A veteran Volkswagen AG engineer pleaded guilty to conspiring to defraud U.S. regulators and customers, the first criminal charge in the Justice Department’s yearlong investigation into the company’s rigging of federal air-pollution tests.
The engineer, James Liang, who entered his plea in Detroit federal court on Friday, is cooperating with the investigation, increasing pressure on higher-ranking officials of the company.
Liang worked at Volkswagen for decades, beginning in Germany and then moving to the U.S. in 2008 — two years after the government says the conspiracy began. He appeared in court with a translator.
He admitted to a charge of conspiracy to commit fraud against U.S. regulators and customers. He faces a maximum penalty of five years in prison.
Liang was one of the engineers at Volkswagen in Wolfsburg, Germany, who was directly involved in the development of the defeat device for the Jetta in 2006, according to a lawsuit filed in July by New York Attorney General Eric Schneiderman.
In 2014 and 2015, he was conducting tests at the company’s Oxnard, California, facility as part of Volkswagen’s effort to conceal from regulators that the defeat devices were responsible for the illegal emissions, according to the New York complaint.
Although the company has already agreed to settlements that may total $16.5 billion to get 482,000 emissions-cheating diesel cars off U.S. roads., the U.S. is continuing its criminal inquiry into the company’s manipulation of emissions systems.
Settlement talks in the criminal matter against the company could be resolved by the end of the year, according to two people familiar with the matter. Germany and South Korea are also conducting criminal probes of the company.
Jeannine Ginivan, a Volkswagen spokeswoman, declined to comment on Liang’s guilty plea.
After VW admitted last September that it had systematically rigged environmental tests since 2009, it suspended several engineers for their involvement in the scheme. They included several managers whom an internal investigation found had turned a blind eye to the effort.
The Justice Department a year ago put in place a policy requiring that all corporate cases include a plan to charge individuals — a policy that came amid criticism that company officials weren’t being held accountable even as the businesses paid billions of dollars in fines. The department has said companies that want credit for cooperating with investigators must name individuals whom they consider responsible for any misconduct.
Top-ranking auto executives have rarely been prosecuted in their companies’ scandals. In cases brought against General Motors Co. for ignition problems and Toyota Motor Corp. for uncontrolled acceleration, no high-ranking executives were accused of wrongdoing in the U.S.
VW still faces lawsuits by at least five states and by investors and dealerships in the U.S. There are parallel lawsuits, including consumer complaints, in Germany, all of which could raise the scandal’s price tag for the automaker.
Future expenses could include hundreds of millions of dollars in fees for the lawyers who secured the multibillion-dollar deal for car owners.