The FBI arrested former Volkswagen executive Oliver Schmidt on charges of conspiracy to defraud the United States. Schmidt was in charge of emissions compliance for Volkswagen and is believed to have participated in a scheme to fake emissions levels to meet U.S. government requirements for pollution.
Volkswagen cheated U.S. emission standards with a software that was potentially in 11 million of the company’s cars.
The initial reason for cheating the emissions standards test was simple. Volkswagen wanted to sell cars in the U.S. market but not spend the money to meet the standards. However, Schmidt’s indictment does not stem from that criminality but allegations that he lied to regulators to cover it up.
In 2014, a study from West Virginia University raised questions about whether Volkswagen’s diesel engines met emissions standards. It was later uncovered that Volkswagen diesel cars emitted nitrogen oxide at up to 40 times the levels allowed under the Clean Air Act.
The study and resulting press attention led to a probe by U.S. regulators to resolve the discrepancy. Schmidt told U.S. regulators the higher admissions were a result of a technical problem with the cars, not a conscious effort to use what was later revealed to be a “defeat device” within the cars to pass inspections.
In September 2015, Schmidt and other executives at the company admitted they lied and the cars did, in fact, contain “defeat devices” to cheat emissions tests. CEO Martin Winterkorn resigned with a nice retirement package.
The arrest of Schmidt comes as Volkswagen is reportedly near the end of its deliberations with the Department of Justice concerning a criminal settlement.
A lower-level Volkswagen engineer named James Liang pled guilty last September to offenses related to his role in the conspiracy and agreed to cooperate with investigators.
It is unclear if that cooperation led to Schmidt’s arrest, but if so, then it looks as though the FBI is finally approaching corporate crime cases like it handles other cases involving criminal conspiracies.