The New York Times is reporting that a Volkswagen executive, Oliver Schmidt, was arrested on Monday, in Florida. The FBI is accusing the former top emissions compliance manager of being an important person in the company’s conspiracy to mislead U.S. regulators, and keep them from finding out that Volkswagen’s diesel vehicles were cheating emissions tests.
The arrest of Mr. Schmidt is an escalation of the criminal investigation into emissions cheating by Volkswagen and comes amid talks between the company and the United States Justice Department about what penalties the carmaker should accept as part of a settlement.
After a study by West Virginia University first raised questions over Volkswagen’s diesel motors in early 2014, Mr. Schmidt played a central role in trying to convince regulators that excess emissions were caused by technical problems rather than by deliberate cheating, Ian Dinsmore, an F.B.I. agent, said in a sworn affidavit used as the basis for Mr. Schmidt’s arrest.
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Mr. Schmidt continued to represent Volkswagen after the company admitted in September that cars were programmed to dupe regulators. He appeared before a committee of the British Parliament in January, telling legislators that Volkswagen’s behavior was not illegal in Europe.
This arrest comes just days after reports that the German company was close to reaching a settlement with the Department of Justice to resolve criminal and civil allegations.
The approval on fixes with the EPA could help defray the total price tag of the scandal that may top $20 billion in the United States alone.
VW will also face the oversight of an independent monitor to ensure it complies with the settlement, which could include either a deferred prosecution agreement or guilty plea, and significant conditions requiring reforms, the people briefed on the talks said on Friday.
The people said Volkswagen will agree to a penalty of at least $3 billion - and possibly more than $4 billion - to resolve the government's investigation, though the deal remains under negotiation and could still fall apart.
The company is taking big hit after big hit, having already agreed to pay $17.5 billion to resolve U.S. owners’ claims, while also facing lawsuits from at least 19 other U.S. states.