FBI Arrests VW Exec in Diesel Scandal

VW_Emblem.jpg photo by Evan Sears

CARS.COM — The FBI has arrested a former Volkswagen U.S. executive on fraud conspiracy charges, according to a report in the New York Times that cites sources familiar with the Justice Department criminal investigation of the company’s diesel emission cheating scandal.

Related: Some VW Diesels Now Have a Fix

The report says Oliver Schmidt, who led VW’s U.S. regulatory compliance office from 2014 through March 2015, was arrested Saturday in Florida and will be arraigned in Detroit.

This marks the second criminal arrest in the scandal and the first executive arrested. Former VW engineer James R. Liang pleaded guilty in September to fraud charges and agreed to aid the Justice Department in its investigation. His sentencing recently was delayed as he continued to cooperate with the probe.

Schmidt is reported to have had a lead role in trying to convince U.S. and California regulators that VW had not intentionally designed diesel emissions control software to give artificially better results during testing. The company has since admitted that it did. In actual use on the road, the cars emitted up to 40 times the legal limit for nitrogen oxide.

Government officials and lawyers for Schmidt declined to comment to the paper. In a statement, VW spokeswoman Jeannine Ginivan said only that the automaker was continuing to cooperate with the investigation.

The Times reported Jan. 6 that VW and the government are close to a settlement of the criminal probe for more than $2 billion.

The diesel scandal involves about 550,000 four-cylinder and six-cylinder vehicles from the company’s Volkswagen, Audi and Porsche brands. Volkswagen already has agreed to pay about $15.3 billion to settle diesel owner class-action and federal and state environmental and trade civil lawsuits against the company over about 475,000 2.0-liter four-cylinder diesels. There is a tentative agreement to settle civil claims over its 3.0-liter V-6 diesels for about $1.25 billion.

The settlements with owners gives them the option of a buyback from VW or an emissions fix plus compensation, if a fix is approved by regulators. Only a small number of the most recent models so far have an approved fix.

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Former D.C. Bureau Chief Fred Meier, who lives every day with Washington gridlock, has an un-American love of small wagons and hatchbacks. Email Fred Meier

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