Franklin, Andrews, Kramer & Edelstein

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Volkswagen Executive’s Trip to U.S. Allowed F.B.I. to Pounce

By JACK EWING, ADAM GOLDMAN and HIROKO TABUCHIJAN. 9, 2017
http://www.nytimes.com/2017/01/09/business/volkswagen-emissions-scandal-oliver-schmidt.html

When F.B.I. agents learned that a prime suspect in the Volkswagen emissions scandal was traveling to the United States, investigators knew they were on the cusp of a rare feat: the arrest of an overseas corporate executive accused of wrongdoing.

On Saturday night, agents swooped in to arrest the Volkswagen executive, Oliver Schmidt, as he prepared to depart Miami International Airport for Germany, according to two law enforcement officials familiar with the case, one of whom described the circumstances of the arrest. The officials spoke on the condition of anonymity because they were not authorized to speak publicly about the case.

Mr. Schmidt, formerly Volkswagen’s top emissions compliance executive in the United States, has been charged with defrauding the government and violating the Clean Air Act. He made an initial appearance on Monday in federal court in Miami. He will be moved to Detroit, where he was originally charged and where court documents suggest that he might be valuable in the government’s investigation into other Volkswagen officials.

Mr. Schmidt, 48, played a central role in Volkswagen’s cover-up of its diesel emissions cheating, according to an affidavit from an F.B.I. agent that was unsealed on Monday. Even as the company obfuscated details of its cheating program from regulators, Mr. Schmidt warned executives in Germany that the company could face criminal charges for its actions, the affidavit says.

The case against Mr. Schmidt sheds new doubt on Volkswagen’s assertions that top executives did not understand the full scale of the wrongdoing until early in September 2015, more than a year after questions were first raised about emissions from its vehicles. Mr. Schmidt briefed executives in detail months earlier, in July, according to the criminal complaint, filed in federal court in Michigan. The timeline of the briefing has not been laid out before by prosecutors.

The complaint also says that other employees were involved in a cover-up, suggesting that more charges could be coming. It is unclear which employees — above or below Mr. Schmidt — the government believes were involved. Mr. Schmidt reported to high-ranking officials at Volkswagen headquarters in Wolfsburg.

Volkswagen is nearing a deal with the Justice Department to pay more than $2 billion to resolve the criminal investigation into the emissions cheating, according to three people briefed on the negotiations. The company or one of its corporate entities is expected to plead guilty as part of the deal, according to one of the people.

That deal, though, would not prevent charges against individual employees. Volkswagen’s emissions scandal has cost the company $16 billion in civil settlements in the United States alone.
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http://www.nytimes.com/2017/01/09/business/volkswagen-emissions-scandal-oliver-schmidt.html