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VW exec arrested during Miami vacation over emissions scandal

reader comments 46 Share this story Enlarge / In this handout provided by the Broward Sheriff's Office, suspect Oliver Schmidt, an executive for Volkswagen poses in this undated booking photo.
Schmidt was arrested January 7, 2017 in Florida and is expected to be charged with conspiracy and fraud in the Volkswagen emissions scandal.
Schmidt was formerly a key emissions compliance manager for VW in the U.S. (Photo by Broward Sheriff's Office via Getty Images) Handout/Getty Images On Saturday night, the FBI arrested Oliver Schmidt, a former emissions compliance executive for Volkswagen Group, as he waited to catch a plane back to Germany at Miami International Airport in Florida.

The arrest is a major setback for VW Group, which has thus far been able to shelter most of its high-level executives from individual prosecution by US authorities. In a Monday appearance in US District Court in Miami, a Justice Department lawyer said that an attorney for Schmidt “had alerted government lawyers that the executive would be in Florida for vacation,” according to the Wall Street Journal. Schmidt, 48, was charged with defrauding the United States, wire fraud, and violating the Clean Air Act. He allegedly played a central role in hiding from US regulators the fact that some 500,000 Volkswagen and Audi vehicles with 2.0L diesel engines sold in the US were equipped with various types of illegal software designed to help the cars pass their emissions tests in a lab and to kill the emissions control system on the cars when they were driving on the road under “real world” conditions. Schmidt allegedly knew of this illegal software since VW Group began using it in Audis in 2009, but the charges the US Government has lodged against him have focused on his involvement between April 2014 and when news of the scandal broke in September 2015.

As an emissions compliance executive for VW Group, Schmidt was based in Detroit, Mich. and was alerted when the International Council for Clean Transportation (ICCT) and West Virginia University produced a report finding that many VW Group diesels showed an alarming divergence from their reported emissions levels when tested in real world driving scenarios. According to the complaint against him (PDF), Schmidt allegedly wrote to other VW Group managers at the time, “It should first be decided whether we are honest.
If we are not honest, everything stays as it is.” For the next year, VW Group danced around regulators’ questions about the study from ICCT and West Virginia University, claiming that the issue could be solved through a minor, voluntary recall. Later in the year, Schmidt wrote an e-mail to the then-CEO of VW Group of America analyzing the “Possible Consequences/Risks” of fallout from the ICCT and West Virginia University Study.
Schmidt added that modifications to the software in Generation 1 and Generation 2 engines “can achieve reductions of NOx emissions under RDE [Real Driving Emissions], but not compliance with the limits.” Even to this day, VW Group has only been able to certify a fix for Generation 3 vehicles—all 2015 models—that will bring the cars into compliance with federal emissions standards. According to the complaint, in August 2015, just a month before the Environmental Protection Agency (EPA), Schmidt traveled to Michigan to meet with a member of the California Air Resources Board (CARB), which had been aggressive in pursuing VW Group’s emissions discrepancies. “Schmidt offered technical reasons and excuses such as ‘irregularities’ or ‘abnormalities’ for the discrepancy without revealing the fundamental reason for the higher NOx measurements on the road: software intentionally installed in VW vehicles so the vehicles could detect and evade emissions testing.” The accusations in the complaint are bolstered by claims from two unnamed cooperating witnesses and James Liang, a engineer for Volkswagen that pleaded guilty to working on the diesel conspiracy in September. Liang has agreed to testify against VW Group to avoid prosecution in the US. Volkswagen has already settled two civil complaints over its illegal software in 2.0L and 3.0L diesel VWs, Audis, and Porsches.

The largest, concerning the 2.0L diesels, will set the company back $15 billion.

Earlier this month, the Wall Street Journal reported that Volkswagen and the Justice Department were considering another billion-dollar settlement based on a criminal investigation of the company.

Charges in that case have not been filed yet, however. Listing image by Handout/Getty Images