Motor Vehicles

VW Supplier Pleads Guilty, Pays $35 Million Fine for Diesel Emissions Cheat

VW consumer fraud 375x210 VW Supplier Pleads Guilty, Pays $35 Million Fine for Diesel Emissions CheatVolkswagen (VW) supplier IAV GmbH has pleaded guilty to a federal felony charge and agreed to pay a $35 million criminal fine for its role in developing the defeat devices for VW diesel engines that cheated U.S. emissions standards.

Federal prosecutors said that Berlin, Germany-based IAV GmbH agreed to plead guilty to one count of conspiracy to defraud the United States and VW’s U.S. customers by misleading them about whether certain VW and Audi diesel vehicles complied with federal emissions standards.

IAV GmbH and its co-conspirators knew the vehicles did not meet U.S. emissions standards and worked with VW and others to design, test, and implement software that enabled the vehicles to cheat the emissions testing process, the U.S. Department of Justice said in a Dec. 18 announcement.

The company also stood by silently as VW concealed material facts about its cheating from federal and state regulators and U.S. customers.

Under the terms of the plea agreement, IAV GmbH will serve two years of probation, subject itself to the oversight of an independent corporate monitor for two years, and cooperate fully with an ongoing federal investigation and prosecution of VW executives and other individuals who engaged in the criminal defeat-device scheme.

The DOJ indicated that IAV GmbH’s criminal penalty could have been much larger considering the scope of the criminal fraud, but it was set according to the company’s ability to pay without jeopardizing its viability.

“Today’s guilty plea shows that this scheme to evade automotive emissions tests and cheat the American public and the U.S. government extended well beyond Volkswagen,” said Principal Deputy Assistant Attorney General Cronan. “Our investigation into emissions cheating is ongoing and we will follow the evidence wherever it leads.”

Last year, a federal judge ordered Volkswagen to pay the U.S. a $2.8 billion criminal penalty for orchestrating the massive fraud scheme that equipped 600,000 U.S. diesel vehicles with the emissions cheat. The penalty was the largest ever negotiated between the U.S. government and an auto manufacturer, dwarfing the record and near-record fines paid by Toyota, General Motors, and airbag maker Takata in recent years.