In January 2019, the US Attorney for the Eastern District of Michigan returned an indictment against four executives from Audi, a Volkswagen subsidiary, for their participation and direction of Audi’s emissions-cheating scandal. 

In December 2018, Audi paid a fine of 800 million euros to settle charges with German prosecutors.  Audi’s CEO, Rupert Stadler, was arrested and has been charged in Germany with alleged fraud and false advertising involving the sale of cars with “defeat devices.”  He was released from police custody in October 2018.    

Volkswagen has settled charges in the US and Germany for installing “defeat devices” in its diesel vehicles to circumvent applicable diesel standards.  VW’s total liability and penalties has exceeded 27 billion (yes, billion) euros.  Audi, a VW subsidiary, has fallen under German, EU and US prosecutions.

Meanwhile, back in the U.S., four Audi executives have been charged for their roles in a 10-year conspiracy to defraud US customers and regulators by rigging vehicles with software defeat devices to pass emissions tests.

The four executives include: Richard Bauder, head of Audi’s diesel engine development department; Axel Eiser, who headed VW unit’s engine development division; Stefan Knirsch, who led that division after Eiser; and Carsten Nagel, the carmaker’s former head of engine registration.  The four individuals are accused of conspiring with indicted former Audi executive, Giovanni Pamio, who may be cooperating with federal authorities, to violate the Clean Air Act.

The defendants are charged with a broad and continuing conspiracy to deceive regulators in the US and California who were responsible for testing and certifying the Audi Diesel vehicles for compliance with federal and California standards for vehicle emission standards.  Audi is recognized as VW’s most important luxury brand.

None of the four men are in custody and they are unlikely to appear in US federal court to answer the charges.  However, the four individuals will be subject to red flag notices and potential arrest and extradition from other countries, in the event they travel outside of Germany.  Germany will not extradite any of the individuals.

U.S. prosecutors have already indicted eight individuals for their role in VW’s emissions’ cheating scandal, including the former CEO Martin Winterkorn.

As described in the indictment, Bauder and Pamio and their co-conspirators eventually conspired to devise and defeat emissions monitoring systems because the technology to comply with the emission standards would not fit in then-current car designs.  As a result, the conspirators knew they were installing the device defeat system to ensure they could maintain specified trunk size and other parameters for the Audi diesel models.

The conspirators followed this illegal plan despite numerous objections from colleagues in Audi who urged officials to avoid the plan because it would violate current regulatory and certification requirements.  The indictment cites officials specifically informed the defendants that the technology would violate U.S. law.  Notwithstanding these objections and with full knowledge of the nature of their actions, the defendants proceeded with the technology. 

Equally disturbing, the indictment sets out events and conduct by the defendants designed to conceal the illegal device.  On numerous occasions, in response to regulatory inquiries and testing results, the defendants sought to mislead and divert attention to data and information suggesting the presence of the defeat technology.