Robert Liang – pled in the U.S. Eastern District Court of Michigan to criminal charges over his role in rigging test results affecting at least 11 million diesels, thereby defrauding regulators.
The Justice Department said Mr. Liang, looking at a maximum sentence of five years in prison, would cooperate with its ongoing investigation. German prosecutors are also known to be looking at criminal charges. How far up the management chain this diesel cancer spreads remains to be seen. Nonetheless, this is a severe setback for Volkswagen, which has reached a deal with the Justice Department for a breathtaking record $15 billion settlement in a civil suit over Dieselgate. More charges, and plea-deals, will surely follow.
According to the latest plea, from 1983 until May 2008, Liang was an employee of Volkswagen AG, working in its diesel development department in Wolfsburg, Germany. Liang admitted that beginning in about 2006, he and his co-conspirators started to design a new “EA 189” diesel engine for sale in the United States.
According to Liang’s admissions, when he and his co-conspirators realized that they could not design a diesel engine that would meet the stricter U.S. emissions standards, they 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 so-called defeat device – in order to cheat on the emissions tests.
Liang admitted that he used the defeat device while working on the EA 189 and assisted in making the defeat device work. In May 2008, Liang moved to the United States to assist in the launch of VW’s new “clean diesel” vehicles in the U.S. market. While working at VW’s testing facility in Oxnard, California, he held the title of Leader of Diesel Competence.
According to the plea agreement, employees of VW and its U.S. subsidiary met with the EPA and the California Air Resources Board (CARB) to seek the certifications required to sell each model year of its vehicles to U.S. customers. Liang admitted that during some of these meetings, which he personally attended, his co-conspirators misrepresented that VW diesel vehicles complied with U.S. emissions standards and hid the existence of the defeat device from U.S. regulators.
“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 plea agreement. Liang admitted that during this time, he and his co-conspirators knew that VW marketed its diesel vehicles to the U.S. public as ‘clean diesel’ and environmentally-friendly, and promoted the increased fuel economy. Liang and his co-conspirators knew that these representations were false and that VW’s diesel vehicles were not “clean,” DOJ said.
In connection with pleading guilty, Liang admitted that he helped his co-conspirators continue to lie to the EPA, CARB and VW customers even after the regulatory agencies started raising questions about the vehicles’ on-road performance following an independent study commissioned by the International Council on Clean Transportation The research showed that the diesel vehicles’ emissions on the road were up to 40 times higher than shown on the dynamometer.
The FBI’s Detroit Office and EPA-CID are investigating the case. Deputy Chief Benjamin D. Singer and Trial Attorney Alison L. Anderson of the Criminal Division’s Fraud Section, Trial Attorney Jennifer L. Blackwell of the Environment and Natural Resources Division, and Criminal Division Chief Mark Chutkow and Economic Crimes Unit Chief John K. Neal of the U.S. Attorney’s Office of the Eastern District of Michigan are prosecuting the case.