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Volkswagen engineer pleads guilty in U.S. emissions cheating case

A Volkswagen engineer who worked in Germany and the United States pleaded guilty Friday for a long-running conspiracy to trick U.S. regulators and VW buyers with software that cheated U.S. emissions tests for hundreds of thousands of “clean diesel” vehicles.

James Robert Liang, 62, of Newbury Park, California, pleaded guilty in federal court in Michigan to one count of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act. 

He faces up to five years in prison.

A federal jury indicted Liang on June 1. The indictment was unsealed Friday.

Liang is cooperating with the government in its ongoing investigation, the DOJ said Friday.

From 1983 until May 2008, Liang worked for Volkswagen AG in its diesel development department in Wolfsburg, Germany. 

Beginning in 2006, he and his co-conspirators started designing a new “EA 189” diesel engine for sale in the United States.

Liang and others couldn’t design the diesel engine to meet stricter U.S. emissions standards.

Instead they created and installed the cheating software, also called a defeat device.

The software recognized if a vehicle was undergoing standard U.S. emissions testing on a dynamometer or being driven on the road under normal driving conditions. During emissions testing, the software would “cheat” by sending false data.

Liang helped design the defeat device specifically for use on the EA 189 diesel engine.

In May 2008, he moved to the United States to help launch VW’s new “clean diesel” vehicles.

While working at VW’s testing facility in Oxnard, California, he held the title of Leader of Diesel Competence.

Liang was among the VW employees who met with the EPA and the California Air Resources Board (CARB) to apply for certifications for each model year of VW vehicles. 

For model years 2009 through 2016, Liang and others “falsely and fraudulently” certified to the EPA and CARB that VW diesel vehicles met U.S. emissions standards and complied with the Clean Air Act.

Vehicles VW marketed as “clean diesels” in fact had emissions on the road up to 40 times higher than shown on the dynamometer tests, the DOJ said.

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In June, VW agreed to spend up to $14.7 billion to resolve federal and California civil allegations of cheating on emissions tests and lying to customers.

About $10 billion went for a consumer buyback and lease termination program and nearly $5 billion to mitigate pollution from the cars and for green vehicle technology.

The settlements didn’t resolve federal criminal liability.

The vehicles involved in the federal and state settlement included 2009 through 2015 Volkswagen TDI 2.0 liter diesel models of Jettas, Passats, Golfs and Beetles as well as the TDI Audi A3.

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The Liang indictment is here (pdf) and his plea agreement is here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.

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1 Comment

  1. Do you think he and his conspirators did not have the "thumbs up" from those above them? This sounds like the "rogue employee" defense we see so often in corporate "oopses." The latest being the 5300 employees fired from Wells Fargo.

    These are cultural issues that start at the top and flow down through the organization. What is (who is) keeping (forcing) the US regulators from understanding (acting on) this?


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